Selling year old car for new car that would come with cheaper payments.

[redfathom]

Our house payments will be going up in Feb (we have an ARM loan and the bank will not refinance us because we owe more on the loan then what the house is worth). So I am trying to find ways to save us some money every month.

 

I want to know if it would be worth it to sell my car for a cheaper new car. My car is a 2005 Honda Element I purchase in 2006 for $20000. I still owe $16,400, it has about 25,000 miles on it; the private seller price on KBB is $ 19,665 in excellent condition so I am thinking about asking for $18,200 then using the difference to put down on a 2007 Honda Fit which costs $14,500 new. I am sure since the 2008’s are out and only $100 more I could argue a good deal on the 2007 and get the dealer down about $1000. At that point the monthly payments would be $160 less then what I owe now and I would have less debt to my name. Plus my insurance should go down as well.

 

In your opinions would this be a good idea?

[Enema]

So much debt... I made a few poor choices with car loans when I was younger.

 

Now, I have invested my money in our house and in the stockmarket... I drive a $1500 car that I paid cash for and though I could go out and buy a new porsche tomorrow, I can't bring myself to do it.

 

Having no debt is such an awesome feeling... is there any way you can save up a few grand, sell the Honda Element and then go buy a second hand car for cash?

[redfathom]

I would, but I am worried about how reliable that car would be. My BIL bought a car froma dealership for $5000, and that car so many things wrong with it two years later we took it back to the dealership for a trade in and got $250 for it. Have you had any problems with your car?

[JamesM]

I am with Enema. Don't spend so much on a car unless you have the means/cash to pay for it. Or shall I say, you have no other debts.

 

The most I have ever paid for a car is 13 grand about ten years ago. It was unnecessary. Since then, I have bought two minivans (10K each) and two small cars (5K each). All of the vehicles have lasted at least five years before I sold them, Two I still have. I am not good with cars which is another reason why I stick with cheaper cars.

 

As for having more problems, did you spend an extra 10 grand on the 5000 car? Think about it. You want to spend 14 grand on a car so that it is more reliable than a 5 grand car? With that logic, you can spend 9 grand on the cheaper car and still break even. And that doesn't include the interest you will spend on the loan.

 

BTW, the car your BIL bought...I don't know how much was spent on it, but if you buy a 14500 car, you will spend almost 3000 a year in just payments (assuming five years). And if you pay cash, then you have lost that money that could have been spent on other bills.

 

I have a 2000 minivan that drives great. Had it for five years. I bought recently a 2002 Neon which looks great for $5000. I have no plans even if I had the cash for it to spend more than 10 grand on any vehicle.

 

IMO, you could easily spend less than $7000 on a decent vehicle. Go to Daveramsey.com and check out his advice.

[redfathom]

That cost comparison does make great sense. Yeah, maybe I should look for a cheap used car. My last car was $10k and the one before that was $2K. I really like the safety of newer cars and the warrenties which is why I bought a new car this time.

[Cobra_X30]

That cost comparison does make great sense. Yeah, maybe I should look for a cheap used car. My last car was $10k and the one before that was $2K. I really like the safety of newer cars and the warrenties which is why I bought a new car this time.

 

I would get your car on the market as soon as possible! Once sold, I would try to get a Toyota Carolla, or some other reasonably priced car, with Low Ownership Costs. If you can buy it outright... I strongly suggest you do that. Sometimes safety costs more than its worth.