I'm sick to my stomach about my car situation..any advice?

[overcome]

I guess I don't really need advice...maybe just sympathy and opinions.

I owe $11K on my V8 SUV. It has a major mechanical problem that NO ONE can diagnose/fix (the dealer, the place I bought it, my local mechanic). I have to get rid of it NOW.

Of course I am not going to get ANYTHING near $11K for the trade it. Try $6K. I AM LOSING $5000 ON A CAR!!!

I know this is my own fault for financing so much on a car in the first place. But if I didn't have this major problem, I would have been fine, paid it off, and continued to drive it.

Common sense (as well as all those financial personalities) would say to purchase a good used car. I am sick of used cars. I am sick of buying other people's problems. I am sick of the unknown.

I want to purchase a 2009 Subaru Forester. I will be putting down between 5-7K (gulp) and still financing $24K @4.9 for SIX YEARS (!), due to the the "upside down" loan situation I am in. Suze Orman would have my head.

That down payment is a HUGE portion of our savings/emergency fund. I know we will be able to replenish it as we are good savers (payroll deduction!) and my DH will receive his bonus in the spring as well as our tax refund. I also know if a financial emergency would occur, my parents would be quick to help us. We already have $$ saved for Christmas presents.

I feel that a subaru will be a good, reliable car that actually has an excellent chance of outliving my loan. I know I am going against all car buying advice, but I just can't go through a used car scenario again.

Thoughts? Encouragement? Anything?? Does my logic make ANY sense?
:crying:

[npace19147]

Can't speak to the financial side of things, but our 2005 Forester is still going strong and we are very happy with it. It really is a great car.

Only downside right now is that it takes premium gas, which is an extra hit every time we fill it up. Just FYI.

[lizajane]

i want so much to be all fun and positive and shout whoo hoo!! new car!!! but honestly, i think you have said all yourself. and i don't mean whoo hoo new car, i mean this is a very bad idea.

find a good mechanic- as for recommendations from friends- and then go ask the mechanic for a used car recommendation. find it and then have the mechanic check it out before you buy.

we drive a $7000 1999 nissan quest minivan with 135,000+ miles. the stereo light doesn't work. the windows are starting to stick. the CD player seems to be stuck (but the 6 disc changer works!) the installed TV/VCR doesn't work anymore, it is FILTHY, it is a totally weird color green... and i LOVE it!!!!!!!!!!! i LOVE "the mini!" we have NO car payment. we have NO panic attacks over getting dirt in the car or a spill on the floor. i dented it, we just left it. it is AWESOME to just not worry about messing up the nice new car... because it is old and gets us where we want to go.

buy a used car. sorry. is there a rain on your parade smilie??? will this do??:gloomy:

[daniele_ut]

I've got to agree with Liza on this one. What you are suggesting just sounds like a really awful idea, financially speaking.

I would second the rec to find a really good mechanic to diagnose the problem. If you really do have to trade it in, I would look for a reliable used car that you don't need to finance. When our 20 year old VW died last November we used savings to pay cash for a 2 year old Chevy sedan with 33000 miles on it. Did I want a brand new Outback wagon? Yes. Could I afford it? No. I have a reliable, fuel efficient car with enough room for my family and no car payment.

[SnuggleBuggles]

Why not go with something really budget friendly and reliable like a Honda Fit? You could get a good, new car for only $14-16kish. That's what I would be looking to do. :) Well, I think I would probably try talking to the guys on "Car Talk" and see if they could tell me what was wrong with my car first! Check out their site- they might have some info.

Good luck on this not so great situation!

Beth

[mytwosons]

Sorry, some one else to rain on your parade.

You know how sick you're feeling losing $5k...do you really want to continue that trend?

Financially, your best bet would be to find a good used vehicle, pay it off quickly, and then start setting aside that money to build a down payment on a new car.

If you really have to buy new, there are less expensive options.

When I'm faced with a spending dilema, I find it helpful to consider everything else I could buy with that money. Would you get more pleasure from the new suburu, the peace of mind that comes with money in the bank, or a really nice trip? It's all about choices and trade-offs.

[brittone2]

Personally, I have to go with the PPs. I don't think it is a good idea at all. Is it worth compromising your financial security? I know you feel like you'll catch back up on savings/emergency funds, but lots of people have had that thought and then for various reasons that can't always be foreseen, they end up having trouble doing so. No one wants to think something bad will happen that will prevent them from being able to rebuild their emergency fund (or worse), but those things happen every day to people that didn't think it would happen to them.

