I bought a Saturn Vue last year (almost exactly 1 year ago). Eyes were bigger than my budget I think. Thought since I had a long drive to work, it would be nice in the winters here.
Well, payments are quite large for my budget.
Question is, how hard is it with GMAC to have someone take over payments (not leased) and then get financing for a less expensive vehicle (ION or something)?
Vidar
On behalf of the American Car Manufacturers I would like to thank you for being a superior consumer!
Thought since I had a long drive to work, it
Well, there is no polite way to say this: We're going to have to amputate both your legs. OK, it's not that bad, but you basically want to stay in the frying pan and NOT jump into the fire. Things could get much worse.
I'm guessing you want someone to "take over the payments" because you realize the car won't sell for enough to pay it off. The straightforward way to sell a car is to sell it. The purchaser borrows money, gives it to you, you pay off your loan, title changes hands. If you don't pay off the loan, you are still responsible for the loan, whether you have the car or not. I don't think title can change either. The new buyer wouldn't own the car. A real mess. Do not just make a written agreement with someone to make the payments for you (even though that is exactly what you want).
Rather than just make up numbers I went to the Edmunds True Cost to Own page for your car:
2003 Saturn Vue 2.2 manual first year depreciation: $7,081 first year taxes and fees: $2,045You are in the frying pan. Also known as math teacher's revenge!
You take a huge hit the first year on a car. You are going to get hit again when you buy another new car.
I would grit my teeth and just keep the VUE. If that is not possible, realize you are going to lose thousands of dollars to trade down and get the lower payment you want. Upside down is where you owe more than the vehicle is worth. If you allow the dealer to wrap your debt into the next vehicle you will be way upside down. The payments won't be that much less and you will be driving a lot less vehicle. You will be bargaining from a position of great weakness (trade in value and fees) if you can't easily walk away from the deal. Don't expect a great deal.
You can always try to get someone to "take over the payments". It could happen. If they have a much better credit rating than you, this is a plus to the lender. Just make sure they pay off your loan as part of the deal.
I've been eyeing the new 2004 Saturn Vue with the 3.5L. Seems pretty cool.
Roadie Roger Heck: Buying depreciating assets with borrowed money Heaven: Buying assets that appreciate more than the cost of the loan
I did something similar years ago and ended up talking to my credit union. The credit union bought out the old loan, gave me a longer term and I think the same interest - the bottom line is that I got the cheaper payment (restoring my cash flow) and I kept the truck. Kinda a win/win for me.
This makes perfect sense to me. It has nothing to do with having someone take over the payments or trading down. A longer term loan simply has lower payments. You pay more in the end.
Car dealers love payment buyers, they seem to have no idea what anything costs. Just the payment. You'll notice there was no mention of loan balance, interest rate or payment term. If he already has a 5 year loan, they may not be so happy about adding a few more years. No real way to correctly analyse his deal. Would you have known if your credit union just tacked on another $20 or $30 just because they could? I wish him well, but refusing to "do the math" can be very costly.
Roadie Roger
Roger, Kudos for a great explanation! Too often we are fooled into looking at the payments and not the cost of vehicle. This can cause us to get into a straight-jacket with the financing. We get "upside down" and, God forbid should something happen to our economic situation or the vehicle itself, we're stuck between a rock and a hard place. One of the best pieces of guidance (IMHO) for buying a vehicle is "how long before I'm not upside down?" Even if you plan on buying a vehicle and driving it until the wheels fall off, it could be stolen or totalled in an accident (both of these happened to me) and you are stuck making payments on vehicles you don't have. It happened on the stolen one but not the totalled one. I was nine months into a 5 year loan on the stolen one and still owed $3 grand after the insurance paid, which GM let me pay in a no-interest loan. On the totalled one, I was 2 years and 9 months into a 5 year loan and owed $13 after insurance so Chrysler wrote it off.
Vidar, You might look at having someone assume the loan, but only if that is your only possible option. If GMAC works the way it us to, the upside is that the other party is now liable for the loan. The downside is that you are still liable also. (Why should GMAC let you off the hook when it can now have two parties to guarantee payment?) Also, the loan liability will still show up on your credit report but auto loans are relatively easy to get so if that is the only downside on your credit, I would guess you would be okay.
JMO, Bryan
My Mom takes it one step further - she commented (to me after I bought my first new car) that she bought a new car once, and after she realized what she paid in interest never financed another. So typically she would buy something 4 years old that fit her budget and paid cash. Anytime I mention buying another new car I get the story again...
...and I've read there's a glut of used cars right now, not that I'm shopping for one.
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