Bought a minivan with GAP Insurance

[maat55]

As far as worrying about the car breaking down, I'd be more worried with the old cheap car than with the brand new one.

Would I want to drag this out for 5 years? Not if I didn't have, but right now he has $68,000 in debt. If that could all be taken care of in 5 years, that would be great.

I think your 5-year plan sounds just fine, by the way.

Even my five year plan can't get rid of 68,000. But it could 46,000 just on the 500.00. If he would use this mentallity in all of his finances, who know's.

[FoolFromAZ]

Thanks everyone for the advice.

Yes I have got 40K of CC debt and 25.5K of auto loan but in less than 3 yrs we can get rid of all our CC debt. Yes I made a mistake buying this minivan. I should have either waited for another yr or bot a old van. I am not sure if it is a smart idea selling it now and buying an old car again. As long as my DW and I dont have any problem with our job we should be able to make all the payment and pay off the CC debt in 3 yrs if we contribute towards our retirement or in 1 1/2 yrs if we dont contribute to retirement.

Reason why I wanted to extend the term is to reduce the auto loan payment as I would like to pay off our cc debt first. maybe i was not clear in explaining why I would like to refinance to 7 yrs. 7 yrs or 5 yrs still I would be paying the loan off in 3 or 4 yrs. If I could refinance to 7ys with same APR and GAP insurance transfered to the new loan, i can pay more to my cc debt and less to auto loan. If you have GAP insurance, i thought it is better to pay less towards the principal of the loan if you have other worser debt (in this case CC debt).

Maat,

I really dont understand the logic behind selling the Car or House and move in to smaller home or buying an older car /cheaper car.

If I had to sell my car now, I could only sell it for 20K. I wud be losing around 7.5 K. It makes sense if I have lost my job or a new job where my salary is reduced to 50% of my current salary or something. Selling it to reduce debt when you have good and stable job is kind of bad move.

[FoolFromAZ]

duplicate

[safari]

How does one go about getting an unsecured loan? Do you just walk into a bank and say, "I want to borrow 5K or 10K" and they run your credit and lend you money with no collateral?

An unsecured loan is basically the same as a credit card. The only difference is that when you get a loan, your interest is usually fixed, but the credit card interest can vary. Some banks now offer credit cards with a fixed interest rate on balance transfers until the balance is paid in full. For example, PenFed CU has a credit card with 5.99% APR for the life of the balance.

[maat55]

Thanks everyone for the advice.

Yes I have got 40K of CC debt and 25.5K of auto loan but in less than 3 yrs we can get rid of all our CC debt. Yes I made a mistake buying this minivan. I should have either waited for another yr or bot a old van. I am not sure if it is a smart idea selling it now and buying an old car again. As long as my DW and I dont have any problem with our job we should be able to make all the payment and pay off the CC debt in 3 yrs if we contribute towards our retirement or in 1 1/2 yrs if we dont contribute to retirement.

Reason why I wanted to extend the term is to reduce the auto loan payment as I would like to pay off our cc debt first. maybe i was not clear in explaining why I would like to refinance to 7 yrs. 7 yrs or 5 yrs still I would be paying the loan off in 3 or 4 yrs. If I could refinance to 7ys with same APR and GAP insurance transfered to the new loan, i can pay more to my cc debt and less to auto loan. If you have GAP insurance, i thought it is better to pay less towards the principal of the loan if you have other worser debt (in this case CC debt).

Maat,

I really dont understand the logic behind selling the Car or House and move in to smaller home or buying an older car /cheaper car.

If I had to sell my car now, I could only sell it for 20K. I wud be losing around 7.5 K. It makes sense if I have lost my job or a new job where my salary is reduced to 50% of my current salary or something. Selling it to reduce debt when you have good and stable job is kind of bad move.

If your confident you can eliminate these debts in 3 years, keeping the van is doable. Your post suggests that you will be paying this note for 5 years +. The fact that you have 40k in CC debt says that you are accumilating and not reducing, especially adding to it 25.5k for a van.

If you can eliminate the 40k in three years, great. Personally, I would still sell the van and be debtfree in three years.

[LivingAlmostLarge]

I'd keep the van. Unless you can find a used car you know the history of.

[maat55]

I'd keep the van. Unless you can find a used car you know the history of.

I drive a 02 ford Exployer Sport Trac with 89,000 miles.
DW has an 02 PT cruiser with 84,000 miles.

