Author Topic: Car loan not paid off - should I sell and get something cheaper?  (Read 1306 times)

willryde

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I'm new to this so pls bear with me... Looking for advice / suggestions: I have a 2015 Kia Soul which I bought new in June 2015. I indulged in too many fancy options etc and took out a huge anti-Mustachian loan of approximately $23,000.00.  Payments are $400/month; still have approx. $16,000 to go until it's paid off. 0% interest rate. My question is: should I try to sell & buy a "gently used" car for less?  Since I'm only in year 2 of paying it off (out of 5), it is still depreciating fast and if I were to sell it is not likely I could get enough to pay off the loan, so I would probably take a hit.  Ideally I'd like to replace it with something that gets very good mileage, good in snow, and - very important - reliable.  Or should I just bite the bullet for the next 3+ years, finish paying it off, and take this as a lesson learned to never take out a car loan again?  Thanks for any suggestions!!!

SwordGuy

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Re: Car loan not paid off - should I sell and get something cheaper?
« Reply #1 on: March 10, 2017, 11:00:26 PM »
I did a quick glance for used cars on CarMax and Craigslist in my area.

Lots and lots of cars in the < $10,000 price range with less than 50,000 miles at CarMax.
Cars on Craigslist tended to have more miles but the prices were 1/5 to 1/2 of that.

How much can you get for your car?  That's the real kicker.   You could end up cutting your debt by quite a bit if you can get close to what you owe on it.

I suspect you could find a fine car in the $6000 to $10000 range.

We've been real happy with the low mileage cars we've gotten at CarMax.  One had 24,000 miles on it (still driving it, it's 15 years old, it was 7 years old when we got it).   Still going strong.  Rarely had a problem with it.  If I was better at getting routine maint. done I would have had fewer problems.

Another had 7000 miles on it.   You would be surprised what you can find if you're not in a hurry and you just want a decent car to drive for a good price.  If you get picky or fussy about color or style, etc., you'll screw yourself out of  some good deals.



Trifele

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Re: Car loan not paid off - should I sell and get something cheaper?
« Reply #2 on: March 11, 2017, 05:05:17 AM »
Hi WillRyde, welcome to the forum.

Your loan is at 0%, so you're at least not paying interest on the Soul which is very good. You are, as you mentioned, paying for some fancy extras on that car however. 

Since we are not talking about a situation where you are paying interest, I think the biggest factor here is how many miles you drive.  I looked up gas mileage ratings on the Soul (26/31) and a Corolla/Yaris/Civic/Fit will do better than that.  Can you figure out based on how many miles you drive how much you would save with a car that gets 30/40, for example?  The more you drive, the greater your benefit would be in selling the Soul and moving to one of those other cars.

I would not get too hung up on the "good in snow" factor.  The biggest factors with snow are the tires on the car, and skill of the driver. I lived for many years in the snow capital of the US (upstate NY) and drove both FWD and AWD vehicles there.  The AWDs were better in deep snow (6 inches plus), true, but even in the snowiest regions, how often do we really have to drive through deep snow? The roads do get cleared. Just put snow tires on the fuel efficient FWD car and you will be totally fine 99+% of the time.  (MMM has a post on this topic somewhere, BTW).

Good luck!

   
« Last Edit: March 11, 2017, 05:07:10 AM by Trifele »

WhiteTrashCash

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Re: Car loan not paid off - should I sell and get something cheaper?
« Reply #3 on: March 11, 2017, 05:18:57 AM »
As previous people have mentioned, the decision here needs to be made based on the number of miles you drive. Have you been able to change your commute from car to bicycle? In that case, you are going to use your car a lot less and it is worth it to trade it in for a cheaper used car. Are you stuck commuting by car like me? Then it may be best to keep the car, since newer cars don't require as much in repairs/maintenance. That's my 2 cents, anyway.

ClovisKid

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Re: Car loan not paid off - should I sell and get something cheaper?
« Reply #4 on: March 11, 2017, 03:24:58 PM »
You would be surprised what you can find if you're not in a hurry and you just want a decent car to drive for a good price.  If you get picky or fussy about color or style, etc., you'll screw yourself out of  some good deals.

I agree.  My guess is that all those fancy features are not nearly as important now that you are shelling out $400K per month -- money that could otherwise be going to your retirement fund instead.  I would sell your current car, get out from under the debt on it, buy something in cash for $5000-$8000.  If you don't have $5000-$8000 dollars in cash, it's probably because you tend to go into debt to get nice, fancy, needless fancypants things you want now rather than saving for what you only actually need: safe, reliable, utilitarian and low cost.  sorry, just channeling a MMM face punch :)


willryde

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Re: Car loan not paid off - should I sell and get something cheaper?
« Reply #5 on: March 12, 2017, 05:58:25 PM »
Ouch! Excuse me while I apply the raw steak to my face!  Sadly, it's true that the shiny baubles used to catch my eye but no more.  It is amazing how quickly the fancy options quickly become meaningless.  Turns out, you can't stare out of a panoramic sunroof while driving!  Secretly, I aspire to getting an electric car.  Fortunately I am in a situation in which I can take my time looking.  Thanks for all the advice!