Bought a new car before discovering 'the path'. What should I do?

[GregP]

A few months back, I made a crucial financial mistake.  I tool out a $24,000 auto loan and bought a new car.  I love the car, but the thought of the amount of money that 5 year loan is going to cost me makes me cringe. 

I'm interested to hear what others would do in my position.  It's a VW GTI, and will retain decent resale value (relatively).  I should also mention that I do need a car for work at the moment.  I wonder if it would be best to keep it and drive it into the ground, pay it off and sell it ASAP, or try to identify the sweet spot and keep it for a while then sell it at the best resale value.

[CheapskateWife]

Hi Greg...we sold my 1yr old VW GTI back to a dealership after finding MMM.  Its embarassing that we made such a bonehead financial move, but you probably need to know that you are not the only one to succomb to the allure of a brand new VW...

Tell me, did it have the black plaid seats with the warmers?  I miss having a warm booty while I drive...

Anyway, start shopping that bad boy around the dealerships...see what you can come up with for a number.  You may find that coming out of pocket to fix your mistake means you don't have $ for a reasonable purchase afterwards, and that you have to stay the course for now.

Start plunking everything you can into some sort of savings vehicle to buy yourself out of that mess.

[Angie55]

If it makes you feel better I succumbed to a brand new VW Eos within a month of it being released..... 34k at 7% for 5 years. OUCH! Definitely worse financial move in my life (and I had over 100k in student loans!). The worst part was the $700 payment every month didn't phase me... I drove it around for 6 years until I sold it for 14k. I drove it for less than 60k miles. What a damn waste. 20k plus the interest I'm too scared to calculate...

Definitely sell that sucker early on. Maintenance on VW's is killer. Once the minimal warranty is up things break that you don't even know existed. Stupid German over-engineering.

[2Birds1Stone]

You already took the biggest hit of depreciation by driving the car off the lot. The GTI is a drivers car, if you REALLY enjoy driving it is a good blend of performance and economy.

I would say it depends on what the interest rate is on the loan, if it was a brand new car or pre owned? And what kind of deal you got on it.  If you could turn around and sell it privately and recoup most of your $$ go for it, if not take an amnesia pill and drive it till the wheels fall off.

[GregP]

God I hate the idea of selling it.  Then again, the idea of working until I'm 70 sounds pretty awful too.  But between the $400 payment, the $95 insurance, the tires, the registration, and the maintenance, I would estimate I'm about $550-600 a month into this thing...

I can afford it with an engineering job and no student debt, but I've learned that being able to afford to waste money, doesn't justify it.

I'm going to have to look at dealerships I guess.  Maybe I could get my dad to loan the money to pay the loan, get the title, and sell it to a private party?  I don't know if that would be worth the hassle and embarrassment for the extra money.

[JLee]

A few months back, I made a crucial financial mistake.  I tool out a $24,000 auto loan and bought a new car.  I love the car, but the thought of the amount of money that 5 year loan is going to cost me makes me cringe. 

I'm interested to hear what others would do in my position.  It's a VW GTI, and will retain decent resale value (relatively).  I should also mention that I do need a car for work at the moment.  I wonder if it would be best to keep it and drive it into the ground, pay it off and sell it ASAP, or try to identify the sweet spot and keep it for a while then sell it at the best resale value.

What's your rate? Penfed has ~2% on cars...if you're paying more than that, I'd consider refinancing if you aren't going to sell it.

[Retired To Win]

As I am sure you already know, depreciation is progressive.  So it's only going to get worse and the car will be worth less and less the longer you wait to sell it.  So you really need to make a decision quickly as to whether it makes (any) sense to keep it.

Good luck.

[JLee]

God I hate the idea of selling it.  Then again, the idea of working until I'm 70 sounds pretty awful too.  But between the $400 payment, the $95 insurance, the tires, the registration, and the maintenance, I would estimate I'm about $550-600 a month into this thing...

I can afford it with an engineering job and no student debt, but I've learned that being able to afford to waste money, doesn't justify it.

I'm going to have to look at dealerships I guess.  Maybe I could get my dad to loan the money to pay the loan, get the title, and sell it to a private party?  I don't know if that would be worth the hassle and embarrassment for the extra money.

You can still sell it to a private party while it's financed. I'm buying one this weekend that's financed by the sellers.

[ShoulderThingThatGoesUp]

God I hate the idea of selling it.  Then again, the idea of working until I'm 70 sounds pretty awful too.  But between the $400 payment, the $95 insurance, the tires, the registration, and the maintenance, I would estimate I'm about $550-600 a month into this thing...

I can afford it with an engineering job and no student debt, but I've learned that being able to afford to waste money, doesn't justify it.

