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New Debt and a New to Us Car

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I am going to sit down this weekend and put together a post on all my existing debt, I realize it is long overdue.  Unfortunately, I did have to accrue some new debt this past weekend.  I had to buy a car.

Back Story

About two years back, I got a great deal on a used car. We put miles on that car with all the back and forth between Virginia and Georgia over the past year, almost daily trips to the gym and now about 100 miles a day between my work commute and an hour drive one way to the gym…our used car served us well.  But about 7 weeks it died.  We have been making due with one car (my son’s 1996 Honda Accord) and borrowing a car (my Grandmother’s) one time a week when three of us had to be in different places.

The Search

I’ve spent the last 7 weeks trying to get by, and trying to determine the best plan moving forward and trying to save more money thinking I might could by a used car with cash. I have learned that I HATE car shopping and I hate the game of car shopping.

The Car

I settled on a 2011 Chevy Impala with 63K miles on it for $10K out the door (including everything, no other out of pocket costs.)  My uncle found it for me, knows the previous owner and made sure it was in good shape. It has new tires, new brakes and so on. Rather than cleaning out the emergency savings I have, I financed the entire $10K at 7% interest for 3 years.  My goal is to pay it off in 2.  I have scheduled payments of $400 a month automatically to start and will go up from there. (The required monthly payment is just at $308.) My uncle delivered it to me from Virginia and I am paying him back the $178 he paid for the tow trailer rental.

Conclusion

This is not the car of my dreams. It’s not one I would have even considered. But the price is right, it came with full service records, it’s a good size for our family while being reasonable on gas for all my driving and I am assured I can get 200K miles out of it if taken care of.  I spent a lot of time figuring out the best plan.

2011 Chevy Impala

Literally within the hour of driving away with this car this past Saturday, another tragedy struck our little family. More on that tomorrow.

Hope

Follow a single mom's journey to be DEBT FREE while managing this crazy life's conflicted choices with regards to kids, pets, homeschooling days and self-employment!
The sorrow and joys of this roller-coaster overwhelm her at times, but she is committed to this course.
Hope plans to dig out of debt using any resource possible including her small business EPOH, her blog and any other resource that comes to mind!

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14 Comments

  • Reply Mindy |

    Oh, Hope! I wish you would have posted about this earlier. I also had to make a car purchase this past month, but I learned a few tips that helped me save a bit more than I expected. If anyone else finds themselves in a similar sutuation, I highly recommend looking a rental car service prividers’ used inventory. We were able to get a great deal on a certified, pre-own 2016 vehicle with low mileage. AlsI, financing through my local credit union git us a 2% interest rate.

    • Reply Hope |

      Hi Mindy,
      Our old bank regularly partners with Enterprise to do the rental car sales. Unfortunately, my credit is not great right now, and I wanted to spend as little as possible. The $10K was at the very top of that budget. So I’m glad I was able to get a deal that technically I can pay off in 2 years with little pain.

  • Reply Katie |

    Do you belong to a credit union? If so, call and ask about rates to refinance. Ours is advertising used car loans as low as 1.49%.

    • Reply Hope |

      Hi Katie,
      We’ve not found a local bank in GA yet. In VA we did. Unfortuantely, I have alot of work to do on my credit now that I am getting back on my feet so I definitely would not qualify for a low interest rate. I’m just glad that I will be able to hopefully pay this off within 2 years, and the car last a bit longer than that as I have two more drivers coming up in a hurry. Yikes!

  • Reply Christa |

    We just bought a 2012 Impala with alot more miles and almost the same price so you got a good deal! This is the 2nd Impala we’ve had- they are a great, dependable car.

    • Reply Hope |

      I think ours may be a 2012, at least that’s what the kids tell me. Oops. I’m glad to hear you like them, I just don’t have any experience with them. But my uncle swears by them and this dealer in particular who negotiated the deal.

  • Reply Brit |

    Glad you found something reasonable! Car shopping definitely sucks. It wasn’t a huge problem when I got my car a little over two years ago. The car I’d had for about 11 years (my first car) died on me while I was driving home from work. My husband and I shared his 2008 Nissan Altima for about 6 months — even when I was pregnant. Omg it was such a drag because our work schedules were different.

