52k miles, "high mileage"?

Yeahh, truly impressive. Read OP's post listing the transmission failures on her previous cars. How long has Detroit been trying to build a transmission that lasts longer than the payments ?

 

An excellent plan, I hope you can make that happen.

It is a common concept, not limited to the Toyota Prius, that the last year's production of a given model will generally be more reliable than the first year's production of that model. In the case of the 2G Prius which has been around for model years 2004 to 2009, the later years are generally more reliable.

Better that, than to buy a product from a manufacturer who doesn't understand the concept of continuous improvement.

 

AStukes, Pat Wong is Prius expert extraordinaire and he is *always* worth listening to carefully, although I disagree with his comment that a 52k mile Prius purchase was not the best choice. A *lot* of data has accumulated that the Prius is extra-ordinarily reliable out to 250k miles and above. Since your car has spent 52k miles a reasonable remaining life is 200k miles bought for about $14k. That works out to 7 cents a mile while saving 7 cents a mile on fuel compared to the MAXX.

Here is the caveat: keep up with maintenance!

 

Your pretty much right, but it wont cover tires/brakes/wiperblades/rattles/lights,bulbs/hinges on doors hood ect.

 

I'm not sure that purchase was the best choice for the OP to make at this point in time, given that her existing car was working fine and she has many other demands on the household income, per her post #13.

I don't disagree with the concept of buying a Prius with 52K miles, if the purchaser's finances permit that expenditure without undue strain.

 

She was credited $5900 to pay off her Chevy loan. I didn't check, but I am willing to guess that the auction value for that car was less than she owed.

Murky crystal balls and all, she traded in a car with expected worse reliability, a much shorter expected life, and worse fuel economy than what she has now.

The odds are in her favor she will benefit from her choice. And she will pollute half as much, and send half as many oil dollars out of the country.

 

As you mentioned earlier, a reset to your expectations and approach to cars is a good idea.

Maintain the car per Toyota reccs (although many of us change the tranny fluid more often); repair the simple and relatively inexpensive stuff if it breaks, and expect 15+ years of service from the car.

 

high mileage??, hardly...we have 150,000 miles on our prius with no issues...changed transaxle 3 times now...inverter flush 3x and still original brakes...with plenty to go...
so ur prius should go alot longer than ur previous vehicles easily ,if routine maintenance is continued...people that whine about the prius havent got a clue...i just laugh at them at the gas pump when they are still going at $80.00+...

 

^^ Transaxle fluid I'm guessing ?

 

Well...you asked...

I see your family's point in that buying higher mileage used cars, wrapping in negative equity from previous cars, and financing them long term is over all a very expensive way and dangerous way to finance a vehicle. At some point you will need to drive one of these vehicles until it is paid for or you will always be financing a huge chunk of some previous car alongside a new car and you're always going to be upside down. Your idea of paying more than the payment is not only a good one, but is vital IMHO to coming out of this deal okay. $5900/36 payments is $163.88 per month, the money you are saving in gas with the Prius over the Malibu roughly. My advice to you would be to add that to your car payment every month. Then you are essentially paying off the negative equity separately over a 3 year term...

Do you have gap insurance on the car? I'd get it...because if it were to be totaled or something like that...you'd be screwed. You'll have no car...and still need to come up with $6k...or more just to pay off the loan. Call your insurance company and ask about gap insurance first thing monday morning.

The positive is the Prius is a long lasting vehicle with a very good reliability record, so if you can hang in there you can drive it until its paid for, or you can drive it until you can get out of it and at least get the loan paid off. That day will be several years from today though...be ready for that.

I agree with your family though, not only will you be upside down on the car at some later date...you are WAY upside down on it right now because you financed the $5900 in negative equity in your Malibu into the deal...

What you should have done IMHO was bought a far less expensive car with similar mileage (a Corolla or Civic or something) you could have afforded to finance for 3 years, the remaining amount of time left on your Malibu loan, and wrapped the negative equity in. Then you'd have the same loan timeframe, a more dependable car, and would have been in a better situation.

 

I know what SWO is saying, but we should put this transaction in context: Practically every new car bought with financing is 'upside-down' one minute after it is driven off the dealer lot, and it stays that way for the entire duration of the loan even if negative equity from a trade-in is not part of the calculation. Going by auction values, OP was about ~$4000 'upside down' on the Malibu.

So this discussion is not about entering into a new 'upside down' state, it is *how much* more upside down for what benefit.

