I have a Scion Xb that is about 2 and 1/2 years old. The car has about 43,000 miles on it.I want to get rid of it.
Helpful DK readers like Jim from mydebtblog.com have been telling me for ages on this blog to ditch the car, and I’ve resisted. But I’m thinking of doing it now, here’s why.
Reasons I Could Survive Without The Car
- I now work from home. I have no office commute.
- My two grocery shopping locations are within easy walking distance
- I still have very little social life
- My dating life didn’t pan out (long story, don’t want to go into it. It didn’t have to do with my debt issues)
- My church is only a 15 minute very nice walk
- I’ve noticed I’ve only been using it about 1-2 times a week
- I’m behind again on the payments
- Between insurance, the car payment, gas, oil changes, etc. I estimate I can save nearly $500 a month going without a car.
Now the problems I see are:
- I owe at least $3,000 more than I can sell the car for
- The car needs about $300 worth of work before I could sell it
- I listed that I was going to keep the car on my bankruptcy petition
- I drive to Portland at least once a quarter (someday I want a portland home)
- It’s nice having a car
Bottom Line
I need to get rid of the car. I’d like to have this done by Jan 15th. That is the action date for this specific goal. I’m going to start doing some goal setting here and tracking my goals.
My first goal is saving $1000 in an emergency fund. Selling the car is the next goal going on the list.
Coming Goals
- Negotiate and begin payment plan with IRS for back payroll taxes from 2006 and 2007
- Reach $10,000+ in revenue from my Plan A project
- Tell 1 more friend about my situation
What do you think?
How can I sell the car when I owe about 3K more than it’s worth. Bear in mind I have a FICO score that is awful, and I’d rather not (and cannot) take on any more debt. Could I voluntarily surrender the car? Do I just need to save up the 3K difference and eat it as a learning expense?
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Walking is good for you. But I like my car for those times I really need it. I also drive once or twice a week. But my car is worth about $750. Do you have a bicycle? I have two bicycles.
Five hundred a month is serious money. Man oh man. To be honest with you, yeah, guys who say they’re broke as heck, their life’s so hard, and they’re driving a much nicer car then me… well… lemme tell ya, my car costs like two dollars a day. Yours is like $20 a day. The difference is enormous.
Well, all your options appear to be equally good or bad. If you have to save up the $3,000 and just eat it, it’s worth it because you will be saving so much money by not having a car–obviously it will pay for itself in 6 months if it costs you $500 a month to keep the car. If you give the car back, your credit is already not so good and you save the $3,000, though it’s not particularly moral–though morality has little to do with business these days and probably no one could blame you. It’s a win-win/lose-lose anyway you look at it.
You didn’t say who your car loan was through but if it’s through the dealer maybe they’d be willing to work with you to take the car back so as not to become just another creditor waiting in line in your bankruptcy. It’s actually maybe a plus that you did not include the car in your BK filing because now maybe you can use it as a bargaining chip.
If you sold the car on your own, what are the chances you can find someone who wants it so badly that they will pay you $3,000 above what it’s worth? Is there any way you could sweeten the deal so that this is a possibility?
What kind of work does the car need? Can you do it yourself?
I think this is a wise thing you’re doing. Cars are so expensive. I hate cars. I drive a 1995 Subaru with 190,000 miles on it. I’m gonna drive it till I have to leave it by the side of the road. It’s not pretty to look at but it’s cheap driving, and it’s paid for.
Maybe a cheap used car is what you need. And that is a maybe, because insurance and gas are expensive. Take it back to the dealer and trade it in.
You need to end your relationships with all creditors, DK. They are in business, they have planned for certain losses, and they will barely miss you as a customer. Start crossing them off the list one by one. BK the company. Some people can handle debt. You are not one of them.
Don’t drag this thing out: time is against you. Realize that, without owning any real estate, and even after filing personal bk, that you are still over $300k in the hole. How are you going to pay that back? You are not swinging the kind of deals that support that kind of debt. Have you set a date when you will be debt free? Do you know how much interest you pay every month?
