Should I dump my new car (2013 Kia Forte) for a free car?

[Zenmervolt]

I drove almost 30k miles last year in my Trailblazer and I still didn't hit $500 a month in fuel costs.

I have an 02 with 194k miles BTW.

True, but he'd still be doubling his fuel costs. The more rational move here is to take the truck, then sell it for the $9,500 he claims it's worth, and use that money to pay down the loan on the Kia.

That gets rid of the whole issue of being "upside down" on the Kia, effectively lowers his monthly payment, and leaves him in a newer vehicle that is still covered by a warranty and also gets better gas mileage.

ZV

 

[SparkyJJO]

But eliminating the car payment (or close to it). If looking at it from a purely financial POV the 2x fuel cost would be cheaper than the current payment + fuel cost for the kia.

Guess it depends on which he'd prefer to have. I'll admit I'm definitely biased. I'd take the trailblazer over a small car any day, partially because of what I do. A small car wouldn't cut it half the time.

I've never had a car with a warranty. I guess it would be nice to have, although on a new car you kind of expect the first 100k miles to be little more than maintenance items.

 

[HitAnyKey]

Sell the Truck and pay down the loan.

KIA Pros:
1. Fuel Economy
2. Warranty

KIA Cons:
1. Monthly payment

Chevy PROS:
1. No monthly payment

Chevy CONS:
1. No warranty
2. Worse gas mileage
3. Repairs sooner rather than later
4. Selling the KIA for near full value might be impossible
5. Coming up with the extra 5K might be difficult

 

[jaedaliu]

True, but he'd still be doubling his fuel costs. The more rational move here is to take the truck, then sell it for the $9,500 he claims it's worth, and use that money to pay down the loan on the Kia.

That gets rid of the whole issue of being "upside down" on the Kia, effectively lowers his monthly payment, and leaves him in a newer vehicle that is still covered by a warranty and also gets better gas mileage.

ZV

Interesting proposal. Wonder how OP's dad would feel about him selling a gift like that.

And to whoever that is that argued he should get a title loan, the ones I'm aware of usually have a very high interest rate.

 

[mvbighead]

Interesting proposal. Wonder how OP's dad would feel about him selling a gift like that.

And to whoever that is that argued he should get a title loan, the ones I'm aware of usually have a very high interest rate.

This, usually this sort of thing is frowned upon because the guy doing the giving could have been the one to profit from the car's sale. Instead, he is doing someone a favor and in turn they are using that favor to profit.

For me, it really boils down to what the op needs in a vehicle. If you're commuting a lot and not having a lot of cargo to haul around, a SUV/truck makes little sense. If you want a truck, then go ahead and make the deal.

Also, this type of thing is precisely the reason why I never get into a car without a significant down payment. My brother always tends to put himself in similar predicaments, but has made some very poor decisions when buying cars. 2001 Jeep GC for $10k a few years back that was pitting with rust in the usual places. My wife and I, at nearly the same time, went out and bought a 2000 Jeep GC for about $6k with no rust (a Tennessee vehicle). Drove it for a couple/few years and then sold it for $4k.

Long story short, if you can't escape a car purchase a year after buying it, you probably shouldn't have made that purchase. If this particular deal works out and can get you out of the ridiculously high loan, then I would do it and live with the mileage for a couple/few years and save money for your next car purchase. Then sell the truck, add in the savings, and you'd probably have $10k or so to put towards your next vehicle and put yourself in a good starting spot with the loan.

 

[MegaFlop]

TechBoyJK,

My vote is to explain the situation to your step-dad and tell him you would like to sell his car and keep the Kia.

I'm not sure which Kia you have, but for a automatic EX Coupe, KBB is showing around $11K trade or $13K private party sale. Now if you are making a $475 payment for 60 months you must have financed about $27,000. I realize you have made a year of payments, but I don't see how $5K is going to get you right side up in your Kia.

If you can get $9500 for the Trailblazer that should be enough to get the Kia payed down to about what it is worth. You bought a new car with a crazy long warranty. You should drive the crap out of it. That is my opinion.

