I need advice on changing vehicles...

[lackofstache]

We're not in great shape now, but looking to get better...

We are a family of 4. We currently have a 2006 Mazda5, which gets ~25mpg & has 56,000 miles on it. We owe $7K on it currently which we're paying down at $1268/mo starting in November (beginning of a snowball). It's worth about that much for individual sale, but our loan is through an online bank, which complicates selling private party before it's paid off as we have to wait 2 business days after it's paid off to receive the title.

I can pick up a 2000 Toyota echo, which gets ~35mpg & has 98,000 miles on it for $4k.

My thought: Trade in the Mazda for $6k (kbb estimate & what we'll owe after the 1st). Borrow $4k for the Echo, pay it off in less than 4 months.

According to estimates on mileage & gas used, we'd save close to $480/yr in gasoline. We're driving less now than we have historically (so savings for better mpg won't be as significant, but we're using it less so that should offset it). We'd also save at least $240/yr in insurance by dropping our comp & collision coverage.

In my head the better mpg negates the higher mileage. We're saving $2K on loans and would continue to save on gas & insurance. I realize borrowing isn't the best idea, but I've already done that & I'm looking for the quickest way out of this situation so I can move on.

Your advice/opinions/facepunches are welcome & appreciated.

[andru365]

Stuffing a family of 4 into an Echo does not sound fun to me.

Keep the Mazda 5, which is almost the perfect vehicle for a family of 4, pay it off ASAP, take good care of it and drive it until the wheels fall off.  That car should easily last another 5 years before major things start going wrong.

Depending on where you live, you should keep an eye on rust developing on the Mazda as they tend to rot-out here in the northeast part of the continent. 

[dragoncar]

My two favorite vehicles are bicycles and helicopters. 

[gimp]

Despite what MMM loves to write, there's a lot more to cars than gas mileage.

Pay off the car, keep it, drive it for the next 15 years or until it falls apart.

[lackofstache]

Dr. Agoncar, I suppose I should've mentioned that this is for my wife's vehicle, I ride my bike at least 19 miles a day, often more. I do have a truck I rarely use, but it honestly saves us more than it costs.

Thanks for your thoughts so far, I feel like we would be fine with a smaller car, but one of the reasons it's been so hard to think about getting rid of the Mazda is the fact that we don't owe THAT much and it has so few miles. I wouldn't buy it again on a loan, but the sunk costs are sunk, as they say...

[TygerTung]

Never buy a car on a loan.

With regards to your family transportation- ride together as a group, only drive in extraordinary circumstances.

[lackofstache]

Never buy a car on a loan.

With regards to your family transportation- ride together as a group, only drive in extraordinary circumstances.

While I agree w/ your sentiment, it's truly of no help to say Never buy a car on a loan. It's already been done. We ride together more often than not, to the farm, to get groceries, to have fun on a sunny Saturday. We won't be a car free family, it's just not in the cards at this point, so I'm trying to maximize our vehicle...

[Bruised_Pepper]

I do have a truck I rarely use, but it honestly saves us more than it costs.

Can you quantify that?  Are you paying insurance, registration fees, gas, maintenance?  Is it making you any income?

[Rust]

I don't think the math makes sense for you to replace the Mazda 3.

Based on the mileage on a 2006, I don't think you drive that much.

Call it 7 years old.  56K means you drive it about 8k miles per  year.  (maybe even less)

8000/25 MPG = 320 Gallons per year
8000/35 MPG = 228 Gallons per year

Gas prices do vary based on where you live so make the adjustment based on your area.  But, lets just call it $3.50.

320*3.50= $1,120
228*3.50 = $798

Annual difference of $322 + $240/year for INS (Your INS will drop off after the loan is paid back and you go to liability only.  I'd call it a wash after that)  Year 1 savings $562

Current value of Echo = $4,000
Current value of Mazda = $7,000

Now the part where it makes sense to keep the Mazda.  Expected life.  The Mazda has at 8k miles per year ~5 more  year of life than the Echo does.  40,000 miles / 8,000 = 5 years.

You'll be replacing the Echo much sooner than the Mazda.  Drive the Mazda into the ground.

[Mr.Macinstache]

^ plus a midsize will hold value better than a compact.

Pay that Mazda down asap, get rid of comprehensive insurance, drive it as needed.

[lackofstache]

I do have a truck I rarely use, but it honestly saves us more than it costs.

Can you quantify that?  Are you paying insurance, registration fees, gas, maintenance?  Is it making you any income?

It was free. It costs $19/mo for insurance (when I have it, I suspend coverage for weeks & monnths when it won't be in use at all) but saves $12/mo on our Mazda's insurance w/ a multi-car discount. I drive it under 1500 miles/yr to obtain free or cheap things that would otherwise cost us money. Mulch for instance. I've been able to get truckloads of free mulch by having the truck. The same goes for dirt, appliances, wood, etc.

License plates were $42 this year. I've spent no $ on maintenance since 2011 when it was given to me...

[chicagomeg]

You more than likely won't be able to get a loan for a car from 2000. When I was in the market for a gently used car shortly after college, no one would finance anything older than 7-9 years old. I agree that the Mazda might be the best vehicle for your needs as this time, but it really depends on how dire your other circumstances are whether or not  you should trade it in. If you are $200k in debt, it might be worth the sacrifice. If this is your only loan, maybe not...

[Bruised_Pepper]

It was free. It costs $19/mo for insurance (when I have it, I suspend coverage for weeks & monnths when it won't be in use at all) but saves $12/mo on our Mazda's insurance w/ a multi-car discount. I drive it under 1500 miles/yr to obtain free or cheap things that would otherwise cost us money. Mulch for instance. I've been able to get truckloads of free mulch by having the truck. The same goes for dirt, appliances, wood, etc.

License plates were $42 this year. I've spent no $ on maintenance since 2011 when it was given to me...

Alright, looks like you avoided a face-punching...for NOW!

No wait, I've got one: why not just throw all the kids in the back of the truck on your family outings!?  Put some hay down, and it's like a hayride every day!

[lackofstache]

No wait, I've got one: why not just throw all the kids in the back of the truck on your family outings!?  Put some hay down, and it's like a hayride every day!

This is a great idea. I guess I could just throw a couple wool blankets back there in the winter time.