Sell car financed and underwater since it's not needed anymore?

[ChrisM]

Just looking for some advice on a situation here. 

We have a car purchased new 3 years ago.  It's a great car, but only drivable about 8-9 months of the year (It cannot do Winter driving).  Payment is $772 (with about 3 years left) and it's underwater about $10k.  The thing is, this car isn't really needed anymore.  We have another vehicle that's fully paid and does fine in the Winter weather. 

I'm tempted to pay down the car ($10k) and then just sell it to be out of the car payment.  My thought process is this...if we keep the car, it will take about 13 months to bring the debt down to $20k, but at that point I expect the sale value may only be around $15k, so we would still be underwater $5k.  So is it better to take the hit now and just move on?  Looking to make the best financial decision at this point on it. 

Thoughts please?  I know buying new was a mistake and don't need to be chided about that :)

Cheers.

[travel2020]

If you really don’t need the car, selling it now to cut your losses seems to be the best option.

Car prices are finally heading down, so you may get even less for it down the road. Even if you just keep it the 13 months, it will cost you close to $15k ($10k in payments + your estimate of $5k depreciation). Don’t forget the cost for insurance, routine maintenance etc.

[ChrisM]

This is exactly my thought process, but I just wanted to make sure I wasn't considering anything else and being stupid...again.

[FlytilFIRE]

You have a depreciating asset, one that not only requires a monthly payment, but also licensing, insurance, maintenance, etc.

If you sell now, two things swing to your advantage. One, you stop spending money on maintaining the car, and two, instead of paying what, 5% interest on the loan, you then INVEST the car payment, making 5% ( a 10% swing on those dollars). Over 36 months, you'll spend another $28k on this car, on top of the $28k you've already spent. Spending the $10k to get out from under this seems like a good idea.

It's often harder to suck it up and terminate a bad financial decision than it is to just keep on going, hoping somehow you will come out ahead. Unfortunately, I don't see how that could happen in this case. Don't worry about it. Learn from your mistake and move on. Most of us have made mistakes of similar magnitude (ask me how I know!).

[ChrisM]

100%.  You are confirming my thought process.  I really wanted to make sure because sometimes we have "holes" in our thinking.  Appreciate others chiming in to confirm my thoughts.