Have you seen this article from CNN on the savings you get from running a car into the ground, even w/ putting $$ into it for repairs? (ETA: in your case, I can understand getting rid of your vehicle. However, I'd definitely, definitely still look at used or at least inexpensive new cars. Just because you had a bad experience w/ this car doesn't mean all used cars are riddled with problems, although it can seem like that sometimes when you are in the middle of car issues).

http://finance.yahoo.com/loans/article/103446/drive-your-car-to-death-save-31,000

Best/worst used car article
http://www.cnn.com/2008/LIVING/wayoflife/04/18/best.worst.used.cars/index.html

eta: DH drives a mid 90s Corolla (he sold a nice vehicle and got this as a commuter car). We've had to recharge the freon/fix the AC, but otherwise it has been great. It gets 38 mpg. He paid 5100 for it 3 years ago. We put the profit (from selling his previous vehicle) in savings.

[pb&j]

Sorry, some one else to rain on your parade.

You know how sick you're feeling losing $5k...do you really want to continue that trend?

Financially, your best bet would be to find a good used vehicle, pay it off quickly, and then start setting aside that money to build a down payment on a new car.

If you really have to buy new, there are less expensive options.



ITA. What's that saying - don't throw good money after bad?

IMO, it's okay to dip into your emergency fund to buy a car to replace your lemon. It is not okay to dip into your emergency fund farther than you need to because you want something shiny and new. One dinged door in the parking lot, one fender bender that isn't even your fault, and you are WAY in the hole.

[awoodm]

Subaru's are reliable, so why not compromise and find a barely used one that is dealer certified? I was upside-down and had to get out of my not-so-kid-friendly car asap when my little one was born. You have more room to work the dealer on price, buy-down etc... when it's a used vehicle, but still get the peace of mind of buying with a dealer warranty. This is also a great way to avoid the intial depriciation that comes with driving a brand new car off the lot.I purchased my Toyota that was only a year old, they certified it and it was still under the original Manu- warranty. I also kept and test drove the car for over a week before I actually bought it(I really can't believe still that they let me do this), but it definitly gave me assurance about the purchase. HTH.

Anna

[bubbaray]

I'm not following the math. You say your current car is worth $6k, and you are putting down 5-7K. THat's 12k. The '09Forester is around 26K plus tax in the US IIRC. Assuming tax at about 6%, you'd be financing around 15k. Can you not get a better rate (0%?) on a shorter term loan??

I'm not going to go into the wisdom (lack thereof) of the situation. You know that and the PPs have covered it off.

But, if you are still going to get the vehicle, I'd negotiate 0% financing for the shortest term. I'd also consider the '08Forester (though we love the '09 that we test drove for a weekend), b/c you might get a better rate.

IME, you might likely get a better financing rate for a new vehicle as opposed to used.

[tarabenet]

Another parade-rainer here. The economy sucks. Forecasts say it isn't on the rebound yet. We don't know exactly how much further it can drop before the turnaround. My DH was extremely underemployed for quite a while, and then he was hit with a serious medical condition. If we'd been paying for new cars, we'd have had to sell the house to avoid bankruptcy. Don't go there. Know how you feel right now? Imagine being hit with it afresh every. single. time. you had to get into your shiny new car to go somewhere.

Do you deserve a new car? Sure.
Do you deserve the risk that it would load onto you right now? No way.
Bad things happen, regardless of what someone might "deserve". Suck it up and buy a more affordable slightly used car. Treat yourself to something really nice for a lot less money, and see if life doesn't feel pretty sweet after all.

[MontrealMum]

Seconding all the pp...I would go used all the way. Check out the Lemon Report for recs as to good bets. Go to the Car Talk website. If you've really got your heart set on a Subaru, they run and run and run. We are on our first, but I have a friend that's on his third. His first (purchased used) he had to get rid of because it was so old it didn't pass emission standards when he moved to BC. His second (used) eventually died ( it was ancient). And he now has his first new Subaru. If you have a good mechanic you can keep an older car running for a long time. Our second car is a 13-year old Corolla. Knock wood, it's still going strong.

[niccig]

I agree with the other and I understand the used car phobia. My dad did all the mechanic work on our very old cars and they always broke down. Always, as in a few times a month. But buying a new car is a very big purchase. Work out what your monthly repayment would be and see where you would get that money, really crunch the numbers and seriously consider your financial situation. What will you do if someone gets sick and can't work etc. The stress you're experience re. the 5k could be a lot more if something else goes wrong eg. new roof etc. 6 years at 4.9 that's a lot of repayments.

Have you considered a used Subaru or a certified subaru?

[willow33]

I won't repeat what others have already said. I only want to add that if you find a 2008 Forester they have a 0% promotion through Monday. I only know this because my mom is looking at this car and the difference between 4.9% and 0% pushed her to the 2008.

Good luck with your decision...

[dms619]

What about a Certified Pre-owned? Usually its a lease termination that the dealer certifies for a specific warranty period usually like to 100k miles.

I know you don't want "used" but it would be "new" to you!

Debbie

[KrisM]

I'm not following the math. You say your current car is worth $6k, and you are putting down 5-7K. THat's 12k. The '09Forester is around 26K plus tax in the US IIRC. Assuming tax at about 6%, you'd be financing around 15k. Can you not get a better rate (0%?) on a shorter term loan??



