Quick background: leased an accord, traded in to buy a '16 Honda Pilot. I drive around 25k a year. Rolled negative equity (3rd car in a row so the debt keeps building).
Payment is $660, it’s a 10 year loan- it would have 250k miles on it, if still running, when finally paid off. It’s probably near $10k upside down right now.
With just my income now, id like a lower payment but “can” make it work if it’s the best option.
Driving that much isn’t expected to change.
Options others have suggested:
Turn this in, get a home equity loan and pay off the neg equity ($250/mo for 42months) and lease a new car and pre pay mileage.
Lease TWO cars at a time and still have lower payments? Divide miles between the two to not have overages.
Drive this until it dies?
4.Keep paying on the loan. Wait a few years and possibly be less upside down?
Dave Ramsey says to pay off the neg equity and pay cash for a beater. But I don’t mind having a payment to drive something nice. I just don’t want this much of a payment if feasible.
It’s going to sound harsh,
but you need to stop making a kneejerk reactions and decide what is more important to you:
a. driving a nicer car
b. having little or no payment
I have no idea what’s expected reliability of the 16 Pilot and it depends how lucky you get, so that’s subjective.
Option Ramsey would be the most rational decision of them all imo,
btw I am not aware of the option 1 available i.e. there is no “turn in”, you either have to sell it of trade it, either way it’s going to cost you money, thankfully Hondas somewhat retain their resale value.
Option 2 is also not an option until you get rid of the negative equity somehow.
The 98 Saturn wagon was one of the most reliable cars I had and drove it for years (hated the way it looks btw) with minimal repairs because I knew what to expect from it and took care of it, so regardless what you decide the maintenance will be the key for you, again imo.
Ramsey will always tell you to do the most sensible thing which is to pay off the car asap.
The fact that you keep rolling negative equity into negative equity is not a good sign of money management. You are going to spend about $80k on the car over the next ten years if you keep as is. That’s a crazy number and doesn’t take into account any sort of repairs you might need (even though hondas hold up well, you will run into issues over 250k mi).
The most sensible solution i can come up with is to buy a leftover 2017 or nearly new car for under $10k such as a 2017 nissan versa that should last 100k without big expenses and pay off the negative equity on the honda either by equity loan or if you can find a very low financing rate on the nissan and they let you roll negative equity in it that’s lower than the home equity line then do that. Once you pay off the neg equity you can reset and sell the nissan and get something else.
Leasing 2 cars will result in having to pay insurance on two cars, so that’s not really an option IMO.
You will have to drive a “less nice” car for a few years to dig yourself out of the hole, even though even a newer versa isn’t so bad these days.
Get yourself the equity loan and sell your Honda. You are far underwater and trading it in on a lease is going to be tough.
go buy a used Toyota Camry for $4-6K. they’re reliable, they can be comfortable and they are easy to keep running.
pay off the equity loan as soon as you can with $500 a month payments.
stop changing cars and rolling neg equity. You drive a LOT. you’re going to be on the losing end of the depreciation curve/paydown curve. You need to make a decision and stick with it for a while with a decent down payment. Ideally buying something a few years old so someone else takes the initial depreciation hit then you drive it into the ground.
Alternative to 4 is when you do get yourself right with the negative equity, lease yourself a nice car but keep the Camry from step 2 and split the mileage so you don’t go over your 15k per year.
a $6k camry will be 5+ years old with 100k+ mi on it and out of warranty. While reliable, she’s going to drive it to 200k before paying off the neg equity. She will without a question have repair issues over that second $100k of the car’s life.
I’d rather get a new car like the ones I’m proposing and keep her cost down. Chances are a new car today comes with better/more standard equipment than a 5+ old car too.
A bit of a wrinkle here… Are you and your husband divorcing/divorced, Or just separated? Your house is marital property, no? In the event of a divorce it could possibly even end up being sold while settling affairs, so perhaps taking on additional obligations wouldn’t be the best option at this point until you figure out what direction the two of you are going and possibly speak to an attorney about leveraging the home equity. Depending on the value of the home maybe selling it could be your best bet instead of taking another loan. Your husband/ex isn’t contributing anything to the household? If there are children involved and there’s no divorce yet, go get your child support already (assuming you are the custodial parent). Even without children you may be entitled to spousal support and/or alimony if divorcing. Based on the cars and figures you were referencing in previous posts (did he end up getting that Mustang?) the child support alone could cover the nut on the Pilot for the time being. That’s assuming that there are kids involved, which I’m assuming were a concern since you needed the third row SUV to begin with.
If you can get a Versa for 10K I guess that is a better option. I don’t have much experience with shopping for a new car in that price range. I didn’t think even with discounts that they got that low, I assumed more in the 14K range.
