Author Topic: Paying off the Honda Fit  (Read 3395 times)

privatevoid

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Paying off the Honda Fit
« on: June 19, 2017, 10:25:33 AM »
Hi, longtime reader, now starting to make some changes in my own life, and I'd love some feedback. :) Story below.

So I graduated from college in 2014 and was able to get a job in the software industry. To make a long story short I found myself in pretty immediate want of a car, I was living with my parents and my new job was a commute away. I had very little saved up (a couple grand) and didn't feel confident I'd be able to score a safe and reliable vehicle in the used car market with it (wrong, although, having $4-5k more kicking around would have really helped.) So instead of spending all of my money on a car, I did the unthinkable and spent more than all of my money on a car.

I'm proud that at least the bad decision I made was pretty smart; with some help from a friend, I scored a brand new 2015 Honda Fit LX for about $16k financed. The payments ended up being about $252/mo.

That was no problem while I was living with my parents and I was easily able to sock away 50% of my income or more while paying down the car. To make another long story short, I had to move out.

Now I'm paying kind of a lot in rent, still commuting (but not as far) and still paying down the car. I'm feeling the various invisible costs that come with it; the depreciation, the insurance, the surprisingly expensive maintenance. I'm breaking even but having a hard time putting away anything new in savings.

Rereading through the MMM archives, I got inspired. I now have about $10k saved up in cash and various investments. I'm considering my options.

1) Plug along steadily until it's paid off.

2) Pay it off ASAP. There's about $8100 left on the car. I could empty my savings and pay it off pretty quickly, and become the sole owner of my 2015 Honda Fit.

3) Sell the thing and buy a reasonable car.

I'm leaning toward #3. The novelty of driving a 2015 wore off pretty quickly, I don't like the way this model Fit performs in certain ways, and I want to get out of debt like right now (I also have some student loan debt).

I'm also leaning towards buying a sweet used Honda Accord I found, or something similar. It's a 2000 model car with 22,000 miles on it, somehow. Sounds like a car that can last me another 10 years; but note it's actually less efficient than the Fit. Much less, to the tune of $4000/10 years (Must find an I4!)

I'm not sure exactly how this 10 year math works out. But my intuition is that the Fit will cost me more over 10 years than almost any 2000-era used car with 60k miles or less. Is this a good move?
« Last Edit: June 20, 2017, 04:14:37 PM by privatevoid »

Dave1442397

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Re: Another lost soul, saving myself from new car debt
« Reply #1 on: June 19, 2017, 10:50:43 AM »
I'd go for it. I'd rather drive an Accord than a Fit any day.

Be aware that an older Accord should have had its timing belt changed based on age, even though it only has 21k miles. If that hasn't been done, maybe you can talk the price down some more.

privatevoid

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Re: Another lost soul, saving myself from new car debt
« Reply #2 on: June 19, 2017, 10:54:48 AM »
I'd go for it. I'd rather drive an Accord than a Fit any day.

Be aware that an older Accord should have had its timing belt changed based on age, even though it only has 21k miles. If that hasn't been done, maybe you can talk the price down some more.

Oh gosh, thanks so much for that tip. I didn't even realize those engines had a belt and not a chain.

Dave1442397

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Re: Another lost soul, saving myself from new car debt
« Reply #3 on: June 19, 2017, 11:17:56 AM »
If it was driven regularly, as opposed to sitting for years, then it should be in relatively good shape. A co-worker inherited his father's Accord - I think it's an '03 with around 30k miles, and it's in great shape.

If the car was driven for 22k miles and then sat around for 15 years, you'd want to have the belts, hoses and fuel system checked at the very least. Tires, too - tires have an expiration date, but if they have no cracks in the sidewalls you could probably chance driving on them for a while.


Vindicated

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Re: Another lost soul, saving myself from new car debt
« Reply #4 on: June 19, 2017, 11:53:02 AM »
How much could you get for the Fit?  What's the interest rate on the Fit loan?

If you have a low interest rate, it might be worth it to just keep the Fit forever.  It really depends on how much it's worth, how much you drive, and what you need a car for.

Just some random speculation, if it's around 35-40k miles, you can probably get $11k for the Fit (based on a quick KBB search).

Option #1 - Sell the Fit (+$11k-$8k owed = +$3k), buy used Accord (-$5k), Net (-$2k paid from savings) = No Car Debt, Own 2000 Accord, with $8k in savings.  More risk of maintenance issues.
Option #2 - Keep the Fit (-$8k owed), Pay off owed from savings = No Car Debt, Own 2015 Fit, but only $2k in savings.  Less risk of maintenance issues.
Option #3 - Keep the Fit (-$8k owed), DON'T pay it off, continue payments, and let your investments grow.*  Less risk of maintenance issues.