After she gets the $6k from the trade-in, she still owes another $5k on the car, so isn't using the $6k for a down payment. In fact, she must be using an additional $5 to pay off that loan.

I totally agree with everyone else - this is just not the best of ideas. If you must, must, must have a new car, I'd find one about $10k cheaper than that Subaru.

[wellyes]

If you do end up listening to the parade-rainers, read this:

My stupid Subaru Forrester has only 95,000 miles on it and it is a rusted-out pile of junk!! The exhaust is ready to fall off. I have had to replace the front wheel joint about 6 times. That's like $500 a pop. The transmission is starting to act strange. I get less 18 mpg on a very good day, which I think is lousy. The backseat is terribly uncomfortable. The front seats are just OK. Emissions-wise I know I will not pass inspection when it's due in six months. I know that some people would say 95,000 miles is good but when I bought the car I assumed I'd get at least 150,000.

I've had fun with my Subie, but I'm disappointed and honestly I really want to go out and kick it right now. Subarus are not nirvana, trust me.

[khm]

We paid off my husband's truck early last year, and my car late last year. We adore the freedom of not being a slave to a silly car payment. We did have to put $1000 into my car due to an alignment issue that was my fault (and the ice's that cause me to hit the curb). But, really, that's nothing compared to a monthly payment, higher insurance, higher license tag fees that would come along with a new car...... It isn't just the payment that hits you, it's all that, too.

I'm a car girl. I love cars - MADLY. But, at this point, my 7 year old sedan (bought by us when it was three years used) is a-ok. It is too small to cart around packs of neighbor kids, and that bothers me occasionally, but not at take-on-a-new-car-payment level. $70 in skinny boosters and I think I can take at least one additional kid now.

We've taken the money that previously went to payments and applied it towards the mortgage, a mutual fund and college funds. Working out the numbers on how THOSE things will benefit us..... it really is a no-brainer. We are "older" parents in that we are pushing 40, so that does make a difference I suppose.

I recently took a 2 week class. The instructor is a man in his 70's. He's got real estate holdings out the whazoo. He owns a popular local restaurant. He still works full-time in a lucrative career. He's a truly wealthy man.

Imagine my surprise on day 5 to pull into the parking lot behind him in his 9 year old plain jane mid-sized chevy sedan. He ended up talking about cars one day. He said he owned his one and only new car in the 1970's. He hated the pressure of owning a new car. He hated waiting for, and eventually getting that first good ding. He hated the knowledge of driving off the lot then knowing he was "upside down" whenever he thought about it again. After he was done with that car, he never bought new again. He said he aimed for a 2-4 year old car and has had great luck going that route. My husband was always a new car guy, but has since changed his tune, thank goodness.

If I were you, I'd really re-think things. I know you've been burned with this one car. That sucks, and I'm sorry. But, in general, a used car is a far better value. Living without a worrying car payment is freeing.

I'd probably look into a used Honda or Toyota, you just can't seem to wear them out, generally speaking. (We are still using my husband's 1994 Accord coupe occasionally. If we could have morphed it into a 4 door, I'd have never bought my sedan....)

I'd suggest finding an old school mechanic somehow. Our dealer stinks. If they can't hook it up and let the computer diagnose it, they are worthless. We found an "import" mechanic that is actually full of mechanics and I have never loved a business more. They diagnosed a problem with my alignment within 5 minutes that the dealer missed after having my car for 2 days and charging me $90. The mechanics were stupefied that the dealer was unable to see the problem, as it was visible to the naked eye (a severely bent part in the wheel mechanism). To me, it just shows that they don't really LOOK anymore. They plug it in and read. :(

[ThreeofUs]

I'd be pretty sick to my stomach, too. And the pp's and Suze would all be right in saying "don't make a bad financial decision that compounds your problem" - now's just not the time for it. I think I'd probably need a bottle of wine and a bgf to sit and mourn over this for a while before I could come to my senses and follow that good advice, though!

So, here's a glass of wine for you

:54:

and some bgf advice for when the bottle is done: go looking for a used car with really high consumer reports ratings on reliability *and* good gas mileage.

You *can* do this. It's hard, it's a sacrifice, and (in our culture) it goes against the "I want it now so I have to have it now" mindset. Even though it doesn't seem fair, it's the right thing to do. I know - I have wanted to tantrum my way into a cool new [insert high-priced thing here], and I had darn good reasons for it, too! In fact, I had to be talked around a couple of times by DH. He's always been right, and I've had to grit my teeth and shut the checkbook. But I'm always happier afterwards that I did - and I never feel sick about our purchases. Queasy sometimes, yes. ;)

FWIW, we have been really happy with the 2001 Subaru Outback wagon we bought from friends in 2003. We've had very little trouble with it at all, in spite of paying way too little attention to it. We have only bought one new car, and that was because we could get a significantly better price on the new car than a used model.


