Should I bail out of my SUV now?
May 23, 2008 8:36 AM Subscribe
Should I dump my SUV? I have a 2006 Expedition, I've only put 12,000 miles on it since I purchased it new. My commute is 12 miles round trip and I only drive it in the winter and when it rains in the spring and summer, I bike on all other days. My concern is two fold. First, I am currently under water on my loan and will have to come up with around $5,000 on a trade or private sale. Second, if I keep the vehicle am I effectively throwing good money after bad, will this vehicle be unsellable / undriveable in a few years. I know that my question requires some prognostication, but I would appreciate some opinions.
Seconded explosion, get yourself out of debt as soon as possible.
You don't need this car, buy some cycling waterproofs for spring and summer rain. You may look goofy, but you'll be dry, debt free and healthy. This will put you easily into the top 5% of people for level of happiness guaranteed.
Newsnight's Ethical Man may give some inspiration.
posted by munchbunch at 8:56 AM on May 23, 2008
You don't need this car, buy some cycling waterproofs for spring and summer rain. You may look goofy, but you'll be dry, debt free and healthy. This will put you easily into the top 5% of people for level of happiness guaranteed.
Newsnight's Ethical Man may give some inspiration.
posted by munchbunch at 8:56 AM on May 23, 2008
how much do you pay on the loan?
how much of your paycheck does this come out to each month?
cars lose value and provide convenience. the question is how seriously the relationship between those two has gone out of balance for you. consider if you do anything else with the car. how about shopping? jumping into it to see friends? (I take your longish work commute to mean you live in somewhat of a rural area?) does that make it worth more to you? is it more important to have more cash in your pocket each month from hereon out or to have the car?
what you're doing right now is essentially renting. the dough is gone and you wrote yourself there is no way to get it back. still being in the hole kind of makes selling it sound like a proposition with very little benefit, which again I state without knowing just how much you pay each month and how much of your paycheck that comes out to.
bottom line: I don't think there is a clear-cut answer. what you should do depends on what kind of person you are and what's more important to you.
posted by krautland at 8:58 AM on May 23, 2008
how much of your paycheck does this come out to each month?
cars lose value and provide convenience. the question is how seriously the relationship between those two has gone out of balance for you. consider if you do anything else with the car. how about shopping? jumping into it to see friends? (I take your longish work commute to mean you live in somewhat of a rural area?) does that make it worth more to you? is it more important to have more cash in your pocket each month from hereon out or to have the car?
what you're doing right now is essentially renting. the dough is gone and you wrote yourself there is no way to get it back. still being in the hole kind of makes selling it sound like a proposition with very little benefit, which again I state without knowing just how much you pay each month and how much of your paycheck that comes out to.
bottom line: I don't think there is a clear-cut answer. what you should do depends on what kind of person you are and what's more important to you.
posted by krautland at 8:58 AM on May 23, 2008
This will put you easily into the top 5% of people for level of happiness guaranteed.
that's assuming there is one way to happiness. that the OP bought this type of car in the first place suggests to me he isn't as hardcore as a biker/enviromentalist as you seem to assume. perhaps he values convenience as well, which he'd lose out on, or stylishness or something entirely different. people vary.
posted by krautland at 9:00 AM on May 23, 2008
that's assuming there is one way to happiness. that the OP bought this type of car in the first place suggests to me he isn't as hardcore as a biker/enviromentalist as you seem to assume. perhaps he values convenience as well, which he'd lose out on, or stylishness or something entirely different. people vary.
posted by krautland at 9:00 AM on May 23, 2008
If you have the $5000 to spend to get rid of it, yes, do so. Over the long term, I doubt gas will get much cheaper, and the big SUVs aren't going to come back into fashion within a year or two. Think of it as: the truck will cost $5k to get rid of today, or will cost ((value of loan - residual value) + maintenance + insurance + gas costs) if you keep it for the remainder of the loan, which is guaranteed to total to well over $5k.
Once you are free of the car, then shop for a used vehicle you can pay cash for, that won't depreciate so much just sitting around during the nice months. Some people do great having no car; I prefer to own one but just not use it all that much. A used but reasonably reliable sedan or station wagon will serve your basic needs just fine; or, if you really really insist on buying new, so will a cheap new vehicle like a Honda Fit.