Yeah, a 6K Camry will be an 80-100K car, but it should have reasonable running costs and run to 200K.
For me, I wouldn’t do a Versa, I just feel that the small Nissans are crappy, but I guess thats why the Versa is 10K. If it were me I’d be considering a $10-13K used Accord LX or Sport if I wanted to spend that much.
For most people the cost of gas is relatively inconsequential compared to cost of vehicle. But for this person that likely doesn’t hold true. Lets say Pilot gets about 24 mpg average (must be doing lots of highway driving to get to 25k miles a year). A new Honda fit gets 40 on the highway or versa gets 39 (let’s say 36 average). Savings are almost 900 bucks a year assuming $2.50 gas. And savings will be even greater if gas prices go up, which is a whole lot more likely then them going down significantly.
I concur with 305 here. Once you teeter over 100k, you’re always going to run the risk of an engine or transmission failure as well, especially if the previous owner didn’t take care of it (which you’ll likely never know for sure). At least the versa will have powertrain coverage after her bumper-to-bumper runs out, providing a bit of protection from this.
Sure, cars last longer these days, yada yada yada. These are also mechanical items that can, and will fail.
I would normally say keep it until it dies, but the 2016 Pilot can have major transmission problems. If it is a Touring or Touring Elite with the 9 speed automatic, I would get rid of it asap. Too many people I know have had to replace the transmission multiple times. If it is an EX-L or below, you won’t have the transmission problems and it should be rather reliable. Another reliable car to consider is the Prius. They are extremely reliable and have more cargo space than the Camry.
They put in the ZF transmission and it’s just awful. One of my friends had it replaced at 3k miles and then it started to fail again at 14k. She got it replaced and then traded it for an RX350 and will never consider a Honda again. Honda and transmissions have never been a good combination (early 2000s anything with a V6 was likely to fail), but this is 10 times worse. I’m surprised the media hasn’t pounced on the opportunity because there are definitely enough pissed off buyers.
To drive that many miles it must be for work related? Maybe you getting expenses from work or deducting them from taxes? However, i agree with what was said above that you need a cheap car and drive it to the ground. And child support payments as suggested is for the kids, not so mom can drive nice cars and pay off negative equity.
Understood. But things like child support, spousal support, maintenance are to maintain the household. Assuming that the children’s needs are being met, where the money actually goes has no legal restrictions. Am I saying that’s the best way to go about it? No, but the household obligations are what they are, and it’s definitely preferable to raiding your home equity when your husband has a legal obligation to continue contributing to the household. If a divorce is in the cards I’d just sell the house and split the proceeds accordingly and get out of that Honda like that, but that’s just me.
Step1: Sell this car for maximum amount and find what your negative equity is.
Step 2: Stop leasing
Step 3: select hybrid Toyota as it gets you best mileage and free service and lasts for Decades
Step 4: Buy a loaner / service vehicle at maximum discount
Like the OP, I drive around 24k miles per year. Over the years I have had many cars both new and used and lately leased.
For what it’s worth, in my opinion the best bang-for-the buck are 1 or 2 year old rental cars sold by Hertz-car sales or others. By bang-for-the-buck I mean that you have generally reliable cars at relatively low cost. I have purchased 3 of these over the years and had very good service from all of them. I usually pick them up with around 25k miles and sell them when they get around 100k miles. So for me that’s about three years for each car. If I were to do a rental car deal today, I could get a midsized car for perhaps $12k. Spend maybe $500-$1000 on maintenance (oil changes, tires, brakes, and maybe some other repair). And then sell the 4 year old car with around 100k miles for perhaps $3000 to $5000. That would give an amortized monthly cost of around $250 a month
When I started commuting long distances I tried driving older, cheap cars to save money. I did save money but I became increasingly unwilling to deal with old car issues. And they almost never occur at convenient times. So for me, having a fairly reliable car makes me happier even if I could save even more money driving old cars. - Been there, done that.
Regarding fuel costs. For someone (like me) who does 24k miles per year fuel usage can be almost as much as the car payments. If your car gets 25mpg then your monthly fuel bill would be around $200-$250 depending on how much gas is where you live. If your car gets 35 mpg then your monthly fuel bill is perhaps $140-$170 (depending). So based on these numbers I always think about fuel economy when selecting a car.
Fuel economy is important but comfort and safety are perhaps even more important. Over the years I have been involved in 3 collisions, one of them was a five car pile-up. I have been around many collisions and narrowly avoided a few. So think about having some metal around you when those events occur. Your life could change in a second.
For me, mid-sized cars are a nice compromise between economy and safety. It’s not all about saving money
I’ve considered the rental car route before. I am always scared away due to the fact you have no idea how the 300 people before you beat the hell out of it.