HTH.... Best of luck as you make your decision.

[lil_acorn]

I don't think you should buy the forester. Is there a reason you need a car that big? You should try to find a good mechanics - ask around to your friends or buy a smaller car that won't cost you as much in payments & in gas.

[bethie_73]

In general I can not buy a new car. The depreciation alone when you drive it off the lot makes me want to choke. That said I do have a friend who just bought a new mini van. They were having big issues with their jeep and the warranty was very important to them. They did their research, etc and bought the van without any bells or whistles, the cheapest they could get. They also were not upside down in another car.

I used to sell cars, briefly. DO NOT get a new car. Financially speaking it is not worth it. for the same reasons the PP said. If you ABSOLUTELY have to, get a smaller more reasonable car like a FIT or a corolla. I understand if there is no way to fix your current car, but not all used cars are lemons, and you don't want to be kicking yourself later.

[MontrealMum]

Just wanted to add this...if you do consider a used car, check out this site/these books: http://www.lemonaidcars.com/ It will help you pick not only a brand, but specific year and model that will be more inclined to behave and be good! For instance, some car companies have been bought out recently by others and the quality has changed; this will let you know if they're still a good bet. Sorry, I had the wrong title in my previous post. Check CR as well, and there are lots of resources on the web (and message boards like this one!) for specific makes and models.

[overcome]

I knew I would get honest, thoughtful, caring feedback. Thank you!
To address some points....

I am not considering buying a new car b/c I am dazzled or impressed by the newness "shiny new car" concept. I am considering it b/c I am so disgusted with my used car experiences.

I do have a good mechanic...two in fact. No one can figure out the exact problem, but all signs point to the entire engine needing to be replaced (several thousand).

If I go the used car route, I have to purchase something with AWD or 4WD due to the winter weather conditions in our area. So far, the used cars we have looked at w/AWD are in the $15K - $18K price range. The financing for this would end up being at a significantly higher rate and by not putting down my $5K from savings, I would be paying a higher monthly payment for 5 years than if I bought the new car and financed it for 6 years (albeit $5K less in my savings account).

The payment for the new car would be about $30 more per month than I am paying now (yes...I realize I will be paying this for a longer time but when you are figuring your budget on a monthly basis, it is what it is).

mytwosons suggested considering everything else I could buy with that money...the peace of mind of having a reliable vehicle is priceless to me.

I am paralyzed with fear of buying the wrong used car *again* (I have always bought used cars and ALWAYS had problems). The thought of buying a used car again and waiting for the other shoe to drop is, as my post said, making me sick to my stomach.

I don't want to sound like I am disparging any of your wonderful heartfelt comments.....just letting you know where I am coming from.

I KNOW the pitfalls of buying a new car, as many of you pointed out in your posts. But I know all too well the pitfalls of a used car too. This is the problem. I can't make a decision....even with the $5K downpayment, we will still have $5K in savings, which I think is a decent amount, as some ppl have no savings whatsoever.

I do thank all of you for taking the time to post and try save me from myself :) I will update as I progress and let you know what I finally end up buying, as the decision has to be made pronto! I am off to Consumer Reports to do more research (I bought an online subscription for a month).

[bubbaray]

If I go the used car route, I have to purchase something with AWD or 4WD due to the winter weather conditions in our area. So far, the used cars we have looked at w/AWD are in the $15K - $18K price range. The financing for this would end up being at a significantly higher rate and by not putting down my $5K from savings, I would be paying a higher monthly payment for 5 years than if I bought the new car and financed it for 6 years (albeit $5K less in my savings account).

The payment for the new car would be about $30 more per month than I am paying now (yes...I realize I will be paying this for a longer time but when you are figuring your budget on a monthly basis, it is what it is).




That was what I was trying to get at in my post. Financing new is usually cheaper than financing old.

I totally get needing AWD/4WD. I kick myself every winter for not having it on my van. Personally, I don't care what the price of gas is, I'm not loading my kids into a Honda Fit or similar. I saw one that had been t-boned on a tow truck the other day and there is NO WAY anyone survived that crash.

It sounds like you've done your homework. If you need AWD/4WD, the Forester is one of the smaller vehicles. Its nice, but there are some things I don't like (the canted cargo floor makes it a non-starter for us and anyone that has a dog). Its also a complete redesign and I don't recommend buying a new model year in its first year. I've done that twice now and you'd think I'd learn.

Others to consider that might get you better financing are the Rav4 and the CRV (though its new this year too). The only changes for next year for the Rav4 is supposed to be moving the spare from outside to inside. You could also look at the Escape, but its reliability is sucky.

I would not pay 4.9% financing for that long a period. I would really look for/negotiate 0%.

