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?