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Help! Repairs cost more than the car is worth!!
My wife and I have a 1997 Mazda 626 with about 80,000 miles on it. It started having transmission problems, so we took it to a national chain for inspection.
The $50 inspection revealed nothing, so they had to seek our approval to open it up. They estimated the cost of repair to be around $2,000 if there was significant damage, around $1,000 if the damage was minor, and a flat $550 fee just for opening it up. We decided to go ahead with the inspection, hoping that it would come back with only minor damage.
Well, it turns out the car had major damage and now their estimate is around $3000!! This is about the same as the car is worth at trade in.
We're seriously considering eating the $550 and taking the car to a dealer as a trade-in. But we're not sure if this is the right thing to do, as we'd end up spending more cash out-of-pocket for a new vehicle, and we're trying to save for a house.
We're looking for people's opinions here. Our questions are:
1. Would a dealer even be willing to take this car, assuming it leaked transmission fluid and has severe transmission damage?
2. If so, would we get anywhere near the blue-book value for it?
3. Would we be smarter just to fix the transmission and hope the car can last another 5 years or so without another major repair?
Thank you very much for your opinions and wisdom. Your insight is appreciated, as we're torn and don't know what we should do!
The $50 inspection revealed nothing, so they had to seek our approval to open it up. They estimated the cost of repair to be around $2,000 if there was significant damage, around $1,000 if the damage was minor, and a flat $550 fee just for opening it up. We decided to go ahead with the inspection, hoping that it would come back with only minor damage.
Well, it turns out the car had major damage and now their estimate is around $3000!! This is about the same as the car is worth at trade in.
We're seriously considering eating the $550 and taking the car to a dealer as a trade-in. But we're not sure if this is the right thing to do, as we'd end up spending more cash out-of-pocket for a new vehicle, and we're trying to save for a house.
We're looking for people's opinions here. Our questions are:
1. Would a dealer even be willing to take this car, assuming it leaked transmission fluid and has severe transmission damage?
2. If so, would we get anywhere near the blue-book value for it?
3. Would we be smarter just to fix the transmission and hope the car can last another 5 years or so without another major repair?
Thank you very much for your opinions and wisdom. Your insight is appreciated, as we're torn and don't know what we should do!
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Comments
Stay away from the national transmission shops. Their prices are double what an independent shop charges. (Guess who ends up paying for all of that national shop advertising).
Consider a junk yard (ie. used transmission) from a wrecked or engine-challenged car. Some of the independent transmission shops can help you here
Consider playing the car donation game. You donate the worthless car to any charity and then take the retail Blue-book tax deduction.
Much less than $3,000 and the car is worthless when it's broke.
We were assuming they would, since they have their own mechanics, and could sell the car for around $6500 once it was fixed. We've chosen not to consider reselling to anyone but a dealer, since we don't want to be responsible for sticking someone with a lemon.
If the national transmission chain is telling us it's a $3000 fix, I'm thinking the dealer's own mechanics might be able to fix it for something like $1000, which means that at a trade in value of $3000 they'd be looking at a net gain of about $2000 on the car.
However, I'm certainly no expert in the used-car industry, so I have no idea if my assumptions are correct.
We're not inclined to donate the car to charity, since we think with a new or repaired transmission the car should have a few good years left. According to Consumer Reports, the 626's have been pretty reliable overall, and this is the first major problem we've had with it. For these reasons, we're really only debating between fixing it, or trading it in and replacing it with a newer (used) vehicle.
Thanks again.
It ain't happening, sorry. Dealers take enough chances on a daily basis to know better than to sign on for a guaranteed loser deal.
Also, even if you car was running great, it would be wholesaled because of the year and miles. In 99% of cases, you can't write a warranty on a 80K-plus vehicle and most lenders won't finance anything over 5-6 years old.
Bingo .!
Tranny shops are NOTORIOUS for the hit and run jobs .. $3 grand ..? sure, if it's 99 Jag XJ8, not a 626 ...l.o.l..
Terry.
$3K is hogwash.
I know that you are SUPPOSED to only deduct the actual value of what a car is worth. However, cars worth less than $5000 do not need to be appraised so nobody will challenge you on it's value. So if you have a broken car (that is worthless) and a retail value of say $3000. Then you could donate it and take say $3000 off of your income and pay maybe $1000 less in state and federal taxes (assuming a net tax bracket of 33 %).
I am not advocating this approach, I just know of several individuals who have used this very popular tax-based approach.
This popular approach is no more immoral than selling a broken car to the unsuspecting.
Yes, they are both immoral but the former is always ILLEGAL, wheras the latter may not always be illegal.
prophet2-The NKF was quoting the IRS code to your friends. Probably nothing wrong with declaring the value at $4999 to avoid the hassle of getting an appraisal as long as the market value was at least that much. But I wonder why they couldn't just do a used car price check from Edmunds, print out the page, and keep that for their documentation in case of an audit?
