What option to pick?

[tgwill]

Looking for advice on what to do as far as our vehicles.

We have two cars, both purchased new, 2 years apart. We are still making payments on each of them. What I am trying to do, is come up with a way to expedite getting completely out of car loans.

The two cars are as follows with balance and value.

08 Scion xB - Bal $10k - Value - $10k
09 Toyota Tacoma - Bal $26 - Value $23k

After being laid off for 6 months, I was fortunate to get a great job with a company vehicle. So, the Tacoma, which is mine, sits in the driveway 5 days a week, or drives 1 mile a day going to get our son. The xB is my wifes and she has a 70 mile round trip commute. I love my truck, and I need to have an actual truck, but making payments on two cars while one sits makes me sick.

Our original plan when I got this job was to sell the xB and walk away clean from it. Spend a thousand or so on a used beater and use that if I needed. However, my wife shortly changed jobs for a higher paying position, further away with hours that require me to chauffeur my son. This is why we still have both. I won't say that either car is a neccessity, but we like both and don't have to worry about reliability. Of course, it's neccessary that we both have a car for our son (I can't have passengers in the work truck).

So here are my options as I see them, and I'm trying to figure out what's best....

1 - Sell the xB, have the wife drive the Tacoma daily and get a cash car.

2 - Trade in the Truck for something used and considerably cheaper, keep the xB. Doing this, I would have to roll over some negative equity, which I don't want to do again since I had to put a good chunk down on it so I didn't have negative equity to begin with from my last trade.

3 - Keep both and work on making the payments.

4 - Trade the truck for something for my wife. Try and find a cheap used truck.

I will add this. The xB is 3 years old, we have 2 years left of payments on it. Owing $10k isn't a huge obstacle, and we can probably pay it off in closer to 18 months than 2 years.

We don't have a huge amount in savings right now. After being laid off, our EF was wiped. We're working on it, but I'm not losing all my EF to buy a cash car.

Also, buying a cash car down here where I am is a lot harder than other places. Most all of the cheap cars are snapped up and hauled down to Mexico, so finding a reasonably reliable and safe car for $1000-$2000 is difficult if not impossible.


I hope I've given enough information. Like I said, I want to be out of car debt. I've thought about doing a voluntary repo on the truck, but I don't want to burn my FICO. And I really am reluctant to get rid of it.

Any help at all is appreciated.

[maat55]

My first option would be to sell the truck. If you are able to borrow enough to payoff the difference and get a beater.

This will lower your debt from 36k to around 15k. In addition, you could sell the car and buy another beater lowering your debt to around 8k. This could be paid off much quicker allowing you to start saving to move up in cars with cash.

This plan only works for couples who are both wanting to get out of debt.

[wincrasher]

I think your best course is just keep up with both payments and bear thru it - over time it will probably cost you less. At least you are not wearing out your truck, so it will have a good residual value down the road.

If you can't do that, then sell the wife's car and have her drive your truck. Then save for a 2nd car.

[jIM_Ohio]

You did not list some information which might help-

How much longer are you paying on the scion?
What is overall budget (income, expenses, debt)?

Here is my opinion...

You are trying to get rid of a car payment and free up cash flow... what will the cash flow be used for (increase other spending)? If the cash flow is going to increase spending, might as well keep both vehicles and snow ball one payment into other... this means keeping the current payments tied up (you did not list the payments, I am guessing you are sending $600-$1000/mo on the car loans). When you pay off the scion, throw that entire payment at the tacoma.

Make sure you drop some of the insurance on the tacoma- every little bit of savings helps.

Here is my second opinion-

if the goal is no debt, and no debt quickly maat suggested a decent course of action. If the goal is use money efficiently now and in the future, I suggest paying off the debt you have, keep both cars, and the end result is two vehicles which should last you 10 years (maybe the tacoma is your son's first car??). Meaning pay off the 30k or so of debt you have now, and you will not need to worry about cars for another decade.

Here is my third opinion, if less debt is the goal, the truck needs to go- you are not using it... and it might be cheaper to rent a truck the times you need a truck than to pay for one to sit in driveway. The truck is 2/3 or more of the car debt- getting rid of the truck cleans off the balance sheet fastest.

For best results, clearly state your financial goal(s) and also state your budget

because giving advice on one without knowing the other might lead to a bad set of advice (for example if you have other debt like credit cards, maat might be first to tell you his advice is short sighted in that regard, because the credit cards need to be paid off before dealing with getting another car). But maybe I am wrong and only way we know that is to know more about you.

What are your short, mid and long term financial goals?
How are you currently working to achieve those goals?