*Depends if your interest rate is low.  It probably is since you bought it new.

I'd probably go with Option #3.  Your Fit will last you forever, and a low interest rate and low payment doesn't hurt your financial goals much long-term.  Plus, you can leave your $10k to continue growing with the market.  You can raise your payment to $300/mo or something to pay it off quicker if you really want to get rid of it.  I just hate taking money out of the market.

Good luck with your decision either way!

privatevoid

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Re: Another lost soul, saving myself from new car debt
« Reply #5 on: June 19, 2017, 11:59:25 AM »
Yep. 32k. Hoping to pull in about 10 grand.

I don't remember the exact rate. I'll see if I can figure it out. It was pretty good.

Enough of my savings is cash that I wouldn't have to pull out any of my investments in order to make the purchase.

Edit: from my number crunching... I would be saving $242/mo on car payments and insurance, but probably spending an additional $30/mo on gas. It's pretty even. I might go for it. I have other motives, I want the psychological effect of Getting Out Of Debt and I've got the itch to car shop.
« Last Edit: June 19, 2017, 12:57:18 PM by privatevoid »

privatevoid

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Re: Another lost soul, saving myself from new car debt
« Reply #6 on: June 19, 2017, 07:12:49 PM »
V6 Accords with automatic transmissions have a design problem that eats transmissions. Gonna skip that.

I think I can fetch a 4-cylinder, manual Accord between 100k-150k miles for about $3,000. According to Vin's math, I should come out about even depending on what the Fit gets. I bet I can make one of those accords last another 100k miles, and lose my car payment. I know a lil bit about car maintenance.

I know this isn't a life-changing decision. I know the Fit is also a wonderful car. I'm not really too worried about this either way. It just feels like too much car. I'm not using the cargo space. I'm not using the little USB port. I don't like how it feels in first gear. I've always owned used cars before this one.
« Last Edit: June 19, 2017, 07:30:16 PM by privatevoid »

Laserjet3051

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Re: Another lost soul, saving myself from new car debt
« Reply #7 on: June 19, 2017, 08:48:24 PM »
I just bought a 2013 Fit LX, financed 90% of the cost at 2% interest, LOVE how it handles, am AMAZED at how powerful this tiny little engine is, and plan to drive it forever. I expect my annualized car costs over the next 10 years (for the fit) to be very low.

I have no problem as to how it handles in 1st gear, but only use 1st very briefly to take it up to speed. It handles just fine in 1st gear for the split second I am in that gear. But to each his (or her) own.

Good luck with your decision.

cadillacmike

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Re: Another lost soul, saving myself from new car debt
« Reply #8 on: June 19, 2017, 10:20:01 PM »
I'd go for it. I'd rather drive an Accord than a Fit any day.

Be aware that an older Accord should have had its timing belt changed based on age, even though it only has 21k miles. If that hasn't been done, maybe you can talk the price down some more.

Oh gosh, thanks so much for that tip. I didn't even realize those engines had a belt and not a chain.

Most asian cars ans well as many european once have timing belts. And they also tend to have interference valve trains which mains if the belt breaks, your valves, etc are toast. About the only carline that know to be mostly or totally free of belts (they use chains) is Cadillac.

gggggg

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Re: Another lost soul, saving myself from new car debt
« Reply #9 on: June 19, 2017, 10:51:50 PM »
I would keep the fit and pay it down aggressively, without completely depleting your emergency money. This is, if you don't have any other consumer debt. If you do have credit card or similar debt, I'd pay that off before the car.

Aminul

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Re: Another lost soul, saving myself from new car debt
« Reply #10 on: June 20, 2017, 06:33:24 AM »
I suppose a question to ask yourself might be:  "Would I pay $8100 for a two-year-old, low-milage Honda Fit with a known (and good) maintenance history?"  I hear they typically go for $10k+, so it might be a good deal. 

I'm on team Keep The Car.

Vindicated

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Re: Another lost soul, saving myself from new car debt
« Reply #11 on: June 20, 2017, 06:54:33 AM »
NO discussion so far on whether you need a car as large as the Fit...  and an Accord can still hold 4+ people with bikes on the back and luggage in the boot.

As you said selling the Fit will get you out of debt much faster, and it will have an ongoing benefit of saving you ~$30/mo in fuel (your calculations).  That's another $360/year.  Insuring an older accord will almost certainly cost a bit less than a newer Fit, nudging that figure up past $400/mo.  That's >$24k over 5 years.  Some of that will get eaten up by maintenance, so let's say $20k over 5 years.  Plus you get to eliminate that pesky car loan immediately and plow that into savings.

