Buy new car or keep current?

[kdogdd]

Hello all-

Newer to the Mustache blog and forums, looking for advice on my car after reading the blog hours upon hours.  I have a 2009 Honda Accord with $116k miles, paid for and worth about $7k.  I drive around 12k miles per year, and its getting around 22 miles per gallon.  I am around 60-70% city driving.

Does it make sense to sell this into something more fuel efficient for the long haul?  I was looking at Toyota Prius with the same miles, they are about $9k in this area.  The Honda Fits are also around $8-9k in the area for similar miles, but there are less of these available.

Any thoughts or advice on buy/sell/hold with the car are appreciated.


Thanks!
Matt

[HairyUpperLip]

Any issues with the Accord?

[kdogdd]

Accord works great, have had it for around 5 years and keep it maintained.

[HairyUpperLip]

Welcome to MMM.

Keep it. Replace with something when you really need too.

[neo von retorch]

Unless you're exceptionally good at buying cars for a great price and selling cars for the very high end of their value, you'll lose more money in transaction costs than you could make up in gas savings over a long, long period of time. Sounds like you've got a rock solid, reasonably efficient car. My opinion is that it is smart to keep it as long as possible. (Credentials: can't take my own advice, and have lost lots of money to auto transactions!)

[TexasRunner]

Did the math across ten years.  Pretty much guaranteed to be a better bet to go with the Prius vs investing the 2000$ difference.  One thing to note, driving 12k miles per year is averaging 32 miles PER DAY.  If you could eliminate a portion of that driving, say 33%, you would break even with the Prius while keeping your current car, you would save yourself 16.6 DAYS EVERY YEAR of sitting in your car....   Just something to consider... :)

Here is the breakdown:

                            2009 Honda      2009 Honda      2009 Prius
                                                         LESS DRIVING      
Price                              $7,000.00        $7,000.00        $9,000.00
Current Milage                  116000      116000                 116000
MPG                                          22      22                           46
Annual                             12000      8000                 12000
Milage in 10 years            236000      196000                236000
Average Price of Gas       $3.50        $3.50                 $3.50
                  
Gas Spending across 10 years:
                                $19,090.91        $12,727.27        $9,130.43
                  
Gas Savings              $(9,960.47)       $6,363.64        $9,960.47
                  
Invested Difference       $2,000.00        $2,000.00        $-   
Assumed Investment Return (minus) Inflation
                                       0.05                  0.05                0.05
                  
Year 1                      $2,100.00        $2,100.00        $-   
Year 2                       $2,205.00        $2,205.00        $-   
Year 3                         $2,315.25        $2,315.25        $-   
Year 4                      $2,431.01        $2,431.01        $-   
Year 5                         $2,552.56        $2,552.56        $-   
Year 6                      $2,680.19        $2,680.19        $-   
Year 7                      $2,814.20        $2,814.20        $-   
Year 8                       $2,954.91        $2,954.91        $-   
Year 9                      $3,102.66        $3,102.66        $-   
Year 10                    $3,257.79        $3,257.79        $-   
                  
Total Comparitive Returns           $(6,702.69)       $9,621.43        $9,960.47



Switching to the Prius, you will save 9.9k, even when the difference is invested.  What you need to calculate is the difference in insurance cost and the likelyhood of you changing cars again within 2-4 years (for example, kids). 

Some assumptions:  5% return on stock market after inflation, that both the Prius and the Accord depreciate equally with added miles, insurance changes are not calculated, both cars will make it 10 years and up to 236000 miles, repairs and the difference in repair cost is not calculated, transaction costs are not calculated.