I made a mistake with the car I bought. What should I do with it now?[ Edited ]
I purchased a vehicle about 6 months ago on a bit of a whim, I didn't need a vehicle, I had a perfectly good one already but here I am. I can afford to make payments every month on the vehicle and all my other debt but it leaves me hardly any disposable income and none going to savings. I'm debating getting rid of the vehicle and buying a cheaper vehicle however I will lose a couple thousand dollars most likely from the time I bought it and don't know if it would be better for me to take the loss now or stick with my choice of purchasing the car and live paycheck to paycheck. Any advice on my situation would be greatly appreciated.
Ouch! You’ve just connected two phrases a financial planner hopes to never hear in the same sentence: “I purchased a vehicle” and “on a bit of a whim.” About the only scenario I can imagine where I wouldn’t cringe at this would be if the person making these statements is very wealthy. And unfortunately, that doesn’t sound like the case here (at least not yet). But, what’s done is done, so now all we can do is focus on the best course of action going forward.
Bite the bullet and move on
Here are my thoughts on that: if it’s possible, I encourage you to get rid of the car, swallow the loss, and buy something that makes more sense to your situation.
The reason I say, “if it’s possible,” is because depending on the car you purchased, you could actually be facing a much bigger loss than you’re thinking. If that’s the case, you’ll either have to sell the car and pony up some extra cash to pay off the loan or if you trade it in, you’ll have to get approved for financing a cheaper car with the extra debt from this car rolled into the new loan. Unfortunately, I don’t have enough details about your situation to know if either of those will be an option. Hopefully, one of them will be though. For more thoughts on this, please check out this similar answer I provided to another member just the other day.
An expensive lesson
In the end, what you certainly don’t want to do is live paycheck to paycheck for the next 5 or so years just so you can drive a car that you really don’t need or want. And it’s not just about the bad outcome of this car transaction. With no ability to save and no cushion in your budget, you could end up in even more debt by the time the car is paid off. Though I wish it wasn’t the case, I’m afraid what you’ve got here is a very expensive lesson that could get worse so I’d encourage you to be willing to take some pretty drastic action to fix it before it does.
Hopefully your slip-up can serve as a good lesson for other readers of this page and keep them from making the same mistake. Cars are expensive. So purchasing one should involve a lot of planning and thought and should never be done on a whim (again…unless you’re really rich).
Thanks so much for your question. I hope this helps and I wish you all the best in getting back on track!