Big Car Mistake

[FloridaBorn]

I had a 1996 Toyota RAV4 which was completely paid off.  I drove it to over 300,000 miles and traded it in when it started to sound like a lawn mower!  Only got $500 for it though... poor old car; it was a sad day for me!

Anyway, I had NO credit, because my car had been paid off for so long!  Capital One ended up financing my loan for a 2007 Seqouia.  (Beast of a car... husband said it would be "safer" i.e. he might could pull a trailer with it).

Folks, after having no car payments for so long, this $500 a month stuff is killing me!  Never mind the $60, 70, 75 (and it keeps going up!) it costs to fill it up with gas.

Question:  Is it too late to take it back?  LOL!  Would I lose a crapload of money if I tried to trade it in on something smaller with not as many payments?

[diana_of_the_dunes]

Sorry you're not happy with your "new" car.  You'd definitely lose on a trade-in, after all, the dealership has to make money...  Have you checked Kelly Blue Book to see what the private party sale value is?  You might be able to pay off your loan if you sell it outright.  Or perhaps you could advertise for someone to take over your payments?  I'm not sure how you go about signing everything over to them, though.  It would obviously involve the bank and credit checks.

If/when you buy another car, I'd look into a local credit union instead of a big bank.  They can actually underwrite the loan based on your income and debt ratio instead of just looking at your (non-existant) credit.  If you have low credit because of NOT borrowing money, not because of financial mismanagement, you can find a lender who will take that into account.

[Momsteader]

You might also look at refinancing it with a credit union now for a better rate. You wouldn't lose out that way.

I have a 2001 Sequoia that I adore :D  Yes, it's a gas guzzling hog, but it's a great family vehicle and I love the space. And as you know the Toyota's are so reliable.

How long have you owned it? Did you put anything extra down?  We purchased a new to us car 18 mos ago. It was a splurge and we'd not had payments in forever either. Well, not 6 mos later, dh was transferred overseas w/ the military and we could only take one car (the Sequoia as we'd need the space). We tried to sell but couldn't. Then we kept it in storage back in the states for 6 mos and tried again. No go. Meanwhile making that big payment every month. I went back to the dealer when I was stateside and they purchased it back from us at the auction value which happened to be $500 less than we owed on it, but with the car payment being almost that a month....we went with it, wrote the check, and they bought it back.  You won't know until you talk to them. Yes, we lost some equity in it, but we were done with it. And certainly we'll not do the super new car thing again. It wasn't worth it!

If for example, you owed $10,000 and they offered $9000 for it. In two months, you'd have paid that extra $1000 in payments and it might be worth doing it. (Knowing these numbers aren't anywhere accurate for an 07 Sequoia, but you get the picture.)  You would have to decide if that would work, and you'd then be starting over.

I'd suggest going 5-7 years out for a car. Other than the one that we sold recently mentioned above, we've not owned anything newer than 7-10+ yrs old and the maintenance has never outstripped that huge payment for a new car.

[GirlBoyGirl]

You would definitely be upside down on the next loan, unfortunately. We currently do not have a car loan but we make "payments" to a savings account as if we did so that when the time comes not only is it a shock to our budget but we have money to put down on a car.

[ilovemygirl]

I don't know what your budget is but $500 a month seems like a HUGE car payment to me. You may appear to lose money by trading it in but would probably save big money in the long run on both gas and payments if you traded it in for something smaller and cheaper.

I bought a 2008 model a few months ago. My payment is only $215 a month. It's "just" a car but it's very safe, can fit three car seats if necessary (I only need two right now) and has a massive trunk that fits strollers, groceries and other odds and ends with room to spare. 

My point is that you could be paying half of what you are now for both gas and your payment if you consider downsizing to a car even if it's a "newish" model. 

We also got our financing through a credit union instead of the bank and it's worked out really well.

GL with your decision.