At the amount you drive, the major issue is not gas costs but rather the other costs of ownership -- depreciation, maintenance, insurance, etc. So on gas costs alone you can't justify selling your SUV (because at 6000 miles a year, it will take forever and a day to recoup the costs of a new car in gas savings alone), but on the total cost of ownership you probably can.
posted by Forktine at 9:05 AM on May 23, 2008
Once you are free of the car, then shop for a used vehicle you can pay cash for, that won't depreciate so much just sitting around during the nice months. Some people do great having no car; I prefer to own one but just not use it all that much. A used but reasonably reliable sedan or station wagon will serve your basic needs just fine; or, if you really really insist on buying new, so will a cheap new vehicle like a Honda Fit.
At the amount you drive, the major issue is not gas costs but rather the other costs of ownership -- depreciation, maintenance, insurance, etc. So on gas costs alone you can't justify selling your SUV (because at 6000 miles a year, it will take forever and a day to recoup the costs of a new car in gas savings alone), but on the total cost of ownership you probably can.
posted by Forktine at 9:05 AM on May 23, 2008
In your decision, make sure to calculate the cost of gas. It's at $4 in many locations and not projected to go down. If you do trade the car in for (perhaps) a used compact that is more fuel-efficient, you will generate noticeable fuel savings that you can factor into your available budget for payments.
Now is probably a better time to sell this vehicle than two or three years from now. As fuel prices remain high, SUVs look less and less attractive to buyers. I wouldn't expect that to change soon - better to get out now than to be trying to sell a five-year-old gas guzzler when gas is $5 or more.
12 miles is a short commute - you could bike if you were interested. But other things to consider in whether you can live car-free: how close are you to grocery shopping and other frequent errands? How close are you to things you do for entertainment - parks, movie theatres, downtowns? My car's been in the shop for several weeks now, and though I really like living car-free and it mostly works, the areas in which I'm noticeable inconvenienced are grocery shopping (my habits have had to temporarily change to shopping at the very close specialty-food and high-priced convenience stores) and entertainment (no variance from downtown and its standard options, no movie house). So do consider your geography before deciding you totally don't need a car.
posted by Miko at 9:08 AM on May 23, 2008
Now is probably a better time to sell this vehicle than two or three years from now. As fuel prices remain high, SUVs look less and less attractive to buyers. I wouldn't expect that to change soon - better to get out now than to be trying to sell a five-year-old gas guzzler when gas is $5 or more.
12 miles is a short commute - you could bike if you were interested. But other things to consider in whether you can live car-free: how close are you to grocery shopping and other frequent errands? How close are you to things you do for entertainment - parks, movie theatres, downtowns? My car's been in the shop for several weeks now, and though I really like living car-free and it mostly works, the areas in which I'm noticeable inconvenienced are grocery shopping (my habits have had to temporarily change to shopping at the very close specialty-food and high-priced convenience stores) and entertainment (no variance from downtown and its standard options, no movie house). So do consider your geography before deciding you totally don't need a car.
posted by Miko at 9:08 AM on May 23, 2008
Ah, Forktine makes a point about short commutes and gas. So it depends a lot on when else you use the car.
posted by Miko at 9:09 AM on May 23, 2008
posted by Miko at 9:09 AM on May 23, 2008
The Givens:
14 miles per gallon.
12 miles roundtrip.
You drive about 6000 miles/year.
You owe about 5K on your loan?
The calculated and estimated costs:
Gasoline for a year (428 gallons) costs about $2000 (at about $5/gallon).
I suspect that your insurance and registration for a year is about the same
as your gasoline costs, with comprehensive insurance (the bank wants to
keep your vehicle protected).
As I see it, your options, in order of relative expense, are:
1) dump the SUV, and get another car.
2) keep the SUV, pay it off, and keep driving it
3) dump the SUV, and do not replace it with another car or vehicle.
That is, it's more expensive to dump the SUV and to buy another
car than it is to keep the SUV. The cheapest thing to do is to dump
the SUV, and become carless.
posted by the Real Dan at 9:19 AM on May 23, 2008 [1 favorite]
14 miles per gallon.
12 miles roundtrip.
You drive about 6000 miles/year.
You owe about 5K on your loan?
The calculated and estimated costs:
Gasoline for a year (428 gallons) costs about $2000 (at about $5/gallon).
I suspect that your insurance and registration for a year is about the same
as your gasoline costs, with comprehensive insurance (the bank wants to
keep your vehicle protected).
As I see it, your options, in order of relative expense, are:
1) dump the SUV, and get another car.
2) keep the SUV, pay it off, and keep driving it
3) dump the SUV, and do not replace it with another car or vehicle.
