Car financing dilemma

I am annoyed with my car (a 1999 Saab 9-3, for those just tuning in).

For a long time it’s had a wobble in the steering wheel and in the seat,
even through multiple balancings and road-force balancings and lining up
runout with the low spot on the wheel and all that. Could’ve been being
rear-ended a couple years ago, could’ve been from flatting out at 130
km/h, could just be 150000 km on a 4-year-old car, could just be bad
luck, but it’s just not that much fun to drive anymore. I don’t like
using it to get out of town because I don’t trust it; I don’t take the
long curvy way home from work anymore because it’s not fun.

The problem, of course, is that I’m halfway through a loan, which means
I’m almost certainly upside-down, probably by a few thousand dollars,
but best I can figure being upside-down doesn’t actually matter, since
the only thing that’s going to make you not upside-down is your own
money, and then it’s just a question of whether you want to pay now
or later.

So with that out of the way (since it just becomes a question of
whether or not I can afford it), I’m trying to figure out what to do.
I think I could get less car — either something less
fancy or something older — and still enjoy it, although there’s
always the chance that I could end up in the same situation.

Poking through Auto Traders I find myself looking at A4s and Jettas
and GTIs and Accords and Acuras and Legacy GTs. Alternatively I could
get something old enough to have had everything replaced by now (past
the “if it was a lemon it’d have been junked” age) that’s still
interesting and drivable and has parts available and isn’t completely
impractical — 944 or 300ZX or something like that. And there’s always
leasing if I manage to talk myself out of going used again.

It seems to me that keeping around the current car is throwing good
money after bad, and doubly so if it needs more work in future (I’m
beginning to suspect the vibration is drivetrain-related). What I’ve
paid already are sunk costs and it doesn’t seem to make sense to sink
more — I should take my lesson (which in this case is that I’d
probably be better off with slightly less low-mileage car than a fancier
high-mileage) now and start fresh: sell the car and pay off the loan
and then start looking again, basically, with enough overlap to make
it possible to get to work and such.

I wouldn’t roll the loan over to the next car. If I couldn’t afford to
pay it down I’d wait until I did, or I’d just forget the whole thing.
I would need a loan on the next car, but hopefully not as big
of one; I’d just be starting over again and not buying as much car.


8 responses to “Car financing dilemma”

  1. Hmmmm. 4 years is just outside the 2-3 leasing window that used car places like to take cars back from the leasers and resell. Might as well get rid of it before the value starts to drop any more, you know?

    Okay, I swear this comment made more sense in my head before typing it.

  2. Hi, long time listener, first time caller. Er, or not.

    To start with I *love* my 2001 Jetta. It’s reasonably speedy, and it achieves reasonable fuel economy for my driving style. My Jetta is a Wolfsburg, which is the every-couple-of-years special sport version of the Jetta. So it handles pretty well, it’s got sport seats, leather wrapped steering wheel and shifter, is a 5-speed, sunroof, etc.

    Now for all the caveats :)

    I recently had to take it in for service, and the mechanic fucked something up. No worries; he bused a hose that they didn’t have on hand, so they ordered a replacement and they gave me a loaner.

    I absolutely hated the loaner. It was a GL (the bottom end Jetta), and an automatic. The 2.0 engine feels sluggish compared to the 1.8t. It didn’t turn for shit, climbing hills right after a turn was about like doing so on a bicycle, etc. The hills thing really bugged me, since I live halfway up a really, really steep hill. I guess you don’t really have that problem in Ottawa.

    So if you decide you like Jettas, test drive several of them and be sure you’re comfy with it. But you knew that ;)

    I do find myself regularly thinking “I should have gotten the A4…”, but the pricetag usually convinces me that I shouldn’t have. Quattro sure is fun, though. I am very glad I bought new. My last car was used, and even though it was in good condition for the price (read: cheap old volvo), I think I’d have been happier without the minor wear problems that tend to come with older vehicles.

