Should I get a new car after my warranty ends?

Submitted by BlurryJen t3_10q5xkb in personalfinance

In August, I made a mistake and financed a 2017 Nissan (as a first-time buyer). After researching more about the car I realized that they’re not very reliable.

I have $9,000 in negative equity for this vehicle. After my warranty end’s I plan to pay off at least $5,000 of my negative equity and roll it onto another loan for a new vehicle.

My other plan is to just pay off the car ( Knowing that I’ll have to pay a lot for a new transmission). Then sell it and use the money to get another vehicle.

I’m currently a college student and I am confused on what I should do.

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retroPencil t1_j6o0tgg wrote

I'm assuming the goal is to minimize current and future costs.

If so, pay off car, do preventive maintenance, drive like a grandma.

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LR_111 t1_j6o2e6b wrote

Selling the car for a loss just to avoid the risk of needing a new tranny is not a good idea. Just keep the car and drive it. The risk of needing a major repair on a 2017 is low.

And is the new tranny over 9k?

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BlurryJen OP t1_j6o5ofw wrote

No, the new transmission is like 3-4K.

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LR_111 t1_j6o6zkx wrote

So it makes no sense to eat 9k to avoid a chance at spending 4k.

Let's say the car has a 25% chance of the transmission going out.

You have an expected gain of 8k by keeping the car and expected loss of 8k by getting rid of it.

This isn't always the best way to frame situations, especially if the loss is catastrophic (for example say you have a 1% chance at a 500k loss) but since the loss in this case is less than what you are spending up front to avoid it, it makes no sense to do so.

This is like paying 1000 dollars a month to insure something that is worth 5000 dollars.

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Liquidretro t1_j6o3r1l wrote

A Nissan what?

$9k negative equity is a tremendous amount for a student. Rolling $4k plus into another vehicle loan just keeps you in this terrible debt cycle. While the car might not be very reliable long term, I would probably take the chance and keep driving it until you were at least break even and hopefully by then you have graduated and have a full time job. Making a bad financial decision to increase that negative equity on the chance you have transmission issues isn't very smart. It's not using statistics very well either.

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BlurryJen OP t1_j6ojq3a wrote

I wish I would have thought more about my purchase, at first I was supposed to go to a Toyota dealership but apparently one of my family members knew someone at the Nissan dealership. So I thought I was going to get a good deal on a vehicle and hopefully not get gypped. At the time I didn't know what negative equity was or the issue with these cars.

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Liquidretro t1_j6oko54 wrote

So what's the make and model?

That's all in the past, learn from it for the future.

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BlurryJen OP t1_j6ol645 wrote

2017 nissan altima sv

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Liquidretro t1_j6om71s wrote

Ya not something you want to keep long term. Ideally it breaks just before your warranty expires and buys you more time. I just hate to see you go further into debt just in case.

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ct-yankee t1_j6oms3c wrote

Keep your car. Set aside an emergency fund to handle potential repairs with some of that 5k, and send the rest to the car note. Keep paying more than the payment until it is gone. The negative equity is a result of a past bad decision, eliminate it ASAP and don't allow it to continue.

Do not skimp on the maintenance of the car. Take care of it.

Rolling your negative equity into another car is guaranteed to make your debt problem worse in order to avoid a situation that may happen. A car transmission problem may never occur, and is even less likely if you maintain as appropriate.

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radalicious123 t1_j6o3hx7 wrote

The top priority financially is to get off the negative equity treadmill and never get back on. If you have the cash available to do that, do it. If not, plan out the quickest way to get there.

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phil-l t1_j6o3yz4 wrote

Knowing its history, personally, I wouldn't buy a Nissan equipped with a CVT. But you've got one - so I'd just take very good care of it. Yes, you may end up with a transmission replacement at some point - but that's generally a $4K-$5k-ish expense, so it can be planned for. Also: Many people seem to skip the maintenance on these transmissions. Check your owner's manual, but I believe transmission fluid changes are recommended every 30K or so miles (and, knowing the weakness of the design, I would err on the side of changing the fluid more frequently).

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Left-Landscape-3890 t1_j6oa5g0 wrote

Save up the cost of transmission repairs or replacement and keep it until the wheels fall off

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1hotjava t1_j6omjct wrote

>$5,000 of my negative equity

Just save that $5k for future transmission. The CVT is really the only problem on these.

>and roll it onto another loan for a new vehicle.

Since you will be underwater on the next one the minute you drive it off the lot this just digs the negative equity hole deeper on that one

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Interesting-Dish8894 t1_j6otj96 wrote

You asked what to do. And I would tell you to stop borrowing money. Do whatever you wish otherwise which means you keep the car. I can’t imagine you need to put that many miles on the car

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