I've been on a see-saw for almost a year now in regards to getting rid of the car. Last September I actually made it to the dealer and almost made a trade but couldn't justify trading all the way down to a base (hubcapped) G5 and still paying $400/mo.
Here's my story...
I'm 26, I live on my own, I work full time, I go to school, I'm receiving an MA degree hopefully this Spring. I bought the GTO in April of 2005. My payments are $580/mo. I have 43,000 miles on the car and the warranty is up at 60,000. I think in April of 2009 I have a balloon payment (SmartBuy) of $13000 or so. I can't possibly give the car back at that time because I will owe too much on the mileage. Another risk is, will the car be worth that balloon payment next year for me to sell it?
I went to the dealer today for an oil change and wiper blade replacements (I know, could have done the wipers myself, but I am really short on time lately). Total cost $107 - unbelievable ripoff. Then they inform me that I will be needing new brakes soon all around, 'fuel injection service', 'fuel induction service', and 'throttle body service'...all maintenance (not damaged). Then my 50,000 mile service will be due at the next oil change which includes a transmision tuneup (which I don't know the cost).
Between all of the routine maintenance and the warranty expiring in 17,000 miles I am heavily considering just getting rid of the car. I know that all cars have routine maintenance, but I'm sure after the warranty the combination of routine maintenance plus anything else that needs to be repaired will be just too much money.
My car payments are high because I lost some money on a trade-in on the GTO. Another reason that the base G5 was $400/mo back in September is because I am upside down on the GTO. I know I would be screwed trading the GTO for a econo-crap car but in the next 3 years (on a lease) I will end up saving alot of money.
I would save:
180/mo on car payments
60+/mo on insurance
70+/mo on gas
xxx.xx on oil changes + other maintenance
However, I would be paying more money than what the new car would be worth if I make a swap. But the main thing I'm seeing now is saving money and not feeling the way I do now. It's never good to be "living" for a car. I am considering just leasing my next car or two so I don't have to be concerned with anything but basic maintenance and just give the car back and get something new.
Another possibility is swapping for certified used car and break even or better and start fresh.
THANK YOU for reading through all of this. I feel like I am in such bind and your advice is appreciated and NEEDED!
..Go to your local credit union and try to get a loan for the difference between what the car is worth and what is owed and sell it. Get a cheap car, ($1,000.00 or less) pay cash for it and work on it yourself. Get another job, (You are young and don't need much sleep) and pay off what you owe. Don't ever but a car again unless you have the cash to pay for it.
If you go trade it in, you will just be rolling the negative equity into the next one and investing more money into something that will lose 60% of it's value in the first few years. You have to break the cycle of always having that much debt or you will be broke for the rest of your life.
Hey, the truth hurts, but you are in no position right now to be driving new cars, period.
..Get another job, (You are young and don't need much sleep) and pay off what you owe.
Hey, the truth hurts, but you are in no position right now to be driving new cars, period.
I already have a decent job, hence the reason I can live on my own and have a new car. Getting an additional job is out of the question, I already have a 9 hour + work day (not including commuting) and am in a full time Master's program at school.
I "can" keep this car as I am 'not' down to the dollar each month. My battle right now is if it is really worth paying all of this money into something that I would most likely sell in the future anyway. But that really comes down to what I want to do. I am just hoping to get a few 'outside' perspectives.
A lot depends on your personality and willpower. Will you enjoy driving your new or replacement enough that you won't trade it early and continue to roll over negative equity? From the sounds of your post, you probably will not be satisfied driving a car that strictly meets your transportation needs.
A lease doesn't sound like a good option unless you pay for extra miles or seriously adjust your driving habots. 48,000 miles in a little over 2-1/2 years is pretty high.
If you are truly concerned about saving money, get out of the GTO and get somthing you can pay cash for that gets good mileage and you can work on yourself. There are phenominal deals out there in the $2000 and under range. I sold a 1991 Prelude with 75k on it for 1400 in the spring when I bought my GTO. It got 28 miles to the gallon and rarely required more than an oil change every 5,000 miles. I was able to do all the routine maintenance myself, including changing my timing belt, in the driveway, using the shop manual I downloaded online for free and articles out of Honda Tuning.
...I just don't want you to be a slave to a car payment for the rest of your life. Do you have any idea what 4-500 a month into a mutual fund will net you over several years? I'll give you a hint. You can pay cash for whatever you want when you are my age, (41).
I paid cash for my GTO after saving for several years and driving my last car over 200,000 miles, (after putting money away for retirement and emergencies). I also bought it used and saved $12,000 off a new one. 9000 miles is new enough for me and I am sure as hell not going to pay a buck and a quarter a mile in depreciation just for that, "new car smell". If you had to feed a dollar cash into the dash every mile would you still drive a new car?
Good luck with your Masters and congratulations. Get out there and make some good money with it so you can buy something fun and not be a slave to the bank.
