Should I buy a crappier car?

[ShoulderThingThatGoesUp]

There's another thread I posted this question in, but I've done some math now so I'd like to give it its own thread.

I own a 2010 Honda Fit with 36,000 miles on it. It looks like I could get $10,000 for it easily, or more with a little effort.

Neither my wife nor I commute, though we do go places with our 18-month-old daughter sometimes. So my question is - do I have too good a car for my situation - am I living on-peak? What's the right analysis here?

I set up a spreadsheet projecting the next ten years, with straight-line depreciation of both car options to zero.

Current car assumptions:
Value $10,000
Annual maintenance $500
Zero value in 15 years

Substitute car assumptions:
Value $5000
Annual maintenance $800
Zero value in 10 years

Assume IRR of 4%

With these numbers I project a cumulative cash flow difference of $4,772 over the next ten years in constant dollars, and having $8,067 in substitute assets versus $3333 in my current car.

I haven't factored in likely cheaper insurance.

[abiteveryday]

Just keep the Fit.   It's efficient, will last a really long time, and I suspect that you underestimate the difference in maintenance costs between that and a $5k car.

[Zamboni]

Do you owe any money on the Fit?  Do you have any other outstanding debts (besides mortgage) that you need to pay off?

If not, I agree you should just keep it.  A 5-year old low mileage small honda is a great car. You can drop collision and comprehensive now if you have the money stashed to self insure, and then the insurance difference is zero.

[nereo]

one more question:  How many miles/kilometers do you drive per year? 

Assuming it isn't much (you have 36k on a 5 year old vehicle) and you take decent care of it (low-rust area?), I question why you'd assume the value would go to $0 (other than simplicity for computing). 

I'd be more inclined to believe you could drive the Fit for another 10 years, and still be able to sell it for ~$5k with ~108k miles on it.  That's in the ballpark of what current 15 year old cars with about 100k miles on it sell for now.

[ShoulderThingThatGoesUp]

No debts whatsoever. Sounds like the intuitive approach (keeping it) is what makes sense here.

[dudde_devaru]

If your running is really low, you could go for a 1996-1999 corolla for less than $2k. Find one which is under 175k miles and you will be good with it.

[JLee]

I would keep it. Unless you're doing your own work, a 180k mi used car is going to cost you a fair amount when you need a water pump, timing belt/chain, accessory pullies, suspension components, rubber dries out - so CV axle boots, tie rod boots, ball joint boots, suspension bushings, wheel bearings, brakes, fuel pump, random sensors, etc. Most of those, you currently don't have to worry about for a long time.

Now if you do your own mechanical work, then I could go either way. :) 

I recently sold two vehicles (one with 213k and one with 283k) to get one with 103k. I do my own work, but I was tired of 200k+ mi vehicles and the amount of work involved to keep them in pristine condition (annoying oil leaks, etc). It was worth it for me to have something a bit newer, and I would be extremely hesitant to go back to something that needed more attention. If you DIY it's generally cheaper to run something older with high mileage, but removing the stress overhead of always having to fix something was worth it for me.

[rmendpara]

For a car you don't use a ton, it wears a lot due to infrequent use. Definitely needs to be somewhat reliable (i.e. relatively new or maintained well) to make sure the battery doesn't die all the time, hoses/plugs/etc are well maintained, etc.

A car that's worth 10k is hardly excessive, and is a very fuel efficient and likely cheap overall cost of ownership as well. You could trade it in for an older car of some sort, but it just won't make much of a difference. Maybe get something else if you have different needs, like a larger car or SUV, but sounds like it does what you need and you aren't hurting for money.

I struggle with this too. May need to get a car (been carless for around 6 months now) for a new position, but will wait until I know more.

Leaning toward a used entry level luxury car, but I also want the good fuel efficiency and creature comforts, but I'm also too cheap to splurge. Ahh, the struggle!

[Bob W]

Theoretically you could buy an 06 Camry for 6K with 150K.     Ours just went 375K with little costs.  So if you are a 7K per year driver (maybe less) you could potentially drive that car for 30 years.     

Even in 10 years either car would still be worth way more than zero.  The Honda Fit may only have 100K at that point.   You should be able to drive that baby for 30 years as well. 

Math wise it make entire sense to do this (way big number over 30 years).  Piece of mind wise you might just stick with the devil you know. 

