Author Topic: Is it worth it to downgrade my car?  (Read 4570 times)

morli

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Is it worth it to downgrade my car?
« on: December 04, 2015, 11:42:13 AM »
I made a financially dumb decision in early 2015 (less than 1 year ago) and bought a certified pre-owned lexus GS 350 AWD.  Beautiful car, and I really like it.  I felt like I was being smart by getting a slightly used car (only had 14k miles) and not paying for a new one.

My rationale was:
  • I got 0.9% financing for life of loan
  • I was buying used so saving that way
  • I loved the car and felt it was a reliable, long lasting brand

But I didn't consider a few things.  $38500 is still a LOT of money for a car.  And now I am getting 20 miles per premium-gas gallon, insurance isn't cheap, and I am paying $450 per month to lexus financial (I put 10K or so down).  I can afford these payments, but they (along with gas, insurance, tax costs for this car) prevent me from putting much more into 401Ks or mortgage.

Balance on the loan right now is $21,784 at 0.9%

I am thinking about getting a medium-trim Honda Fit instead.  Possibly even a used one.  So that would be somewhere around $14-18K

I can get about 9-10K in cash if I sell the car now (it's worth about 31K private sell).

This would mean I would have a much smaller payment, if one at all, and should be able to pay it off very quickly after that. And my gas, insurance, and repairs costs would all drop a lot.  Virginia also has crazy property tax on cars, another savings.

My only hesitation is that I paid 38K for a car that is worth 31K now.  I know all cars are a liability and not an investment, and I didn't pay the whole 28K anyway, but is it worth it to take this loss now, or wait a little while and get some use for the money I spent?

Thoughts?
« Last Edit: December 04, 2015, 11:45:02 AM by morli »

ShoulderThingThatGoesUp

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Re: Is it worth it to downgrade my car?
« Reply #1 on: December 04, 2015, 11:55:15 AM »
This seems to be the calculator you want. I get that you'll save $1700 a year with replacement.

AZDude

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Re: Is it worth it to downgrade my car?
« Reply #2 on: December 04, 2015, 12:06:13 PM »
Dont fix a bad mistake by making a slightly less bad mistake.

Sell the car, take the $9K plus whatever cash you have and buy a reliable used car with cash. Now you save $450 a month in car payments, plus insurance and gas savings. You still have reliable transportation.

tarheeldan

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Re: Is it worth it to downgrade my car?
« Reply #3 on: December 04, 2015, 12:18:05 PM »
My only hesitation is that I paid 38K for a car that is worth 31K now.  I know all cars are a liability and not an investment, and I didn't pay the whole 28K anyway, but is it worth it to take this loss now, or wait a little while and get some use for the money I spent?
Thoughts?

Sunk costs are sunk. Ignore them (the 7k depreciation) :-) ShoulderThingThatGoesUp's link looks like a good one.

ShoulderThingThatGoesUp

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Re: Is it worth it to downgrade my car?
« Reply #4 on: December 04, 2015, 12:51:50 PM »
Also, it seems like you can get a 2010 Fit for $8000. So I'm not sure why you would be looking at spending $14k-$18k.

morli

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Re: Is it worth it to downgrade my car?
« Reply #5 on: December 04, 2015, 01:07:24 PM »
I didn't look too far into prices. Just was thinking around 14 for a good used one but hey, 8 would be great.

MsPeacock

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Re: Is it worth it to downgrade my car?
« Reply #6 on: December 05, 2015, 04:49:58 AM »
I am in a very similar situation. This weekend I am selling/ trading in my very expensive car (2014 Toyota Highlander hybrid led with 13500 miles on it, bought for 46k,smelling for about 40k, owe 25ish on it) for one that I can purchase with the equity in the car. No more car payment. Totally worth it to me financially and emotionally to fix this mistake (made only a few months before I found mm).

I spent yesterday at Carmax getting their offer and test driving 8 or 9'different cars. Settled on getting an older Pilot or Escape. Both with less than 50k miles. I like both models, actually like them better than my current car and love ditching the car payment (560 a month ... Face punch).


Do it!!!

JJ saves

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Re: Is it worth it to downgrade my car?
« Reply #7 on: December 05, 2015, 11:34:20 AM »
Also consider as it ages you will still be paying Lexus prices for insurance, maintenance and parts. Take a loss now and you will slowly recover that cash in the future. The feeling of zero debt is awesome!

Icecreamarsenal

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Re: Is it worth it to downgrade my car?
« Reply #8 on: December 06, 2015, 11:32:49 AM »
Also consider as it ages you will still be paying Lexus prices for insurance, maintenance and parts. Take a loss now and you will slowly recover that cash in the future. The feeling of zero debt is awesome!

Lexus is consistently the most reliable car, according to multiple sources. So insurance, maintenance, and parts should be on the cheaper side.
I went from an 2011 m3 vert and an 09 e350 4 matic to an 07 honda odyssey touring and an 09 honda fit sport.
Paid in cash for all. Love the odyssey. Not a fan of the fit: lots of road noise, anemic on the on ramp, feels like I'm sitting in a tin can.
That being said I will maintain it and run it into the ground, because we're all on the forum for a reason, right?
If I had to do it over again, I'd definitely repurchase the odyssey, but might go for an early 00s or late 90s lexus ls. Bulletproof.
Also consider as it ages you will still be paying Lexus prices for insurance, maintenance and parts. Take a loss now and you will slowly recover that cash in the future. The feeling of zero debt is awesome!

JLee

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Re: Is it worth it to downgrade my car?
« Reply #9 on: December 06, 2015, 11:48:10 AM »
Also consider as it ages you will still be paying Lexus prices for insurance, maintenance and parts. Take a loss now and you will slowly recover that cash in the future. The feeling of zero debt is awesome!
You say that like it's a bad thing.

Lexus insurance isn't bad (how many people drive them recklessly and get into dumb accidents? low risk factor), maintenance is Toyota, and parts are also Toyota.

So....it's basically a really nice Toyota.