Like millions of families, my husband and I have always had two cars. Even when I transitioned to working from home full-time, I clung to my own car.
But when we got serious about our finances and paying down debt, I just couldn’t justify keeping a second car any longer.
Find out why I decided to sell my car, how much money I’ll save, and how I overcome the challenges of having just one car when life acts up.
Americans and cars
My family isn’t the only one to have multiple vehicles. According to a study by Experian Automotive via The New York Times, the average American household has 2.28 cars. A staggering 35 percent of homes have three cars or more — often, that’s more cars than there are licensed drivers in the household.
Those cars come at quite an expense. Even if you drive a small, entry-level vehicle, repairs, fuel, and insurance is expensive.
AAA estimates that it costs you $7,373 a year to own and maintain a small sedan. And that’s assuming only regular maintenance and doesn’t include major repairs or heavy commuting.
Deciding to sell my car
My little car was a 2012 Nissan Versa. Nothing fancy, just a basic little sedan with excellent fuel mileage. I paid cash for it, so we didn’t have a monthly payment. Because of this, I told myself for a long time that it made no sense to sell it.
But I realized I was driving it less and less, and my husband’s car is newer and just as fuel efficient. I decided to take a closer look at the numbers to see if it was financially wise to keep it or sell it.
I spent about $50 a month on gas and about $20 a month on tolls. My monthly insurance premium was about $90 a month. Plus, I set aside about $50 a month in a bank account to save for future car repairs and maintenance. Without those expenses, I would save $2,520 in a year.
While my car had been a tank, it was nearing the point where it probably needed some work. It definitely needed new tires right away — which would cost about $500 — and likely some other minor things. Without buying those tires, I could tuck that money back in my savings account.
By getting rid of my trusty Versa, I would hold on to $3,020 this year without even considering the money I would get for it.
I calculated how much I could save in interest if I used the money I would save by selling my car to pay extra towards my student loan debt. Over time, I would save thousands.
Selling the car
I ran the numbers on my car. It was in excellent mechanical condition but had some cosmetic flaws and, of course, needed tires.
I knew I could sell it for more if I sold it myself on Craigslist or Facebook, but that could take weeks or even months. In the meantime, I’d have to maintain and insure the car, sinking more money into it.
Instead, I decided to sell my car with AutoTrader’s instant cash offer system.
You import your car’s information, such as its make, model, mileage, and condition. AutoTrader makes you an offer which you can take to participating dealers. As long as the information you entered is accurate, the dealer will honor the cash offer.
I completed the AutoTrader form, printed the cash offer, and headed off to the dealer. Within 30 minutes, I walked away with a check for $4,200, which I thought was fair to sell it so easily and quickly.
How much we’ll save
With what I took home from the sale and my savings in maintenance, this is what I’ll save in one year:
That puts me within $150 of AAA’s estimate in what it costs to own and operate a small sedan, which makes sense since I drove fewer miles than most people.
For many people, $7,220 may not seem worth getting rid of a perfectly good car. But for us, that money is better spent paying down debt and investing. If we apply the monthly expenses to our debt snowball plan, we’ll cut down on interest and save more money over time.
Getting around without a vehicle
I expected that selling my car would be a real shock to my system, but it’s actually been a very smooth transition. One of the biggest positive changes I’ve noticed is a drop in my overall spending.
Because I now need to coordinate around my husband’s work schedule if I want the car, I can’t just go shopping on a whim. That means I don’t fritter away cash on cute things I forget ten minutes later.
I find when I do go shopping, I’m more deliberate since it took more planning and I don’t make as many impulse buys.
When I do need to go somewhere and my husband’s car isn’t available, Uber has been invaluable. While it can get pricey, I’ve only had to use the service once in awhile for emergency appointments, so it doesn’t cut significantly into my savings.
Making lifestyle changes
When you have student loans or credit card debt, making lifestyle changes can be difficult. But by freeing up more income, you can get out of debt faster and give yourself more freedom.
While the idea of going without a car was frightening to me at first, I’ve found it to be well worth the sacrifice.
For more ideas on how to free up money to make extra payments towards your debt, check out this article to make money on the side and boost your income.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|