Car Advice Please :-)

[Hector]

OK so Carmax offered me $19000 for my truck. That will pay it off and give me $5000. We are trying to decide whether to buy a new car with a lower payment or a cheap junker and bank some cash and catch up on some bills.

I would buy a used car worth 5k or less.

[mrpaseo]

Carmax has great deals on used vehicles, I would sell to them or better yet, work out a trade (You would get $5000 profit if you sold your truck but they might give you $6000 trade value).

The bottom line, sell the truck to Carmax, get a new car for $5,000 or less... then, pay yourself the car payment into an interest bearing account. So, if your payments were $450, then save $450 a month into an account. Let the money grow for 10 months, this will give you $4,500. Take your $5,000 dollar vehicle and your $4,500 cash and trade it in for a $9,500 vehicle.

Continue to save the $450 a month, wait 10 more months and take that $4,500 and your $9,500 vehicle and trade that in for a $$14,000 dollar vehicle. I'm sure you are catching on by now. If you do it this way, you will never pay interest to anyone... you will earn interest.

This is Dave Ramsey's plan not mine. There is a pretty good video on his site. If you can stick to the plan, it's sound.

Ray

[pdweaver]

Sometimes banks will let you skip a payment for a fee. I know you said you didn't think they would work with you, but have you pressed the idea to the collection department? Sometimes if you complain long enough, specifically to the collection department they will let you skip 1 payment a year for a $30-50 fee. Try this first. If they will not work with you then sell the car to Carmax and buy a used car for $14-16000. You can purchase a nice vehicle for this price and have money to spare.

[Shewillbemine]

Sell the truck and use the leftovers to buy a reliable, beater car. I suggest a Honda Civic.

The fact that you are considering a NEW vehicle for a LOWER MONTHLY payment suggests you need to study auto loans and interest further.

Free yourself from the cyclical debt of car loans and watch your wealth go up. Trust me, I'm coming from a very nice BMW and 6 cars in 4 years because I was THAT GUY who had to have the nicest vehicles and only thought of my monthly payments.

Fast forward to today--I drive a beater Acura and am loving putting away 4 figures into my savings every month. Not having a car payment or any other debt does wonders for your bank account, self esteem, financial security, etc...

[mmtprofile]

Just ask yourself what you can learn from this so it doesn't happen again.

I don't want to steer you in the wrong direction. I would say sell the truck and buy a cheaper vehicle with the cash but I don't know your situation enough.

I always recommend to cut expenses and manage money. Create a contingency or emergency fund for next time.

Just build the habit of saving with these accounts:
Investment -1%
Savings for Spending - 1%
Fun - 1%
Education - 1%
Charity - 1%
Necessity - 95%


I hope that these help you out! :-)