  3. Well, honestly, I think that you’re trying to put things in a light that look positively at getting something new, rather than looking at the whole picture objectively. Saying things like “getting more car” or “getting less car” are just ways to avoid saying “spending more money” or “spending less money”. Yes, I know that they have value as statements, but when you’re looking at making a very big purchase when you already have monetary commitments, I believe you need to be more bald and honest with statements. I don’t think it’s bad that you want a new car, but I do think you are unconciously using language that is trying to make you feel better about doing something that you may or may not have the money for.

    I always write things down, and try to be as objective as I can. And then I try to remember that I really like to buy new things, and look at the list with a grain of salt, too. ;)

  4. Hrm, yeah. I did a lot of editing to avoid talking about monetary figures, because it felt odd to talk about real amounts in a public post. :-) But since it’s a commitment I think the numbers don’t matter that much; I owe the bank X whether I pay it off over a couple more years or a couple more months, and once I don’t owe them anything I start all over again, and in that two years my car’s going to cost Y in repairs and a new one’s going to cost pretty close to 0 because of warranty.

    I’m really still stuck trying to figure out the finance side of this car independent of what comes next. My suspicion is that if I can afford to get out earlier, staying in longer than necessary is throwing good money after bad (in maintenance, not in loan payments, which end up the same no matter how quickly I pay) but I’m not sure that I’m not missing something.

    I think I’ll probably end up holding on but not putting in more money than I need to keep it in good condition, and if I find myself up against an expensive repair, sit down with a calculator and figure out cost/benefit as best I can with real numbers. The problem with that is that once I’m up against an expensive repair, I’ve missed my chance to get out early, because at that point I have to pay for the repair, either directly or by lowering my asking price for the car an equivalent amount.

  5. Noting more of Deviant_‘s comments from IRC:

      <mendel> deviant -- And hey, you never commented on the finance side 
               of my car post :P
    <deviant-> mendel: oh, what was there to comment about?
      <mendel> Whether or not getting out early made financial sense or not,
    <deviant-> Oh.
    <deviant-> Yes, of course it does.
    <deviant-> A car is not an investment.  All you can do is lose money.
      <mendel> deviant -- Hrm, of course. So it's just a matter of whether 
               or not I can afford to do it, but that's really just another way 
               of saying whether or not I could afford to get the next car.
    <deviant-> right.
    <deviant-> So even if you're past the flip point, it's still a question 
               of losing what you've put into it so far, or losing more.
  6. LOL… I came across your posting. I bought used (52Km) and my car is falling apart (water pump and whole cooling system went recently on a trip) costing me close to $2K in repairs. But since I own the car (3 year loan financed thru a bank rathe rthan lease), it makes sense to fix it and keep the clunker (I’ve put in an additional $1000 this year and it needs another $1000 worth). Things that can go: water pump and cooling system, air con/heating system (my heater & fan strangely started faulting while snowboarding at Tremblant), so the whole unit has to be changed), transmission (even with manual), shocks and struts (my struts are leaking), and all those pipes/hoses and rings that connect them (my engine “O rings” need replacing, so it’s not idling properly, sucking in too much oxygen). Warren Buffet once said to lease things that depreciate and buy things that appreciate… I too thought about a used 911/944 or 300ZX (hot damn!) but the repair costs are not worth it. The father of a good friend of mine has a ’87 silver 944 that he’s sunk well over $15K in repairs, engine rebuilds, etc… now it drives brand new. Only if you are intersted in putting $ into it. My next car will be close to new with extended warranty from the manufacturer (am thinking MINIs) that cover all the major repairs (1 major repair is the same cost as the extended warranty). Don’t dig yourself deeper into the hole with roll-over financing… live within your means buy out your next car within 3-4 years, get the warranty to cover your ass, and sell it off (the warranty will add value in resale) before done (but after loan is paid for). This way you’ll realize value (even after depreciation and loan interest) and essentiall drive a “free” car. Good luck!