Author Topic: I bought a new car a year ago...  (Read 7652 times)

veazer

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I bought a new car a year ago...
« on: April 27, 2016, 09:48:06 AM »
So a year ago I graduated from college and sold an old Ford Windstar with 220K miles. I then bought a new 2015 Honda fit base model manual for $16K financed at 1.5% for 3 years. My reasoning at the time was that I wanted a fit-like car in a stick, but that prices for used fits with ~100K miles were about $9-10K when I could get a new one for $16K with far better features (cruise control and bluetooth, that I could've added to a used car but it was easier to just buy something that had them, in addition to better seats, space, mileage, etc.). I've had enough invested since before I bought the car to pay it off anytime and I make $75K/yr as an engineer, but having read a bunch of MMM's posts about car inventory, I'm realizing that I should've looked into older cars or similar hatchbacks.


That said now that I've bought the fit I do like it and I've racked up about 20K miles in its first year (That driving will decrease to about 12K soon I think, I'm on a temporary work assignment in a different state and have been driving back to visit my parents/friends/spend weeks at my work home base). Should I sell it and buy something older or keep it and drive it until it dies or until my GF wants it and I can then buy the old, used miata I've always wanted? If I keep it I'll wait until I've had it for 3 years and then drop collision and comprehensive if I have a garage to park it in by then. Thoughts? Should it stay or should it go?

NoStacheOhio

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Re: I bought a new car a year ago...
« Reply #1 on: April 27, 2016, 10:31:26 AM »
What would you buy instead? What's the resale vs. balance of the loan?

You already have this one, and it's a very practical/economical car (depreciation not withstanding). Will trading it in allow you to save more money?

I'm struggling to see a better option than drive it until it dies. Maybe pay it off early?

Dicey

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Re: I bought a new car a year ago...
« Reply #2 on: April 27, 2016, 10:43:50 AM »
Is your employer compensating you for your travel?

Every time you buy/sell a car, there are costs involved. My vote is to keep it, take excellent care of it and drive it for at least ten to fifteen years longer.  You  bought a practical vehicle. It will continue to be that for many years. It's a valuable lesson and a good visual reminder to make and keep frugal habits.

Sibley

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Re: I bought a new car a year ago...
« Reply #3 on: April 27, 2016, 10:58:59 AM »
So, you bought a a new car at a reasonable price, and you're thinking of replacing it with an older car that will most likely have repairs sooner?

Just pay it off and keep it for ever.

hoping2retire35

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Re: I bought a new car a year ago...
« Reply #4 on: April 27, 2016, 10:59:14 AM »
i'm guessing you owe about $11-12k still and edmonds.com has a base model with 20k miles private party sales are just shy of $15k, looks like you can sale and win. So, sale this buy a miata for less than $5k and you are good to go. and will save at least $6k but should get a little bit over what you have already paid into the fits so you could get close to saving/making $10 upfront not to mention MMM "saving money and investing over 10 year" calculations would make this a lot more money.

If GF wants a car buy her one of MMM practical cars for smart people for $4k
http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/

2Birds1Stone

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Re: I bought a new car a year ago...
« Reply #5 on: April 27, 2016, 11:12:26 AM »
100% keep it. You know how the car was cared for from the get go. You already ate the biggest portion of the depreciation curve.

Drive it into the ground over the next 10-15 years while you get to FI.

JLee

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Re: I bought a new car a year ago...
« Reply #6 on: April 27, 2016, 11:34:00 AM »
i'm guessing you owe about $11-12k still and edmonds.com has a base model with 20k miles private party sales are just shy of $15k, looks like you can sale and win. So, sale this buy a miata for less than $5k and you are good to go. and will save at least $6k but should get a little bit over what you have already paid into the fits so you could get close to saving/making $10 upfront not to mention MMM "saving money and investing over 10 year" calculations would make this a lot more money.

If GF wants a car buy her one of MMM practical cars for smart people for $4k
http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/

A Miata is basically the exact opposite of a fit-like car.

veazer

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Re: I bought a new car a year ago...
« Reply #7 on: April 27, 2016, 11:35:51 AM »
Is your employer compensating you for your travel?

Every time you buy/sell a car, there are costs involved. My vote is to keep it, take excellent care of it and drive it for at least ten to fifteen years longer.  You  bought a practical vehicle. It will continue to be that for many years. It's a valuable lesson and a good visual reminder to make and keep frugal habits.

Yeah they only compensate me for the work related parts of it though, probably less than 1.5K of the 25K miles. I'm thinking now that the course of action might be to teach my GF to drive a stick and then when she's comfortable with it and when her '05 Montego dies, she can drive the fit and I'll buy a nice $3-8K miata.

veazer

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Re: I bought a new car a year ago...
« Reply #8 on: April 27, 2016, 11:37:49 AM »
i'm guessing you owe about $11-12k still and edmonds.com has a base model with 20k miles private party sales are just shy of $15k, looks like you can sale and win. So, sale this buy a miata for less than $5k and you are good to go. and will save at least $6k but should get a little bit over what you have already paid into the fits so you could get close to saving/making $10 upfront not to mention MMM "saving money and investing over 10 year" calculations would make this a lot more money.

