A very expensive, very mediocre car. There's got to be a better way!
February 23, 2015 7:56 AM   Subscribe

I'm feeling frustrated with my automobile situation and don't really know where to start. The gist of it is that I can't really afford the payments and maintenance on my car, and I think I want out, but I don't know how.

Due to my iffy credit score, I'm making payments of almost $400/month on this car. It was a certified pre-owned 2009 Subaru Forester that I bought from a dealer a couple of years ago with around 90K miles. Now it's got around 105,000 miles and badly in need of maintenance. The maintenance, I'm told (by a trusted mechanic), is standard and necessary around the 100K mark.

I'm only halfway through the loan term, but I'm thinking this isn't sustainable. I really like this car--and need a car for work, and I drive a lot on unpaved roads in bad weather so the AWD is something I'd like to keep. But $400 a month is just so much money. I mean, what are my options?

- stick it out, maintain it well, and drive it as long as I can after it's paid off (this was the original plan)
- sell the car on Craigslist? How do I offload the car loan?
- get the expensive maintenance done before selling, or let it go?
- buy a new car? how? with what kind of financing?
- titles????
- how to spot scammers if I attempt this privately?

Any advice, including a "snap out of it! your situation is totally fine and normal!" is welcome. I've become so stressed about the finances of this thing that I may have lost perspective.
posted by witchen to Work & Money (20 answers total) 2 users marked this as a favorite
The service you're up for would be the timing belt, I'm guessing, and all the while-we're-at-it stuff that goes with it, like the water pump, pulleys and seals. Yes, it's pricey and necessary. If you don't do it and the belt breaks, your engine will suddenly become a very expensive paperweight.

Your bigger-picture options are going to depend on how much you owe on this thing. How much do you owe on this thing?
posted by jon1270 at 8:01 AM on February 23, 2015 [6 favorites]

Response by poster: The current outstanding principal balance is a bit over $11,000.
posted by witchen at 8:04 AM on February 23, 2015

According to Edmunds, your car is worth about 6k-7k (sold to an individual, I assumed good condition).. given that you are about 5k upside down on this, I suspect your best route is to get the work done and keep the car. A well maintained Subaru should easily get 200k miles...
posted by HuronBob at 8:13 AM on February 23, 2015 [11 favorites]

According to Edmunds, your car is worth about 6k-7k

Which trim is it? If it's an X, Kelly Blue Book has it listed closer to 7-8k; if it's XT, 10-12k. That's obviously a big difference.
posted by The Michael The at 8:16 AM on February 23, 2015

If you've got two years of good payment history, you can refinance to a better loan. Do you have money to bring to the table to pay it down enough that you're not upside-down anymore?

If you don't have enough cash on hand to cover the difference between the balance of the loan and the car's blue book value, I think your only option is to hold onto the car.
posted by rabbitrabbit at 8:17 AM on February 23, 2015 [4 favorites]

Second HuronBob's comment. You won't be able to unload it and get out of your principal. The timing belt job is a bit of a hit but necessary. Maintain the car well and you will have it for quite a few years.
You may want to look into refinancing the loan. You said you are halfway through the loan, so maybe that helps improve your credit a bit?
For your needs it sounds like you picked the right car, maybe over payed for it a bit but that is water under the bridge at this point.
posted by a3matrix at 8:20 AM on February 23, 2015

Best answer: Well, check the trade in value on KBB. You're about $1500 in the hole (check your exact zip code and trim.) If you trade, don't do any servicing, you'll never get the money out of it.

So the good news is you can trade it in on something else. You can technically do this with no money down, because they'll roll the $1,500 into the new loan.

The bad news is that unless you seriously down grade and/or lease, your going to have a hell of a time getting that payment any cheaper.

I put zero dollars down on my Honda Civic and I pay around $250 per month on a lease. It's great because I love the car, it has all the latest bells and whistles and since it's new, I won't have to deal with repairs or tires or anything like that. If you drive a lot, this will not be the optimal answer for you.

But I would do a trade in, yeah, you might lose out on a couple of bucks, but they can do some magic with your financing.

If you can bring cash to the table, it will help a LOT!
posted by Ruthless Bunny at 8:20 AM on February 23, 2015 [2 favorites]

Response by poster: I did look into refinancing about a year ago, and the deal they offered wasn't an improvement on the status quo. Would it be worthwhile to look for (re)financing from a different bank than the one that currently holds my loan?

Thanks for all the answers so far!
posted by witchen at 8:22 AM on February 23, 2015

Best answer: Would it be worthwhile to look for (re)financing from a different bank than the one that currently holds my loan?

Of course! Preferably a credit union.
posted by Ruthless Bunny at 8:27 AM on February 23, 2015 [13 favorites]

I have an '07 Legacy with 153,000 miles on the clock and it runs just fine. Best car I have ever owned. It's paid off, but I'm keeping it until it falls over dead in the road. I need new tires and the Check Wallet light is on for code P0420 (which was an $800 repair for new oxygen sensors last time it happened about a year ago, but my state inspection isn't due for another year so I have time to get that fixed.) I replaced the timing belt and spark plugs at about 100k miles on the advice of my mechanic (after it had been towed for a broken coolant thermostat --> overheated engine --> which was actually a very inexpensive repair) and that was a bit of a hit to the wallet. Once I did some research on what a timing belt is, I am glad I did it. If your timing belt breaks you could end up paying $400 per month on a car that won't move.

