Car finance advice

[elainecrawford]

Hello everyone. In need of advice:

I’m a 30y/o male, full-time employed in Health. I financed a 2015 MINI Country Cooper S in 2021 that I’m still paying off (I’m about 65% of the way according to ClearScore). I live on a very limited budget.

The thing is, it’s become a problematic car to maintain. It’s out of warranty and has issues with its timing chain, turbo charger and oil issues (not sure what but I frequently have to replace the engine oil..?)

Since I still have an outstanding balance on it, I was wondering if I have any options in getting rid of it (trade-in, selling it, other options I’m not familiar with idk) because I truly cannot afford to fix it - and driving a car on “borrowed time” (before it breaks down) isn’t something I want to entertain.

Any advice will be welcomed. Thanking you all.

 

[clock17]

@elainecrawford It sounds like fixing your current car is your only option, not another finance. Reengineering etc will always be cheaper than financing a new car.

A lot of the time people bring up mechanical issues as a way to convince themselves that they can solve one poor decision with another poor decision.

I have 2 cars, bought them cash. If I can keep a car from 1987 and 2006 working, sure you can too my friend.

 

[karebear70]

@clock17 To add to this. Once you fix the current problems, it's unlikely you'll need to fix them again. Buying a new used car, could leave you in a similar situation.

Don't take it to the dealer, find a local mechanic or autoshop. Or if you have a bit of confidence with a car, watch some YouTube videos. A lot of replacing parts on a car is just unbolt the old part and bolt the new part on.

 

[elainecrawford]

@clock17 Thank you. The idea for trading in et al was mainly to relieve the financial pressure of keeping a “sick” car. But you make an excellent point.

 

[resjudicata]

@elainecrawford My advice is sell the car to Webuycars. They won’t even bother checking for faults and they will give you a good price.

They will settle your current loan and then send the remainder to your account.

Use the remainder as a deposit for another car, preferably a naturally aspirated 2018+ car. Something like a Kia Rio/Hyundai i20/Polo Vivo etc Get one of those. Cheap to maintain and never break.

Do not keep that Mini, you will sink all your money in it, after you fix it something else is guaranteed to break. Endless money pit. Sunk cost fallacy.

Never buy any high maintenance car out of warranty.

Goodluck.

 

[irishkid777]

@resjudicata I would listen to this guy's advice.

 

[trueform]

@elainecrawford This is a tough one. The thing is that if you trade in your car, you will nog get the value of the car, because the dealer will notice the issues. A Mini does not retain value because of known issues especially if you do not service it with somebody who knows the car well - BMW. They are expensive.

What were you quoted for the repair?

I think you might have a bigger problem if you are already struggling. Is this due to other debts as well?

 

[elainecrawford]

@trueform The car has been serviced only by BMW.

Repairs were for about R45k. (Which I cannot raise.)

I am already struggling, staying afloat but only just. The smallest inconvenience could quickly spiral into catastrophe.

 

[trueform]

@elainecrawford Trading it in is likely to increase your monthly expenses making your situation worse. If you have a shortfall on a trade-in even worse. At least it was services by BMW and not Pete - the friendly backyard mechanic..

Repairing is almost always a better option, because if something has been repaired it is unlikely to happen again soon and on the longer term it will save you. If you can’t afford financing to repair the car, you probably won’t be able to get vehicle financing on a trade-in

I would suggest to speak to a financial advisor you trust as it depends on your circumstances what the best way will be to get out of this mess.

 

[samiradedas]

@trueform But BMWs are known to breakdown after the maintenance plan ends.Personally I'd think that it's best to cut his losses and get a reliable car even a Toyota,atleast they'll just be dealing with the car installment rather than unexpected costs.Imagine being quoted R45k for repairs?

 

[trueform]

@elainecrawford Reading this morning again - it seems like your repairs were already completed, but you don’t have the money to pay for the repairs.

Can you get enough on a trade-in to clear the debt and get a deposit out for another car? If so, and it is the only way to raise the 45 k, let it go and seriously - buy down to something simple and reliable. Stay away from anything German in the used market and go for something with low costs and give yourself time to recover economically. But do your homework first - if you overextend yourself with the new car’s payments it defeats the purpose of the excercise. Banks will be very reluctant to grant you a car loan if your exposure including the load is more than 33% of your salary.

I feel your pain as I have been there. So here is my story for interest sake. I once changed jobs to a lower paying salary and wanted to trade in a two year old German sedan on a small four door hatch. The savings would have been significant per month and would have placed me in a situation where I could comfortably cope with the new lower salary I also payed extra on the previous car and after two years already covered half of the original purchase price. So I had a handsome trade-in and my car cost would been cut by two thirds.

