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Which Car Stays & Which Car Goes?
Friday, Aug 7, 2009
Question: We have a baby due Sept 3, and need a four-door car because of back problems. We have two two-door vehicles. One is a Ford truck with back seat that's difficult to climb into. It has a monthly payment of $380, and we owe $12,000 until we own it outright. The other is a leased Honda Accord with more than two years to go, and a monthly payment of $355. It needs about $1,000 in repair before turning it back in and if turned in early we must pay an adjusted lease balance which exceeds realized value. What's that? Which vehicle do we keep?
Answer: My guess is that if you return the Accord now you would owe at least $5,000, plus $1,000 for the repairs. Check with the lease company to learn the "lease balance," which is exactly how much you would need to pay if you would terminate the lease early.Different lenders call a lease balance different things, but it is the unpaid portion of the adjusted capitalized cost of the lease. You can think of it as a lease version of a deficiency balance, which is the difference between the amount owed on the vehicle and its market value.
The Accord has an excellent reputation for reliability, and as a mid-sized car the Accord provides
good but not stellar gas mileage. The Accord makes a fine second car if you or your spouse use it for a long commute.
Regarding the truck, you may or may not be underwater on the loan. By that I mean the balance of the loan may or may not be greater than the value of the truck. You mentioned the loan balance is $12,000. Go to Kelly Blue Book to determine the private seller price for your truck in your area. Because pickup trucks are available in a bewildering array of models, trim levels, and options, be sure to check off all of the equipment installed on your particular truck.
If the Ford is worth more than balance of its loan, then sell it. However, if you or your spouse need to haul equipment and materials to job sites, then keeping the truck is a priority. However, since you didn't mention this, it is safe to assume you bought the truck for
Regarding the truck, you may or may not be underwater on the loan. By that I mean the balance of the loan may or may not be greater than the value of the truck. You mentioned the loan balance is $12,000. Go to Kelly Blue Book to determine the private seller price for your truck in your area. Because pickup trucks are available in a bewildering array of models, trim levels, and options, be sure to check off all of the equipment installed on your particular truck.
If the Ford is worth more than balance of its loan, then sell it. However, if you or your spouse need to haul equipment and materials to job sites, then keeping the truck is a priority. However, since you didn't mention this, it is safe to assume you bought the truck for
recreational use or the image it conveys.
If the value of the truck is substantially less than the loan value (which is probably the case), then you are stuck with both the Ford and the Honda.
Buy or borrow a child seat and install it in both vehicles. Take a sack of flour or rice and practice putting and getting it from the child seat in both vehicles. The least-convenient vehicle is the one that the child's customary caregiver is not going to drive.
One last opinion: You mentioned having a bad back and an interest in buying a four-door car. Nothing beats the sliding rear doors of a minivan for ease-of-use when getting infants in and out of car seats, and schlepping all of the life-support gear parents haul when toting a child about town.
I hope this information helps you Find. Learn & Save.
Best,
Bill
www.bills.com/blog/
If the value of the truck is substantially less than the loan value (which is probably the case), then you are stuck with both the Ford and the Honda.
Buy or borrow a child seat and install it in both vehicles. Take a sack of flour or rice and practice putting and getting it from the child seat in both vehicles. The least-convenient vehicle is the one that the child's customary caregiver is not going to drive.
One last opinion: You mentioned having a bad back and an interest in buying a four-door car. Nothing beats the sliding rear doors of a minivan for ease-of-use when getting infants in and out of car seats, and schlepping all of the life-support gear parents haul when toting a child about town.
I hope this information helps you Find. Learn & Save.
Best,
Bill
www.bills.com/blog/
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