As a CPA licensed in Ohio and Illinois, you are DEAD wrong. In each of the past two years, I have received bulletins from the Cincinnati and Chicago offices that donation of used cars was "an area of potential abuse" that would require additional scrutiny from the IRS. Thanslated into plain English, if you contribute a car and declare it on your Schedule A and the related charitable contribution forms, you are MORE likely to be audited.
What you are advocating is fraudulent, period. Sure, you MIGHT be able to get away from it, but then again, matbe not. Personally, I would prefer NOT to be audited.
I advise my clients not to contribute their beaters to charity. I tell them that it is more advantageous to sell the car for below book and pocket the cash or give the cash to charity.
By the way, remember when Clinton's taxes were released. He had "donated" his USED underwear and deducted $2 a pair for his used tighty-whiteys.
I am sure that the plaintiff bar would be willing to spend a whole lot more (g).
Just like those big flashing lights on the side of the road, it pulls the IRS's attention, it's in their top 10 "wanna come and see ya" list .. tread carefully and carry a big CPA ...
Terry :-)
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Red flag territory? You betcha!
With a bad transmission, this car is practically worthless. I have no problem with the donation route as long as you have a good printout of your car's retail value. Even IF you deduct the price of a used transmission installed (about $1,500), and thereby being perfectly honest, you will still show a KBB value near $5,000.
That is correct, you must have an appraisal if you declare over $5,000, so try to stay under that.
Depending on your tax bracket, you might end up with $1,500 in your pocket for a donation approach, which is probably more than you'll get trying to sell the car as is.
Speaking of used transmissions, have you explored that route as a cost-saving compromise?
Thought it was good deal. Has been giving AT check
engine light occasionally. TOok to Natl AT chain,
came up with 1.8K min 2.6K (with Torq convt) estimate. Have it in today in a indep AT shop for 1.8K rebuild. Wish I had read this post and gone the put in used AT route. This car sucks and is
not a good buy even w/ lower price. Especially since I have had Toyotas that ran 160 and 130K w/o any transmission problems.
So donation route or repl with used is way to go. Also in Nor CA I dont see any ads for cars with prices as low as what is in TMV or KBB midpoint.
(see autos.yahoo.com) Priv parties seem to ask
for more than TMV and are getting it in this area.
SO u can use slightly higher valuation of u document current listings in newspapers or online
Our credit is not good... Around the 500 mark. We had a BK back in 2001 and since have struggled so much its been nearly impossible to raise it much. My car just died and it will cost around $4000 to fix it. Here's the real kicker... We still owe $5000 on this car! So fixing it is out of the question, even if we did have the money. (Which we don't!) So here is what I have to walk on a dealership with:
*Bad Credit
*No $$ for down paayment
*Exhisting vehicle for possible trade-in not running
* Still owe $5000 on this car
*Can't afford a payment more than what we pay now, which is $250.
**So basically its like, "We need you to pay off our exhisting loan, take this car that needs fixing, and give us a new car, all while keeping our payments around the same. ($250)
Is there any hope at all for us? I have read other questions on this forum. Some others are in better shape than us, and have been told there's not much hope....
Would a dealership possibly discuss a lease with us? Should we give up now?
Any advise would be appreciated. Thanks for your time.... I know this is probably the worst anybodys ever heard....
you can always get a Kia Rio and keep the payment at $250/mo. Heck Kia approves anyone if they have a beating heart.
maybe you can get some help from the local Votech auto shop? try a different mechanic?
2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.
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the best hope is a cheaper fix for the old car. Otherwise, you are looking at payments stretching way out on a cheap car, if you have to hide most of the 5K negative, plus whatever you buy.
Maybe a cheap used car, but then you have repair worries again.
2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.
p.s. as for the repairs on our car, it is a very trusted mech. and friend who gave us the bad news. He is shopping around for some used parts but ultimately, even he agrees that its probably not worth it... And the car would fetch $4000 at absolute best.... More than likely around $2500-$3500. Although a dealership probably wouldn't even offer a $500 credit since its currently not running.... (well it is, but not enough to be driving it anywhere far as it would burn up..)
And if you decide to explore the possibility of getting a different vehicle, no salesperson worth his salt is going to LAUGH at you. A reputable salesperson would prefer to actually sell you a vehicle, and laughing at you won't help. Most salespeople will work hard to find a good way to put you into another vehicle, if it can be done. If you decide to go look at Kias, we can point you to areas of this website where other members are recommending good dealerships, hopefully some in your area.
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I knew it was an auto, but what kind? Is it a car or is it that small jeep looking thing that I am thinking of.... I'll do a search...
I would LOVE to get some info on a good dealership in the Fresno/Clovis area... If you could point me where to get this info I would greatly appreciate it....
Thanks!
For now, I'd check out places like auto auctions and see what kind of car you can purchase outright. Forget being in the "book of the month club." Do this until you can either raise the funds to repair your Olds or your overall finacial situation improves.
