Author Topic: Selling my newish car for a used car?  (Read 1520 times)

mayodt

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Selling my newish car for a used car?
« on: March 28, 2018, 08:29:26 AM »
Hey Guys,

I started a new job a couple weeks ago and I will need to drive my personal vehicle significantly less for work than before (~7500km a year maybe with personal driving included). My last job had me driving my personal vehicle 20,000km+ for business itself so I got a 2015 toyota corolla for reliability and fuel economy. Now that I am driving significantly less, I feel like I do not need as reliable of a vehicle so I should go older to save some money on depreciation, insurance and purchase price (also: if my car breaks down my company will pay for a rental if I need one for business purposes). Is it worth selling my corolla and getting an older vehicle to save money on mainly depreciation and insurance (and investing the initial cost difference)?

It should be noted that where I live there is a 13% sales tax as well and I only bought my car approximately 6 months ago (used with ~65000km on it), does it make sense to sell this car so fast and get an older car? Also should be noted that I live ~5 km from work and I sometimes bike to work but I need to convince myself to wake up early enough (if anyone has tips on convincing my body to get out of bed early in the morning that would also be appreciated ;) ).

TL;DR - Driving significantly less, sell 2015 corolla for older vehicle for savings on depreciation and insurance?

Thanks!

neo von retorch

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Re: Selling my newish car for a used car?
« Reply #1 on: March 28, 2018, 09:12:01 AM »
I think it's hard to tell from your post whether it will be worth it.

A few questions:
 - what kind of "blue book" value can you find online for your selling your car privately?
 - how much is your insurance with your current car vs. an older one?
 - how much would the change in insurance and the cash netted from selling a vehicle and buying another (after costs - fees and taxes) affect your other goals?
 - could things change in the near enough future that you'd end up thinking you needed to changes cars again, adding to your transaction costs?

It's probably worth it, technically, as in it will overall improve your financial picture, a little, on a one-time scale and to some degree ongoing with reduced insurance costs, but how much is something you should research by getting quotes and looking up values. But depending on your current income/savings rate you might be just fine and long-term better off just driving the reasonably priced, reliable and economically efficient 3 year old car for the next 20 years.

mayodt

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Re: Selling my newish car for a used car?
« Reply #2 on: March 28, 2018, 09:28:01 AM »
I was thinking I could maybe pocket ~$5000 after transaction costs and maybe save ~$50/mo on insurance since I would drop all the coverage that isn't required. But I suppose the $5000 could get cut into really quickly paying for repairs for a ~10 year old car, especially because I do not know how well it was maintained. At least with the car I have now from here on I know how well it has been maintained if I keep it. What is the general consensus here for insurance coverage? I have basically full coverage for my car just in case, but should I drop it down and save some money per month?

I suppose it is probably the right thing to do to hold onto this car for a while because it is a "good" car (known for reliability, gets decent fuel economy, depreciation is fairly low for Toyota cars). I have avoided most of the depreciation anyways by buying it 2 years old I believe.

Thanks!

frugaliknowit

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Re: Selling my newish car for a used car?
« Reply #3 on: March 28, 2018, 09:28:36 AM »
I would start by looking up the value of your Corolla versus the value of a more minimal car you would by.  Then, see what investing the difference at a conservative rate (say 7%) would look like over the likely useful life of the Corolla.  Is it worth the effort?

In general, if you have no debt and are pretty "thick" financially, it's probably not worth the effort.  If you don't have much of a net worth, then yes, consider trading down.

RWD

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Re: Selling my newish car for a used car?
« Reply #4 on: March 28, 2018, 09:30:21 AM »
You'll probably save a little money, but the Corolla isn't a very expensive car to start with. You can drive that thing for another decade or two and the depreciation will be minimal compared to your overall financial picture.

