What to do about this tough financial decision?

Well my first suggestion is to talk to a financial planner so that you can actually calculate out the costs of both options and get high quality advice. You should be able to estimate the summer gas costs for the Civic, since you have the cost of your summer gas and I’m sure you can estimate the average price per gallon over the summer, thus giving you the number of gallons used, use that to find the number of miles traveled, use that to find the Civic’s theoretical gas cost.

Is there no way to reduce your gas expenditure during the summer? Carpooling, using public transit some days, working from home, being wiser about running out for errands, anything?

I cannot recommend buying a new car if you are in financial troubles. You can almost guaranteed find a solid used car for much less than a new car costs. Look around for used Civics, they’re not at all rare.

Buy a used car. Chalk the negative equity up to a learning experience.

My first thought is to modify your use of the car you have to lower your gas costs and hang on to it. I don’t see any reason to get yourself further in debt with another car. If you can sell the one you have and get another without incurring more debt, that would be a good solution.

I just reread and saw you were talking about a new Civic. Forget what I said about the old Civic needing maintenance at 100k. They do, but you don’t have to worry about it.

I agree w/ Alfreda, above. Why do you need a new car? Dump the current car, pay off the balance (even if you must take out a personal loan to do so…) and get a good USED car.

It doesn’t seem like you are learning the lesson being taught to you by your current predicament (no offense). Cars begin to lose value as soon as you drive them off of the lot. (One could maybe make an argument for high end vehicles or collectors, but I digress….)

There is a glut of great used cars on the market. Do not get another loan for the replacement car. Buy what you can afford and pay in cash.

Well, this is the situation: I have 200$ in my bank account until my next paycheck. The dealership I went to the new 2009 civic base models were cheaper than all of the older civics. Like the 06’s were 16,000 but the 09 base model is only 14,000. I owe 23,000 on my car now but the dealer is only going to give me 15,500. I have 8,000 negative equity on the car so I was going to get a 5,000 dollar personal loan to pay off some of the 8,000 and then roll the rest into the new loan. Right now my car payment is 443. The new payment for the car will be 370 plus the 250 a month for the personal loan. this will be 620. After 2 years the personal loan will be paid and I will only have the 370 car payment to worry about and my insurance will be lower with the new car. I can’t buy anything in cash because I have no money ;( If I get a loan for 10,000 (if they even give it to me) maybe I can pay off the negative equity, sell the car and use 2,000 to buy a used car but if no one buys my car I’m screwed, right?

….and another thought. What if you lose your job. Why the urgency to do this…?

Why not just keep up w/ the $443 instead of jumping to the $620/month for 2 years. If you can’t afford what you have now, how does spending an extra $200/month put you in a better situation financially? The only way that this is an improvement is if you consistently spend >$200/month in gas in your current vehicle. Don’t count on gas prices skyrocketing this summer. People are hurting. There is less travel, less commerce. I am not saying it won’t happen, I am just saying it isn’t a certainty.

It sounds like you might be going from bad to worse?

Last month I spent 261$ in gas alone. Jan and feb were around 200 also. I’d be going from 60$ a week to 25$ a week. All in all I think I would only be paying 50–100 extra a month until 2 years are up. I only make 500 a week but I am going to get another pt job and cut down in other areas.

If I was a lender, I would have to be on drugs to give you an additional $10k loan. You are trying to make a bad situation worse. Stick with the car you’ve got. Take the extra $200 per month that you think you can afford on this deal, and put it toward paying down the negative equity on the car you have now. The balance will drop much quicker than you think it will, and once it’s yours, that’s $600 per month straight into your pocket. Save that for a couple of months, if you want, and pay cash for a nice used gas-sipper. You’ll save money over all, and your credit score will climb nicely (assuming you make all your payments on time).

Trust me on this. I speak with the voice of experience.

Alrighty…. Do you think refinancing would be a good idea?

@qualitycontrol If you can get a lower interest rate, it might be worth it to refinance, since you only bought the car 8 months ago. If you do, and your monthly payment is reduced, you should still pay the original amount (plus that extra $200) to pay the loan down as quickly as possible. I know the numbers on the gas pump are excruciating, but by doing it this way, you’ll be saving yourself money. You’ll be out of debt sooner, and the feeling that will give you is amazing.

Are there any alternative modes of transport you can use to cut down your gas use? As @dynamicduo suggested you could carpool, use public transport, be wiser about running errands, car pool or do more work from home. You could also shop online more for things so you don’t spend gas to go find them, ride a bike for close errands, or even walk some.

As soon as a new car leaves the sales lot its value drops a huge amount. Your present car is only 8 months old so you haven’t even gotten the value of that drop yet. As @Poser suggests, looking into refinancing the car at a lower interest rate might be a very good idea. Also check with your insurance agent to be certain your insurance rates would stay the same for the Civic as for your current vehicle – different car models cost different amounts to insure. You might also find that you can reduce your insurance coverage or increase your deductible, at least for the short haul. You can then apply the savings towards paying off your existing car loan sooner.

And finally, if you really insist on selling your present car, instead of trading it in to a dealer, sell it on your own – you will inevitably get more money so you might be less “upside down” when all is said and done. Possibly you could even get several thousand more than the dealer is offering you.

However, the best way to save money on owning a car is to own it for 10 years. I read an article once upon a time that laid it all out, and you save a huge amount over time if you routinely do that.

Try hypermiling.

I don’t think it will make much of a difference, I get 15 mpg as it is

Have you researched the car prices yourself? You might try to put it on the market privately, to see what people might be willing to pay. Theoretically, the dealer pays $1000 less than what they think they can get. This allows them to make money when they resell it.

@qualitycontrol – Then you are doing OK – our truck gets 11 mpg, but we need to space and hauling capacity.

Just think, if you could carpool every other day you would be getting the equivalent of 30 mpg without even taking out a loan.

No one I work with or go to school with lives in my city so I can’t really car pool. The truck is worth about 16–17k private sale…I would still owe at least 6 or 7k which I don’t have to the bank…I’m sooo stuck!

Some schools have bulletin boards where folks are looking for rides, car pooling, etc. You might look for something like that and meet someone new. Even if they don’t have a car but can pay you something for the ride you would be better off than having that additional loan.

Also look into things such as driving your truck only far enough to get to public transportation, then take that to work or school. Do your calculations to see which is cheaper – driving the whole way (and maybe paying for parking) or driving part way and paying for transportation the rest of the way.

I would love to take public transit, I wouldn’t have a car if I didn’t live in a small town. There are no buses and the train schedules don’t match up with where I need to be and at what times, I’ve already checked it out. I think I’m SOL ;(

Actually I think you would be SOL if you sold the truck, bought the car, carried two loans instead of one, and paid out $620/month for 2 years instead of $443.

Much better to get a second job, pay off the truck early and go from there. You don’t know that gas will be going up as it did last year but you know for sure you would be paying out more money per month by getting a new car.

yeah you’re right…

Where I live, car dealers are trying to make it easier to get out from under an upside down loan by financing your new purchase and tacking the excess due onto the loan. It’s a higher interest, and the payments go on forever, but it might help.

Everyone else is suggesting public transport, and such, but have you condidered a small motor bike, or even <gasp> a bicycle? In our college days, Hubby rode a bike to work and back every day, and to school at night.

@qualitycontrol
If I were you, I would look to refinance or sell it off and then buy a used car.
I get 15–17 mpg, but I have a Hemi and it’s a write off for business.:)