[Puddy73]

I do have a good mechanic...two in fact. No one can figure out the exact problem, but all signs point to the entire engine needing to be replaced (several thousand).

Big hugs! I know that these decisions are very stressful. Is the engine the only problem with your SUV? If so, why not just use some of your savings to replace the engine? It does seem frustrating to keep pouring money into a used car, but if you run the numbers, it is almost always cheaper to repair your existing car than to buy a new one (unless you have a true lemon with numerous repairs to various systems throughout the car). Good luck with your decision!

[o_mom]

Another dissatisfied Subaru owner here... Our Outback died with less than 90K miles on it and took us for $4K of repairs in 3 months before we pulled the plug. I was seriously ticked about it.

I will also say that our van with traction control does just as good in the snow as the Subaru did. We also bought the van and the sedan that replaced the Subaru certified used so they are warrantied to 100K mi through Honda.

[mytwosons]

mytwosons suggested considering everything else I could buy with that money...the peace of mind of having a reliable vehicle is priceless to me.

I do understand why you would choose to spend the money for the extra peace of mind. But, I still think you could get the same peace of mind for less money.

Many of the certified used vehichles come with an extended warranty. Or, you can usually purchase one yourself. I would at least investigate what is available and run the numbers yourself. I bought a certified Honda that had 30k miles, but came with a 100k mile extended warranty. Yes, my interest rate was higher than new, but not too bad at 5%. Since the car cost a little over half what it would have new, it was still cheaper to pay the used car interest rate.

My big concern with your situation is that you'll be financing the car for such a long period of time. You need to be aware that you will be upside down in that vehicle for just about the entire 6 years. You have no way to know what life will throw your way before that car is paid off. In our case, we were always pretty financially secure (not rich, but 2 incomes and big savers). Well, we had a child with special needs and spend upwards of $30k each year on his therapies, and I needed to stay at home with him. For me, my peace of mind is that we can provide him with whatever he needs.

Good luck with your decision! I find financial decisions like car shopping one of the most stressful things!

ETA: I wouldn't rule out a vehicle because of lack of AWD. We test drove a Saturn Aura in the snow and couldn't belive that it handled it just as well as our 4WD SUVs. I don't think that's the norm, but I do think some cars have greatly improved in the last few years.

[brittone2]

Another vote to check for something like a used CR-V. I had one and loved it, but ended up getting a minivan for a variety of reasons. They get *excellent* reviews for reliability and are often listed as a car w/ a solid potential for going 200,000 miles or more. I think mine was an 01 or 02 (I can't believe I can't remember now LOL). It was the first year of a redesign. In any case, there were some issues with driver side impact that came out after the fact. But the later models didn't have that issue.

They have a good amount of cargo space, still get decent gas mileage as a small SUV, and are super reliable generally speaking.

[MontrealMum]

I'm not trying to dispute your need for AWD or 4WD, but just thought I'd throw this into the mix since they seem to have fallen out of fashion in the US...snow tires? You would not believe the difference between even cheap snow tires and expensive all-season radials. I've lived through 11 Quebec winters as a driver - and let me tell you, we have WINTER here - and I've been fine with my very nice snow tires, no 4WD/AWD. And we drive on bad roads a LOT since we are very outdoorsy, ski all season long, and often drive on dirt and other unpaved roads the rest of the year. We will be having our first winter with AWD this year, so I can't give you a comparison yet, but I can get in and out of just about any parking place without shovelling, up hills (Mtl. is VERY hilly), and through snow banks (unless we've had true blizzard conditions). I can always stop. You should see the looks when I drive my car back in MI in the winters when everyone else is skidding all over the place (freaks me out a bit since I know I can stop and they can't). It's something to consider. I'm not up on tire prices lately, but I'd imagine you could get a set on wheels for under $500. They're so essential to our winters that the government is considering making them mandatory in this province.

We also had to seriously consider our recent purchase of an Outback since the WD makes the gas mileage much less friendly than without; another thing to consider in these times of high gas prices.

I'm not saying you shouldn't do it, you have to make the choice that's right for you. But just wanted to put the idea of snow tires out there since it could be a cheaper option and you might not have considered it. And yes, you can buy them in the US, I got my 1st set in MI.

[KBecks]

I personally like to buy new cars and keep them for a LONG time, 10 or 12 years, or however many years we can keep them going. After the car is paid off it's awesome.

But, I wouldn't choose a Subaru, I'd choose a Honda. We've had great luck with our Honda vehicles and I know we're not alone in getting longevity. I don't know that Subaru is bad, but if longevity is part of your plan, then I'd go with a company with a sterling reputation, and to me that's Honda or Toyota.

Then you have to take a good look at your financial picture. Is your emergency fund going to be ALL GONE? That's not an OK answer. How many months of expenses will you have left available in savings? If you still have enough to cover you for maybe 3-4 months of expenses in your savings, I would be OK going that low for the shorter term. In fact, our e-fund is that low, but we have other savings available that would be accessible although painful to use, but we'd not be totally broke.