What is it that happened to your car that it needs $4K in repairs? I would go to another mechanic for a second opinion. Avoid dealers for they are the most costly. Avoid places like Pep Boys for they are often third-string mechanics who flunked out of Vo-Tech. A reputable independent mechanic is the best choice.
Before going down that road, I would have another look at the Cutlass. It's hard to think of what single problem could cost $4K to fix on a 10 year old midsize domestic. Correct me if I'm wrong but I would think even a new engine or trans should be less than that.
There are tons of Kia automobiles in different styles, so you'll want to click on the "new cars" tab at the top of the page to find a list of all Kia vehicles if that's what interests you.
If you don't decide to repair your Cutlass, then talk to EVERYBODY - call dealerships, talk to your bank or credit union - be honest about your situation, and see what options are available. The best advice we can give you is that, whatever you purchase, purchase with the intent to keep it til it's paid off. That's the only way you'll avoid a situation like this again, and it will improve your credit score.
Once you work with a bank/credit union/dealership to figure out what you can afford, we can help you better to decide what vehicle is right for you.
If you look at the search tools at the left, you see a "browse by message board" feature. If you select the Prices Paid board, you'll get a list of topics in which people are reporting their good & bad experiences with different dealerships, listed by make/model.
I did a quick search on the keyword "Fresno," and found only a few references - mostly for Mazda dealerships.
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The poster is in a tough spot with no clear solution I'm afraid.
Even though I totally see what some of you are saying about the Kia, we are stuck between a rock and a hard place at the moment, so unfortunatly, the here and now is what matters most. Later re-sale is definately a concern, but if a car with not the greatest re-sale ends up being our only option, we will take it....
So if I call a dealership, do I just ask for the financing department?
Again, thanks for all the responses. Its helping alot! I am so thankful for the internet!
If your credit score is as low as you think, then your interest rate will be high. So you have to figure that you'll pay about $25 per thousand that you borrow. In order to get a $250 payment, you need to borrow $10,000. Your car may be worth a few hundred dollars, so you'll be burying 4800, so now you need a car that you can buy for 5200 after tax and plates, not impossible but you also need to finance twice its value. That is where it will get sticky for you.
Look for a 2004 domestic car with a large rebate and you may be able to get approved, but you won't have a $250 payment. If you do go this route, do yourself a favor and buy the gap insurance.
$5k on a '95??? Can you spell "predatory lending"?
Next, tweety needs to scrounge together some cash. Home equity line of credit, maybe? Lots of cars to be had in the $5k range; Chevy Prizm being the all-star here.
No 4x4 "jeep-looking" thing for you, too expensive.
Or do it right and declare BK. It doesn't sound like you have a way to crawl out of this hole.
Question for the professionals: A friend from work, smart guy but -zero- life skills, owes an undisclosed amount of $$ on a '99 Ranger. The truck has a stuck rear drum brake and hasn't moved in 11 months, he's behind on the payments and is considering "surrendering" the car. They will screw up his credit, naturally, but once they take the car, does he still owe the difference between payoff and whatever the auction will bring? Or can he "walk away" from it with wrecked credit?
I get to feeling queasy just thinking about it. The guy makes decent money, has low expenses, but doesn't have money for food by the 25th...
-Mathias
Are you serious about letting them repo our car? Wouldn't that have a huge impact on our score? I think that would have to be an absolute last resort. But who knows.... Thanks for the input.
I guess that shouldn't surprise me... so better to keep paying.
In tweety's case, the car is gone, but the well is still there... so that's not as bad as it sounds. And the CU helped out, so they should not be stiffed. But $4k of repairs on a 10-year-old Olds? No way. The car has to go, and the insurance, registration costs etc. with it.
Tweety, since you guys own your house, why not get a home equity line of credit? Even the "up-to-100%" loans have semi-decent rates. First & foremost, you guys need $$ to stop the bleeding. They say you can't borrow your way out of debt, but don't forget Steiner's Law of Credit: It's expensive to be poor. You have to get some maneuvering room first to avoid justifying bad decisions [new Kia, for instance :-)] by previous bad decisions.
Good luck!
-Mathias
Thanks for all the help....
You have HOW MUCH equity??? Didja make any mortgage payments lately??? How bad can your credit be with that kind of equity in your house??? Why are you messing around with a car loan on a 10-year-old sled?
I think you need to have a sit-down at your credit union; they appear to have some faith in you, and it looks like you got something to work with here. This should be no problem at all. Pay off the Olds, ditch it, get an '01 Prizm with 40k miles for $5-6, and start paying off your debt.
Good luck,
-Mathias
We refinanced last year and even though we had alot of equity, we had a real hard time finding a lender willing to help us.... We went through about 6 or 7. I thought Geez, even if we totally flaked they would make money off us.... Alas, we were turned down over and over....
I'll look into that Prizm....
Hope you all have a nice holiday!