However, you didn't talk about your current financial picture. Are you just scraping by or are you saving 50%+ of your post-tax income? If the small difference between a $5k car and a $12k car is what it takes to give you some breathing room with your finances then you should consider the change more seriously. But if you're already comfortably saving then it doesn't make to over-optimize every penny. Especially when the car you have now is reliable and fuel efficient.

mayodt

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Re: Selling my newish car for a used car?
« Reply #5 on: March 28, 2018, 09:33:07 AM »
Well I probably reached a bit more than I should have when buying this car. It is worth approximately 1/4 of my net worth if you include it as part of my net worth. I just finished school ~ a year ago though and I have been saving at a pretty good rate (aiming for 30%+ most months and my savings have been going up and up as I get a better hold on this whole "adult" thing aha). But it is probably not worthwhile to trade down at this point if I am willing to hold onto this car for the long term like you guys are all suggesting. Also, I paid fully in cash so it is totally paid off and not causing me any additional costs per month other than insurance and gas (~$300/mo most months, $220/mo insurance, ~$80/mo on gas), and I have done one oil change since I've got the car, no other maintenance yet (although I need to buy new tires soon).

neo von retorch

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Re: Selling my newish car for a used car?
« Reply #6 on: March 28, 2018, 09:41:32 AM »
Whoa. That insurance. That's crazy. $2640/year. $13,200 in 5 years. Now, not having insurance would suck in the unlikely event of a crash, but having insurance is crazy. How much of that is collision and comprehensive? How much would you save by dropping it?

Given your situation, I think you could certainly consider dropping down to a ~$6000 car with minimum insurance. (Self-insure against collision by socking away that money you save!)

mayodt

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Re: Selling my newish car for a used car?
« Reply #7 on: March 28, 2018, 09:59:11 AM »
I also forgot to mention I am 23 years old and male, so that greatly increases my insurance costs (or so I'm told). The costs often go down once I turn 25 if I have not had any tickets or collisions. I did though have a 2007 f150 before I bought my corolla and had pretty much minimum coverage to allow me to legally drive on roads and I was still paying about $150/mo. I am not exactly sure what I need for minimum coverage in Ontario, Canada where I live but I can tell you that more than 3/4 of the cost for my insurance on my corolla is bodily injury + accident benefits + property damage + collision or upset.

I believe I had all this coverage except collision and upset (and 2 other smaller categories, car rental and coverage for rental car) with my f150. If I took these 3 coverages off my total would be ~$40 less per month it seems. Should I switch this up and take it off? I guess I should read into car insurance policies more, anywhere I can look into this?

Thanks!

RWD

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Re: Selling my newish car for a used car?
« Reply #8 on: March 28, 2018, 10:20:19 AM »
Have you tried shopping around for insurance? That seems very high for a boring cheap car like a Corolla, even for a 23 year old. What are your deductibles set at? You can often save a decent amount just by raising your deductibles without fully dropping collision/comprehensive coverage. I'd estimate you should be paying less than half that amount.

mayodt

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Re: Selling my newish car for a used car?
« Reply #9 on: March 28, 2018, 10:35:02 AM »
I have not really shopped around to be honest. My parents use an insurance broker so I have just used him and I am just under the impression he is finding me the best deals possible. I guess it won't hurt for me to make a few phone calls and try to get lower insurance. I was also thinking that, I have a 4 door corolla, it's not like I'm getting into any races with anybody aha.

My deductibles for the required Bodily Injury and Property Damage appear to be $1,000,000 each, which I believe is the minimum coverage available by law.

Any suggestions where to start for getting lower insurance? Send some emails, make some phone calls to insurance companies in the area?

Thanks!

neo von retorch

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Re: Selling my newish car for a used car?
« Reply #10 on: March 28, 2018, 10:53:48 AM »
Google is your friend*. "compare insurance premiums."

You're talking about coverage limits, not deductibles. A deductible is what you pay in the event of a claim. It's usually $100, $500 or $1000. With a paid off car, you can set it to $1000 and pay a lower premium.