That is, it's more expensive to dump the SUV and to buy another
car than it is to keep the SUV. The cheapest thing to do is to dump
the SUV, and become carless.
posted by the Real Dan at 9:19 AM on May 23, 2008 [1 favorite]
You should not bail. With the low miles you drive, your energy and (potentially) depreciation savings from swapping to a more efficient car will never make up the cost of buying the new car and making your Explorer loan whole.
The environmental impact of the swap would be perverse. You'd move your low-efficiency Explorer to someone who would put more miles on it and you'd take the high-efficiency replacement out of the hands of someone who'd put more miles on it than you. (And while each of those others would find a replacement, each Explorer on the market makes Explorers cheaper and more attractive and each efficient car purchase makes efficient cars more expensive and less attractive.)
posted by MattD at 9:35 AM on May 23, 2008 [1 favorite]
The environmental impact of the swap would be perverse. You'd move your low-efficiency Explorer to someone who would put more miles on it and you'd take the high-efficiency replacement out of the hands of someone who'd put more miles on it than you. (And while each of those others would find a replacement, each Explorer on the market makes Explorers cheaper and more attractive and each efficient car purchase makes efficient cars more expensive and less attractive.)
posted by MattD at 9:35 AM on May 23, 2008 [1 favorite]
First the snark: Congrats on being the only Expedition owner in the entire country who has ever ridden a bike to work! (Sorry, had to be done.)
Gas prices have never been this high, and I think people are wrong that they'll never go back down. The US government has a vested interest in low gas prices, so I think they'll find a way to bring them down to at least the $3 range at some point. It's like assuming housing prices will stay high forever. It's not likely to happen. One caveat - if John McCain is elected, were likely to go to war with Iran, which I think will drive gas prices to the $5 per gallon (or higher) range.
I also think the conventional wisdom that truck and SUV owners have learned a "lesson" with high gas prices is wrong. SUV and truck sales are going to track with gas prices for the foreseeable future. When gas prices go back down, SUV and truck ownership will go back up.
Think about how much you're paying off in principle per month. If you figure you're $5,000 in the hole now, but you're paying off $200 in principle per month, you'll only be $2,500-ish in the hole in a year. You're going to eat that extra $2,500 whether you get rid of the car now or not. If you get rid of it now, you've got to ADD whatever car payment you end up with in a new vehicle. The bottom line is that you're paying nearly the same amount of money to get rid of the car now as you would to keep it for another year.
In addition, your commute is only 12 miles, which I'm going to figure is about your vehicle's MPG. That means you're using a gallon of gas (or about $4) every day you drive the car. A new vehicle with double the mileage is only going to save you $2 per day.
Now understand, that I HATE these ridiculously large vehicles. But you've got to look at this in two ways. Is this your conscience saying that you should drive a more fuel-efficient vehicle because it's the responsible thing to do? If so, then it's worth losing the money. But if this is a purely pragmatic, cash decision, I would wait, pay down the principle, hope gas prices go down and SUV demand goes up and then sell it in six months to a year.
posted by cnc at 9:38 AM on May 23, 2008 [1 favorite]
Gas prices have never been this high, and I think people are wrong that they'll never go back down. The US government has a vested interest in low gas prices, so I think they'll find a way to bring them down to at least the $3 range at some point. It's like assuming housing prices will stay high forever. It's not likely to happen. One caveat - if John McCain is elected, were likely to go to war with Iran, which I think will drive gas prices to the $5 per gallon (or higher) range.
I also think the conventional wisdom that truck and SUV owners have learned a "lesson" with high gas prices is wrong. SUV and truck sales are going to track with gas prices for the foreseeable future. When gas prices go back down, SUV and truck ownership will go back up.
Think about how much you're paying off in principle per month. If you figure you're $5,000 in the hole now, but you're paying off $200 in principle per month, you'll only be $2,500-ish in the hole in a year. You're going to eat that extra $2,500 whether you get rid of the car now or not. If you get rid of it now, you've got to ADD whatever car payment you end up with in a new vehicle. The bottom line is that you're paying nearly the same amount of money to get rid of the car now as you would to keep it for another year.
In addition, your commute is only 12 miles, which I'm going to figure is about your vehicle's MPG. That means you're using a gallon of gas (or about $4) every day you drive the car. A new vehicle with double the mileage is only going to save you $2 per day.