If GF wants a car buy her one of MMM practical cars for smart people for $4k
http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/

A Miata is basically the exact opposite of a fit-like car.

This is true. I would have the miata as a daily driver / commuter for when I can't use a bike, and would rely on my GF's car for practicality. It would just be essentially a motorcycle more than anything. We're still allowed to have some fun right?

VaCPA

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Re: I bought a new car a year ago...
« Reply #9 on: April 27, 2016, 11:49:27 AM »
I'm probably in the minority that thinks buying new isn't always a terrible decision if it's a reasonable reliable car and you'll drive it until the wheels fall off. That said, my advice is drive it until the wheels fall off.

veazer

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Re: I bought a new car a year ago...
« Reply #10 on: April 27, 2016, 11:51:03 AM »
So, you bought a a new car at a reasonable price, and you're thinking of replacing it with an older car that will most likely have repairs sooner?

Just pay it off and keep it for ever.

I mean the idea would be that similar to the MMM post where he discusses buying a new corolla for 20K or a used corolla with 100K miles for 9K twice, you still come out ahead buying the used ones because you've got money tied up in car inventory that could be working for you instead. Car repairs short of an engine or transmission failure aren't typically as expensive as most people make them out to be too, especially when you've got some very mechanically minded friends.

That said, it's not like I bought a new F250 or something ridiculous so I'll probably keep the car till it falls apart, especially since I do tend to drive a lot more than most and because used Fits hold their value better than just about any other car. I could sell mine for 14.5K easily even though I paid 16K OTD for it 20K miles and 11 months ago.

JLee

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Re: I bought a new car a year ago...
« Reply #11 on: April 27, 2016, 11:51:19 AM »
i'm guessing you owe about $11-12k still and edmonds.com has a base model with 20k miles private party sales are just shy of $15k, looks like you can sale and win. So, sale this buy a miata for less than $5k and you are good to go. and will save at least $6k but should get a little bit over what you have already paid into the fits so you could get close to saving/making $10 upfront not to mention MMM "saving money and investing over 10 year" calculations would make this a lot more money.

If GF wants a car buy her one of MMM practical cars for smart people for $4k
http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/

A Miata is basically the exact opposite of a fit-like car.

This is true. I would have the miata as a daily driver / commuter for when I can't use a bike, and would rely on my GF's car for practicality. It would just be essentially a motorcycle more than anything. We're still allowed to have some fun right?

lol I have a 460whp MR2...I'm not the poster child for efficient vehicle choices.  My thought was if you bought a Fit because you wanted a Fit-like car (i.e. lots of utility space), a Miata likely won't fit the bill.

RWD

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Re: I bought a new car a year ago...
« Reply #12 on: April 27, 2016, 11:58:37 AM »
You've already paid for the most expensive part of a new car (initial depreciation, taxes, and fees) and can't recoup that. Since the car is efficient, relatively inexpensive, and you have such a low interest rate I don't think there is much to gain by switching to something else now.

GuitarStv

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Re: I bought a new car a year ago...
« Reply #13 on: April 27, 2016, 12:08:43 PM »
Keep it and drive it into the ground.  I'm not entirely convinced that there's significant difference in cost between buying a new car and doing this over 15-20 years vs buying a succession of older cars that require more regular repairs and driving them until they fall apart.

lbmustache

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Re: I bought a new car a year ago...
« Reply #14 on: April 27, 2016, 09:44:14 PM »
Keep it and drive it into the ground.  I'm not entirely convinced that there's significant difference in cost between buying a new car and doing this over 15-20 years vs buying a succession of older cars that require more regular repairs and driving them until they fall apart.

Agreed. I'd just keep the Fit.

hoping2retire35

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Re: I bought a new car a year ago...
« Reply #15 on: April 28, 2016, 05:55:44 AM »
come'on somebody! no help? I'm the only one on here advocating to spend less money.

NoStacheOhio

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Re: I bought a new car a year ago...
« Reply #16 on: April 28, 2016, 06:01:20 AM »
come'on somebody! no help? I'm the only one on here advocating to spend less money.

It just doesn't seem that clear-cut. It's not a $65k Tahoe financed at 3.9% with $0 down. Between transaction costs and more frequent repairs (even if they're minor), it's pretty close to a wash over the time frame we're talking.

Pigeon

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Re: I bought a new car a year ago...
« Reply #17 on: April 28, 2016, 06:16:35 AM »
Keep it and drive it into the ground.  I'm not entirely convinced that there's significant difference in cost between buying a new car and doing this over 15-20 years vs buying a succession of older cars that require more regular repairs and driving them until they fall apart.

I agree.  This isn't a Cadillac Escalade, it's a Honda Fit.  Keep it for many years, take care of it and stop worrying about it.

VaCPA

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Re: I bought a new car a year ago...
« Reply #18 on: April 28, 2016, 09:50:18 AM »
come'on somebody! no help? I'm the only one on here advocating to spend less money.

But will he spend less money? Yeah maybe in the short term but assuming he keeps that Fit for a long time it could end up being cheaper overall. I have no problem with people buying new cars as long as they keep it a long time. Where you get hosed is buying new and trading it in while it still has a lot of miles left in it.