Hi there, and happy new year!
I purchased a car for the first time in 7 years - an '06 Pontiac Vibe with 58k miles. I’ve had no problems with it, but… the $300/a month payments are a real drag!! I got a great interest rate (4%) by agreeing to pay that much and thought I’d pay it off as fast as possible and pay less over the long term, and own the car for 10+ years (until it dies). However, at this point (5 months later) I am thinking that I’d rather be spending that money on something else, like my student loans. This leads me to my question.
Is it cheaper over the long term to get a newer used vehicle with low miles and pay it off over 3-7 years, or get a 10-20 year old honda/toyota/nissan with 100k+ miles and no payment, and instead pay for repairs over the long term? I am trying to figure out if I should refinance at a higher interest rate + longer term for a lower payment, or if I should just sell the car and get a reliable older car. I’m very tempted by an '89 Nissan Sentra hatchback with 100k miles on it.
Hi there, and happy new year!
Need a lot more information…
How many miles do you plan on driving?? What’s the repair history of the older car??
ANY 20 year old vehicle is going to have problems.
If you don’t drive too many miles a year…and you can afford the repairs…and the car has a good maintenance history…then a 10yo car with under 150k miles might be a good choice. Even then it’s a crap shoot.
The cheapest way is to buy a car you like and take proper care of it. That includes doing all the maintenance listed in the owner’s manual on schedule. I would also add changing the transmission fluid about every 30,000 miles along with the transmission filter. Note: flushing is not the same as changing. Generally it is a sales trick not proper maintenance.
Then keep the car until it falls apart. Avoid taking out a loan for a car or worse leasing one. When you are looking at a used car, then I would suggest taking it to YOUR mechanic before you sign.
I would not be tempted by a 89 Nissan with 100K miles. No doubt it will come with major maintenance and repair costs due to age. I also think you will suffer some sort of loss by selling the Vibe. Changing your mind on a course of action is generally more expensive than staying the course.
Keep what you have, maintain it, and enjoy it. In my part of the world, not having a car is not an option (no really good public transportation).
I only use it to commute in the winter, when the weather is bad, and for camping and road trips in the summer. I put around 3k miles on it in 5 months, but a part of that was a week long trip around the great state of Oregon (which was about 1500 miles).
I don’t know anything about the older car other than what the ad says as I am just entertaining the idea at the moment. Ideally whatever older car I get would have been well-maintained.
well, the temptation is really the idea of not having a $300/month car payment + $100 for full coverage insurance. Plus, I am hoping to move to the other side of the country this coming year and am wondering if it’s feasible to take the car with.
Better the devil you know than the devil you don’t know, I say. You have a fairly new vehicle with “no problems”. At 4%. If I were in your shoes I would pay the $300/mo. and focus on paying off the student loans. Student loans cannot be discharged in bankruptcy and will follow you to the grave or until you pay them off.
I would take Mr. Meehan’s advice for maintaining your vehicle.
The trouble with the 10-20 year old honda/toyota/nissans is they hold their value too well because they have good reputations. So you still have to pay $$$ for old ragged out ones.
The thing is, I can’t afford the $300/month for the car AND the $500/month for the student loans. So I need to do something - and it is either sell my car or keep it and refinance at a higher rate. Wish I could afford both, but I work at a nonprofit right now and a raise is out of the question.
If you had a new car you’d be stuck. Since you purchased the car used, the question is can you sell it for something close to what you paid for it? If the answer is yes, then sell it.
I’m not sure you understand the finances behind getting an older car either. Repairs can be expensive unless you do some of them yourself. You might get an older car and find it needs several $500+ repairs in a year. Cars are expensive, perhaps you need to see if you really need a car at all.
Get a paper route and pay everything off quicker. Every hour you spend working and earning is an hour you don’t have to spend money.
IMHO you are beyond the point of entertaining the idea of another car. This cost/benefit analysis should have been done well before entering into a transaction. A car is a depreciating asset. It will never fetch anything close to what you had paid for it, even if you want to sell it after only 24 hours of ownership.