$11,000 on an '09 Forester with > 100,000 miles is bordering on an unreasonable price, but you never know.

When cars get that many miles on them, they start to nickel and dime you to death, but my Legacy has been nickel and diming me much less often than other cars I've owned with far fewer miles on the clock. Keep that in mind.
posted by tckma at 8:35 AM on February 23, 2015 [5 favorites]

Do get the maintenance. Do look into refinance at a credit union but NOT for a longer term. Do not trade in and get financing from a car dealer, (the magic will come out of your end, they are not your buds.) Stop calling your car mediocre, it speaks of hideous consummer brain washing ( you also said you really like it). Realize the 2 years is a small amount of time and having a paid off reliable car that you like is well worth it.

The above is true if you can afford it, if you have been paying for the last couple years than you have been affording it even if it seems like an albatross that sucks money away from things you would rather buy. If your financial circumstances have changed, if you are unable to meet your monthly bills despite removing discretionary spending from your budget than you have a different problem and might have to take debt enslavement for a longer term and kick the can down the road. And then there is always defaulting on the loan and walking away which doesn't sound as practical in this case because you don't have enough money at this time to buy a reliable car.

Good luck, a lot of people have been in your shoes. I don't mean to sound school marmish but I think you would benefit from learning about the basic mechanics of personal finance and debt and I don't mean from somebody like this asshole
posted by Pembquist at 9:42 AM on February 23, 2015 [3 favorites]

Would it be worthwhile to look for (re)financing from a different bank than the one that currently holds my loan?

Of course! Preferably a credit union.

Unless you own half interest in a bank, avoid them like a plague. Get thee to a credit union, STAT.

Learn to change your own oil, and do it faithfully.

Do all needed maintenance now and in the future, pay it all off, and drive it like it a borrowed mule. Cherish every month it gives you after the payments are completed, and put at least $50 a month toward a down.

We've gotten as long as 300k/18 years out of our old faithfuls, and they've deserved a decent resting place, but we've been gotten a couple hundred of them for old hoopies.

The downside is no ego boost--total upside to the checking account.
posted by BlueHorse at 10:45 AM on February 23, 2015 [1 favorite]

If you said the transmission died or it blew a head gasket or something, you might be in a bad place. But if you want a low-maintenance AWD vehicle, you won't do much better than what you have. If you overpaid, you've already taken the loss.

So, do the regular maintenance and it should treat you fine.

If you were going to change cars to save money, you'd have to compromise on some combination of reliability (age&miles) and AWD. You don't drive much (for the US) so getting a higher-mileage vehicle won't be as big of a financial benefit.
posted by flimflam at 10:57 AM on February 23, 2015 [2 favorites]

You're upside-down on the car, so you don't have any equity in it that would let you just walk away and come out ahead.

If you go to sell it, given the mileage, a reasonably-aware buyer is going to basically figure the cost of the upcoming maintenance out of what they will give you for the car. So you are not really avoiding the maintenance by selling, exactly. (Cars' values dip right before big maintenance intervals.)

And you still need a car to get around. So if you got rid of this car, you'd just have to get another one. One that's either newer and potentially more expensive upfront, or one that's the same vintage or older, and is "the devil you don't know" in terms of maintenance needs. I don't think that's a smart move.

It seems like you may have really overpaid for this car when you bought it, but that's water under the bridge at this point. It's done, and selling the car now in order to buy something else might well be sending good money after bad.

You don't say how many more months of payments you have on this car. That is the big consideration when trying to decide whether you want to refinance or not. If you only have a few more months at $400/mo, I would just suck it up and pay it off ASAP, then take the $400/mo you don't have in car payments anymore and put it towards maintenance. If you still have more than a year of payments though, at $400/mo, then it might make sense to refinance. However, I would try very hard not to be tempted by low monthly payments that you extend the loan duration. The goal ought to be savings via a reduced interest rate, not by just extending the loan further out in the future... since cars are depreciating assets, that will almost certainly result in you being upside-down on the thing again in the future, perhaps when it gets wrecked or fatally blows a head gasket or something, and then you're really S.O.L. So try to avoid that.

Subarus have good reputations for powertrain reliability if they are taken care of, so I would probably pay for the maintenance (although, for the love of all that's good in the world, get a couple of estimates from a few different shops... big maintenance jobs like timing belts are something that you can totally shop around for) and then run the numbers and see whether refinancing to a lower rate or just paying the car off works out to be better.
posted by Kadin2048 at 12:14 PM on February 23, 2015 [5 favorites]

I think it's hard to say without knowing exactly how much cash flow you can afford for a car, and exactly how much cash you have in the bank for maintenance.

