One of our biggest "mistakes" in the past was our purchase of a 2005 Dodge Durango.  I still owe $20K on the loan, but the vehicle is worth around $17K-$18K on a private sale.  Not so uncommon to be upside down on a trade, but being in debt with a $451 auto loan payment isn't wise.  I wasn't sure what I could do about it.  So....

I stopped by the used car dealership on Friday and inquired what I could do to get out of my favorite gas guzzler and into something more practical with lower payments. 

We found a 2005 Pontiac Grand Prix GT.  It started out as a $21K loan plus tag, title, tax.  By the time we left, the deal was a $19K loan with everything included.  The loan terms are 9.49%, 72 months, $347 per month.  That's $1000 less debt and $100 dollars a month less in payment a month.  Add on lower gas costs and about an $11 per month insurance savings, and our monthly burden is decreased.

Yes, I am very well aware that the rate is not so great and that in the long run we will be paying more in interest, but with our income not even coming close to paying our monthly living expenses, is this an option I should consider? 

My opinion at this point is to take the deal, get our payments lower so we have some breathing room.  (In other words, so we don't have to use the credit card to buy groceries any more.)   Then start fixing the terms after we are back on our feet.  Or am I just using the same clouded judgement that got us into this mess in the first place?

You're trading in the truck for the coupe?  I think the best bet would be to trade down to a sedan that's going to be easier on the pocketbook as well as the gas pump.  I'm sure the gas mileage is already an upgrade from a truck, but couldn't you do even better?  A sedan would certainly be a lot cheaper to insure?

What about going for an '03 or '04 Honda or Toyota?  Cars loose 60% of their value over the first 4 years, so why not get something 4 years old?  Then, if you were to sell it, you'd be getting closer to the amount you paid.

In short, if you're willing to sacrifice the nice car for something more economic, why not go all the way?

Keep us posted on what you decide.  I'm very interested to see how it turns out. 

In short, if you're willing to sacrifice the nice car for something more economic, why not go all the way?

Because the sacrifice is hard enough without going all the way.   

The GT is actually a sedan.  I need the size and four doors for the family.  I don't want to go older because I have bad luck with vehicles and end up putting more maintenance in than the car payment.  And having been in accidents that are still causing me healthcare costs, I feel more secure in something newer.  I guess I have too much old vehicle baggage on my mind.

It may be a mute point any way.  During our intense conversations this weekend about money and options, my husband decided that he is going to start his DJ business back up.  You can't haul all that equipment in a sedan.

If you wanna be debt free. Sell the Dodge, get out ot Dodge and into a $1000- $3000 ride. This will take a big chunk of debt off the plate. $20,000 note sell for $17,000 pay $3K plus $3k and your payments would be a heck of a lot cheaper. Stop working for the car dealers and keep your hard earned $$$

If you must finance a car, and don't want to pay cash/ save up etc, then at least make sure not to finance a car for more than 48 months.  It is the only way to keep from going way upside down.  36 months should at least keep the value of the car equal to the debt.  If you can't afford it at those terms than you can't afford the vehicle. Anything higher is just an accumulation of debt and puts you in a situation to where you will be financing forever.  19000 for a used car is way too much.  You don't say how many miles are on it or what the terms of your current car is but you will be paying close to 25000 for the Pontiac.  You could get a more economical car for less.  Aveos hold their value well, and Kias, Focuses and Fits are all under 15000 brand new (if not less after negotiations) they are also good on gas. 
I see that you didn't buy the car  after all but I wanted to post just for future reference.  I strongly believe that long term car loans--at any interest rate, even 0% are bad deals because they keep you in debt and force you to roll that debt into the next vehicle (which is why those deals are offered--you won't see 0% offered at 36 months because it doesn't force you to finance with them again)

To have a truck during the time of high gas prices is so not a great idea. So I totally understand your changing over to a coupe. That is something that I would have done. To have to pay 451 dollars a month in a car note plus high gas prices is so not fun. I would have thought though, that you would have gotten something a bit more practical. You only cut 1000 dollars off the previous loan which isn't all that big of a deal for me. I would have definately gone for something a few grand less.

Hey WannaBeDebtFree, it sounds like your situation is a little complex.

I think that safety features are one of the few sound reasons to spend more on a vehicle personally, so I'd suggest staying with something you believe in.

I don't suppose your husband could use an alternate smaller but good sound system for the DJ business that may make a smaller (safe!) vehicle an option?

Good luck.

Thats an opportunity that you shouldn't pass up:P