New Car Trap: Keep or Trade

[drachma]

Bought a new car for 23k - mazdaspeed3, 2012 model. I have since learned more about mustachianism.

* 45k miles (15k/year)
* $15700 blue book value
* $6000 left on the loan ($420/mo payment @ 6%)
* 24 mpg given my commutes
* still has a warranty (2 years left)
* $120/mo insurance
* takes premium fuel (~3.90; regular is 3.50)
* ~400/year registration

Total cost to own:

* 15k mi / 24 mpg = 625 gal * $3.90/gal = $2437/yr fuel
* $1440/yr insurance
* $400/yr reg
* Total = $4277/yr

To make this break even, I would need to find a car with:

* 15k mi / 32 mpg = 469 ga; * $3.50/gal = $1640/yr fuel
* $80/mo insurance * 12mo = $960/yr
* $100/yr reg (if 5+ years old and <20k MSRP)
* total = $2800/yr

A 2008 hyundai accent fits these requirements rather well with a KBB of $6900 if it has 50000 miles (or 4500 with 85000 miles). Assuming I can find a car like this, it makes perfect sense to me to sell my car and take on a jalopy of comparable mileage. I would pocket $3000 immediately and save around $1500 a year on operating costs. Not even counting tire costs (big rims, fat summer tires that wear down fast...)

I've been waiting for my loan to get past the break-even point for this plan to work, it seems I am finally there. Time to start hunting for cars.

Things I lose:

* warranty protection
* sweet turbocharger, bluetooth bullshit
* knowledge of car's driving and maintenance history
* ...? is that really it?

What thinks the mustachians?

[orbix]

Seems like a solid plan to me. A few thoughts:

• Look for a hatchback, Accent or otherwise- MMM has posted about the joys of the hatch on several occasions, and you probably even have a hatch already since you're talking about a Mazda 3...
• If bluetooth and whatnot are features you'll miss, aftermarket stereos with the right features should be easy to come across for only a couple hundred dollars (if not less), and you should be more than able to install them yourself as well.
• Look for a manual transmission if you want to keep some of the fun of driving- our 90hp Golf TDi is a ton of fun to drive, even with the low horsepower. Cars with small engines can be infuriating when mated to the usual slushbox automatic transmissions that most people buy.
• With the cost to replace an Accent or comparable vehicle, you should be able to safely drop back to just liability on your insurance, rather than full coverage. If you have a decent driving record, you ought to be able to save even more than the $40/month you're estimating in insurance costs.

[drachma]

* I am a hatchback fiend, for sure. the utility cannot be beat. agreed!
* stereos etc - im an electrical engineer by trade and build them as hobbies. all i need is an aux port. I have extra stereos i've salvaged that will do the trick and make a great conversation piece with all the honies I'll pick up in my new ride
* manual is my deal, harder to find but worth the wait IMO
* just got an insurance quote and it will actually be closer to $55/month instead of 80. this assumes $2000 collision/comprehensive deductibles (probably not even worth it on a $5k car). it gets down into the < $40/mo range without collision/comp

[alsoknownasDean]

Seems like a decent plan. Would an Accent beat 32MPG? Not having to pay $420 a month on loan payments would be good as well, and free up a little extra capital for further investment.

As for the low mileage vs the high mileage example, it depends on how long the things last. If they each last 175000miles, you've got 125,000 miles of use left in the lower mile example vs 90000 miles of use left in the higher mile example.

Also 45k/15k = 3, on a two year old car? :)

[orbix]

* just got an insurance quote and it will actually be closer to $55/month instead of 80. this assumes $2000 collision/comprehensive deductibles (probably not even worth it on a $5k car). it gets down into the < $40/mo range without collision/comp

Yeah, on a $5k car, it's absolutely not worth the extra $15/month for what amounts to $3k of actual net payout if you cause an accident. By sticking with a cheaper (i.e. more mustachian) car, you have the added bonus of lessening your liabilities/losses in the event of something going horribly wrong. :)