 

[Seaneboy]

Well, all this talk of fuel economy, and cost... goes out the window when you hear this.. Despite their safety reviews from NTSB.. My friends volunteer at Roslyn Rescue on Long Island, NY.. (they are responsible for a section of the Long Island Expressway), their motto is 'Cuttin'em Free on the LIE' (they have multiple sets of the jaws of life, and use them frequently.
When a call comes in over the radio.. It's not 'truck vs car' or 'car vs car', it's 'Kia vs car', 'Kia vs truck', or 'Kia vs SUV'... And the levels of everything are elevated.

However, where do you live? Snow an issue? I'm a big dude (6'3", 280lbs), and once I went for an SUV, I've never went back.. So, there's that side of things. Not saying it's good or bad, I love my '99 2 Door Tahoe and all, but sometimes I wish I still was 'comfortable' enough being able to squeeze into a car.

I think usage, safety, and comfort outweigh cost in this situation, especially if you might not exactly have to incur any costs other than interest...

 

[Ferzerp]

And to whoever that is that argued he should get a title loan, the ones I'm aware of usually have a very high interest rate.

No. This is only for what you see advertised on TV from the other types of lenders who advertise on TV (i.e. predatory lending institutions). Regular banks and credit unions do this with the same terms as normal used car loans.

 

[Leyawiin]

http://wheels.blogs.nytimes.com/201...-consumer-reports/?_php=true&_type=blogs&_r=0

I thought so too, but the transmissions behavior was downright hilarious. It'd randomly miss gears and rev like it was in neutral. Wasn't a good experience.

Yeah, read that too. Basically, if you get a manual its a great little car. Auto... not so much.

 

[Tweak155]

His step dad wants to give him a vehicle, not $9,500. I think any parent in their right mind would be pissed if he just sold the vehicle, especially if they have trouble getting $5,000 themselves.

I'm curious as to the loan on the Kia. Obviously the company gave you a larger loan than the vehicle is worth, have you considered calling them about having a balance if you sell the car? I don't think they considered the Kia their only way to "insure" their loan if you borrowed more than vehicle value to begin with.

It can probably be modified and you just have a loan while driving the Trailblazer. It's just now a much smaller loan.

 

[ViviTheMage]

Personal loan is really your only option, unless you know someone who can give you 5k.

 

[Zenmervolt]

His step dad wants to give him a vehicle, not $9,500. I think any parent in their right mind would be pissed if he just sold the vehicle, especially if they have trouble getting $5,000 themselves.

If his step dad is rational, he'd be perfectly fine with the OP selling the vehicle. From the step dad's position, there's no difference between whether the OP uses the truck or sells it; in both cases the step dad's position remains the same.

Also, if the parents are having money issues ("hav[ing] trouble getting $5,000 themselves"), why would they gift the OP a $9,500 truck in the first place? They'd be better off selling the truck themselves, taking the profit, and giving the OP a portion of the profit as a cash gift.

I get that people can sometimes be irrational and I understand that intrafamilial politics may make the most rational option unpalatable, but the OP needs to at least consider the option and potentially discuss it with his step dad to see if it's OK.

ZV

 

[Tweak155]

snip
Seems kind of a round about way to get it done, but neither I nor my step-dad have the cash laying around to get out from the KIA loan. The way I'm thinking, I could buy the TrailBlazer today and put my Kia up for sale tomorrow.
snip

If his step dad is rational, he'd be perfectly fine with the OP selling the vehicle. From the step dad's position, there's no difference between whether the OP uses the truck or sells it; in both cases the step dad's position remains the same.

Also, if the parents are having money issues ("hav[ing] trouble getting $5,000 themselves"), why would they gift the OP a $9,500 truck in the first place? They'd be better off selling the truck themselves, taking the profit, and giving the OP a portion of the profit as a cash gift.

