Car Opinions

[bankruptbull]

I wanted to get your opinion on my car situation.

I have a 2006 Pontiac Grand Prix currently with about 185,000 miles. The car has been paid off for over five years now. Last month I had to put $670 in to it for repairs.

My question is, should I go ahead and trade it in and get a decent value for it (KBB says about $1,300). Or just drive it till it dies?

Currently there are no major problems with it, it runs good, and gets me to work and back.

[bankruptbull]

Update. I talked to my lawyer and she said the next big repair I have would be a good time to get it replaced so we can have justification for it.

[159515951]

You just repaired it, and it's running good, and gets you to work and back (your words). I see no reason why you'd get rid of it.

I frequently see arguments justifying trading in cars that are paid off. Those arguments seldom make any real financial sense, and are just emotional bargaining because someone wants a new car. That's fine to want a new car, but I don't understand the bad financial arguments.

Your situation is a great example. Your current car payment is $0, and you put $670 into repairs last month. Let's say something bad happens to the car tomorrow; let's go nuclear and assume it needs a new transmission. According to Google, a new transmission on your car, with labor, will cost around $1,700. If the $670 and $1,700 are the only repairs you've had to make this year, then the cost to own your car this year (outside of routine oil changes, etc.) is $197.50/month, or $2,370 total. It might be "more than the car is worth", but that argument is almost completely irrelevant when a car is paid off.

So let's say you decide to trade the car in rather than getting that transmission repaired. According to Edmunds.com, the average new car payment these days is $479/month, or $5,748/year. Unless your repair bills begin to approach that amount, I don't see how a new car makes good financial sense.

Obviously, you'll want a new car sooner or later. My advice is to start putting $479/month in savings. In three and a half years you'll have $20k, enough to go buy a new Altima S or lightly used Camry. And you won't owe a dime to anyone.

Just my opinion. Good luck with whatever you decide!

[bankruptbull]

Thank you for your input! I appreciate you laying it all out there like that. Let me ask you this. I would be going for one of the cheaper cars on the market - the Nissan Versa. Something small, yet reliable to get me back and forth from work. I would buy new. According to my attorney, the trustee would roll the payment in to my payment plan - my payment plan wouldn't go up and I would have a car paid off by time my bankruptcy is over. Would it make more sense to do it then. I will have to wait until something happens to my car so the trustee would see a justification.

[lvmilizia]

Are you just starting the bankruptcy? My cars are much newer than yours, we are half way thought a 5 year plan, and I worry all the time that something is going to breakdown, as there is no money for an expensive repair. If your just starting I would try get a newer one, as during bankruptcy coming up with $700 may be hard. If your already in to the bankruptcy and did not have a problem coming up with the cash to pay the repair, I guess keeping going with what you have would be OK.

[bankruptbull]

I had to get my parents to help with the repair. Chapter 13 is keeping things tight. I am about 6 months in to my Chapter 13. Car was running great this summer when I filed. Since filing I had the $700 repair to replace a leaking timing chain cover. I am going to need to get it back in to the shop soon, the fan blower is not working now and it's getting cold! It also leaks a small amount of oil when left overnight and is losing antifreeze.

[159515951]

Thank you for your input! I appreciate you laying it all out there like that. Let me ask you this. I would be going for one of the cheaper cars on the market - the Nissan Versa. Something small, yet reliable to get me back and forth from work. I would buy new. According to my attorney, the trustee would roll the payment in to my payment plan - my payment plan wouldn't go up and I would have a car paid off by time my bankruptcy is over. Would it make more sense to do it then. I will have to wait until something happens to my car so the trustee would see a justification.

If you're saying that you can buy the car, include it in your current plan payment, and not have your plan payment increase, then that's a no-brainer -- buy the car. I'm not sure how your attorney is getting that done, though. Where I live, taking on new debt requires a motion to incur debt, and that motion specifically states that the plan payment must not be effected by the new debt. Doesn't your attorney expect your creditors to object to receiving less money because you bought a new car?

[krielly]

I was able to trade vehicles back in 2008 (3 years into our Chapt 13). I was the one who approached the lawyer with the idea. Had to file a motion to incur new debt and a motion to modify our plan payments to allow for the car payment. It was approved, much to my lawyers surprise. Court understood that reliable transporation was necessary for me to get to work in order to fund the Chapt 13 payments. Percentage of payments to creditors was reduced as such. Its definitely a no-brainer as stated above in this scenario.......no extra money out of your pocket each month. I STILL have this car by the way

An afterthought......It's been a few years, but I seem to recall the court MAY have been more receptive as we had completed the 1st 3 years of our plan.......

[159515951]

An afterthought......It's been a few years, but I seem to recall the court MAY have been more receptive as we had completed the 1st 3 years of our plan.......

That's actually pretty important information. Trustees are only required to ensure that you are paying in all disposable income for the first 36 months of the Plan. After that, it's up to the Trustee's discretion.

[LadyInTheRed]

...Had to file a motion to incur new debt and a motion to modify our plan payments to allow for the car payment. It was approved, much to my lawyers surprise. Court understood that reliable transporation was necessary for me to get to work in order to fund the Chapt 13 payments. Percentage of payments to creditors was reduced as such. Its definitely a no-brainer as stated above in this scenario.......no extra money out of your pocket each month. I STILL have this car by the way

That makes sense. You are allowed necessary expenses in a Chap 13. Arguably, getting a modest, new reliable car is a necessary expense. There could be an argument that a new car isn't really needed and that bankruptbull should get a used car. But, if the attorney thinks the court will approve the purchase of a new car and a modification of the plan to pay for it without an increase in the plan payment, that is the way to go.

[bankruptbull]

Thanks for all of the input. This was my understanding as well. My bankruptcy plan would be amended to include this new expense. I could just as easily go for a used car as well, but I was hoping by getting a new one (a very cheap new one) that I would avoid expensive repairs down the road. When the time comes, I will be sure to update this with my experience.

[krielly]

As I recall, we were allowed a vehicle finance of "up to 15K". No limitation on new vs used, just the dollar amount allowable.