Greed got you into this. Only total self-sacrifice will get you out of it — the kind of self-sacrifice where you turn over all your money each and every month, aa you pay your bills.
Get rid of it! If you can survive without the car, you should. You can always rent a car for your trips to Portland. You can get one on Priceline for like $15 a day sometimes. Unfortunately you may have to eat some portion of the $3k, but that will pay for itself within six months if your $500/mo. savings is accurate. Keep in mind that the longer you wait, the more the car depriciates. If you sell now, you still owe $3k, but it’s even sillier to pay $500 a month for a car you don’t need.
You live in a nice climate, so you should be able to get around by bicycle for most things. Plus there is probably a decent bus line where you live, and there are always taxis for emergencies. You could rent a car every now and then and take a couple taxis a month and still save money.
When you are back on your feet, then you can think about buying a cheap used car like my ‘92 Camry that I picked up for $1600. It’s not a chick magnet by any means, but it has gotten me to and from work with no repairs in the last 6 months. As far as being attractive to the opposite sex, you will be more attractive by staying physically fit walking and biking for transportation, and you will be more confident without the stress of living beyond your means. In the future let this be a lesson to you: only buy as much car as you can afford to pay for CASH.
Check with your bankruptcy lawyer. I would think that you should be able to surrender the vehicle to the lender through the bankruptcy.
don’t they have the short term rent-a-car things in seattle? i was there a few months ago and i remembered that you could rent a car for a few hours then were supposed to leave it at a specified drop location. it was supposed to be pretty cheap.
The car is dead weight. Rent a car for trips to Portland.
In my town, we have a rad bike co-op (www.durhambikecoop.org) that serves the community. I fixed up a bike that hadn’t been ridden in years there for nothing — all they asked was that I teach someone else what I had learned. I’m able to leave my car parked now 5 days out of 7 — big savings when gas is >$3. If you can swing walking your neighborhood, you’ll love the amount of freedom a bike can get you. Look into local bike co-ops if you don’t already have a bike. Might be a great option for you.
Cheers!
When I seen this question-I had to read what everyone would suggest. I knew it would be to dump the car-sell it-move on! I am in the same boat as you and that is all I am hearing. When you are in debt already-how do you sell it when your upside down? Well you already know dealers will not give you close to what you need to pay it off. Especially if the car needs ANY work. How do you come up with the difference? Anyone else will not buy a car for more than what it is worth (would you?) unless there is some sort of incentive… and what can you possibly offer when you are broke? I am stuck on this one too.
I have not gone the BK route yet as I am trying to figure all this out but I have considered it. I did read a lot on it and I could have swore I read somewhere that thru the BK process-your car is worked out to it’s “fair market value” with your lender and is included in your BK. I don’t know for sure. Maybe someone could shed some light on it or maybe talk to your attorney.
I guess there really is the option of voluntarily surrendering it to the lender but to me that would only cause more problems down the road.
I know I will be checking regularly on here to see advice other people have about this.
Good luck in whatever you decide to do with your car and please keep it updated on here. I would love to know how it all turns out!
Good luck!
Getting rid of this car is going to be tricky. It may be possible to include the vehicle in your bankruptcy, but you might incur more lawyer’s fees which would defeat the purpose.
“Voluntarily surrendering” the vehicle is not an option. You do not want to do this, because the lender will simply liquidate the vehicle and then hold you liable for the rest of the loan while will be far more than your current $3k shortfall.
I would certainly consider calling Toyota Financial Services to find out of there’s anyway they can help you and themselves get out of this bind. If they’re willing to lend money at 1-3% for promotions, perhaps they would let you finance the shortfall.
You’d knock that debt out in no time if you simply made your car payment on the lower balance. When you talk to them, make sure you make it clear that you do want to do the right thing, but that you can’t continue to make the payments. So they’re probably going to end up with a repo’d car and then you definitely won’t be able to make the payments!