I get that people can sometimes be irrational and I understand that intrafamilial politics may make the most rational option unpalatable, but the OP needs to at least consider the option and potentially discuss it with his step dad to see if it's OK.

ZV

Don't ask me, but looks like you didn't read everything. Since he opted to give him the truck instead of selling and then cash, I assume there is a reason. It would seem to be a reasonable observation.

Either way I don't know the guy. I would think TechBoy can estimate based on past interactions with him.

 

[Zenmervolt]

Don't ask me, but looks like you didn't read everything. Since he opted to give him the truck instead of selling and then cash, I assume there is a reason. It would seem to be a reasonable observation.

I did read everything, thanks. Not having cash lying around is not the same as "having trouble getting $5,000 together."

The former simply implies illiquid assets. The latter implies heavy debt or or credit problems. Very different things.

Opting to give him the truck instead of the cash may have just been what seemed easiest on the surface; in my experience people very often just jump on their first thought without thoroughly examining the situation and that seems most likely what happened here.

Either way I don't know the guy. I would think TechBoy can estimate based on past interactions with him.

I agree that the OP is in the best position to suss out the step dad's reaction, but that doesn't mean we should fail to present possible options that may well work better than the one that first came to his mind.

ZV

 

[Tweak155]

I did read everything, thanks. Not having cash lying around is not the same as "having trouble getting $5,000 together."

The former simply implies illiquid assets. The latter implies heavy debt or or credit problems. Very different things.

Opting to give him the truck instead of the cash may have just been what seemed easiest on the surface; in my experience people very often just jump on their first thought without thoroughly examining the situation and that seems most likely what happened here.

You're implying I'm stating something that I never said just because you took it that way. If it is "lying around" (OPs words), it is "trouble free" to obtain (my offensive re-word?). Otherwise there is some sort of "trouble" involved. Focusing too much on semantics as I had no intention of rewording what the OP stated. The fact remains the option was available to sell the car, yet that isn't what he chose to do.

I agree that the OP is in the best position to suss out the step dad's reaction, but that doesn't mean we should fail to present possible options that may well work better than the one that first came to his mind.

ZV

I didn't limit any options. Your suggestion was already previous in the thread. I added a new possibility / opinion / option, which is what you state you're encouraging, but actions are proving otherwise.

 

[lakedude]

It would be a good idea to see if the stepdad approves of the actions being planned.

I've given away several vehicles. Sometimes I had conditions in mind, other times not so much. Generally I'd expect the vehicle to be kept and driven. Selling or trading in favor of another vehicle would generally be okay, especially after the passage of some time. Selling the vehicle to get money to buy drugs or some such would not be cool at all.

Everytime I've done this the recipient did not have another vehicle. I doubt I'd give a vehicle to anyone who already had a late model vehicle so this situation is a bit hard to imagine.

Some would argue that it does not matter, a gift is a gift.

 

[Midwayman]

If his step dad is rational, he'd be perfectly fine with the OP selling the vehicle. From the step dad's position, there's no difference between whether the OP uses the truck or sells it; in both cases the step dad's position remains the same.

Also, if the parents are having money issues ("hav[ing] trouble getting $5,000 themselves"), why would they gift the OP a $9,500 truck in the first place? They'd be better off selling the truck themselves, taking the profit, and giving the OP a portion of the profit as a cash gift.

I get that people can sometimes be irrational and I understand that intrafamilial politics may make the most rational option unpalatable, but the OP needs to at least consider the option and potentially discuss it with his step dad to see if it's OK.

ZV

The really smart thing to do would be for the dad to sell the trailblazer and give him the cash. There is usually transfer tax based on the value of the vehicle, but you can give a gift of upto $14k in 2013 without incurring any gift tax. Pay down and refinance.

 

[Zenmervolt]

The really smart thing to do would be for the dad to sell the trailblazer and give him the cash. There is usually transfer tax based on the value of the vehicle, but you can give a gift of up to $14k in 2013 without incurring any gift tax. Pay down and refinance.