Now understand, that I HATE these ridiculously large vehicles. But you've got to look at this in two ways. Is this your conscience saying that you should drive a more fuel-efficient vehicle because it's the responsible thing to do? If so, then it's worth losing the money. But if this is a purely pragmatic, cash decision, I would wait, pay down the principle, hope gas prices go down and SUV demand goes up and then sell it in six months to a year.
posted by cnc at 9:38 AM on May 23, 2008 [1 favorite]
NPR and Consumer Reports addressed pretty much this question yesterday (although not from the unusable in a few years perspective). The bottom line is that especially if you are upside down in it it is cheaper to keep it; your added question about it becoming obsolete really doesn't change things, because whatever you replace it with may also become obsolete in the future, so you would still be stuck with a useless vehicle plus you would be out all the money you lost getting rid of your expedition early.
posted by TedW at 9:43 AM on May 23, 2008
posted by TedW at 9:43 AM on May 23, 2008
Keep it. They just did this exercise on CNN. Option number two posted by the Real Dan and TedW have it right. If you are upside down on the loan they recommended paying it off and keeping the vehicle.
posted by fixedgear at 10:01 AM on May 23, 2008
posted by fixedgear at 10:01 AM on May 23, 2008
The US government has a vested interest in low gas prices, so I think they'll find a way to bring them down to at least the $3 range at some point. It's like assuming housing prices will stay high forever. It's not likely to happen.
The dynamics of the two situations are totally different, though there is some speculation component to high oil prices, I'm fully sold on the analysis that India and China's rising middle class represents a demand shock that these P.O. times are going to have a hard time supply.
There is no government solution to this, subsidies will just make the supply shortfall worse. We could try strict rationing like we did in the 70s, but gas rationing will make driving SUVs (as a daily driver) even more painful than $5 gas would/will be.
Anyhoo, my advice is to just pay the SUV off, and use it as you are now. Low miles SUV and a bicycle are the best of both worlds, IMO. Can I call you when I need to move?
posted by tachikaze at 10:10 AM on May 23, 2008
The dynamics of the two situations are totally different, though there is some speculation component to high oil prices, I'm fully sold on the analysis that India and China's rising middle class represents a demand shock that these P.O. times are going to have a hard time supply.
There is no government solution to this, subsidies will just make the supply shortfall worse. We could try strict rationing like we did in the 70s, but gas rationing will make driving SUVs (as a daily driver) even more painful than $5 gas would/will be.
Anyhoo, my advice is to just pay the SUV off, and use it as you are now. Low miles SUV and a bicycle are the best of both worlds, IMO. Can I call you when I need to move?
posted by tachikaze at 10:10 AM on May 23, 2008
Too many people are assuming that he needs to immediately buy a car, or even own a car. Perhaps if he sits down and does the math, he could find that taxis, rentals, and relying on friends is substantially cheaper than owning a car.
He says he needs to come up with $5000, he'll get a good deal more than that from a 2 year old Explorer, assuming it's been maintained and in good condition.
Perhaps we need more information on where you live and how often you need to drive otherwise. I know people who live in the city or near one, and drive out to the suburbs to work, but essentially need the car only for the commute. If you're like this, sell for sure. If you need to drive everywhere (but neglected to mention it in the question?) then the fuel savings will probably add up a lot faster than people have worked out.
Either way, I dispute the notion that fuel prices will fall. They're up because of continued foreign interest in using oil that wasn't previously present. Unless China decides suddenly to cut oil consumption, the prices will stay high. Get rid of your gas guzzler before it's unsellable.
posted by explosion at 10:15 AM on May 23, 2008
He says he needs to come up with $5000, he'll get a good deal more than that from a 2 year old Explorer, assuming it's been maintained and in good condition.
Perhaps we need more information on where you live and how often you need to drive otherwise. I know people who live in the city or near one, and drive out to the suburbs to work, but essentially need the car only for the commute. If you're like this, sell for sure. If you need to drive everywhere (but neglected to mention it in the question?) then the fuel savings will probably add up a lot faster than people have worked out.
Either way, I dispute the notion that fuel prices will fall. They're up because of continued foreign interest in using oil that wasn't previously present. Unless China decides suddenly to cut oil consumption, the prices will stay high. Get rid of your gas guzzler before it's unsellable.
posted by explosion at 10:15 AM on May 23, 2008
The bottom line is that especially if you are upside down in it it is cheaper to keep it
I saw this advice on CNN and I don't understand it. Why do your personal finances (how much your car loan is) have anything to do with whether it's cheaper to keep your car or not? You have to pay off the loan, in the exact same amount, no matter whether you trade in the car or not. If you look at trade-in value, transaction costs, the cost of gas and the other costs involved, and determine that it's better to trade it in, why does it matter how much you owe?
