Advice on automobile situation

[Woosh]

Hi everyone,

Looking for some advice on a decision I need to make. Quick background on my situation:

Bought my first house in 2008 but was laid off for six months recently. Finally found a new job in May of this year at a comparable salary to my last job but I've been trying to get caught up ever since. I'm currently on a repayment plan with my mortgage company that goes through February 2011. I ditched my cable TV and lowered my other monthly expenses as much as possible but I'm still paying some past due amounts on utilities and living paycheck to paycheck.

In 2007 I bought a used Dodge Durango - big gas guzzling SUV. I have $360 monthly payments on it until June of 2012. Unforunately my new job is a far commute and I'm having to fill the tank twice a week to the tune of $120 travelling back and forth.

My sister owns a Ford Focus that she has not been using since she moved into the city a few months ago. She has graciously agreed to let me use it as much as I need. It gets twice the gas mileage of my Durango and costs half as much to fill the tank. This arrangement will be good at least through the end of the year and most likely will be good as long as I need it.

I'm trying to decide what to do with my Durango now. At this point, I'd like to get rid of my monthly payments on it to continue saving money. I'm just not sure how to go about this. I don't know if I can sell it because it's financed - I don't have the actual title. I don't want to trade it in because I don't need to buy another car as long as I'm using my sister's. Should I just call the finance company and talk to them about making some arrangement? Obviously I don't want to do anything that will ding my credit score worse than it already is. I just don't know what my options are.

Thanks for any and all advice.

[jIM_Ohio]

If you are making payments on a car you do not use, dump it.
Don't finance another vehicle again.

Other than that, keep plugging away, try not to finance too many things, and when you do, finance for short (2-3 years) amounts of time.

[littleroc02us]

Easy solution, sell the Gas Hog and take a loan out for the difference based on kkb resale. Then you will be able to get the title by paying off the finance company by using the amount you get and the loan. Then work like heck to pay off the bank loan.

[sigamy]

Are you upside down on the car? That could be a fator in sellling.

Call your finance company and ask them the procedure for selling the car. If they have a local branch I belive you can go there with new buyer and as they pay off the car, the title can be transfered directly to the new buyer.

It may take a few calls and some paper work but it is doable.

Another option is borrow the money to pay off the car from family so that you have the title. Then when you sell, you pay family back and buy them a pizza.

[snafu]

Check with the finance company to determine the exact sum needed to discharge the loan and determine savings from auto insurance but list the SUV for sale on every free site you can think of. If you are underwater, make arrangements to get a loan to cover the difference.

Is there anything you can do to generate more income? Rent a room? Rent your garage? Take in a foreign student if you live within a reasonable commute of a college campus. They pay well, rarely cause problems and you will learn a lot from another culture.

[bjl584]

You can sell the car. It doesn't matter if you own it or not. Something to look into is whether or not you are upside down on it or not. I will assume that you are. In that case, you may need to inquire about a personal loan to make up the difference unless you have the cash on hand to do it. (Example, you owe 10K on car, and car is worth 8K. You sell it to someone for 7K. You now need to come up with 3K so that the bank will transfer title to the new owner and clear the loan for you.)

There are several free sites to advertise your car on, Upillar, Craigslist. But, I would go to Autotrader. Way more traffic. You have to pay, but IMO it's worth it.

[whitewater30]

Dump the gas hog

Dump the Durango. If you are updside down, you might be able to sign a note for the difference of your loan payoff and what you get via private sale.

Cars never go up in value, so if you can stick to quality used cars, more than 2 years old, and if you have to finance, don't do so for more than 2 years.

[bjl584]

yes always buy used and pay cash!
new cars lose their value as soon as you drive them off the lot!

So? There's nothing wrong with buying a new car if you can afford it, and if you plan on driving it until it is fully amortized. A car will always be worth something to the person that is driving it regardless of what Kelly Blue Book says. It is a mode of transportation to and from work or wherever no matter how much it's worth. My friend is a former car salesman, and he is constantly on my case about getting rid of my old car before it's "worthless" on trade. I try to explain to him that I didn't buy my car under the mindset that I wanted it to be worth something on trade X number of years from now. I bought it to get to work, to the store, to take on vacation, etc. I don't care what it's "worth." As long as it runs, it's worth something to me.

[disneysteve]

So? There's nothing wrong with buying a new car if you can afford it

That's true.

The reality, though, is that most people buying new cars can't afford them, evidenced at least in part by 5, 6 and 7-year car loans. If you're saving 15% for retirement, 5% for other needs, have a fully-funded EF, no debt other than your mortgage and have a pile of cash to use to buy that new car, go right ahead. Unfortunately, that probably describes a very small minority of new car buyers.

[savelikedave]

get rid of quick

If you can use the focus and don't have to pay for it, sell the durango. The finance company may loan you the difference if it sells for less than the financed amount. It will be easier to pay a small loan for the difference than to pay 2 more years on a gaz guzzler you are not driving right now! Think of how much less stressful (financially) life will be without that $300 + payment each month!