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    Advice on car loan/payoff

    I have a 2011 Kia Soul, 28,000 miles, at 2.9%. The payoff is $11,300 (trade in value), payments $320. Love the car, but it's horrible in the snow!

    I have $8000 to put towards a used car purchase or continue savings to pay off the Kia.

    My options:
    * Continue saving til I can pay off the Kia and keep it (I will need $1400 in snow tires and rims if I keep it). I can probably pay off car in June.
    * Trade Kia in (dealer will pay loan off) and pay cash for an older cheaper car with more miles...a car that can get around in the snow a bit better.

    I'm torn as to what to do...
    On one hand I think it would be a smarter choice to pay Kia off in June. Then I'd have a new car with low miles I know has been taken care of.
    On the other hand I would rather have a cheaper car, paid off as soon as we found one (probably $6000 range). That would put us closer to being debt free.

    When the Kia is paid off, that will free up $320 to put towards our snowball. We will only have 1 loan left to pay off (plus the mortgage).

    I've been undecided about what to do with the Kia. That's why all my snowball money has been going directly to a savings account.

    What would you do?

    #2
    Have you looked into selling privately for a few thousand above trade-in value?

    Comment


      #3
      I would sell the car privately and use the money towards a new car. If the dealer will pay off your loan, you know you can get more privately.

      Comment


        #4
        Originally posted by heyaim View Post
        I have a 2011 Kia Soul, 28,000 miles, at 2.9%. The payoff is $11,300 (trade in value), payments $320. Love the car, but it's horrible in the snow!

        I have $8000 to put towards a used car purchase or continue savings to pay off the Kia.

        My options:
        * Continue saving til I can pay off the Kia and keep it (I will need $1400 in snow tires and rims if I keep it). I can probably pay off car in June.
        * Trade Kia in (dealer will pay loan off) and pay cash for an older cheaper car with more miles...a car that can get around in the snow a bit better.

        I'm torn as to what to do...
        On one hand I think it would be a smarter choice to pay Kia off in June. Then I'd have a new car with low miles I know has been taken care of.
        On the other hand I would rather have a cheaper car, paid off as soon as we found one (probably $6000 range). That would put us closer to being debt free.

        When the Kia is paid off, that will free up $320 to put towards our snowball. We will only have 1 loan left to pay off (plus the mortgage).

        I've been undecided about what to do with the Kia. That's why all my snowball money has been going directly to a savings account.

        What would you do?
        Where do you live? How long are your winters? If winter drags on and on then it may make sense to sell the car for safety reasons. But, if it isn't that long, and you can fix the problem with snow tires, then I'd keep the car.
        Brian

        Comment


          #5
          First of all, whether the car is fully owned, leased, or still in payments, you need to figure out how to solve the "horrible in snow" issue.

          My suggestion is to look into snow tires. You can sometimes find good deals on CL for mounted snows. I look at it this way: as you're white-knuckled in an uncontrolled slide heading toward a concrete barrier, what price would you pay right then and there to avoid wrecking? Figuring the high costs of body work plus the inconvenience of filing claims, towing, rental, etc., most people would probably say up to $1000, maybe even more. A good set of used mounted snow tires run about $200-$300 on CL, and you can use them from Nov to Apr.

          Since I hate car loans, my suggestion would be to pay off the car by summer and get some mounted snow tires now.

          Comment


            #6
            I would address the snow handling issue, rarely do you get the best deal when trading in with a traditional dealer. Also, your newer car is much less likely to need major repairs that an older car might incur... and were deferred by the previous owner.

            Comment


              #7
              Thought I'd top this instead of starting a new thread. My wife and I are mostly following the Dave Ramsey plan, however in a moment of weakness we incurred new debt when we purchased a new car. It is our only debt other than our mortgage. We could pay off the car entirely, leaving about 13K in the bank (which would cover less than 3 months of expenses). So, pay it off or not is the question. Thoughts?

              Comment


                #8
                what is the interest rate on the car loan?

                How quickly could you rebuild your emergency fund if you put the old car payment each month towards the fund?
                Gunga galunga...gunga -- gunga galunga.

                Comment


                  #9
                  Originally posted by greenskeeper View Post
                  what is the interest rate on the car loan?

                  How quickly could you rebuild your emergency fund if you put the old car payment each month towards the fund?
                  2.74% APR

                  We could probably build it back up in 6 months or so to the level it's at now. We could be at 3 months of savings very quickly.

                  Comment


                    #10
                    Pay it off, then rebuild your emergency fund with the old monthly car payment.

                    The only question that remains is how often do you NEED to drive in the snow, in a car that you say is horrible in those conditions?

                    If it is fairly often, then I would suggest selling the car to a private party to get the most out of it, then roll the leftover money (hopefully) into a vehicle that performs better in the snow.
                    Gunga galunga...gunga -- gunga galunga.

                    Comment


                      #11
                      If you decide to keep the car, watch for appropriate sized, snow tires on CraigsList or wreckers. Check with nearby major tire distributer/retailer for their 'deals.' While separate rims are nice to have, they aren't imperative. We store our off season tires in heavy duty, giant sized plastic bags in a home made tire rack to use as small space as possible.

                      If you chose to sell the Kia, which front wheel drive vehicle do you prefer? The light weight, small, cars can be difficult to handle on clogged country roads where they don't do effective snow removal.

                      Comment


                        #12
                        i would see if snow tires would do the trick. you're going to lose a lot of money trading in+buying another vehicle.

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