If you are wiping out your only accessible savings, then that's not OK, I would not feel comfortable with it.

Then I would take a look at what you can really afford for a new car and if you can manage the payments, and I would take a look at how secure your husband's job is. My DH went through 2 layoffs in the early 2000's, and one period of 6 months of unemployment (thankfully we had no kids and I was working). A job loss sucks and it sucks a lot harder with kids, I'm sure!

You know your finances and I think you should be very careful about this decision. I like the suggestion of certified pre-owned, and I think you should research reliability very very carefully on the vehicles you are looking at. Personally, I would totally go Honda or Toyota.

I would also look at selling your other vehicle privately as a possibility, or see what other avenues you might have.

[KBecks]

My big concern with your situation is that you'll be financing the car for such a long period of time. You need to be aware that you will be upside down in that vehicle for just about the entire 6 years. You have no way to know what life will throw your way before that car is paid off. In our case, we were always pretty financially secure (not rich, but 2 incomes and big savers). Well, we had a child with special needs and spend upwards of $30k each year on his therapies, and I needed to stay at home with him. For me, my peace of mind is that we can provide him with whatever he needs.

Good luck with your decision! I find financial decisions like car shopping one of the most stressful things!

ETA: I wouldn't rule out a vehicle because of lack of AWD. We test drove a Saturn Aura in the snow and couldn't belive that it handled it just as well as our 4WD SUVs. I don't think that's the norm, but I do think some cars have greatly improved in the last few years.


If she's making a large down payment, $5k, it's unlikely she'll be upside down on the loan at all. Upside down is when the car is worth less than the amount of the loan.

Long loans are pretty normal now. I was surprised to get a 6 year loan on our Odyssey when we bought it. We took the 6 year loan but I'm paying more than the payment amount every month. What is nice is that I don't *have* to pay more than the minimum, but we consistently have. If things get unexpectedly tight, we're ahead on our payments by a lot.

I'm not against a 6 year loan, if it's an affordable amount..... but I am against using the entire family's resources to fund a vehicle.

I think that traction control is awesome for snow.

One problem with Subaru is that there usually aren't as many dealers around and you could get stuck with one dealer and fewer options for service and repairs, whereas Hondas and Toyotas are more common and easier to find service and parts if you need them.

[JTsMom]

I'll admit I'm a little distracted right now so maybe I missed it, but I'm not understanding why you'd take that big of a loss on the car. Why not replace the engine, and sell it for 11? A new engine plus labor shouldn't cost $5K, right? What type of car is the lemon? You'll still lose, but not as much if I'm figuring right.

[KBecks]

I wonder how awful your snow is in PA compared to ours in WI. I've lived here my whole life and have never had an AWD vehicle and have been fine. (Not including some times when I ended up in the ditch when I was a young and not so attentive driver.). Anyway, you can get a prepaid cell phone for emergencies and get on with it. My worst winter experience as a mature adult was a flat in a snowstorm and that royally sucked, but that's life. AWD isn't going to keep you totally safe. You might slide *a little* but that's life in winter, I think it's more about driving correctly for the conditions than anything else. A new car should have traction control and possibly vehicle stability control.

And traction control totally rocks.

[mytwosons]

If she's making a large down payment, $5k, it's unlikely she'll be upside down on the loan at all. Upside down is when the car is worth less than the amount of the loan.

But she's not making a large downpayment. She would be rolling $5k stilled owed on the current vehicle into this purchase, and then putting down between $5-$7k. Even if she puts down $7k, that only puts her ahead $2k, and more than that will be gone as soon as she drives off the lot.

My issue with longer term loans is the car is depreciating faster than the loan is being paid off. I realize people often pay off the loans sooner, but I also think there are a lot of people who go into a long loan with good intentions, but then something comes up and they don't pay it off early. Also, loans that long tend to have higher interest rates.

[daniele_ut]

I wonder how awful your snow is in PA compared to ours in WI. I've lived here my whole life and have never had an AWD vehicle and have been fine. . . . AWD isn't going to keep you totally safe. You might slide *a little* but that's life in winter, I think it's more about driving correctly for the conditions than anything else. A new car should have traction control and possibly vehicle stability control.

And traction control totally rocks.

I have to agree with this. I live in Utah and we frequently drive in the mountains in snow all winter long. While I've lived here I've owned a 1989 Chevy Cavalier, a 4WD 1992 Isuzu Amigo, a 1988 VW Jetta, a 2001 Subaru Impreza Outback (still own) and a 2005 Chevy Malibu (still own). Of all of these cars, the one that performs best in the snow is the Malibu, hands down. I was really surprised at how much difference there is driving a car with traction control. The only advantage our Subie has is that it is a manual transmission so you have a little more control stopping and starting than the average vehicle, but I've slid on ice in that car just as a non-AWD vehicle would.

