Trading Down in Cars

After finding out I was pregnant, early this year we traded in our beautiful coupe on our current car. It was before we started on our mission to become debt-free. We knew that we wanted to try to go down in car for the sake of cheaper payments but we also wanted a third-row seat and no mini-vans. I really didn't want a van. I know, materialistic isn't it? If it gets you from point A to point B it shouldn't matter what it looks like. But somehow it still mattered.

We traded in our coupe on a late model used Toyota Highlander with a third row so we could fit lots of kids inside. We got what we felt was a good deal on it, and we were happy. It was still a rather expensive loan with high monthly payments because we rolled in negative equity.

Enter the major revolution in our lives to become debt-free. After listening to Dave Ramsey's radio show, we heard over and over "dump the car." It made sense. We pay more for a car payment than some people we know pay for housing. Yikes.

Why exactly were we hanging on to a depreciating hunk of metal? What made it so more "valuable" than a cheaper car? Reliability? Looks? My husband can fix anything, and my dad knows a lot about cars, so we would be okay if it needed occasional repairs. Looks- well, I would just have to live what I believe is true- that material possessions are not what this world is about. All that really matters to us is that the car is pretty reliable and that it fits our growing family. My spouse's car will not hold our family, so this would be the only car we could all ride in. It's important that it won't break down frequently.

So, here we are, trying to "dump the car" as Dave says. It is a lovely vehicle, and we haven't had a single problem with it. It runs as well as every new car we have bought. Our biggest problem now is that we owe more on it than it's worth. We have negative equity in it.

If we get a loan for a cheaper car, we would have to find a way to finance the difference that we owe on the Highlander. At this point, we are shopping for a much older used car and trying to find out how to finance the difference. We could possibly get a personal loan at a bank, or put it on a very low-interest credit card. There are a lot of important decisions to make. We don't want to make the same mistakes that we have made in the past. Decisions like these are not easily made when you are trying to get the best deal and get out of debt.

Something that is comforting to us is that the whole situation is going to work out in God's timing. We are praying to make the right decisions and that God will open the doors for us to allow us to get out of debt. It's hard not to try to figure it all out on my own (as I often try to do), but I know that if it is in God's will for us, He will make it happen.


Anonymous said...

Hi- I just wanted to comment on your post about dumping the car. My husband & I have just recently started listening to Dave Ramsey also and we are in the same situation with our car, upside down. I'm interested to see how it works out for you, because we have no idea how to dump our car. Listening to Dave has been so eye opening but I don't think I've heard him talk about what to do if you can't get a loan to help get rid of the car. Have you? Good Luck, and I really like your blog.

Mandy said...

Hi Mindy!
Thanks for reading! :)
I know I have heard Dave say that he recommends paying down the car with your debt snowball until you can get it low enough to sell and get a loan for the difference. That's what we are doing right now.

I don't think he would recommend putting the difference on the credit cards (which we are looking at), he seems to always say that loans are better. I've heard him say also in one situation where the caller was way too far upside down (like 10k) that they were just stuck with the car for now.

I've thought about calling in before to ask about our car situation. He does open phone lines, so that might be one option- to give him a call! :)

I hope that helps! Good luck to you as well!

Teresa said...

Hi, I see this post is 4 years old and I would love to get rid of my car but I've only had it for 6 months.
I'm just now starting FPU and wondering how this worked out for you?

Mandy said...

It was very expensive to do, but it was worth it in the end. We ended up upside down of course, and we paid off the difference and saved the $400+ per month toward debt. I would do the same thing again, but of course it depends on how upside down you are. It's hard to get traction when you have so many payments. Oh, and don't trade in at a dealer, they will rip you off big time. Only sell person to person. Hope that helps!