*Shhh, don't protest. Trust them.

mayodt

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Re: Selling my newish car for a used car?
« Reply #11 on: March 28, 2018, 11:05:09 AM »
Oh okay, it only shows deductibles on comprehensive and collision ($500 each).

I'll go through the compare insurance premiums information and see what kind of numbers I can get there. From a quick review with minimum coverage, it looks like I can get an insurance policy for about $1300/year at Pembridge if I enroll in this my_bridge program which tracks your driving habits, so I'll give that a read through later when I have more time. But, if this is true and I can save $100+/month, sign me up! aha

Thanks!

shelbyautumn

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Re: Selling my newish car for a used car?
« Reply #12 on: March 28, 2018, 11:29:29 AM »
I was given a new Corolla when I graduated high school in 2008 and I love it. It can do more than you think, too - I've strapped large couches and a queen mattress to it! You could add a hitch and tow a trailer if you ever needed to haul BIG stuff.

I'd look at upping your deductibles and making sure you have the $1000 cash+ in the bank at all times. If you keep the Corolla it will last for at least another 15 years. Mine will be 10 years old in August, has around 135,000 miles on it, and is still running like new. I've only had to do basic maintenance on it (Oil changes, transmission fluid, new tires, etc) and it's never broken down on me. If you can lower those insurance payments, I personally would keep it.

mayodt

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Re: Selling my newish car for a used car?
« Reply #13 on: March 28, 2018, 12:00:57 PM »
I was given a new Corolla when I graduated high school in 2008 and I love it. It can do more than you think, too - I've strapped large couches and a queen mattress to it! You could add a hitch and tow a trailer if you ever needed to haul BIG stuff.

I'd look at upping your deductibles and making sure you have the $1000 cash+ in the bank at all times. If you keep the Corolla it will last for at least another 15 years. Mine will be 10 years old in August, has around 135,000 miles on it, and is still running like new. I've only had to do basic maintenance on it (Oil changes, transmission fluid, new tires, etc) and it's never broken down on me. If you can lower those insurance payments, I personally would keep it.

You tow with the corolla? My 2015 manual specifically states not to tow with the corolla I have aha. I'm not sure if it's because it's 6 speed vs. automatic or why that is the case, I was hoping I would be capable of towing at least a small trailer with a few hundred pounds in it.

robartsd

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Re: Selling my newish car for a used car?
« Reply #14 on: March 28, 2018, 12:02:45 PM »
Yes, increase your deductible to $1000 (or consider dropping comprehensive/collision, but be ready to replace your car if needed).

If you drop comprehensive/collision you might pick up cheaper uninsured motorists insurance instead. That would cover you for collisions if another (identified) driver is at fault (unfortunately you wouldn't be covered for a hit-and-run in most states).

In my state (CA) liability limits can be significantly lower than $1,000,000. This is probably a good level if you have deep pockets to protect, but you might consider lowering these a bit until insurance companies view you as mature enough to offer more reasonable rates to you.

mayodt

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Re: Selling my newish car for a used car?
« Reply #15 on: March 28, 2018, 12:07:47 PM »
Is the deductible just the point where insurance starts kicking in? For example, if I have coverage for hitting stationary objects (e.g. fence) and I do $750 worth of damage, if my deductible was $1000, I would get no coverage, but if it was $500 I would get coverage?

RWD

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Re: Selling my newish car for a used car?
« Reply #16 on: March 28, 2018, 12:15:56 PM »
Is the deductible just the point where insurance starts kicking in? For example, if I have coverage for hitting stationary objects (e.g. fence) and I do $750 worth of damage, if my deductible was $1000, I would get no coverage, but if it was $500 I would get coverage?

