Upside down car loan

[HundredK]

So the folks on this forum have got me thinking of possibly getting rid of the car. Especially after seeing the other post showing how Uber can be more cost effective than owning in some situations. We have used our car heavily for business, but we're now refocusing our business efforts to do less of it, and none of it in a car (uber and airplanes will now suffice). We're currently upside down on the loan and will be for some time (at least until January 2018), and in the debt payoff schedule I have created, it's pretty far down on the list of items to get paid off.

In your opinion, do you think just waiting it out until we aren't upside down is the best thing to do? Or maybe best to just keep the car and pay it off as soon as my debt payment schedule allows us to not be underwater? Or sell it and cover the deficit using other monies currently planned for higher interest debt? This would leave us without any car at all, which would be a huge change but I think could be workable. I just don't know which of these methods would be ideal.

[disneysteve]

This would leave us without any car at all

Do you live somewhere where not owning a car is common practice, like NYC? If so, going without a car might be perfectly reasonable. Otherwise, I'd keep it, or at least replace it with something more affordable (I don't know the details on the car).

[HundredK]

I don't live in an area with a subway, but there's never an Uber driver more than a minute away. There's also a large bus terminal within a 3 minute walk.

[disneysteve]

I don't live in an area with a subway, but there's never an Uber driver more than a minute away. There's also a large bus terminal within a 3 minute walk.

Can you easily and affordably do all of your day to day activities without a car? Things like grocery shopping, going out to dinner, getting to a doctor's appointment, etc?

I've never lived anywhere where being carless was feasible so it's really a foreign concept to me, but I realize there are people who make it work. Personally, we are too active and mobile for it to be an option. If nothing else, I need a car to get to work, but beyond that, we're always out and about doing something.

[HundredK]

Can you easily and affordably do all of your day to day activities without a car? Things like grocery shopping, going out to dinner, getting to a doctor's appointment, etc?

Yes, we could affordably do all the day to day activities without a car. But it would definitely be a sacrifice. Now that we aren't using the car for business, we use it maybe twice per week. But I won't lie, the thought of not having a car makes me feel pretty emotional. Still, I want to give it serious consideration since it was one of the most common bits of feedback I got when talking previously on here about our financial situation.

[disneysteve]

I want to give it serious consideration since it was one of the most common bits of feedback I got when talking previously on here about our financial situation.

How much do you owe on the car and what is it currently worth? I know you posted that before but that info is gone now.

[HundredK]

How much do you owe on the car and what is it currently worth? I know you posted that before but that info is gone now.

It's worth about $27,000 according to kbb.com, and we owe $35,000

[disneysteve]

There's certainly an option between that car and no car. What about an affordable car? Sell that one and replace it with something for $5,000 or so. Even if you have to borrow to do it, you drop your car debt from 35K to 13K.

[HundredK]

There's certainly an option between that car and no car. What about an affordable car? Sell that one and replace it with something for $5,000 or so. Even if you have to borrow to do it, you drop your car debt from 35K to 13K.

I was under the impression that banks won't offer loans for higher than the equity value unless it's for a new car?

[disneysteve]

I was under the impression that banks won't offer loans for higher than the equity value unless it's for a new car?

That may be true. Do you have any other way to cover the deficit if you were to sell the car? You mentioned something about using other monies to do that.

[HundredK]

If I saved the money I have budgeted to pay down debt for the next 3 to 6 months (some of our income is variable), I could pay for it that way.

[greenskeeper]

I was under the impression that banks won't offer loans for higher than the equity value unless it's for a new car?

You'd be amazed at what some banks will finance for vehicles and percentage above actual cash value.

You need to keep the car and make payments until the vehicle is at break even or better.

What is the percentage rate on the car loan?

Are you setting aside any money for a vehicle/repair fund?

[HundredK]

The interest rate on the loan is 5%. Which pales in comparison to the interest we're paying on some other items. So I guess after talking it through, it really does make sense to just stick to my plan and deal with the car when it's time to do so.

Maybe in the interim I will pseudo-pretend that we don't have a car, and make a note of how often we drive and how much ubers would have cost. That should give us a good idea of how feasible it is to make sure there would be no regrets.

[greenskeeper]

Maybe in the interim I will pseudo-pretend that we don't have a car, and make a note of how often we drive and how much ubers would have cost. That should give us a good idea of how feasible it is to make sure there would be no regrets.

A car paid in full is a better value than any uber or ride sharing garbage

[LivingAlmostLarge]

A car paid in full is a better value than any uber or ride sharing garbage

respectfully disagree. A car still costs insurance, maintenance, and a place to park. If you live in some areas it's prohibitively expensive to rent a parking spot, insure, and maintain an object you use at most 1x/week.

This is something only determined by where and how you live. Not having a car is very expensive in most major cities, not just NY or SF. When you factor in having to have a parking spot, then insure, and maintain it's not worth it.

Based on our numbers if we lived in the city our insurance would be saving $300/month. Then the cost of depreciation on the car $100/month. Then maintanence $100/month. Then say conservatively $100/month parking. So You are looking at $600/month. That's a lot of uber, public transit. And remember when you drive places from point A to point B you have to pay for parking. It's not door to door service and NOT wasting time looking for a parking spot.