A $1,600 monthly car payment turned unmanageable after a blown engine left the vehicle undrivable.
Danielle told “The Ramsey Show” she earns $65,000 a year and still owes about $65,000 on a 2019 Audi Q8 she has owned for about 18 months. The vehicle needs a full engine replacement estimated at roughly $20,000. The warranty would cover $7,000, leaving her responsible for the remaining $13,000.
“I made a bad decision,” Danielle said, adding that she also carries about $32,000 in student loans and $2,000 in credit card debt, bringing her total consumer debt close to $100,000. She added that a previous vehicle was stolen and never recovered, and that insurance paid off the balance without leaving her any cash.
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As the numbers were reviewed with hosts George Kamel and Jade Warshaw, Danielle said the loan carries a 12% interest rate and that she initially rented the vehicle out to cover the payment. After her other car was stolen, the Audi became her primary transportation. She said she is currently driving a loaner vehicle.
Danielle said the warranty would cover only $7,000 of the roughly $20,000 repair, which led Kamel to question why only part of the cost was being paid.
“Either they cover it or they don’t,” he said.
After reviewing the loan balance and repair costs, Danielle said she felt taken advantage of by the situation.
“No, you didn’t get screwed,” Warshaw said. “You chose this.”
She added that paying $1,600 a month on a $75,000 vehicle while earning $65,000 a year did not work even if the engine had never failed.
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The hosts compared the remaining options. Selling the Audi without repairs could bring in about $30,000, leaving roughly $35,000 still owed on the loan. Repairing the engine would require about $13,000 out of pocket after the warranty contribution, but would allow the car to be sold closer to market value.
Kamel advised against selling to a dealership and recommended involving a trusted person when arranging both the repair and the sale.
“You pay cash, it’s a used car unless you’re a millionaire,” Kamel said, adding that the total value of vehicles should stay under half of annual income.
