Lowering a payment

Where are you going to find a car for $4000 that will provide reasonable utility without high repair costs? More like $14,000. This is the same rationale that Dave Ramsey uses that I disagree with. Maybe 20 years ago but today would only be from people that love you.

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Dave Ramsey is living in the past with that $2,000 car advise.

5 Years ago, when someone was shopping for a $1500 car, many members advised to pay for a pre-purchase inspection. A cheap car is going to need work, fail inspection, money wasted inspecting junk cars. A person willing to drive a beater needs to be able to be handy with their own auto repairs. Don’t buy a $4000 car unless you are willing to drive noises, leaks and without A/C.

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???
This is not a person with lousy credit who bought an overpriced junker from a sleazy Buy Here Pay Here dealer with a high-interest loan. This is a person with decent credit, who purchased a decent vehicle from a reputable dealer, and financed this vehicle at a reasonable rate. This person now has buyer’s remorse, because they paid too much for the car, but defaulting on the loan is not the solution.

If this was a discussion about someone who purchased a junker from a BHPH dealer, and got ripped off, then I’d have mentioned default and bankruptcy as well.

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Wow, first. Thank you all for all the responses. It was great to hear everyone’s take and for the most part I think I know what to do now. I couldn’t help but laugh at some of the assumptions though.

I’m going to with the “pay it off or until its not underwater” camp. I think I’ll just bite the bullet and make double payments on it for a couple months. The faster that I can get above water… the faster I can unload it and just move on. Don’t get me wrong. I love the TLX, but I’d really like a platform that I can play around with. Luxury is great and all, but I really want to have fun with my cars if I own them and there isn’t much you can do aftermarket to a TLX.

  • My old car was a 2001 Toyota Echo. There was no “fixing it”.
  • Yes, I have GAPP insurance… :slight_smile:
  • My auto loan loan is at 1% through my corporate credit union.
  • Upgraded the Nav System to GROM VLINE

It’s not that I can’t afford this car. It’s just that a 2 year old really eats into my disposable income.

Thanks everyone!
John

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I’m not sure double payments makes sense in this case. That works for investments like a home where there is an expectation that it will increase in value. Double payments in this case will reduce depreciation somewhat if you can sell the car early, but even then most of the depreciation is front loaded. By the time you are no longer under water depreciation may be mostly worked off. Also 1% loan payments are mostly principle anyway. Lastly, if inflation keeps up, delaying payoff means that you are paying with less valuable money as the loan progresses. You my have evaluated those issues already and decided on the best course for you. I just thought I’d mention a few of the possible issues against paying off the loan more quickly.

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Think how much you would have paid in avg interest charges on a 36-48 month loan. A 30k loan at 18% might have cost you thousands. So, you are basically breaking even. On a depreciating item like a car.

An $863 monthly car payment? What a joke! I have lived in apartments which cost less than that…and that was as recently as 8 years ago. And suffice it to say that I have purchased several used cars for under $3k, which provided years of useful service.

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Prices have gone through the roof in the last few years, housing rather rent or own is stupid crazy now… At least around these parts and many more…
And if they are under $1000 a month, you probably don’t want to live their… lol

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OP has 1% loan though. But a $30k balance over 5 years is still $500+ payments.if you have 4 yr loan and 10% interest then it’s $700+.

Doubling up on payments is a foolish move. Right now, some CD rates are near 5%. If you have credit card debt, the rates are even higher. Put your money in CDs that will that will mature that will mature at the time that you project t sell your car. Even better yet, just keep your car for a long time, and then you have something you can tinker with to your hearts content.

I will add that the cheap beater option only works well for those who do their own work. Otherwise, the difference in annual costs is surprisingly small, and even has the possibility of making things worse.

Somebody is making a profit on the car you sell to them and also the car you buy from them. That turnover cost gets hidden. There is value in refusing to play that game yet again.

Yeah a 1% loan kinda throws out some of the usual advice. There are times to hang onto deals like that. I’m not a big fan of cds but yeah 5% is not unusual now if you pick a safe bank.

Just to contrast though, there was a recent article on southern Minnesota farm land that seems to have increased by 30%. Land, not houses, and for sure not office buildings. I remember my fil just burning a farm house that was on his land. So yeah, in inflationary times you want stuff, not money. My timing has been bad all my life though. Still I remember at a family meeting saying let’s not sell the land yet at $500 an acre. Can’t go down much more. A few years later the Colorado lawyers were paying $3000. Who knows now?