If there's not a definite NEED ofr the larger size of the Fit I'd go with an older Accord.  You are just starting out your FI journey and maximizing your savings is key here (you're just starting to 'surf the wave').

Your next car can be something slightly newer and nicer - for now I'd recommend you just save, save, save!

Maybe I'm reading this wrong, but did you mean to say that the savings would be $400/yr, not $400/mo?  $400/yr savings would only be $2k over 5 years.

nereo

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Re: Another lost soul, saving myself from new car debt
« Reply #12 on: June 20, 2017, 07:01:06 AM »
NO discussion so far on whether you need a car as large as the Fit...  and an Accord can still hold 4+ people with bikes on the back and luggage in the boot.

As you said selling the Fit will get you out of debt much faster, and it will have an ongoing benefit of saving you ~$30/mo in fuel (your calculations).  That's another $360/year.  Insuring an older accord will almost certainly cost a bit less than a newer Fit, nudging that figure up past $400/mo.  That's >$24k over 5 years.  Some of that will get eaten up by maintenance, so let's say $20k over 5 years.  Plus you get to eliminate that pesky car loan immediately and plow that into savings.

If there's not a definite NEED ofr the larger size of the Fit I'd go with an older Accord.  You are just starting out your FI journey and maximizing your savings is key here (you're just starting to 'surf the wave').

Your next car can be something slightly newer and nicer - for now I'd recommend you just save, save, save!

Maybe I'm reading this wrong, but did you mean to say that the savings would be $400/yr, not $400/mo?  $400/yr savings would only be $2k over 5 years.

Man... this is what happens when i respond too early in the day before coffee...  yeah, defintiely not the $24k savings i put earlier... recomputing...
(post deleted while i reformulate a response). 

Vindicated

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Re: Another lost soul, saving myself from new car debt
« Reply #13 on: June 20, 2017, 07:05:46 AM »
NO discussion so far on whether you need a car as large as the Fit...  and an Accord can still hold 4+ people with bikes on the back and luggage in the boot.

As you said selling the Fit will get you out of debt much faster, and it will have an ongoing benefit of saving you ~$30/mo in fuel (your calculations).  That's another $360/year.  Insuring an older accord will almost certainly cost a bit less than a newer Fit, nudging that figure up past $400/mo.  That's >$24k over 5 years.  Some of that will get eaten up by maintenance, so let's say $20k over 5 years.  Plus you get to eliminate that pesky car loan immediately and plow that into savings.

If there's not a definite NEED ofr the larger size of the Fit I'd go with an older Accord.  You are just starting out your FI journey and maximizing your savings is key here (you're just starting to 'surf the wave').

Your next car can be something slightly newer and nicer - for now I'd recommend you just save, save, save!

Maybe I'm reading this wrong, but did you mean to say that the savings would be $400/yr, not $400/mo?  $400/yr savings would only be $2k over 5 years.

Man... this is what happens when i respond too early in the day before coffee...  yeah, defintiely not the $24k savings i put earlier... recomputing...
(post deleted while i reformulate a response).

We've all been there.  No worries :)

alsoknownasDean

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Re: Another lost soul, saving myself from new car debt
« Reply #14 on: June 20, 2017, 07:12:15 AM »
$5700 for a 17 year old Accord?

If it was a 10MPG SUV that you were contemplating downgrading, sure, but in this case, you've already got a perfectly good economical reliable car that should be good for another decade. $8000 won't take all that long to pay off.

Keep the Fit if it still meets your needs.

researcher1

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Re: Another lost soul, saving myself from new car debt
« Reply #15 on: June 20, 2017, 08:05:04 AM »
I think I can fetch a 4-cylinder, manual Accord between 100k-150k miles for about $3,000. According to Vin's math, I should come out about even depending on what the Fit gets. I bet I can make one of those accords last another 100k miles, and lose my car payment. I know a lil bit about car maintenance.

I know this isn't a life-changing decision. I know the Fit is also a wonderful car. I'm not really too worried about this either way. It just feels like too much car. I'm not using the cargo space. I'm not using the little USB port. I don't like how it feels in first gear. I've always owned used cars before this one.

Don't do it.  This is a stupid idea.  Keep your current car.

You currently drive an economical, reliable vehicle. 
It is nearly new with presumably very low mileage. 
You have the complete ownership and maintenance history on this car.

Yet you want to get rid of this car in order to by an old Accord with 150K miles with unknown ownership/maintenance history?