Even if you are able to sell the car with only a $3k loss (as an example), you'd still need to buy another car. If you have $5k you might be able to buy a decent car that will run for at least a year or two, but chances are, you are going to run into the same maintenance issues within a year or two, where you will need to replace the timing belt. So you'd want to spend $1k anyway. That means you are looking at $9k in the bank to spend on a car. (All hypothetical, of course. Run the scenario with your own numbers.)

If you choose to keep the car, you will need to do the repairs, which are around $1k. But then you have $400/month of car loans. But how much of that is interest? If it's more than 4% or 5%, I would definitely look at refinancing through a credit union. If it's a purely cashflow issue, consider stretching out the loan term, but paying the loan off at the same monthly rate while you can afford it. (This will give you more wiggle room if something comes up.) Then you can take the extra $8k and use it as a cash cushion or towards paying off the car.

FWIW, I'm driving a '98 Accord with 180k miles on it. I paid $2500 last year to change timing belt, radiator, and everything else that needed to be done (including brakes). It was expensive, and almost the entire value of the car. But now I know the car's reliable, and nobody's going to sell you a 7+ year old used car with already-changed timing belt because it's such an expensive maintenance item.
posted by ethidda at 2:17 PM on February 23, 2015 [1 favorite]

Stop calling your car mediocre, it speaks of hideous consummer brain washing ( you also said you really like it).

Yea, really. Wtf? This is a nice car. All the private school parents drive them in the northwest, where i live.

The maintenance is worth doing. My dad has kept up with his older forester, and it's up to around 250k now and vaguely asking for some decent big work, but doing fine. These are die hard, reliable, nice cars. And they're a hell of a lot nicer to drive than cheap-mid range nissans and toyotas.

If you're putting miles on that slowly(5k a year?) you'll have this thing when you're old and grey. My dads car is 16 years old, and it's fine. Friends of mine have 20-25 year old subarus, or even older that are still fine, with totally hilarious amounts of miles on them.(they're, as i side, very popular in this area of the country) They're pretty much japanese volvos that never took that massive hit in quality in the early 2000s.

Do the maintenance, refinance, and keep it. Also keep in mind that you might not be as upsidedown as you think, because at least around here newer subarus never sell used for bluebook and everyone knows it. They're similar to priuses a few years ago or something, the used market is apple product levels of hot.

Pretty much, the payment sucks, but the car doesn't. Find a way to deal with the payment, you want the car.
posted by emptythought at 3:23 PM on February 23, 2015 [1 favorite]

I thought I put a link to the famous personal finance personality I was denigrating but either I'm just incompetent or I was breaking a rule so apologies, but I want to be clear that when I said "...like this asshole" I was refering to a famous personal finance personality and not anyone here or myself.
posted by Pembquist at 8:42 AM on February 24, 2015

Response by poster: Thanks for the advice, everyone--I am relieved that the consensus is to keep the car and drive it forever. And for what it's worth, I think it is a great car, but the levels of cash it's taking from me seem like new-model luxury levels, way above my means. Without knowing the make/model of the car, someone advised me to get something "a little less luxurious," hence the "mediocre" comment--because this is certainly not an extravagant vehicle! I am really, really not a car person, much less a new car person, so please believe I've received no consumer brainwashing.

That said, this has been a good dose of common sense talk and encouragement that my little Forester can make it many more years if I invest in its proper care. So thank you for that.
posted by witchen at 11:31 AM on February 24, 2015

I think it is a great car, but the levels of cash it's taking from me seem like new-model luxury levels

To expand on this, yea, it's as much as the lease or payments on like, a BMW X1. But while you're paying that much you're also buying the fact that you don't have to pay all the maintenance, higher insurance costs, stupidly expensive tires, and other BS you'd pay on a vehicle like that.

It might seem a bit expensive for what it is, but look at that payment like airfare for a vacation where you only have to buy food, and get to stay at your uncles house in the area for free Vs having to pay everything out of pocket. Some doofus might go "wow, you could have gone to kauai for that much!" about said airfare but they aren't factoring in the follow on costs of all the extra shit you'd have to pay for at all.

Definitely think about that if it starts to bug you again. It's the difference between buying something kind of expensive for what it appears to be, but that will last a long time Vs something expensive that's a fashion statement, but falls apart quickly.

The only person i know with a bmw with 200k miles on it is in a serious relationship with a woman whose dad is an established master BMW mechanic since the early 80s. On the other hand, as i said, there's heaps of super high mileage subarus in my area that normal people just keep driving around.

A car payment is not the whole story of what a car costs to own. It's like assuming the price of an entree for one at a restaurant is the total cost of going there on a date.
posted by emptythought at 2:24 PM on February 24, 2015 [1 favorite]

Whenever I hear someone say that they got a great deal on a new car (and they always do) I think how do you know? The car is two weeks old. My car is 17 years old with 250,000 miles on it. I could have overpaid by $5000, and it still would have been a great deal.
posted by DTHEASH1 at 3:41 PM on February 24, 2015 [4 favorites]

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