The bank refused the vehicle financing on the grounds that it would not fit my new financial situation and affordability was an issue. It took more than a month and several visits to the bank and we could swing the transaction. I loved my secondhand car but three years later the mechatronics failed. R 45000 later it worked again and I got rid of it as quickly as I could after repairs and traded into a new, small Japanese car, and never looked back. That small Japanese car stayed with me till I changed back to my old, better paying career, and I then upgraded to family-sized Toyota which I paid off in 18 months. I went on an active pursuit of killing my debt and am now in a brilliant position. In a short time (5 years) i killed all debt and my home and cars and everything is paid off snd have built up a significant nest egg (3x my salary plus 5x my salary in investments. I bought a second home and rental income from my house covers my second house. So I am spending passive income on creating more equity. I will pay off the second house in another 28 months.

I learned many lessons.
1. Always by Japanese or Korean
2. You never know what the future holds
3. Get rid of all debt as soon as you can because of 2.
4. It is always better to live a simpler life where your income is your own income and does not have to go to a bank.
5. Only spend extra money on stuff that improves your equity. Preferably on stuff that will generate passive income.

Even if you can afford an expensive lifestyle at the time, don’t waste it on stuff that is transient. You can actually build a future moderately wealthy to wealthy just on your salary.

 

[redruthie7889]

@trueform

I also paid extra on

FTFY.

Although payed exists (the reason why autocorrection didn't help you), it is only correct in:

• Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. The deck is yet to be payed.
• Payed out when letting strings, cables or ropes out, by slacking them. The rope is payed out! You can pull now.

Unfortunately, I was unable to find nautical or rope-related words in your comment.

Beep, boop, I'm a bot

 

[valula]

@elainecrawford If I were in the same position, if the vehicle is out of warranty and no service plan. I'd go to get worth and see what they can offer you to clear the remaining amount on the vehicle. The main objective is to get rid of the car. Full sale or maybe a trade in for something else in your budget.

You can always buy a car that's in your budget with a proper full service history, and on top of that, get a quote for a warranty on it.

Alternatively, find a mechanic that's not manufacturer/dealer related cause BMW will cost more to repair through them.

Sometimes, it's better to get a simple daily with a fairly decent amount of spec. Stay away from expensive brands ( BMW, Mercedes-Benz etc)
Get a vehicle with reliability on the long term is also possible, but be weary of the inflated second-hand market at the moment. Don't just buy anything, compare thoroughly, and get a second opinion.

 

[celtics]

@elainecrawford Call the bank and ask for the settlement amount of the car.

Then take the car to a dealership or we buy cars and get a quote for how much you would receive if you sold the car. Would you sell it for more than what you owe the bank ?

Then go to reliable and competent mechanic and get a quote to fix the car and then see what works best for you.

Also check what other cars are available and you can afford.

You need to do some leg work and run the numbers.

 

[ana1234]

@elainecrawford If you can’t get out of the deal, then check out the local BMW and Mini forums to find a decent workshop to sort it out.

 

[anioko1]

@elainecrawford This is why I drive a Chevy spark. Blown engine? No problem, just 13k to replace. Radiator broke? No worries just 5k with labour... no turbo so you'll never have that problem again...2k to service (major service). Cheap tyres, great economy, not the fastest or a flashy car but gets me from a to b without me breaking the bank.

Its hard to have nice things nowadays.

 

[vancouverguy]

@elainecrawford If you trade in or sell it the balance of your loan becomes due to your lender. If you are underwater on the car you could owe more than its worth.

A dealership will ask those questions too when putting together a deal.

 

[definitecomet]

@elainecrawford Bad advice: make sure you're insured and crash it. I'm serious, this is terrible advice. Don't do that.

Otherwise older MINIs are known for being unreliable. I would have suggested the best thing is to get a warranty/service plan going. They don't cover everything after the car hits a certain age but it can remove the sting as they'll pay for some of the work. They make it difficult to claim and may not cover issues that were uncovered before the insurance.

Otherwise I think I'd look at how to use the car as little as possible. I'm not sure how your life is structured but I would rather bite the bullet and start maybe going to work with colleagues, public transport etc, for now while I reduce the debt on the vehicle.

 

[trueform]

@definitecomet That is the worst possible advice. It is encouraging somebody to commit a crime!!!

 

[definitecomet]

@trueform Hence I told him not to do that.