~~~~~UPDATE~~~~~~
(scroll down for part 2 if you like, these jokers mostly convinced me to keep the car)
In the past year with aggressive savings and a small cash windfall from a relative I paid off $5,000 of credit card debt and $7,500 of student loan debt. Both are down to zero (though I use the card for southwest points and pay the balance in full now each month now). I'm itching to move my new savings habits to an index fund, but one thing (seemingly) stands in my way.
A little over a year ago my 1991 Park Avenue finally called it quits. Under pressure from my (then) girlfriend and my car-loan-loving family, I told myself I could "afford," an entirely new car. I can EASILY make those monthly payments! Hell, I could even pay it off early. I must admit, those dealerships really do make it fun for a buyer. It's all fake and glossed over and I fell for the whole damn thing.
Fast forward a year. I'm trying to grow this freakin' moustache (by myself now) but there's a 2014 Nissan Versa Note in the driveway with $11,000 left on the loan (3.29%). If you do a quick KBB or Edmunds eval on this car (SV trim, like-new/great condition) you'll see my dilemma. I'm not upside-down, but it's close. I've got it on Craigs and Ebay Motors and have absolutely zero bites.
I'm afraid that in order to be rid of the car (and thus, loan) I might have to take a loss. So here's the question: Take a slight loss to escape the loan and buy a cheap car with cash, OR, stick it out with what's really a pretty great car and drive this mother into the ground? And finally, if the best answer IS to stick it out with the loan, do I devote all unused income to paying it quickly? Or could I be investing that chunk and paying the normal payment amount? I'd appreciate some help crunching these numbers and observing the necessary variables.
~~~~UPDATE~~~~~
Thanks everyone for the feedback. It sounds like most everyone would keep the car. Which begs the question: Funnel all future savings at the loan for quick payoff OR set up investments to counter the interest with nice growth?
More numbers:
Income - ~$45,000 (I'm a server so it has potential to fluctuate)
Expenses:
Rent/Utilities - 650/mo
Auto/Renters Insurance - 100/mo
Health Insurance - 180/mo
Phone - 75/mo
Car payment - 245/mo
Food/Drink/Gas ~ 350/mo (estimate, my Mint setup isn't tracking this very well)
In my least mustachian months I'm saving around 50% of my income. 60% in the good ones. If I pay the car payment as is, I pay around $800 in interest at the end of 4 years. So the question becomes, do I kill this negative interest as fast as possible with these savings? Or set up investments (IRA/taxable/whatever) and hope the returns outweigh the loan's interest?