Her family was wrong in their criticism because they:
1. Assumed the Prius would have the same life and reliability as a Chevy;
2. Ignored the substantial savings in fuel.

I do agree with the sentiment to own the Prius at least long enough to pay off the loan, and with a bit of luck for long afterwards. Getting out of the rut of buying cars with loans is a very nice position to be in, and folding negative equity into future car loans an unattractive way to handle money. Exchanging the MAXX for a Prius was a smart first step.

My last remark, repeated: 52k miles on a well maintained Prius is NOTHING.

 

I don't agree with that statement. If you finance for no more than 60 months, the vehicle may be upside down right after purchase for a time, but it won't be for the entire loan unless its a model with VERY poor resale. Now...thats a NEW vehicle, on a USED vehicle where the initial depreciation hit has already been taken...I wouldn't expect it to ever really be upside down...

You sure? I think the entire $5900 was wrapped into the Prius loan.

Thats like saying "Well, you're already bleeding...so why not just stab yourself in the chest again to get a cookie?

Look, I have had argument after argument on here about people who say "you should never borrow money for a car", I don't agree with that. I think car loans are so low interest, and most people can't and never will be able to write a $25,000 check for a car. Even though I can...I still finance or lease cars because I get better returns on my cash than a car loan costs, so I don't want to part with my cash. A responsible, low interest, reasonable term car loan is not a dangerous thing IMHO.

However, this is not a responsible car loan IMHO. This is potentially creating a situation where she could never own a car she doesn't owe 35% more on than its worth. 35%! Thats a lot.

However wonderful a vehicle the Prius might be, however much gas it might save...its not worth jeopardizing the financial health of your family for.

This is done, but that doesn't mean that something can't be learned for the future, and things can't be done during the life of this loan to lessen the potential issue down the road, such as making additional payments on that $5900 negative equity every month.

 

SWO,

kbb says trade-in value for her MAXX is $2 - 3k, and she owed $5900. I gather dealers in general do not pay kbb unless a new car purchase is wrapped into the deal, so I think it is reasonable to use auction market values for this discussion. Yes, *still* $4000 upside down on the MAXX after 6 years of payments.

Your arguments would hold true if she traded in her MAXX for another, somewhat less used MAXX. Trading in for a much more reliable car that costs half as much for fuel is a completely different situation. I agree that she has taken on financial risk now, but she has an excellent chance of significant future gain: getting off the 100 - 150k mile trade-in carousel; decreasing fuel costs by half; and much less repair costs. She has also hedged against future rises in fuel costs and Prius shortages in the near/mid-term future and interest rate increases.

I say smart move, IF she treats her Prius as a long term investment and learns to maintain it well and inexpensively. I don't think she has exposed enough of her finances to voice an opinion whether gap insurance is a good idea.

Here is another way to compare: if she had done nothing but pay off the loan over the next two years she would have spent (5900+excess fuel costs) = $9500. I'll assume interest rates are similar and ignore them. With the Prius in two years she owes $12,500 and has a ~ 100k car. That is about retail market value up till the tsunami in Japan. Any fuel cost increases or MAXX repairs makes her decision today better than doing nothing.

 

My point is she could have purchased an even less expensive car and been in a better situation. When she gets to the end of the loan, 5 years from today the Prius will have 209,000 miles on it based on her 30k a year estimate. Thats a lot...

She said the needed the warranty because she doesn't have any money in savings to pay for repairs. So...if she doesn't have any money to pay for repairs how will she pay off the loan if the car is totalled?

I'd say a $200 gap insurance policy is a must have.

 

She also said she does not have cash flow problems.

All the more reason to have a Prius.

 

But that statement and saying she doesn't have any money in savings and cannot pay for repair bills if they should come up are two different things. When you don't have any cashflow problems one can pay their monthly bills without an issue. However, a totalled car and $6,000 in cash to pay off the loan before you can buy a new one is a completely different thing.

Here is what she said:

Ergo..."If I had to shell out $2,000 for a repair right now...that would be hard to do"

Its just common sense, if she can't pay for repairs and needs the warranty...then of course she would unable to pay off a significantly underwater loan in the event of a total loss...a bill sure to be more than any car repair.

A $200 gap insurance policy is just a no brainer in this situation.

 

If you drive it, and enjoy it for the next 7 years...it will become a good deal. If you are looking to get out of it in 3 years...you're going to take a bath....