Available cash to pay off the loan shouldn't be a problem, as long as your new car plus transaction costs is $5,000 less than the price you get for your old car. And since the old car is a two-year-old Expedition, that shouldn't be so hard.
posted by Dec One at 10:16 AM on May 23, 2008
I saw this advice on CNN and I don't understand it. Why do your personal finances (how much your car loan is) have anything to do with whether it's cheaper to keep your car or not? You have to pay off the loan, in the exact same amount, no matter whether you trade in the car or not. If you look at trade-in value, transaction costs, the cost of gas and the other costs involved, and determine that it's better to trade it in, why does it matter how much you owe?
Available cash to pay off the loan shouldn't be a problem, as long as your new car plus transaction costs is $5,000 less than the price you get for your old car. And since the old car is a two-year-old Expedition, that shouldn't be so hard.
posted by Dec One at 10:16 AM on May 23, 2008
NPR and Consumer Reports addressed pretty much this question yesterday (although not from the unusable in a few years perspective). The bottom line is that especially if you are upside down in it it is cheaper to keep it; your added question about it becoming obsolete really doesn't change things, because whatever you replace it with may also become obsolete in the future, so you would still be stuck with a useless vehicle plus you would be out all the money you lost getting rid of your expedition early.
This analysis assumes that you will be replacing the SUV with another rapidly depreciating new car. If you go for, say, a 2003 Accord instead, you'll bring down the depreciation cost and the fuel cost.
posted by mr_roboto at 10:18 AM on May 23, 2008
This analysis assumes that you will be replacing the SUV with another rapidly depreciating new car. If you go for, say, a 2003 Accord instead, you'll bring down the depreciation cost and the fuel cost.
posted by mr_roboto at 10:18 AM on May 23, 2008
perhaps he values convenience as well, which he'd lose out on, or stylishness or something entirely different. people vary.
True, Krautland, but that isn't my point. My point is worldwide the proportion of people who manage to be dry, healthy and debt free is pretty low, currently OP is only 2 out of 3.
Going 3 dor 3 would be a very positive outcome, that he will gain by getting rid of his car now. The convenience & stylishness that he will forego, certainly has a value, but can it can be mediated short term with some forward planning (such as renting, car sharing, imaginative lycra short and vest combos); and may be recouped at a later date, when he is more secure financially.
I don't know anything about American cars, but I still feel pretty comfortable in my assumption that someone somewhere will buy a 2 year old car with only 12'000 miles on the clock. And to answer a direct OPs direct question, maintaining a car you don't really need and can't really afford is throwing good money after bad.
Enviroment-shmiroment, its just the most economic thing to do in his current situation. That it happens to be eco-friendly is just a bonus.
posted by munchbunch at 10:21 AM on May 23, 2008
True, Krautland, but that isn't my point. My point is worldwide the proportion of people who manage to be dry, healthy and debt free is pretty low, currently OP is only 2 out of 3.
Going 3 dor 3 would be a very positive outcome, that he will gain by getting rid of his car now. The convenience & stylishness that he will forego, certainly has a value, but can it can be mediated short term with some forward planning (such as renting, car sharing, imaginative lycra short and vest combos); and may be recouped at a later date, when he is more secure financially.
I don't know anything about American cars, but I still feel pretty comfortable in my assumption that someone somewhere will buy a 2 year old car with only 12'000 miles on the clock. And to answer a direct OPs direct question, maintaining a car you don't really need and can't really afford is throwing good money after bad.
Enviroment-shmiroment, its just the most economic thing to do in his current situation. That it happens to be eco-friendly is just a bonus.
posted by munchbunch at 10:21 AM on May 23, 2008
The environmental impact of the swap would be perverse. You'd move your low-efficiency Explorer to someone who would put more miles on it and you'd take the high-efficiency replacement out of the hands of someone who'd put more miles on it than you. (And while each of those others would find a replacement, each Explorer on the market makes Explorers cheaper and more attractive and each efficient car purchase makes efficient cars more expensive and less attractive.)
Interesting argument, but neither the supply of SUVs nor the supply of cars is fixed. Putting a used SUV on the market may ultimately cause one fewer new SUV to be produced.
posted by Dec One at 10:33 AM on May 23, 2008
Interesting argument, but neither the supply of SUVs nor the supply of cars is fixed. Putting a used SUV on the market may ultimately cause one fewer new SUV to be produced.
posted by Dec One at 10:33 AM on May 23, 2008
"The bottom line is that especially if you are upside down in it it is cheaper to keep it."