I'm going to have to look at dealerships I guess.  Maybe I could get my dad to loan the money to pay the loan, get the title, and sell it to a private party?  I don't know if that would be worth the hassle and embarrassment for the extra money.

...You're renting the tires?

[GregP]

God I hate the idea of selling it.  Then again, the idea of working until I'm 70 sounds pretty awful too.  But between the $400 payment, the $95 insurance, the tires, the registration, and the maintenance, I would estimate I'm about $550-600 a month into this thing...

I can afford it with an engineering job and no student debt, but I've learned that being able to afford to waste money, doesn't justify it.

I'm going to have to look at dealerships I guess.  Maybe I could get my dad to loan the money to pay the loan, get the title, and sell it to a private party?  I don't know if that would be worth the hassle and embarrassment for the extra money.

...You're renting the tires?

I'm not renting anything, I'm just factoring the costs associated with tires into the equation.  I live in Maine so I need to put snows on it, get them mounted, etc.  It's at least $200 a year.

[cautiouspessimist]

I can relate since I've purchased new vehicles around every two years for the past 10 or so. Big waste of money, but it's all under the bridge now, so no use fretting over it. I do still owe on my current car, but since I'd had it almost two years when I discovered the way of the mustache it's a bit too late to try and sell it at a small loss.

If you can sell it at only a small loss I probably would. If the loss plus the price to replace (assuming you currently need it) is more than you can easily handle I'd probably keep it and pay it off as soon as I could. That's my plan. Of course, mine is actually already a very mustachey car (manual hatchback with good mileage) and yours is...a little sportier I'd say.

[skunkfunk]

Money-wise, best choice is to sell. Almost always better to sell a high-value car unless it's a business-type thing.

Same thing happened to me. Wife bought a car, $13k loan. Our compromise is that we'll pay it off (2% interest) as soon as we can afford to self-insure.

Wife didn't want to get rid of it. 6-speed that we get about 39 mpg average, whatever, I can handle an $8k hit I guess for the sake of one less argument in our marriage. I'd sell it if it were mine. I drive a beater, and only rarely for that matter. We have put 22k miles on that in our first year with it, almost all of it traveling to see family.

Man, big digression but whatever I'll throw it out there.

[JLee]

Money-wise, best choice is to sell. Almost always better to sell a high-value car unless it's a business-type thing.

Same thing happened to me. Wife bought a car, $13k loan. Our compromise is that we'll pay it off (2% interest) as soon as we can afford to self-insure.

Wife didn't want to get rid of it. 6-speed that we get about 39 mpg average, whatever, I can handle an $8k hit I guess for the sake of one less argument in our marriage. I'd sell it if it were mine. I drive a beater, and only rarely for that matter. We have put 22k miles on that in our first year with it, almost all of it traveling to see family.

Man, big digression but whatever I'll throw it out there.

If you're putting 22k/mi a year on a car, a $13k car doesn't sound bad to me at all.  There's something to be said for enjoying the time you spend behind the wheel.

[RapmasterD]

I'm generally against selling new cars because of the aforementioned depreciation issue (i.e., you've already taken such a big hit). But VWs consistently score toward the bottom of Consumer Reports' reliability rankings.

I see a lot of 15-20 year old Toyotas on the road. It's a rare old VW that I see, other than a Beetle or bus some Bay Area HIPPIE is driving on their way to a PROTEST.

[DeltaBond]

I'm a little more upside down on a car loan myself, and once I get my tax return, I'll be using that to pay the car down to whatever a buyer won't be able to cover.  I'm doing it with cash, for one, and I have a classic Benz to drive that's free.  I guess you need to consider what you will get after this one, if you sell it.  That is still part of the equation.

[Calvin]

I just recently traded in my 2014 Subaru Forester I bought a year ago and got into a 2010 Honda Fit with 75k miles. I was planning on keeping the Forester and driving it into the ground, but realized that I had absolutely no more enjoyment driving it than driving my dad's 2005 Honda Civic with >100k miles on it. I'm just not the type of person who finds driving exciting at all. Also, I only realistically drive ~5000 miles a year so if I kept the new car it'd take 15+ years to hit the first 100k miles. And I'm single, no kids, so an SUV just makes no sense.

In any case, now I have a car much more suitable for my actual needs and I already feel like a psychological weight has been taken off. It felt so wasteful to drive a new SUV 3 miles back and forth to work (still working on buying the bike), and I didn't want to be the "Joneses" to others. I think someone else will like the Forester a lot more than me. So, this added about $9k to my Vanguard account and I'm already saving ~$400 on winter tires and another $350 for registration.

Also, when I was debating whether to do it, I ran the numbers and realized I only paid a little bit more for this endeavor than it would've cost to lease the Forester over that year. So, it wasn't too bad.