If you calculate the cost per mile of these two options, I guarantee your Fit will come out ahead.

frugaliknowit

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Re: Another lost soul, saving myself from new car debt
« Reply #16 on: June 20, 2017, 08:18:39 AM »
I think I can fetch a 4-cylinder, manual Accord between 100k-150k miles for about $3,000. According to Vin's math, I should come out about even depending on what the Fit gets. I bet I can make one of those accords last another 100k miles, and lose my car payment. I know a lil bit about car maintenance.

I know this isn't a life-changing decision. I know the Fit is also a wonderful car. I'm not really too worried about this either way. It just feels like too much car. I'm not using the cargo space. I'm not using the little USB port. I don't like how it feels in first gear. I've always owned used cars before this one.

Don't do it.  This is a stupid idea.  Keep your current car.

You currently drive an economical, reliable vehicle. 
It is nearly new with presumably very low mileage. 
You have the complete ownership and maintenance history on this car.

Yet you want to get rid of this car in order to by an old Accord with 150K miles with unknown ownership/maintenance history?

If you calculate the cost per mile of these two options, I guarantee your Fit will come out ahead.

+1

The Accord is a 17 year old vehicle.  You WILL have to replace lots of old parts.  The V6 is a relative "pig", especially for commuting.  The Ad sounds like a lot of BS (too good to be true...though possible...just came from the dealer, then he's "giving it away"...LOL!)

Focus on other cost savings:  NOT eating out, bring lunches to work, no cable TV, etc.
« Last Edit: June 20, 2017, 08:25:27 AM by frugaliknowit »

privatevoid

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Re: Another lost soul, saving myself from new car debt
« Reply #17 on: June 20, 2017, 02:20:06 PM »
Quote
Don't do it.  This is a stupid idea.  Keep your current car.

Oof. I probably needed that. I might be mistaking an "urge to be frugal" with impatience to get out of debt and the itch to buy something, which is decidedly the opposite.

Thank you for all the individual responses.

Quote
The V6 is a relative "pig", especially for commuting.  The Ad sounds like a lot of BS (too good to be true...though possible...just came from the dealer, then he's "giving it away"...LOL!)

After chatting with dude, I decided that too. No V6s for me. I4 manual or bust.

Sounds like if I found juuuust the right used car, I might break even on this. Really stands as a testament to how economical the new Fit is, honestly. And I'd be leaning on how incredibly reliable some of these old Hondas can be.

So clearly more financially sound/safe option is to just keep this lovely car. One hopes I won't be impulsive enough to turn this question into an experiment if I find just the right used car :)

Vindicated

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Re: Another lost soul, saving myself from new car debt
« Reply #18 on: June 20, 2017, 02:23:13 PM »
So clearly more financially sound/safe option is to just keep this lovely car.

I think this is the right decision!

Rosy

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Re: Another lost soul, saving myself from new car debt
« Reply #19 on: June 20, 2017, 02:24:55 PM »
I suppose a question to ask yourself might be:  "Would I pay $8100 for a two-year-old, low-milage Honda Fit with a known (and good) maintenance history?"  I hear they typically go for $10k+, so it might be a good deal. 

I'm on team Keep The Car.

+1
Another vote to keep the Fit!

Rockfish

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Re: Paying off the Honda Fit
« Reply #20 on: June 21, 2017, 01:48:37 PM »
I also vote to keep the Fit. Even if the Accord is low miles and well maintained it's still 17 years old. Parts wear out, metal corrodes, rubber disintegrates and things need to be replaced. Also, a 2015 Fit is likely safer than a 2000 Accord due to advancements in airbags, etc.

thx712517

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Re: Paying off the Honda Fit
« Reply #21 on: June 21, 2017, 02:16:28 PM »
If I had to choose between a 2015 Honda Fit with known maintenance and low miles versus a fifteen to seventeen year old Honda Accord of questionable maintenance and history and six digit miles, I would choose the Fit. The warranty is usually 3 years/36,000 miles, so there's still a little left.

The vehicle gets better gas mileage. Has superior safety features and crash performance. It is less likely to require surprise expensive maintenance. Whether you choose to pay it off at an accelerated rate or all at once is up to you. I would suggest leaving a three to six month reserve in savings and accelerate the payoff of the car.

SuperSecretName

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Re: Paying off the Honda Fit
« Reply #22 on: June 21, 2017, 02:25:35 PM »
First you must acknowledge the past is gone.  Whatever decisions you made are done.  They are a sunk cost.

So, only thinking about the future, this sums it up well.  I know I would.  Instead of beating yourself up about the past, think how lucky you are to be set up for the future!  Nothing to worry about for 10 years is a great place to be:

I suppose a question to ask yourself might be:  "Would I pay $8100 for a two-year-old, low-milage Honda Fit with a known (and good) maintenance history?"  I hear they typically go for $10k+, so it might be a good deal.