According to Forbes Auto:


The harsher the winters where you live, the more justifiable 4WD becomes. But the reality is that most drivers will do just fine with two-wheel drive, especially now that increasing numbers of vehicles have electronic traction control and stability control as standard or optional equipment.

Even in all but the harshest of snowy conditions, a two-wheel-drive vehicle (whether front- or rear-driven) will perform safely and securely in snow with the proper snow tires mounted on all four wheels. Comparison tests performed by automotive-enthusiast magazines in the snow have shown that a 2WD drive vehicle with snow tires on all four wheels will outperform a 4WD vehicle with regular tires.

All of this is to say that the added assurance of having all-wheel drive can be largely psychological. The instances in which most motorists who don't venture off-road actually benefit from having 4WD are relatively few, unless winters are harsh where they live.



Overall, I would also say that I haven't been overwhelmed by our Subaru. It's only 7 years old and we've already had to do major transmission work on it. It's also the least kid-friendly vehicle I've ever encountered. Car seats are a huge PITB to install in it.

[lovin2shop]

I have to agree with the PP's that buying new in your situation is a huge financial mistake. Besides the issues previously mentioned, you have to consider that a new car may not last you long. I have had a new car totaled and that would be a disasterous situation if you are upside down on the loan. If you are determined to go through with this, I would highly recommend purchasing gap insurance and the lender may even require it.


That down payment is a HUGE portion of our savings/emergency fund. I know we will be able to replenish it as we are good savers (payroll deduction!) and my DH will receive his bonus in the spring as well as our tax refund. I also know if a financial emergency would occur, my parents would be quick to help us. We already have $$ saved for Christmas presents.


Have you discussed this idea with your parents since they are your emergency back up?

[o_mom]

If she's making a large down payment, $5k, it's unlikely she'll be upside down on the loan at all. Upside down is when the car is worth less than the amount of the loan.



The $5k "downpayment" will pay off the previous car, meaning that she is financing 100% of the new car. Take a depreciation of 15-20% when you drive it off the lot and she will be $4-6K upside down at the start.

Even on a used car, there will be a period of being upside down, since she will be financing 100% of the car. However, the lower cost of a used car, shorter term of the loan (which is more affordable because of the lower price) and less depreciation, means that the amount they are upside down is lower and they can get to a better position much faster.

[dcmom2b3]

DH drives a mid 90s Corolla (he sold a nice vehicle and got this as a commuter car). We've had to recharge the freon/fix the AC, but otherwise it has been great. It gets 38 mpg. He paid 5100 for it 3 years ago.

My '93 Corolla was finally put out to pasture last month with 199k miles on the odometer -- because she was totalled in an accident. Family joke is that Rosie's engine is still humming along in a junkyard somewhere outside of Boston.

OP, I'd be much more afraid of financing that $5k deficiency at 4.9% for 6 years than I would be of buying another used car that *could* be a lemon.

If you can't stomach the thought of fixing the car you have (and I can understand why you'd feel that way), the 5k is a loss that you're going to have to take at some point. Is there any way to defer the loss w/o financing it, and, more importantly, not tying it to the financing on yet another depreciating asset? I shudder to suggest, but maybe a 0% cc deal? No/low-interest long-term loan from your folks? Pay off the old car's loan now, with low or no interest $$, and put $5-7k down on the Subaru (or something less expensive, provided that they'll still give you the same amount on the trade-in).

I'd be of the "only buy used" camp ordinarily, but I realize that the biggest market for a non-functioning car is a dealer trade-in, which you can only get if you buy from a dealer who may a limited used car inventory. Is Carmax an option, though? I think they don't always give you the best price, but may be something to consider.

Anyway, I'd avoid at all costs just rolling the 5k into your new car loan.

[brittone2]

My '93 Corolla was finally put out to pasture last month with 199k miles on the odometer -- because she was totalled in an accident. Family joke is that Rosie's engine is still humming along in a junkyard somewhere outside of Boston.



I'm holding a moment of silence in honor of Rosie :hug5:

I'm sure she's still humming along in that big highway in the sky :)

[kijip]

I have to agree with nearly all of the PP.

My relatives that live in super snowy mountains by and large do not have AWD- they have snow tires.

The economy is not at the lowest point it will go this recession. Taking on debt now is very very risky IMO.

If you have to replace the car you have, replace it with something small, reliable and inexpensive. We have a Camry. It does pretty well with gas and it's the same car most of my relatives in wintry climates have.

Nearly EVERY car bought new on a 5-6 year loan will go upside down unless the down payment is so large they never should have financed it for that long in the first place. Cars are not appreciating investments, they depreciate like mad. Any car that is not super easy on gas right now (and the forrester is NOT- the mileage is terrible and the newest one is bigger and uses MORE gas than the used ones IIRC) is going to lose value even faster. There are plenty of reliable, used cars out there. Inspect before you buy...with a mechanic...stick to high reliability brands like Toyota or Honda and you can get a great used car for as little as your downpayment on the Subaru.

