The PMI Conundrum, Continued: The Pepaw Van

Just as we settled on indeed using this blissful period before the arrival of baby Squidge (and attendant daycare fees) to knock out the PMI on our house, and have made good headway on the matter, life again throws us a curve that keeps the PMI plan a constant conundrum.

This time, that curve comes in the form of the Pepaw van. Mr. Steward and I had already settled on the fact that in 2-3 years, we would like to buy a minivan. We don’t need a minivan with two kids. But we want one, for several reasons. It will make travelling to our family’s homes a lot easier, as we are already running out of room in our car by the end of some trips. Flying is less of an option with two, so we see more long car trips in our future. We also don’t have a vehicle that can haul anything now. So, though the gas mileage will be atrocious, we decided this would be our someday splurge. The plan was to save up to buy a 6-7 year old Sienna or the like with around 100,000 miles, which should run us about $10,000-$12,000.

I called my Pepaw, a homegrown mechanic, to see if the personal finance community’s love of Toyotas and Hondas was well-founded. He said they do seem to last a long time. He also said that he is currently selling a 2014 Dodge Caravan that he bought new. It has 55,000 miles, new tires, is still under a Powertrain warranty, and no accidents. He’d sell it to me for $13,500.

Which is just about the amount left before we would get the PMI off our house, and the very maximum we would have “extra” in our budget over our current baby-free period. He needs to sell it soon-ish, because they bought another of the same vehicle, the next package up, due to my Memaw’s problems with arthritis and shutting the trunk latches.

The Pros

Besides the general pros to a minivan I already mentioned, there are several reasons why this minivan:

  • One owner (and we know him!), and nothing wrong with the vehicle except a scratch on the back and a clothes hanger that has come loose.
  • Mr. Steward’s 2006 Mercury Sable, which we’d be replacing, has doors that don’t shut in the winter, the cruise control is out, and he did not always maintain the car well in the past. There is also rust on the exterior. It has a little over 100,000 miles. It’s still quite serviceable, but it’d be nice to replace it sooner than later.
  • The price seems fair, according to Kelly Blue Book. Since it’s a family transaction (although I have to confirm with the BMV), we should also save about $1,000 in sales tax.
  • We’d be getting a much lower mileage car than I suspect we would if we wait the 2-3 years.
  • I’ve driven the vehicle, and I liked it. I also think the Caravan is the best-looking of the minivans.
  • Our car philosophy is to drive it until the wheels fall off. So, theoretically, once the interior space upgrade is made, we won’t need another car for a long time.

The Cons

  • We would have to take out an auto loan. We could complete paying off the vehicle in six months to a year. If we edge toward the latter, things would be tighter than usual for the last few months once daycare for Squidge begins, barring unforeseen positive occurrences, like raises.
  • Daycare for Squidge, plus my being out of work for a month unpaid, are still somewhat unknowns in our budget. Obviously we can project the numbers, but stuff happens. I’m wary of adding another factor that might make those times more challenging than they need to be.
  • I’m somewhat against auto loans on principle. I don’t want to become like so many, poor because of bad automobile choices.
  • We’d still have PMI on our house for another couple of years, at $600/year. I’m also against PMI on principle.

So tell me, is my Pepaw’s offer serendipitous or a vile temptation? Would you stick with the PMI plan, or switch gears to buy the van?

2 Replies to “The PMI Conundrum, Continued: The Pepaw Van”

  1. ths117

    I think the mini-van option is a good one for a number of reasons. You know you want one eventually; you’re not going to get a more favorable deal than this from someone who needs to make a profit; and you’ll have the use of both house and car while you’re paying off both. You know how highly I rate use value and convenience. 😉

    Auto loans, particularly if you shop around and look at credit unions and local banks, tend to have very low interest rates. (I am not tellingly you anything here you don’t already know.) Obviously run your numbers, but even if things got tight there for a while, you could pay less than you *preferred* to pay on the auto loan (while still meeting the minimum of course), and still probably do better in the long run than the initial outlay on a used minivan from a dealer, which would also be an older vehicle with fewer years of uncomplicated use in it.

    I WOULD, however, do your research on how that make, model, and year are being rated by Consumer Reports as used cars. If CR is finding a lot of problems with them, that would be the thing that would keep me from doing it.

    Last thing, and this is unquantifiable, is related to the complications of family transactions. If for some reason, the mini-van developed a bunch of costly issues – would this affect your relationship with your Pepaw? Something to consider. HOWEVER – I think it’s far more likely that this is a net good for both of you – it will make your Pepaw’s life easier to have the cash, and I bet it will make him happy to have passed the vehicle on to you.

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