You have listed a '87 Camaro. Do you still have that one. If so, sell the GTO and buy another comuter car, alot cheaper and durable. Or sell the camaro and what money you make, put it into your GTO. If your not strapped month to month, then it should come down to how much you wanna keep that GTO. If you really like the GTO, keep it. You sound like you'd rather give it up.
..Go to your local credit union and try to get a loan for the difference between what the car is worth and what is owed and sell it. Get a cheap car, ($1,000.00 or less) pay cash for it and work on it yourself. Get another job, (You are young and don't need much sleep) and pay off what you owe. Don't ever but a car again unless you have the cash to pay for it.
If you go trade it in, you will just be rolling the negative equity into the next one and investing more money into something that will lose 60% of it's value in the first few years. You have to break the cycle of always having that much debt or you will be broke for the rest of your life.
Hey, the truth hurts, but you are in no position right now to be driving new cars, period.
1. I misread your post. 43,000 isn't that bad, but is borderline for a lease.
2. You sound a lot like me. I had several trucks and SUVs that I kept rolling over negative equity until I ended up paying luxury car prices for a base model SUV. I didn't have to trade any of the previous vehicles. I alwasy had some excuse like it needed new tires anyway, or a new brake job, or it was due for a big service.
A couple hours later, I can see the positive side of trading for a lesser car to save money. I think lease vs buy is the only way to get out of being upside down and drive a new(er) car for you while saving some money each month. There are a lot of small cars out there that are fun to drive, so don't limit yourself to a pontiac just becasue you are trading in a pontiac. Remember your GTO is not the same class of GM car as the other Pontiacs on the lot. Consider a Honda Civic EX that gets similar or better gas mileage and has fully equipped models at around $18,000. Invest the $300 amonth and buy a nice pre-owned vehicle at the end of your lease.
If you decide to keep the goat, be frugal with maintenance by taking it to to reputable certified repair facilities that have the best prices for the services they offer. Keep your receipts. Places that specialize in brakes will usually have better prices on brake work. Jiffy lube, walmart, and many others have coupons every week, and they carry Mobile One. You don't have to have your work done at the dealership to keep the warranty in tact. 5 minutes to change the wiperblades yourself next time. You probably wasted that much time hearing the guy explain why that and the other laundry list of services needed to be done and waiting for him to do it than if you had picked up the blades and changed them yourself.
Again, good luck. Having been there several times, it is a tough decision, especially if you like the car you have.
You are single , young with a good job and you have a GTO while you are completing a high level degree. There are many more questions and complexities in your life that I'm sure you cannot expose however from a very general view, you have a lot of sprockets going for you.
You also have choices so I would vote for you to reflect and to see what really pleases you at this wonderful time in your life. Don't forget to take under account your short and long term goals.
Good luck in deciding and don't forget to get an opinion from those closest to you.
I would look at the idea of buying that $1500 car. Right now you are 33 months into a 48 month smart buy (lease by another name) and you have 43,000 miles out of 48,000 allowed. The rate you are going you will be at 63,000 miles at the end of your smart buy. If you drive the beater most of the time and get your mileage back in line, at the end of your lease you will have about 48,000 miles. Even if it's 50 or 52 it won't matter much.
If your buyout is $13,000, and you have 50,000 miles on the car, you can negotiate on the return of the car that even though you are over in miles that the car is worth more than 13,000. If they won't take it back without charging you mileage then you buyout the car and sell it. They lose. That means you can put about 500 miles a month on the GTO and 800 on the beater.
If you keep the mileage around 50,000 you won't have to do the 50k service, plus brakes and what not and that will save you the price of the beater right there. If you get a beater that's good on gas, the money you save on gas will pay for the insurance on the beater.
Then after you turn the GTO in never lease a car again. You drive too many miles and you need to buy a car, not lease. As a matter of fact I'd think about driving the beater for 6 months after you turn in the GTO and put the GTO payment amount into a savings account. That way when you buy your next vehicle you have 3,000 or so to put down on it and you end up with equity at the start.
If you don't like the idea of a beater, and I can understand not wanting to drive one, I'd dump the GTO now and get a certified used vehicle. But the key is going to be buying something that you can live with for 5 years and that the payment is low enough that 3 years down the road when it starts needing work you'll have the cash to do it.
Around here they have a bunch of Pontiac Grand Prix's available. They run about 11,500 to 12,500. Figuring the negative equity you have in the GTO at around $3000-4000, and no money down, you'd have a payment of 315 to 330 a month. Your insurance would go down and your gas bill would too. It would take you almost 4 years till you had any equity in it to break even on a trade. If you bought one with 25,000 miles on it, it would have about 90,000 miles at the 4 year point.
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down to how much you wanna keep that GTO. If you really like the GTO, keep it. You sound like you'd rather give it up.
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