[bubbaray]

If you can't stomach the thought of fixing the car you have (and I can understand why you'd feel that way), the 5k is a loss that you're going to have to take at some point.


:yeahthat:

She'd be taking a loss on her current car, not only b/c of the engine issue but mainly b/c SUVs aren't worth squat right now.

Personally, I think the price of gas is going to come down from where it is now. It might not get back to the cheap gas of 5 yrs ago, but it will decrease. Canada has a ton of oil and developing more areas (offshore in particular). The current price increases are as much fueled by the media as anything IMO. The whole environmental issue is completely separate. I believe that once prices dip again, the market might improve for large SUVs.

I can completely understand why the OP might want AWD/4WD. I have friends in the Midwest who, while they live in a deepfreeze for winter, don't content with mountains like others do. We travel into the mountains regularly in winter and AWD/4WD does make a huge difference. JMHO.

In her situation, I would get a new vehicle. I wouldn't dump thousands into a large SUV that is apparently a lemon. I'd sell it, hopefully before the need for a new engine became readily apparent and get a new vehicle with 0% financing.

[o_mom]

Personally, I think the price of gas is going to come down from where it is now.

Thread-jack..... On that note - I paid $3.56 yesterday! :cheerleader1:

[Drag0nflygirl]

Thread-jack..... On that note - I paid $3.56 yesterday! :cheerleader1:

:30: No fair! We're still paying almost $4 a gallon here.

[KBecks]

Ashley if you end up looking at used Hondas and Toyotas, then be sure to do careful test drives and inspections. I haven't bought many used cars, but when I test drove some used Odysseys when we were considering a new van, the difference from vehicle to vehicle varied quite a bit. Some used vans drove badly, while others ran well. Each car is individual and some will have been maintained and just have held up better than others. Drive several so you can tell what they feel like. So if you go used you'll have to really be cautious and also get a 2nd opinion from a mechanic. I think getting something like certified pre-owned with a warranty is a very good option if you go used.

[kijip]

:30: No fair! We're still paying almost $4 a gallon here.
It's over $4 here and I highly doubt it will ever go down by much. I expect to be paying a lot more for it in the future. Demand around the world is rising. We did not used to compete with Chinese or Indian or Russian consumers to the same degree for gasoline and it's not an infinite resource.

[brittone2]

It's over $4 here and I highly doubt it will ever go down by much. I expect to be paying a lot more for it in the future. Demand around the world is rising. We did not used to compete with Chinese or Indian or Russian consumers to the same degree for gasoline and it's not an infinite resource.

I agree w/ Katie. I don't see the price dropping in the long haul. Periodically dipping, yes, but long term I'm pretty convinced we're in for higher prices.

IMO, it isn't that we don't still have supply. We have huge demands coming out of China, India, etc. and even if there are untapped sources of oil, the demand is just going to keep going up, up, up as more and more people in China and India buy cars, etc. I think the demand is just so strong, that even if we aren't "running out" of oil, the price will be driven up substantially.

eta: there are about 10 cars per thousand people right now in India. As their rising middle class becomes more consumer-driven and as they become wealthier, there is going to be an enormous demand for petroleum.

[June Mommy2]

As someone who will make our last payment this month on our 2001 SUV that we bought new (and now has 150K miles) I would say don't do it! I rue the day we bought that vehicle, and now I'm praying it will last another year or two before we have to buy another car. And when we do, I will buy used. I think in your situation, my first thought would be to replace the engine if necessary. It may cost a few thousand, but you should be able to get some estimates on that...I would check with a few different mechanics. Also, if you have any friends or family in the car business, you could look into getting something from a used car auction. That is where the dealers buy, so you can get some really great deals. Just ask yourself if you will still feel the same way about this situation in 6 years when you are still paying for your car...from someone who has been there, it's not so fun anymore after a couple of months!

[kmak]

Just to throw my 2cents worth in on AWD/4WD, snow tires, & gas.

Before the mini-van, I had a jeep wrangler. We actually did off-roading trips. When I got pg in 2005 we traded for a Honda Odyssey.

We live in CO and drive up to the mountains for skiing. Snowy roads in the winter for work commutes. The front wheel drive van with traction control and snow tires actually does better for commuting in the snow than the 4wd wrangler did (all season tires).

And, I grew up in a family that won't live without at least one 4wd car in the driveway. Right now both my mother and father drive 4wds living in TN.

We purposely didn't get a van with AWD because of the gas milage. And, you're still going to need snow tires with AWD anyway. Traction is all about where the rubber meets the road.

[LD92599]

I don't think I noticed this in the OP but what year is the car in question that needs work? And what type of SUV? That could make a difference too!