The crappier the car,  the more one has to be risk tolerant and have reserves.   Personally,  I have always driven "crappy" cars.   I'm kinda done with that.

So I vote no.   

Refocus on saving, investing,  earning more,  cutting expenses etc..   

[Retired To Win]

Just keep the Fit.   It's efficient, will last a really long time, and I suspect that you underestimate the difference in maintenance costs between that and a $5k car.

The OP is projecting $800 a year "maintenance" for the older substitute car.  You think that cost would actually be higher.  I would disagree.

For my 1996 Dodge Dakota, over the last 3 years, the cost for ALL repairs and by-the-book maintenance done by a service station has been 2.5 cents per mile.  (And I live in an annual inspection state, so there's no deferring repairs.)  Other "older car" owners on this Forum have detailed out even better results at 2 cents and 1.5 cents per mile.  So the OP might want to regigger his calculations.

And BTW, titling this thread "should I buy a crappier car?" reveals a very unhelpful and negative approach to the question.  It might work better to leave the emotion out of the analysis. ;)

[stlbrah]

On a scale of practicality, your car is already a 10/10

[Home Stretch]

I'd keep the car.

The bigger thing for me, personally, is having a newer model-year car. If you want to really liquidate the equity in your car in a meaningful way, you're going to have to go back to the late 1990s to get something below $3k.

This means a few things:

1. You're going to lose a shit-ton of safety features and airbags, which objectively is a bad thing. There's a reason those have become standard on all newer cars, and it's not because they are an extravagant luxury.

2. You're going to get a bunch of 20-year-old rubber components, such as every seal, gasket, and tube. Some of them may have already been replaced. Doesn't matter. All of them will fail.

3. You're going to deal with more car bullshit. I hate car bullshit. There are two categories, and I've experienced both. Expensive car bullshit is when you own a ridiculous sports car or truck and realize you will have to pay $900 to replace four tires. Cheap car bullshit is when your transmission fluid hose (thanks, 1995 Jeep) rots to pieces on I-95 in Delaware and you are stranded at a toll booth. That little oopsie cost me $500.

Choose carefully.

[Ricky]

You should keep the Fit. Nothing wrong with having a newer car unless you trade frequently. I probably won't purchase new again, since I could buy something a year old for thousands off the new price. But, I don't regret my decision since I plan on driving this car for as long as it lasts.

[captainawesome]

I've been in that mindset previously. The "I'm doing better than I was, better than 90% of people, but I'm not doing enough. I must completely optimize!" mentality is a good thing to have, but especially when you know you have a decent car and will never need a new one at your current driving rate, it makes no sense to jump into another vehicle of which you know little.

I'll use myself as an example. I had a perfectly fine 2008 Mazda3s Grand Touring sedan.  Manual transmission, had leather seats, sunroof etc. and super low miles, like 50k at the time. It was more than I needed truly, but it was a nice car and I owned it outright.  I was in constant search to "do more" and optimize, so I put it up for sale and went in search of a hatchback version because hatchbacks have to be better right?  I sold the sedan, and still havent found a hatchback of similar quality a year later. I regret selling the car. And I now understand that if you have something, and it works for you and your situation, there is no need to change that portion. Just work to improve other areas. Sure you can always do more, or sacrifice more, but what dividends will those sacrifices pay?

[ShoulderThingThatGoesUp]

I've been in that mindset previously. The "I'm doing better than I was, better than 90% of people, but I'm not doing enough. I must completely optimize!" mentality is a good thing to have, but especially when you know you have a decent car and will never need a new one at your current driving rate, it makes no sense to jump into another vehicle of which you know little.

I'll use myself as an example. I had a perfectly fine 2008 Mazda3s Grand Touring sedan.  Manual transmission, had leather seats, sunroof etc. and super low miles, like 50k at the time. It was more than I needed truly, but it was a nice car and I owned it outright.  I was in constant search to "do more" and optimize, so I put it up for sale and went in search of a hatchback version because hatchbacks have to be better right?  I sold the sedan, and still havent found a hatchback of similar quality a year later. I regret selling the car. And I now understand that if you have something, and it works for you and your situation, there is no need to change that portion. Just work to improve other areas. Sure you can always do more, or sacrifice more, but what dividends will those sacrifices pay?

Yeah, this is where I came down. Yesterday I got a big raise out of the blue. A speculative savings of around $3000 over the next ten years, that might go extremely sour, just is not a good idea.