Need Help...car loan advise

[jswhite1983]

I have a 05 prius that I got 2 years ago we have 3 kids and they have out grown this car....right now we owe 10k on it and its blue book is $4,200 for a trade...We tried to get a 8k Honda odyssey but our negative equity was to high for the bank to approve the loan....

They said that our best bet is a lease for a new Odyssey because at the end of the 3 years then we owe nothing, but the payment will go up $170 above what we pay now. We have the funds to pay this I am just not sure what the best move is for us.

Any thoughts are welcome!!

[Petunia 100]

I have a 05 prius that I got 2 years ago we have 3 kids and they have out grown this car....right now we owe 10k on it and its blue book is $4,200 for a trade...We tried to get a 8k Honda odyssey but our negative equity was to high for the bank to approve the loan....

They said that our best bet is a lease for a new Odyssey because at the end of the 3 years then we owe nothing, but the payment will go up $170 above what we pay now. We have the funds to pay this I am just not sure what the best move is for us.

Any thoughts are welcome!!

Who is "they"? The salespeople at the dealership? At the end of three years, you will owe nothing IF you have not exceeded the allowed mileage or have done any damage to the car other than normal wear and tear. You will also no longer have a vehicle. How much is due at signing?

Is the Prius your family's only car? What was the thinking behind choosing a Prius two years ago? How much do you have saved to replace the Prius?

[disneysteve]

Welcome.

A lease is NEVER, NEVER, NEVER the "best bet" when obtaining a car.

I can't help but wonder how many of those 3 kids you had when you decided to buy a tiny car like a Prius.

Forget about the trade in value. What's the actual resale value of the Prius if you sell it privately? Without any details, kbb.com puts a 2005 Prius in the 7-9K range depending on condition and mileage. If you have any extra options, that number would be on the higher side. No way would I trade it in for $4,200.

While it's true that with a lease, in 3 years, you'll owe nothing, you'll also have nothing and be right back in the same situation needing to buy a car.

How much do you have in savings that you could use toward the car purchase?

[jswhite1983]

Thanks for the replies!!


So two years ago my wife was driving a lot to see Dr.s because she developed a medical condition and had to see a lot of specialists. It was nice to save on gas and at the time the kids were a lot smaller...they are now 10,8,&5....

We do not have the cash to put anything down right now, or the savings to pay off the negative equity.

With our kids being bigger and doing sports needing to drive other kids at times we deff need a van..

Just feeling stuck...I guess I just think that at the end of the lease then at least we wont have the negative equity hanging over us???

[dczech09]

You do not NEED a van. You WANT one. There is nothing wrong with wanting one, but please understand the difference.

If you do not have the cash to cover a new car, not to mention the negative equity, you do not have any business buying a new car. The bank will not give you a loan for a reasons- they know you cannot afford it.

Sure, the dealership would be willing to give you a lease, but that is the most expensive way to operate a vehicle and their are many risks. Leases are dangerous because of the hidden traps.

Leave your personal and family situation out of the picture for a moment - forget that you NEED a new car for sports and what not. Instead, focus on your means. Your means, right now, do not allow you to do this. You are underwater on a car, which should NEVER happen!

You need to focus on paying off that car, saving up some cash, AND only then do you revisit this idea of a new car. If you want to be a good financial shape, be smart! If you do not want to be in good financial shape, then let your emotions take the wheel.

You are thinking all emotion without considering the financial impact. A lease will either A) keep you in the same situation you are currently in or B) put you in a worse situation all together. No good will come from a car lease!

[Eagle]

Thanks for the replies!!


So two years ago my wife was driving a lot to see Dr.s because she developed a medical condition and had to see a lot of specialists. It was nice to save on gas and at the time the kids were a lot smaller...they are now 10,8,&5....

We do not have the cash to put anything down right now, or the savings to pay off the negative equity.

With our kids being bigger and doing sports needing to drive other kids at times we deff need a van..

Just feeling stuck...I guess I just think that at the end of the lease then at least we wont have the negative equity hanging over us???

Looks like you need to get your budget and savings in order. How much did you spend last month? How much did you make? How much did you save? Let's start there.

Leasing is typically not a good option. I agree with Dczech09 this van purchase is a want not a need. If you had 4-5 kids a van would be a need. With 3 it's just tight.

[feh]

You do not NEED a van. You WANT one. There is nothing wrong with wanting one, but please understand the difference.

+1

Use the Prius until your financial situation improves.

[jswhite1983]

Thanks for the advise...I think we are going to try and make the prius work for a while longer.

[autoxer]

Thanks for the replies!!