    About four months before I was due my stepdad and mom took me to a dealer. My stepdad negotiated the sticker price down and I ended up getting an interest rate of 2.95% with one of the dealer’s finance companies 🙂 My car is almost paid off. Just before I can get too excited, my husband and I have come to the realization he needs a new car. WOMP. The CVT transmissions in these Altimas is known for being terrible and going out. I want to get rid of it before it goes completely out. My husband is also open to having it rebuilt but I’m so over that car. I just don’t want another bill :(:(:(

    • Reply Hope |

      Oh no, Brit, I can feel your pain, especially if you have read today’s post where my son totaled his car. We are going to have to buy a second car a lot sooner than I had hoped. And my younger two are just a couple of years from driving.

      I just got frustrated in shopping, I wanted an “out the door” price, and dealers were very hesitant to give that. They wanted to know what I wanted my payments to be. I just wanted something that would not drag on for years and year and years. I am very happy with the financial aspect of this deal, especially in light of my less than stellar credit score right now.

  • Reply Walnut |

    I think you were wise to keep your emergency fund in tact. 7% is a steep interest rate, but if you keep paying extra on the principal, your total interest expense won’t be too bad. Make sure when you make your extra payments, it’s actually going to the principal. For some reason car loans are notorious for using the extra to just push out your next payment due date.

    • Reply Hope |

      Definitely Noted! I want to get to the place where I am paying $500 per month, so to pay it off in a bit less than 2 years, but have a couple more financial goals before I commit the extra $100 over my $400 monthly payment right now.

  • Reply Catherine Lyle |

    Other than the high interest rate and the payments high at a minimum $300+ I feel as a working mom I can’t afford not to have a reliable car. Too many scary times when I was younger and POS breaking after a late shift only to be rewarded with drunk drivers wanting to give me a ride, super creepy… Plus, when you got a job you can’t afford unnecessary tardiness from a crap car. I know Dave doesn’t agree but a used but good car with payments is okay in my book…

    • Reply Hope |

      Absolutely! My biggest fear is cars breaking down, especially when I am often over an hour away from one kid or another. I think it’s a single mom thing. I felt like this was a good compromise, taking on a bit of debt but not spreading it out for 72 months as they like for you too so you spend more money.

  • Reply Jean |

    To springboard off a few other comments, when I saw the 7% interest, I cringed but I knew it was probably due to your credit. I think my previous car loan was 6% interest for the same reason (about 10 years ago) – and that was through my credit union. You said that you have USAA insurance – did you look at getting a loan through them? I’m all for a local credit union but I hear that USAA has good rates as well.

    Also, have you considered making bi-weekly payments? My car loan is set up that way, as is my mortgage. I have a half payment taken out every time I get a pay check, which is every 2 weeks. That means I’m making an extra payment every year, in addition to more quickly decreasing the loan amount and interest that I have to pay.

    Sounds like you got a solid car, and a payment you can afford. Sometimes that’s hard to do when you’re under the gun. Hope the car will serve you well for years to come. Make sure you do the regular scheduled maintenance – that makes a HUGE difference in the life of your car. I recently got rid of my 2003 Honda Accord with 238K miles on it – sold it to a college girl. It’s starting to show its age but still mechanically sound – and I believe that’s from the regular maintenance (in addition to it being a Honda! 🙂 ). I’ve also had to ‘settle’ for a car before – not what I wanted, but what I could afford. You’ll get to the point that you’ll be able to get what you want (within reason, of course) so be proud of your choices and make the best of it until then.

    • Reply Hope |

      Thanks for the encouragement, Jean. You are right, the interest rate is due to my credit. I did try to get a loan through USAA to no avail, but I know I am headed in the right direction financially and trying my best to not rush decisions especially something as big as a car. At the same time, I am working on learning more and more about repairing my credit myself.

      My son’s car was almost at the 200K mark but ran great. Except for minor clutch repairs and regular maintenance we hadn’t had to put too much into it. I’m a big Honda fan as well. In fact, if I had my druthers, I probably would have purchased a older Honda Fit just for the gas mileage! But even used they were above my comfort zone financially.

      I hadn’t thought about bi-weekly payments, I will have to look into that. Thanks for the suggestion.

So, what do you think ?