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My Car (A Saga)

March 18th, 2015 at 10:04 am

Though I was born and raised in the Bronx, I lived in Manhattan for several years in my early thirties. No need for a car, although I do love driving. When I made the decision to move home to Mom's house in June of 2014, I knew I couldn't get away with that for long. Although where we live is part of NYC proper, you do definitely need a car to get around. Our area is quite underserved by public transportation. My father passed away 4 years ago, and while we do still have his car, it's a Suburban and not really suitable for a daily driver in NYC. Especially since I drive to work (more on that below...)

The plan was...I was moving home in June, would spend the summer saving up a down payment, and buy a used compact SUV in the $17-$18k range after Labor Day. I have no interest in driving a beater, no matter how much help it would provide to my finances, and need AWD or 4WD for our great winters. I'm a researcher by nature, so decided one afternoon on my way to run some errands in my mom's car to stop by a local dealership to "look at" some cars they had, and maybe test drive some models to decide if I liked them or not.

Well, I need to not be allowed to shop for any big ticket items alone, because 2 hours later, I was driving away in a new (to me) car. With no down payment, a non-manufacturer's warranty, and a hefty interest rate. Sigh. Not the best move by far, but I have no regret...it did wonders for my mental state over the next few months. (It's not really a great feeling to have to ask Mommy if you can borrow her car to go to CVS at the age of 35...)

It made my commute a lot easier, albeit a little more expensive. My options pre-car were 1. to take a local bus to the subway, where I would have to transfer 2x, and get to work 90 minutes later, then do it all again to go home ($113 for a monthly pass, deducted from paycheck pre-tax); 2. Take the "express bus", which takes about 2 hours in the morning and anywhere from an hour to 90 minutes in the evening ($220 for monthly passes, $130 of which can be pre-tax); or 3. Some combination of the above (cost varies, $130 max can be deducted from paycheck pre-tax). I also have the option of having parking $$ deducted, and the max is $250 per month. The net difference to my take home pay between the max for transit and the max for parking is only about $30...most months I come pretty close to staying within that $250, sometimes I go a little over but not by much. I usually stay within my gas budget, and my commute when driving is 60-90 minutes each way (for 15 miles! NYC traffic is crazy). Yes, it's taxing, but not having to deal with crappy public transportation is worth it to me. Once I move, I will be moving to a neighborhood with good subway access, and so will not be driving in anymore, will be using the $113/month option.

So, that's how I justify the purchase...it was definitely not the greatest move I could have made, but it's what happened and so now I am stuck with it and making the best out of the situation.

My Original Loan (initiated in July 2014):
~$23k @ 21.73% for 72 months (ouch, ouch, ouch)
Monthly Payment $574.94 (I pay bi-weekly, $290 every other week.)

I am just finishing up a refinance. It didn't get me too far ahead, but cut my interest rate a tiny bit. I'll continue to make the same bi-weekly payment to get a little more principal paid off. I plan to refinance again either over the summer (at the 1 year mark), or at the end of the year (at the 18 month mark). For this refinance, since I knew it was temporary, I extended the term back out to 72 months. It doesn't matter since I pay bi-weekly and it will be paid off before that, and also since for the NEXT refinance, I will be going with the term that would have been left at that time on the original loan. Make sense? I'm pretty wordy sometimes, sorry Smile

New Loan (initiated in March 2015):
~$22k @ 20.45% for 72 months (STILL ouch, ouch, ouch, but slightly better. Glad to see that all of my payments since August have done so much for my principal *rolls eyes*)
Monthly Payment ~$540 (not sure of exact number, haven't gotten all of the final paperwork yet, will still be paying $290 every other week).

The good news is that the payoff check sent from my new lender to my old lender is for more than the current payoff amount, due to a payment made while everything was processing. Which means the overpayment will be coming back to me...just waiting for them to apply the payoff so I can find out the amount, but somewhere in the $400-$500 range, I'm hoping!

In a way...I'm glad I am paying this much interest. Crazy? Yes, but hear me out. You can bet I'm feeling the pain of it, and am learning my lesson to not screw my finances up again! Once I get out of this mess, I will NEVER let myself get to the point I started at last summer. If I get lazy, all I have to do is some math to figure out how much $$ I wasted on this ridiculous interest rate!!!!!

3 Responses to “My Car (A Saga)”

  1. VS_ozgirl Says:

    You're not the only one to make not so smart financial decisions, so don't be too hard on yourself. You're learning from it and hopefully you can make some big inroads on your debt

  2. Petunia 100 Says:

    Ouch is right. Did they charge you any fees on that refinance? Dropping your rate by 1.28% isn't a whole lot, but it is something.

    I think you should take that refund check and open an online savings account with it. Smile It is good to have a little something set aside, just in case.

  3. LizfromtheBronx Says:

    VS_ozgirl - thank you! Knowing that others have gotten themselves into similar messes really helps Smile
    Petunia - no fees. I could be wrong but based on the research I've done, I think most auto refinance are no fee. Unfortunately, the refund check is already earmarked for some money I owe to my mom - she has been great about helping me out (and letting me live at home for very little rent!). Now I don't have to figure out how to make that $ work in the budget. Either way, it's a win!

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