In many (my gut says to say "most" or even "all" but I don't have the time to do exhaustive research on all 50 states to verify) states you can specify that the transfer of the vehicle is a "gift" during the title transfer and avoid the transfer tax as long as it's between family members.

There will still be a title transfer fee, but those are generally relatively minor.

ZV

 

[LTC8K6]

In many (my gut says to say "most" or even "all" but I don't have the time to do exhaustive research on all 50 states to verify) states you can specify that the transfer of the vehicle is a "gift" during the title transfer and avoid the transfer tax as long as it's between family members.

There will still be a title transfer fee, but those are generally relatively minor.

ZV

Yes, my dad gave me his car this way. Father to son transfer was tax free all around.

 

[TechBoyJK]

I can't sell the SUV. It's being given to me because I mentioned I wanted one and would like to do without a car payment.

Frankly, I'd like to get rid of the car payment, save up some money, and buy a 09 BMW Z4. I had an 04, but it had some issues so I sold it. To my understanding, the 09 (last year they made that body style) was pretty much flawless, and if I wanted a Z4 to keep, that'd be the one to have.

So I'm thinking I drive the SUV for a year or 2 until I'm a little better off financially. Then decide what to do from there.

 

[Tweak155]

I can't sell the SUV. It's being given to me because I mentioned I wanted one and would like to do without a car payment.

Frankly, I'd like to get rid of the car payment, save up some money, and buy a 09 BMW Z4. I had an 04, but it had some issues so I sold it. To my understanding, the 09 (last year they made that body style) was pretty much flawless, and if I wanted a Z4 to keep, that'd be the one to have.

So I'm thinking I drive the SUV for a year or 2 until I'm a little better off financially. Then decide what to do from there.

Did you try calling your loan company to see if you can modify the loan? I.E Set up a deal where they get the sales value of the vehicle, have an expectation only ~$4500 will be left over and you continue to pay interest?

Really I don't see how this is any different than if you car got totaled and your insurance company wrote you a check, but not one large enough to pay off the balance of the loan. You'd still owe the remaining balance.

Maybe you can put the SUV as leverage that you'll pay off the loan instead of getting a new loan.

 

[nerp]

Take the truck, don't register or insure it while you keep the KIA and wait until the loan isn't upside down. Then sell it.

Or bring the kia back with the truck, trade both in for something you can afford once the numbers settle out.

 

[jaedaliu]

In many (my gut says to say "most" or even "all" but I don't have the time to do exhaustive research on all 50 states to verify) states you can specify that the transfer of the vehicle is a "gift" during the title transfer and avoid the transfer tax as long as it's between family members.

There will still be a title transfer fee, but those are generally relatively minor.

ZV

$8500 is well under the annual gift allowance, so no taxes needed even if gifted to a stranger.

Take the truck, don't register or insure it while you keep the KIA and wait until the loan isn't upside down. Then sell it.

Or bring the kia back with the truck, trade both in for something you can afford once the numbers settle out.

but that means he's holding onto the Kia for 1 year+, paying $6k and letting the truck sit for a year. Option 2 may work.


So, what did the OP decide? Every day spent deciding is another ~$20 down the drain.

 

[Midwayman]

$8500 is well under the annual gift allowance, so no taxes needed even if gifted to a stranger.

That's for the giver, not the receiver. However auto use tax is typically a tax you pay when you register a car. Doesn't matter if it was a gift or not it is based on market value. Thats to prevent people claiming lower values than the actual transaction to lower taxes. I did look up the family benefit and there are two cases in my state. Immediate family qualifies for a reduces rate (like $30, so nominal). If it is transferred to a spouse as part of an estate, there is no tax.

 

[Zenmervolt]

$8500 is well under the annual gift allowance, so no taxes needed even if gifted to a stranger.

We're talking about use taxes imposed at the state level. Not about the Federal exclusion.

States are not obligated to follow the same guidelines and most will only waive the state's transfer taxes if the vehicle is gifted between family members.

Remember, there is more to taxes than just the federal level.

ZV