Some insurance policies reduce the rate if you drive a very low number of miles, so make sure to check into that.
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We’ve had this insurance discussion before. I bought my first auto policy back when I was 17 in 1966. I’ve stuck with them and they have stuck with me ever since. I don’t go shopping based on emails or TV ads. Options on a policy though can make a difference. But you have to have your auto and homeowners or renters policy from the same place before you can get an umbrella policy. And it’s a mutual company so you get to participate in the profits and the losses as they occur. I just don’t shop for the cheapest. They pay for my roof and I pay their premiums. We remain friends.
How about a scooter? Very cheap transportation.
The only way I would recommend that you sell the car would be if you can swing it not to even own a car…public transportation, uber, bicycle, etc. Otherwise, keep your car and plan to make it last 15 years. Then it will become a beater with a known history.
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I don’t think so. I have been riding 2 wheel vehicles since I was 12 years old . With the traffic now a road constrution every where you go I no longer ride. I even rode to work in the snow . Also while you ar work or in a store your motorcycle or scooter may be in the back of a van headed who knows where.
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All good advice, pay it off, keep it and work on your credit score.
The important thing not emphasized is that with any used car you rarely really know what that car’s been put through so you’re opening yourself up for potentially big future repair costs.
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You currently have a rare opportunity where the prices of several year old used cars like you have is much higher than normal. If you are going to get rid of this car to get out of debt, now is the time to do it. You could replace it with a fairly reliable 10 year old car. 10 years old is not a beater. You could also get a 15 year old car and spend $1500 on a 20 year old beater and still come out ahead. Or get two 20 year old cars. When you have really old cars the time spent off the road due to repairs can make it so that you need two cars. You could probably switch your insurance from one beater to the other if a long repair is needed. If you have two cars try to keep one out of the salt in the winter. After 10 or 15 years the paint starts to fail and the damage from road salt becomes extreme. It only takes one short drive to cover it with salt which stays until it is washed or driven through a rain storm.
Someone mentioned that with used cars you don’t know what it’s been put through. This is a very important. An original owner vehicle has more resale value. Also, a vehicle that was not planned to be sold, such as one that belonged to someone who died, or someone who had to move on short notice, should be more valuable. If someone knows that they’re going to get rid of the car in a few years, they’ll likely drive it hard knowing that the next owner won’t have any way to verify the state of transmission wear. It’s especially important when the car is fairly new and has less than 100k or 150k miles. When the miles are that low it’s too soon for the results of abuse to show. If you buy a 200k mile 20 year old beater you don’t have to worry as much about how it was taken care of. You can do an oil consumption test. You can feel how the transmission shifts. The fact that it is still on the road is a testament to how well it was cared for.
You really do not understand the current market or you live in a place that is not like the rest of the country ( US maybe ).
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+1 on all points.
It’s always a nice little surprise when I get my annual rebate check from my “mutual” insurance company. And, like with your insurance company, they came through with flying colors when Superstorm Sandy damaged my roof.
My neighbor–who had more damage to his roof than I had on my roof–was only able to get paid for the replacement of random shingles, while my insurance company approved a total re-roofing for me. My roof was then 17 years old, and I would have had to do it on my dime w/in a few years anyway, so I was surprised that they paid for a complete re-roofing after I lost 40-50 shingles in that storm.
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You at least bought a sensible car. The refinance was a good idea. If you sell it and buy a beater, you may get a good price for your car right now, but you will pay a premium for a beater right now, so you won’t really be better off, plus there will be the cost of repairs.
My recommendation would be to keep making those $270 payments until the car is paid for. Then open a special bank account and put $270 a month into it and keep the Sentra. When ever the Sentra needs maintenance, use the money from this account. When it needs tires, there should be enough in this account to cover them. When the Sentra seems to be near the end of its economical service life, you may find that you have enough money in this account to pay cash for its replacement.
I ave this advice to my daughter when she was in a similar situation. She bought a new (2003) Corolla. When it was paid off, she kept making those payments into a “new car account”. In 2014 when the Corolla passed 200k miles, she bought a new Camry XLE for cash, and still had some money in this account toward its future replacement.