Yes, that's essentially how it works. It's how much you're liable for before insurance will pay out. So in your example if you had a $500 deductible the insurance company would pay $250 of the $750 repair bill.

robartsd

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Re: Selling my newish car for a used car?
« Reply #17 on: March 28, 2018, 12:19:02 PM »
Is the deductible just the point where insurance starts kicking in? For example, if I have coverage for hitting stationary objects (e.g. fence) and I do $750 worth of damage, if my deductible was $1000, I would get no coverage, but if it was $500 I would get coverage?
Yes, collision/comprehensive insurance should cover cost to fix your car minus your deductible. Liability insurance (coverage to fix someone else's fence) is not subject to a deductible. If you did $750 of damage to your car and had a $500 deductible, insurance would pay $250. If you did $750 of damage to someone else's fence, insurance would pay $750 to the owner of the fence. If you damage your own property liability insurance provides no coverage.

You tow with the corolla? My 2015 manual specifically states not to tow with the corolla I have aha. I'm not sure if it's because it's 6 speed vs. automatic or why that is the case, I was hoping I would be capable of towing at least a small trailer with a few hundred pounds in it.
I'd consider towing with my Corolla in spite of what the owner's manual says (but so far it's been easier to just borrow my mom's CRV - I've also been borrowing her trailer, but the trailer has been stored at my place lately). Certainly, Corollas are not designed to tow; I would limit it to fairly light loads and gentle inclines (limiting both stress on the transmission and the brakes). The service manual does recommend increasing service frequency for some routine maintenance if towing regularly.

shelbyautumn

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Re: Selling my newish car for a used car?
« Reply #18 on: March 28, 2018, 12:19:33 PM »
You tow with the corolla? My 2015 manual specifically states not to tow with the corolla I have aha. I'm not sure if it's because it's 6 speed vs. automatic or why that is the case, I was hoping I would be capable of towing at least a small trailer with a few hundred pounds in it.

I personally never have, but I've read about other people doing it with small trailers. The '09-'13 Corollas are rated for 1500 lb towing capacity.

Is the deductible just the point where insurance starts kicking in? For example, if I have coverage for hitting stationary objects (e.g. fence) and I do $750 worth of damage, if my deductible was $1000, I would get no coverage, but if it was $500 I would get coverage?

Your deductible is the amount you pay towards any damage. So if there is $750 of damage and you have a $1000 deductible, you pay it all. If you have a $500 deductible, you pay $500 and your insurance pays the remaining $250. If there was $9000 of damage (when your spouse rear ends a Suburban with a towing hitch and you need a new bumper), you pay $1000 and insurance pays the remaining $8000.
« Last Edit: March 28, 2018, 12:21:32 PM by shelbyautumn »

neo von retorch

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Re: Selling my newish car for a used car?
« Reply #19 on: March 28, 2018, 12:45:21 PM »
I have a 2015 Mazda 3. In other parts of the globe, the towing capacity is rated at 2000 lbs. Mysteriously, in the US it's rated at 0 lbs. Must be the same way in Canada.

I installed a hitch with a 1.25" receiver, and got a 1 7/8" ball. I towed a trailer with a 400 lb wood stove on it. No big deal. The litigious, truck/SUV hungry American continent does funny things with cars...

(There's video online of Brits towing 2000 lb campers with a Mazda 3.)

robartsd

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Re: Selling my newish car for a used car?
« Reply #20 on: March 28, 2018, 03:03:48 PM »
I have a 2015 Mazda 3. In other parts of the globe, the towing capacity is rated at 2000 lbs. Mysteriously, in the US it's rated at 0 lbs. Must be the same way in Canada.

I installed a hitch with a 1.25" receiver, and got a 1 7/8" ball. I towed a trailer with a 400 lb wood stove on it. No big deal. The litigious, truck/SUV hungry American continent does funny things with cars...

(There's video online of Brits towing 2000 lb campers with a Mazda 3.)

Yes, you can install a 3rd party tow hitch for most sedans that is rated for 2000lb gross trailer weight/ 200lb tongue weight. I'm sure litigation is one reason manufactures don't rate these vehicles for towing. If I were towing 2000lb with a Corolla, I'd want the trailer to have its own brakes (often not required in the states on trailers less than 3000lb).