Another option:
I’m not sure how quickly you are repaying your mother, but perhaps you can put that repayment on hold until you’ve sold your car. Once you’re freed from the debt, insurance, and other car related costs you’d be able to repay her much faster.
The last option I see would be the most painful, but might work. You could seek help at your church. Perhaps your pastor or an elder could connect you with someone who would give you the money or allow you to work it off doing odd jobs.
I once chose to live without a car – not because I couldn’t afford it, but because I was going to live in NYC and having a car there is just stupid. The subway takes you where you need to go…. And there are taxis, car services, etc. For weekends away, renting a car was easy.
The mistake was that after a period of time I became an “uninsured” motorist. Two years later, when I moved out of the city and needed a car, I found getting insurance VERY expensive. I had a clean driving record…. the problem was that I had been uninsured for a long period of time, so I essentially had to “start over” and was paying high rates for a couple of years.
If I ever decide to live in a City like NY w/out a car, I will still own a vehicle (i.e., something very cheap) and keep it “parked” somewhere with minimal insurance so that I’m never considered “uninsured” again.
I have been car-less for over 2 years now and it is very freeing! It has kept m in-shape and saved me a TON of money, by not paying for insurance, annual fees, and GAS!
I commute to work, which is 6 miles each way and it is my favorite part of the day. It should also be noted that I live in Chattanooga, TN which is far different than being car-less in NYC
Dude get rid of the car. Sell it or get it surrendered in the bankruptcy. I am sure you can find a used car at some point for $2000 or $3000 that will be serviceable. If you have that many miles on your car then it appears that you do some amount of driving and probably will need a vehicle. The car you have now is beyond your means. Even really poor people seem to have cars. They may not look the nicest sometimes, but there is something out there for you that you can pay off and have for a back up to make trips, See if there is someone you can share a car with at times if you decide to go entirely without one. Being young and single and close to work, should be no problem to have no car or a less expensive one.
Try this:
Take the car to Carmax and have it appraised for sale. Don’t worry about the repair work, just get them to appraise it as-is. I recently sold my old car to them, and I felt like I got pretty much fair market value, despite several cosmetic problems with it (fading paint, rust spot, headliner coming loose, upholstery issues, etc.). I don’t know the worth of your car, but for the sake of example, let’s say that Carmax offers you $10K.
Call the people that hold your car loan (Toyota, your bank, whoever it is), explain that you are in a difficult financial situation, and ask if they will accept the $10K as payment-in-full of your debt, rather than risking that you might go into default (or maybe offer them $8K, and use the remaining 2K for haggling-room). If you are able to get them to accept, *get it in writing*.
Consult Dave Ramsey’s stuff for more info on this. That’s where I heard about doing that sort of thing.
If that doesn’t work out, if it was me, I’d probably keep the car until it was no longer upside-down. If you’re going to have topay that $3K anyways, you might as well get some use out of it. Of course, this doesn’t account for your point about it being listed in your BK stuff. Don’t know what to tell you about that, other than to consult your atty.
Good luck!
Yes-what he said.
Carmax or calling Toyota. That was really good advice. I am gonna try that out too. Problem is I have 2 to get rid of…ouch!
Good luck DK!
Heck, you can save a fierocious amount of money in the long run getting rid of the car and thus the car payment itself. Don’t just surrender the car at the dealership for it will be counted against you as a repo.
Anyway, I drive a 1988 Buick Park Avenue. The paint looks terrible, but the interior is still in extremely good condition, it runs very well, and is actually pretty good on gas. If I wanted to, I could ditch the car as it’s only a brisk 45-minute walk to work or a 15-minute bus ride.
These days it's even easier to get by without a car in US big cities because you can get a membership to something like Flexcar and have access to a car when you need to get somewhere off public transit lines.