Take almost free heap or be independent and keep paying off own new car?

Question:

Hi, I'm a recent college grad. I have a full time job, but only earn $2k/month. I have about $7k in savings-I save now about $500/month. I recently bought a 2006 toyota for $16K, and have a loan of $350 a month/3 years. I pay ~$150/month for insurance. My job contract is ending in a few months, and I am nervous that though I have a useful, relatively dependable vehicle, it may have been a poor financial decision to buy such an expensive car. I may be jobless for a month or two, and the next job is unlikely to pay more (I'm applying for bio tech positions). My parents are offering to sell me their 98 Honda Civic w/ 70K miles for $2K. I'm proud to be finally financially independent of them, and I wonder if it's smart to turn down this offer to retain my independence. I need a reliable car since I drive a great deal (over 1K miles/month) for work and pleasure, and often to remote areas where it would really suck to be stuck. Should I take their offer? Stick out paying off the new car?

I can appreciate that you want to be independant... but its not like they are GIVING you the car. They want some $$ for it. The upside is that you can own the car outright with money you already have in the bank.

I say take the car, thank them for it... realize that Honda is about the most dependable car ever and 70k miles for an engine that could give you 300k isn't bad.

Why not start looking for a new job now? You would have peace of mind and not face the prospect of selling your car for a loss. The depreciation on a new car, even a Toyota, is steep for the first three years. Get the payoff and a few estimates from dealers and the internet on a sale price before making this financial decision.

If you can't find a job before the end of the contract the Civic would still seem to not be a bargain because of the car's age, unless they maintained it very well. Civics run forever if not abused. Since you have $7k in savings, you have prepared yourself for any contingency while hunting for a job you love. Good luck!

I agree with Ginger. Look at it this way. You have $7,000.00 in savings. And you are likely to have at least another $1,000.00 in savings before this job ends, if you continue to save $500.00 per month. You don't think it is likely that you will be without a job for more than 2 or 3 months. Here is my suggestion. Out of the $7,000.00 you have saved already, get 6 money orders for $350.00 each. Mail those money orders to your parents and have them send off one money order per month, for your car payment, AFTER you lose your job. This way, you don't have to worry about car payments for 6 months after you lose your job. If you pay your parents $2,000.00 for their car, that is like making 6 payments on your own car. Instead of buying an older car for $2,000.00 plus losing money on the sale of your own car, you may as well pay down $2,000.00 on your own car. You will lose ZERO money, plus you will have your independence, plus a newer car, plus you don't have to worry about making car payments for at least 6 months, while you are looking for another job.

Take almost free heap or be independent and keep paying off own new car?

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