Both are worth less than 6,000 dollars and I would drive either to California and back. Lower cost cars are reliable.

Also, My truck can haul a family and I love it.

[aukxsona]

Oy! I have a family of 7. Older cars do break down but parts are cheap and if you have a second mode of transportation which is newer/more stable...then get a second older car.

We have a Chevy Nova and we are getting a moped. The moped will be for regular driving until the Nova is fixed. Once the Nova is fixed we'll use it once a month. The moped costed about 900 dollars brand new.

[LivingAlmostLarge]

Were they both bought used? For how much and how old?

[disneysteve]

I'd keep the van. Unless you can find a used car you know the history of.

I'm not saying he should sell the car, as I'm still not convinced that's the way to go, but buying used cars really isn't an issue in my mind.

Both of our cars were bought used. Both were bought from Toyota dealers. Both were certified pre-owned. Mine was a 1998 Camry that I got in August 1998 with 11,000 miles. I paid about $6,000 less than a new one would have cost. My wife's is a 2000 Sienna that we got in September 2002 for about $10,000 less than a new one. It had 34,000 miles. We still have both vehicles and both have over 100,000 miles now. We have no intention of replacing either anytime soon.

[FoolFromAZ]

I'm not saying he should sell the car, as I'm still not convinced that's the way to go, but buying used cars really isn't an issue in my mind.

Both of our cars were bought used. Both were bought from Toyota dealers. Both were certified pre-owned. Mine was a 1998 Camry that I got in August 1998 with 11,000 miles. I paid about $6,000 less than a new one would have cost. My wife's is a 2000 Sienna that we got in September 2002 for about $10,000 less than a new one. It had 34,000 miles. We still have both vehicles and both have over 100,000 miles now. We have no intention of replacing either anytime soon.

I was contemplating between buying old and new van. I bought 98 model camry for 12K in 2002 but i had to change timing belt, struts, brakes, etc., in the next 2 to 3 yrs. spent about 3k for those. then I stopped going to dealer for service or repair from 2005 onwards. just went to local firestone or fletcher for service/repair. in 2008, i started getting all kind of issues from my car.. spent about 3k in the last 6 to 8 months. I was really fed up, that also forced me to go for new one and thats also the reason why i went for extended warranty too.

[noppenbd]

Most people who buy new cars use the repairs on their previous cars to justify the purchase. But to be fair you must include the increased insurance costs, financing costs, and most of all depreciation on the new vehicle. A new $27500 car is going to depreciate $3000-4000 a year for the first few years on average. When you include the cost of financing and higher insurance it is almost always cheaper to make the repairs on the older vehicle. The problem is, most people feel the pain of a $3000 repair much more sharply than a $3000 depreciation in value, even though they are identical in terms of your financial health.

[disneysteve]

I bought 98 model camry for 12K in 2002 but i had to change timing belt, struts, brakes, etc., in the next 2 to 3 yrs. spent about 3k for those.

I think it is important to distinguish between repairs and routine maintenance. Routine maintenance is things that need to be done from time to time no matter what. For example, the timing belt needs to be changed at 90,000 miles. Brakes need to be replaced periodically, as do tires. Those kinds of things aren't the fault of the manufacturer or the previous owner's neglect. Whether I buy a car new or used, I know that after 40,000 miles, it will need tires, after 90,000 miles, it will need a timing belt, and so on.

I have no problem spending a couple thousand to repair my car as long as the work being done is stuff that falls mostly in that routine maintenance category. If something more serious breaks or goes wrong, that's when I would consider getting rid of the car. The routine maintenance costs are far below what it would cost to get another car.

[tripods68]

The positive: Honda tend to hold its value. So when you resell this Van in few years it might get more money out of it. But I wouldn't extend it to 7 years. Also, I personally would never buy GAP or Extended Warranty insurance. That's a complete waste of money IMO. Unless you have a history of getting into accidents or buying American made cars (sorry no offense). Then I would consider it.

[disneysteve]

Also, I personally would never buy GAP or Extended Warranty insurance. That's a complete waste of money IMO. Unless you have a history of getting into accidents or buying American made cars (sorry no offense). Then I would consider it.

I agree with you on the extended warranty, but not sure I agree about the gap coverage. If a brand new car gets totaled, you could collect thousands less than you owe. Unless you are prepared to make up the difference out of pocket, the insurance is probably a good idea.