Selling a Car I Can't Afford!

Dear Miss Mota Mouth,

I have a 2005 Mustang that I purchased on a 5-year loan. A year and a half in, and I'm just tired of paying nearly $500 a month for this car. As much as I love it, I just want something cheaper. Can I trade in my car for something that's going to have a lower monthly payment? Do I have to sell it myself? What are my options? And how does it work trading a car in like this. Any advice would be great.
Sincerely,
Terry in Tennessee

Dear Cheap in Chattanooga,

Going car shopping with a new paycheck sometimes is like going to the grocery store when you are hungry: you end up with way too much in your basket and end up having to toss half of what you bought because it goes rotten in your fridge.

With a car, when you sign a 5-year loan, it pretty much means that for 60 months, like it or not, you have to make that payment unless you are able to pay it off in advance. Short of having a big windfall of cash coming in, you will probably have to sell the car and in most cases, you will still owe a balance on the loan because the loan balance is for more than the car is worth. Estimate your new used car payment here but remember this isn’t all that you will have to pay.

If you went back to a dealer and used the car as a trade-in they would give you wholesale value credit for the car and roll the balance that into yet another. You could end up paying as much to drive a car that isn’t as nice as your ‘Stang.

A better option is to sell the car yourself and get more than wholesale which will lower the amount that you will owe to the lender and then start afresh with a new used car. You can get your For Sale By Owner value at www.mota.net.

Don’t forget to try your credit union or bank for your next loan. Very often they will have better rates than any dealer will want to give you. And, when you find you more humble car, count it as a lesson learned.

Encouragingly,

M

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