I saw this advice on CNN and I don't understand it ... why does it matter how much you owe?
Available cash to pay off the loan shouldn't be a problem, as long as your new car plus transaction costs is $5,000 less than the price you get for your old car. And since the old car is a two-year-old Expedition, that shouldn't be so hard.
Well, because being upside down on a loan means that if you sell the car, you can't even get enough to pay off the loan. In this case he would be out a car plus an extra $5000 so your scenario is impossible.
As the Real Dan originally said, if you need a car, then keep it. Buying a replacement car, even a cheap one, will cost you more. If you don't need a car, then sell it.
posted by JackFlash at 11:08 AM on May 23, 2008
I saw this advice on CNN and I don't understand it ... why does it matter how much you owe?
Available cash to pay off the loan shouldn't be a problem, as long as your new car plus transaction costs is $5,000 less than the price you get for your old car. And since the old car is a two-year-old Expedition, that shouldn't be so hard.
Well, because being upside down on a loan means that if you sell the car, you can't even get enough to pay off the loan. In this case he would be out a car plus an extra $5000 so your scenario is impossible.
As the Real Dan originally said, if you need a car, then keep it. Buying a replacement car, even a cheap one, will cost you more. If you don't need a car, then sell it.
posted by JackFlash at 11:08 AM on May 23, 2008
Get rid of your gas guzzler before it's unsellable
I bought my 2000 Miata with an eye to swapping out the engine and putting in a battery array after the powertrain starts crapping out; don't see why this won't be an option for SUVs sometime next decade.
posted by tachikaze at 11:50 AM on May 23, 2008
I bought my 2000 Miata with an eye to swapping out the engine and putting in a battery array after the powertrain starts crapping out; don't see why this won't be an option for SUVs sometime next decade.
posted by tachikaze at 11:50 AM on May 23, 2008
The futures market has settled on oil being at least ~$120/b for the next eight years. Translation: The price of gas ain't going to come down. Most likely, it will go up. Quite possibly it will go up a lot. A lot of people still don't get this, but as this penny drops for more and more people, the market for SUVs will continue to shrink and thus the depreciation on your SUV is accelerating.
So I was going to say "sell sooner rather than later", but writing this, it just occurred to me that you could short your SUV like stocks. Eg sell it now, then buy it back (or one like it) in a couple of years when people are more desperate to get rid of them, and so you could end up back at square one, except richer. :-)
posted by -harlequin- at 12:05 PM on May 23, 2008
So I was going to say "sell sooner rather than later", but writing this, it just occurred to me that you could short your SUV like stocks. Eg sell it now, then buy it back (or one like it) in a couple of years when people are more desperate to get rid of them, and so you could end up back at square one, except richer. :-)
posted by -harlequin- at 12:05 PM on May 23, 2008
He says he needs to come up with $5000, he'll get a good deal more than that from a 2 year old Explorer, assuming it's been maintained and in good condition.
Um, but the rest of it will go to the lender, because the OP is upside down on the car loan.
I think you should definitely get rid of the car, and perhaps in a few months if you feel like you need one, buy a different car that is more reasonably priced and that gets good gas mileage. E.g. a 2003 civic or something. The reason I think you should get rid of the car is that upside down on a car loan is a bad place to be, and suggests the car was actually beyond your means in the first place. It also suggests that you may want to do more research about car loans in the future, and actually work the numbers. I bet this was a dealer loan with no or a very small down payment; these are effectively scams. At the very least, you need to work out the numbers for your current loan and see if you will continue to become more upside down in the future, if you decide to keep the car. I don't agree, btw, that keeping it is necessarily cheaper in the long run. It all depends on the car, what you replace it with (if anything), and the loan; the fact that you are upside down in the first place suggests the loan may not be very good (designed to minimize monthly payments and down payment as much as absolutely possible = not good in the long run). Also, if you aren't going to get another car immediately, don't forget to factor not having to have car insurance, pay gas, pay for maintenance, and so on for a while into the calculation.
One more thing: do not underestimate the annoyance of selling an upside down car to a private party. If your lender is nearby, this will make things a lot easier (you can do the paperwork / money exchange in their office, and your buyer will get the title right there), but if not, it can be really unpleasant and stressful for a buyer, if you kind find one who's willing to deal with it. This is especially true if the dealer has sold your loan to an out of state lender specializing in (effectively) sub-prime car loans. Some of these loan aggregaters make it as hard as possible for a private party sale to go forward; e.g. not releasing the title until they get all the money from the current owner. (I have bought a car with this kind of loan, and I would honestly never do it again. In this case I had a connection of sorts with the seller so I was reasonably certain she wasn't trying to rip us off, but even so it was not fun.)
posted by advil at 12:07 PM on May 23, 2008
Um, but the rest of it will go to the lender, because the OP is upside down on the car loan.