So two years ago my wife was driving a lot to see Dr.s because she developed a medical condition and had to see a lot of specialists. It was nice to save on gas and at the time the kids were a lot smaller...they are now 10,8,&5....

We do not have the cash to put anything down right now, or the savings to pay off the negative equity.

With our kids being bigger and doing sports needing to drive other kids at times we deff need a van..

Just feeling stuck...I guess I just think that at the end of the lease then at least we wont have the negative equity hanging over us???

I'm sorry that you are feeling stuck, but you need to think more long term. At the end of the lease, you may not have negative equity, but you also won't have a car. That is just kicking the can down the road, because you will have a whole new problem when the lease runs out.

Stand back and look at your whole financial picture. What kind of changes would you have to make to build up an emergency fund, so that you can deal with situations like this without going into debt?

[bjl584]

Thanks for the advise...I think we are going to try and make the prius work for a while longer.

I think this is the smartest move. At least until you get your head above water.

[disneysteve]

With our kids being bigger and doing sports needing to drive other kids at times

I wanted to highlight this also. You don't "need" to drive other kids. It is very nice to offer to car pool but only if you have the ability to do so. You shouldn't go out and buy a van you clearly can't afford just to help out other parents.

I think you're making a wise decision. Keep what you have and work on the budget to save up for an EF and money toward the next vehicle purchase (a nice used car).

[snafu]

I think you're wise postponing purchasing the desired van. Perhaps we could help by offering ideas to help you s-t-r-e-t-c-h income. Meanwhile I suggest tracking the on-line asking price for private sales of Prius as the numbers you're hearing from the dealership sounds low. Likewise, review information like Lemon-Aid [Edmondson] reports on used vans, likely free at library, for problems and recommendations. It might be a great project for your 10 y/o. From that point you could have DKs work with you tracking the cost from private sellers and dealerships. It takes a bit of co ordination but has potential to get you the results you desire predicated on savings accumulated.

[YolandoAmaya]

Buying a car is not a simple, there are many options to take financial advice for car loan. Running costs also have to be considered. You should make sure you have enough savings, It should be good to buy a car with your credit card.

[Permanent Temp]

I have a 05 prius that I got 2 years ago we have 3 kids and they have out grown this car....right now we owe 10k on it and its blue book is $4,200 for a trade...We tried to get a 8k Honda odyssey but our negative equity was to high for the bank to approve the loan....

They said that our best bet is a lease for a new Odyssey because at the end of the 3 years then we owe nothing, but the payment will go up $170 above what we pay now. We have the funds to pay this I am just not sure what the best move is for us.

Any thoughts are welcome!!

Also wondering why you still owe 10K on a 05 Prius? Did you buy it new? Right now you should just stick with the Prius because you are sort of stuck with it. Focus on building an emergency fund and try to pay just a little extra on the loan each month as long as you don't get hit with a fee for doing so. What is it interest rate on the loan? Do you have any other pressing debts as well (cc bills, student loans etc)

Rehaul your financial situation right now. Then you can prioritize your debts and figure out how you can save up money plus much extra you can send to debts to eliminate them. Also try to avoid buying a new car if possible due to the depreciation. I know Toyota's don't depreciate like a Chevy or a Kia but they are still depreciating assets so it doesn't make sense to buy it new, and as far as I know you can get a great deal on a certified pre-owned Toyota.

As someone else pointed out leasing isn't the best option and while a van would be nice for your lifestyle it doesn't fit into your financial situation. If you re-evaluate your situation you could potentially avoid situations like this in the future.

When I started up here at SA I had an upside car loan too but now its paid off and so are my credit cards. Almost all of us here started off in an iffy situation and came here to learn a better way and most of us are well on our way to being rid of debt. If you stick to a plan you can be rid of debt as well.

[dawnwes]

You had kids in carseats 2 years ago. I would think they would fit better now without carseats.

I have 3 kids. I have 16,14, and 10. I sometimes make them squeeze in the back of our Camry.

However, my guess i that once your 10 year old is old enough to sit up front (age is 12 here), you can have him/her sit upfront when it is just a one parent transport, freeing up that middle seat in the back and making it more comfortable.

Our Camry (hybrid) is our drive around town car to save gas and we love it.

Dawn

Thanks for the replies!!


So two years ago my wife was driving a lot to see Dr.s because she developed a medical condition and had to see a lot of specialists. It was nice to save on gas and at the time the kids were a lot smaller...they are now 10,8,&5....

We do not have the cash to put anything down right now, or the savings to pay off the negative equity.

With our kids being bigger and doing sports needing to drive other kids at times we deff need a van..

Just feeling stuck...I guess I just think that at the end of the lease then at least we wont have the negative equity hanging over us???