Whatever savings you might realise from not having this particular car will be wiped out by the transaction costs of selling it (the vast majority of people buy their cars at retail value and sell them at wholesale value) and/or the repair costs of the other older car, you are now considering.
If you’re moving to New York, then yes, you should sell the car now and book your loss.
If you stay where you are now, you would be better off keeping and enjoying this car for the next 10-15 years and properly maintaining her, until the cost of maintenance is equal to or greater than the cost of a new loan for a new car.
my current job requires a car. I went without a car for 7 years, which was nice. The best thing about having a car though, is being able to get out of town and go camping and whatnot.
It is true; I don’t understand the finances at all! That is why I am asking you guys what you think. My father in law seems to think that I should just sell the car - because, yes, I can sell it for close to what I paid (which was under the blue book value at the time) and have enough left over to get a $2000 vehicle. But then, will I feel safe taking it camping? I dunno…!! How reliable can an older car be?
Other than agreeing wiht Mike and Mr. Meehan, I think one problem you have is with the Vibe. You have only had it 5 months and odds are that you owe more than what the car is actually worth.
The car also has the undeserved stigma of being manufactured by a car company that no longer exists and a shaky parent company with Federal involvement.
That does not really matter in the big scheme of things but the stigma is there anyway.
The mileage on the 89 Nissan is not bad for that age and I think it’s viable if the car has been maintained at least half well. As with any used car an inspection should be done.
Neither. I believe the best approach is the high mileage newer car. Age and not miles alone determine how long a car will last. !00k mile cars do not have to be 10 years old. You can find 100K mile cars cheap at 4 to 5 years where the other equipment and the body are still in good shape with an engine/trans with good maintenance will give you 200k+ miles.
In your situation, keep the Vibe. It’s a good car in it’s prime…run it into the ground with good maintenance.
Well, I will be moving to the SE part of the US, and will most likely need a car, since public transit is not well funded down there. (Georgia or Louisiana, or perhaps one of the Carolinas.) So that throws another wrench into the figuring.
well, the thing is, I value my time more than I value having a nice car. I don’t shop for fun either, so spending money is not really an issue. I spend money on living expenses, student loans, my car, and my cats’ vet bills. I’m the queen of the land of make-do, and when I do spend money on clothing, it is used. I try to be as thrifty as possible - the car was really a stretch for me, which is why I am doubting the smartness of getting such a new (2006), low mileage vehicle with a payment, when an older one would have been fine, maybe.
OUCH! It twists my heart to suggest this (I hate debt) but have you looked into trying to refinance / defer the student loan debt? Other than that, I like Rod Knox’s suggestion. A paper route or other part-time job. If you know something about fashion, you could buy those clothes at the thrift shop and sell them on e-bay for a profit. I know people who do that type of thing as a sideline.
You can find a good car for $2000, but it takes time, patience, and some skill, and even then you can get it wrong. What could you lose in terms of pay and/or your job if you have a car which keeps breaking down? Also, if you are contemplating a cross-country move, I think you’d be better off driving a '06 Vibe than a 20 year old anything.
Sometimes the most expensive mistakes come by being cheap. Not saying you should go buy those Italian designer jeans when Walmart specials will do just as well, but some times buying a cheap car can cost thousands more in the long run than if you bought a newer car.
Step back and look at your monthly budget, call and ask if you can defer your student loans for a bit longer. If you can defer payments for a little while, take you student loan payment and put it towards your car payment. Then reverse it once you pay off the car. Should the car require some expensive repair down the road, you can use the extra you’d put towards the loan on the repairs.
A variant of this would be to open a savings account and put the extra loan payment into it each and never touch it until the other loan is paid for. Then, you can use that money you saved to pay down the other loan.
I like the idea, unfortunately, I made the mistake of taking private loans to fund my education. Sallie Mae is unwilling to negotiate. My only options are to pay around $300 a month on my private loans, or pay them $100 a month to defer payments. Fortunately, I am in the process of consolidating the federal loans so I don’t have to pay on them right now - otherwise my payment would be much higher.
I think what I will do is try to find a way to refinance so that I can keep my car. I do like it, a lot!