I think you should definitely get rid of the car, and perhaps in a few months if you feel like you need one, buy a different car that is more reasonably priced and that gets good gas mileage. E.g. a 2003 civic or something. The reason I think you should get rid of the car is that upside down on a car loan is a bad place to be, and suggests the car was actually beyond your means in the first place. It also suggests that you may want to do more research about car loans in the future, and actually work the numbers. I bet this was a dealer loan with no or a very small down payment; these are effectively scams. At the very least, you need to work out the numbers for your current loan and see if you will continue to become more upside down in the future, if you decide to keep the car. I don't agree, btw, that keeping it is necessarily cheaper in the long run. It all depends on the car, what you replace it with (if anything), and the loan; the fact that you are upside down in the first place suggests the loan may not be very good (designed to minimize monthly payments and down payment as much as absolutely possible = not good in the long run). Also, if you aren't going to get another car immediately, don't forget to factor not having to have car insurance, pay gas, pay for maintenance, and so on for a while into the calculation.
One more thing: do not underestimate the annoyance of selling an upside down car to a private party. If your lender is nearby, this will make things a lot easier (you can do the paperwork / money exchange in their office, and your buyer will get the title right there), but if not, it can be really unpleasant and stressful for a buyer, if you kind find one who's willing to deal with it. This is especially true if the dealer has sold your loan to an out of state lender specializing in (effectively) sub-prime car loans. Some of these loan aggregaters make it as hard as possible for a private party sale to go forward; e.g. not releasing the title until they get all the money from the current owner. (I have bought a car with this kind of loan, and I would honestly never do it again. In this case I had a connection of sorts with the seller so I was reasonably certain she wasn't trying to rip us off, but even so it was not fun.)
posted by advil at 12:07 PM on May 23, 2008
Second, if I keep the vehicle am I effectively throwing good money after bad, will this vehicle be unsellable / undriveable in a few years.
No. It's not like you are going to stop having to pay for gas. Assuming your driving patterns don't change, the BEST you could do with a tiny econo-box is maybe double the MPG, halving your fuel cost. And you lose the utility of having a large vehicle, which I presume was one of the reasons you bought the thing in the first place.
And, no. Once you pay the truck off, you will the the owner of a low miles vehicle which should give you years of service. So maybe after its paid off, you decide to sell it. At that point, the resale of ANY used car is going to be fairly low (relative to its purchase cost). And those trucks already have a fairly low resale value for some reason. I doubt the difference would be very big.
Oil prices can't keep going up like they have been- first, the spectre of third world consumption increases pretty much disappears if the price keeps going up. They are even less equipped to pay high prices than we are. And there is no reason to believe that oil supply is going to tighten appreciably during the lifetime of any vehicle on the road today.
posted by gjc at 6:47 PM on May 23, 2008
No. It's not like you are going to stop having to pay for gas. Assuming your driving patterns don't change, the BEST you could do with a tiny econo-box is maybe double the MPG, halving your fuel cost. And you lose the utility of having a large vehicle, which I presume was one of the reasons you bought the thing in the first place.
And, no. Once you pay the truck off, you will the the owner of a low miles vehicle which should give you years of service. So maybe after its paid off, you decide to sell it. At that point, the resale of ANY used car is going to be fairly low (relative to its purchase cost). And those trucks already have a fairly low resale value for some reason. I doubt the difference would be very big.
Oil prices can't keep going up like they have been- first, the spectre of third world consumption increases pretty much disappears if the price keeps going up. They are even less equipped to pay high prices than we are. And there is no reason to believe that oil supply is going to tighten appreciably during the lifetime of any vehicle on the road today.
posted by gjc at 6:47 PM on May 23, 2008
I didn't want to derail this discussion into the fuel-efficiency issue, because OP barely uses his car right? But then I googled it out of banal curiosity, I found out that (referenced from here) OP’s car does an almost unbelievably lame 11.4 mpg. To put that in context (and I'm trying to be careful to not mix up UK & US Gallons, as they're not the same), but I think I ‘m correct in saying A 2006 Expedition does less miles per gallon than a Model T Ford , introduced in 1908, which got 13-21mpg. So is OP's car out of date, when it comes to actual fuel efficiency - only by a measly one hundred years.
