Keep gas guzzler or get new car?

[Nick2219]

Hi guys new here just looking for some advice. I'm currently a college student, but working full time as well. Right now i drive a jeep grand cherokee, and commute about 40 miles a day round trip to work. I owe about 14k on the car, which isn't a problem for me, I've started paying double payments as well. I was thinking of getting a new or almost new car, like a honda civic or camry to try to offset high gas prices. Would it make sense to pay a little more, maybe 2 or 3k more for better reliability and gas mileage? Just want to know what makes the most sense financially. I'm about to start saving for an EF fund and for a 401k, and will be moving into an apartment next year. Right now, little other expenses.

[Mesem]

How much does your full time pay?

[Nick2219]

About $1600 per month, not paying much else right now except $100/month insurance and gas, food, etc. I was thinking about taking out a 3 year loan on a newer honda before the classic jeep problems set in

[Nick2219]

By the way its currently a 6.9% loan, with 4 years left. I figure i can take out a 3 year loan on a certified pre owned, pay a little more and keep it for at least 10-15 years. Will be moving down south next year so rent shouldn't be too much compared to here in the northeast

[YLTL_Dan]

I'm assuming you'd have to roll your existing loan into a new car loan with the upgrade? Honestly, I think that's a dangerous game to start playing.

If you're that concerned about the gas mileage and reliability of the Grand Cherokee, why don't you sell it and buy a used/cheaper Civic or Camry for cash? You should do everything you can to fight continuing your cycle of debt before you've even graduated from college... that's exactly what I did when I bought a brand new car out of college and had to spend the next 3-4 years cleaning up my mess! I have enough cash to buy a new car outright now, but there's no way I'd spend my hard earned money on an expensive new car.

[disneysteve]

Your post is full of financial red flags.

You earn $1,600/month. Standard advice is for your car payment, if you even have one, to be no more than 10% of your monthly take home pay for no more than 3 years. Clearly your current loan doesn't fit that guideline since you still have 4 years remaining and we don't know how long you've already had it.

What is the Jeep worth today as a private sale?

[emanon1501]

Jeep gets about combine 15 MPG. Honda Civic gets about 25 combine MPG (My wife has a Honda Civic Hybrid and she gets about 30 combine MPG). You are only saving about 40% in gas bill. If you are spending $400 a month on gas, you will save about $160 a month. Now you want to get a newer car and maybe even roll over some of your old loan to a new loan. That will wipe out any potential savings.

I have a Truck that gets 10 MPG, it’s a V10. I hate paying the gas bill, but I am saving ton of money as the truck is paid off and bought it for $4,000.

[Tonyall]

If you put environmental costs into the equation, it certainly makes sense to go for mileage. Think of all the carbon and pollutants every gallon of gas burned creates. Consider how burning fossil fuels, which are a finite resource, tends to support terrorism etc..

I know Americans do not want to think of such things until there is a crisis, but I think that is really sad.

[greenskeeper]

are you planning on keeping the jeep after the loan is paid off?

can you get a lower monthly payment and better mpgs at the same time?

if the jeep was paid in full I would hold on to it, quite a few tank fulls to equal a payment.

[emanon1501]

If you put environmental costs into the equation, it certainly makes sense to go for mileage. Think of all the carbon and pollutants every gallon of gas burned creates. Consider how burning fossil fuels, which are a finite resource, tends to support terrorism etc..

I know Americans do not want to think of such things until there is a crisis, but I think that is really sad.

That has nothing to do with budget.

[Nick2219]

Thanks for the help guys, the jeep is worth probably about 10k in a private sale. I think after looking into it keeping the jeep for a long time is my best bet. I really want to be debt free, and realize I made bad choices before I had become interested in saving for my future. My only other question is should I make double payments on it now while I have relatively little bills, or just pay the regular amount? My goal is to have it paid off by September of 2015 when I have to start paying college loans back.

[disneysteve]

the jeep is worth probably about 10k in a private sale.

If you are $4,000 upside down, how were you planning to replace it? By taking on even more debt? BAD IDEA.

Keep the car. Pay it off as quickly as you can. Your interest rate is horrible so pay as much extra on that loan as you can and get rid of it. Then drive your paid off car until the wheels fall off.

[Nick2219]

@disneysteve thank you for the help, definitely made some bad decisions before, I think I'll be keeping this for a long time

[disneysteve]

I think I'll be keeping this for a long time

Now that's a good decision.

[scfr]

Since you'll be moving long distance next year ...

• Keep the Jeep for now
  Make extra payments so you get to where you owe less than what the Jeep is worth
  Start saving for your next car
  Sell the Jeep before you move (don't drive a car all that distance, especially not a gas guzzler)
  When you get to your new place, buy your next car with cash, even if it's a $2K beater
  If you can't afford to buy a car when you get to your new location, go without a car. Live close enough to work so that you can take public transportation, bike, or walk
  Live and learn

I know this plan probably sounds unappealing, but believe me when I say that some sacrifice now will pay off handsomely down the road.