He owes $14,500 on the car. He can sell it and get rid of the loan.
I could find him a 15 year old car for $4000 and a 20 some year old beater for $1500. That’s $5500 spent on the cars. That’s $9000 better off than before, and now he has two cars. It’s two insurance payments, but there are discounts for having two cars and the price for comp and collision if even needed will be less.
And instead of a near new car the OP knows, he has two potential money pits.
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But no more interest payments! So he’s more than $9000 ahead. I don’t think he said what the interest on the loan is.
It’s easy when it’s other people’s money.
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The only time you buy two old cars is when one is going to be a donor (parts) car.
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I think this suggestion was in jest. It seems he still owes $14 K so selling would be a wash. No $9 K free money to work with and no car and bad credit. What a way to throw away a few years of payments and get a couple questionable vehicles besides.
I’m not terribly crazy about Dave Ramsey but my wife’s cousin has been doing the classes at their church for several years now. He says more than one couple has had their marriage saved by getting their finances straightened out using the Ramsey method. I’ll listen to him on the radio once in a while and people with hundreds of thousands in debt have managed to get themselves free in a few years. I would check for someone doing similar work locally. I’ve had finance and business training from high school on but sometimes when you are in the swamp it helps to have someone else charting the path forward.
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If he owes 14k now doesn’t that mean he could pay 14k now to pay it off? If he keeps paying off the loan monthly he could end up paying much more than 14k because of the interest.
edit: If he bought a $1500 car and a $4000 one I assume the $1500 would be paid for and then the remaining loan would be just $4000 instead of the $14000 loan. That’s a big difference! At the current rate he’ll be paying monthly for 5 more years at least.
If someone had $14k sitting around in a bank account earning a fraction of one percent interest, wouldn’t they logically have used the money, rather than taking out a loan at a high APR? Therefore, I would venture a guess that the OP does not have this money sitting around.
This may be true in absolute dollars, but with high inflation occurring right now, and expected to continue for the foreseeable future, the time value of money is much lower than its present value. In other words, when you make payments in the future, those payments are being made with cheaper dollars. So a low-APR loan is actually a form of subsidy to the buyer.
Huh? In today’s market, a $1500 car is over 20 years old, and/or has over 200,000 miles on it, or if less than 20 years/200,000 miles, it either has major body damage or mechanical problems. I might buy a $1500 car as a fixer-upper, but I DIY and I also have more cars than people in my household. So having one of them out of service for months while I find the time to do repairs is not a problem. Telling the OP to buy a $1500 car with the expectation that he can depend on it is irresponsible.
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bcohen2010,
Did you not realize that the whole point of this was for him to buy two old cars so that one can be out of service for a while for repairs? If the cars are driven half as much each they’ll be nearly half as likely to break down each, except for rust issues like brake lines if they’re both used in the winter.
It would be nice to know what the interest on the loan is, but we don’t for now. Look at it from a practical perspective. If inflation is so high that it turns out that the interest on the car loan matches the devaluation of the dollar, he would have to have a raise in his salary to take advantage of this, but he probably won’t get much of one, so it will still take the same amount of time to pay off the loan. 5+ years from now when the car is paid for he’ll have a car that’s worth about $6000 in today’s dollars assuming the car shortage is over with by then. There’s an 8 year old 2013 Sentra for sale at $6900 in Chicago right now. That $6000 is currently 23 months of payments.
So say he buys a $1500 beater and has a $4000 loan on a newer car. I’ll assume that the insurance is the same. That $270 a month payment is now $77. That leaves $193 left over for savings and repairs. If $100 per month is used for repairing both cars, then $93 is left over. If that $93 is put in to something to protect it from inflation, such as a stock or commodity, then its value 5 years from now can be measured in today’s dollars. At the end of 5 years he would have $5580 saved up, and two cars. He can now buy his 2018 Sentra back and have 3 cars without paying a dollar more.
2 old vehicles ? What if both of them need transmissions , tires , batteries and who knows what else . Sorry that is a silly idea . Plus I suspect this person lives in an apartment complex and the managment will have a broken down vehicle towed if it sets too long.