“the BEST you could do with a tiny econo-box is maybe double the MPG”
Hmmn, well gjp and I would never have thought that you could expect much better than to, maybe, double your cars fuel efficiency during the one hundred years in which science put a man on the moon, discovered, then decoded the genome and built a world wide telecommunications network. But surprisingly we did! A Ford Focus 1.6 diesel does 75.4 mpg (US), and isn't even a serious “econo-box” like the G-Wizz is. Would tanking you're car around 7x less help your budget, gee, I don't know? Let's find out:
OPs milleage is 6000 miles a year.
The Expedition does 11.4mpg so that makes 526.32 gallons a year, if Gas costs 5$ a gallon then that's $2631.60.
The Focus at 75.4mpg would consume just 79.6 gallons, costing $397 a year.
I hardly need to do the next step, but 2631.60 - 397 = a saving of $2234.60 in one year.
posted by munchbunch at 6:00 AM on May 24, 2008
“the BEST you could do with a tiny econo-box is maybe double the MPG”
Hmmn, well gjp and I would never have thought that you could expect much better than to, maybe, double your cars fuel efficiency during the one hundred years in which science put a man on the moon, discovered, then decoded the genome and built a world wide telecommunications network. But surprisingly we did! A Ford Focus 1.6 diesel does 75.4 mpg (US), and isn't even a serious “econo-box” like the G-Wizz is. Would tanking you're car around 7x less help your budget, gee, I don't know? Let's find out:
OPs milleage is 6000 miles a year.
The Expedition does 11.4mpg so that makes 526.32 gallons a year, if Gas costs 5$ a gallon then that's $2631.60.
The Focus at 75.4mpg would consume just 79.6 gallons, costing $397 a year.
I hardly need to do the next step, but 2631.60 - 397 = a saving of $2234.60 in one year.
posted by munchbunch at 6:00 AM on May 24, 2008
OK, but you have to look at you assumptions- what mileage is he actually getting in his Expedition? What mileage will he actually get in some other car? Can he get a Focus 1.6t in the US? I don't think so.
In my readings of various car related forums, nobody ever gets much more than 50 in a US small diesel in pure highway driving, and people often do get better than 11 in a large truck like an Expedition under similar driving. And right now, Diesel fuel is significantly more expensive than regular gas. So that reduces your factor of five to more like 3, maybe, if it's even possible to get a diesel car in the US right now. I didn't see any available on Volkswagen's site.
posted by gjc at 8:40 AM on May 24, 2008
In my readings of various car related forums, nobody ever gets much more than 50 in a US small diesel in pure highway driving, and people often do get better than 11 in a large truck like an Expedition under similar driving. And right now, Diesel fuel is significantly more expensive than regular gas. So that reduces your factor of five to more like 3, maybe, if it's even possible to get a diesel car in the US right now. I didn't see any available on Volkswagen's site.
posted by gjc at 8:40 AM on May 24, 2008
Maybe you haven't test driven the new 2009 Jeta , although you're right about Diesel being more expensive at the pump, I should have factored that in.
posted by munchbunch at 5:32 AM on May 25, 2008
The best outcome would be if someone torched it or stole it and you got the insurance money. But that's not going to happen unless, I don't know, you park it in a place where cars are often stolen, have a few drinks at a local pub, and then take a taxi home because you shouldn't drink and drive.
So... if you can afford the short-term financial loss, try to sell it and be done with it. (But who's going to buy such a goofy thing? Would anyone even steal it?) And then don't buy anything to replace it. Bike 95 percent of the time, take a taxi or arrange carpooling for the rest of the time, and you'll more than make up for this short-term silliness in long-term savings, attractiveness, health, and longevity.
posted by pracowity at 9:51 AM on June 1, 2008
So... if you can afford the short-term financial loss, try to sell it and be done with it. (But who's going to buy such a goofy thing? Would anyone even steal it?) And then don't buy anything to replace it. Bike 95 percent of the time, take a taxi or arrange carpooling for the rest of the time, and you'll more than make up for this short-term silliness in long-term savings, attractiveness, health, and longevity.
posted by pracowity at 9:51 AM on June 1, 2008
This thread is closed to new comments.
As winter gets closer, you might be able to find a car that better suits your needs and is a bit cheaper, but I can only see the demand for SUVs going down further, so get rid of it yesterday. Get yourself out of debt now.
posted by explosion at 8:45 AM on May 23, 2008