Help me! I just bought a Ford Explorer

[Moronic Money Monkey]

So I recently (before finding MMM) purchased a 2016 Ford Explorer XLE. I'm basically just using it to drive 16 miles round trip to work every day. I will get some use out of it to transport the family on the weekends - wife, kid and dog.

I have owned the car for 3 months and it has already depreciated about $5000. Value of the car is currently about $21,500 if I were to trade it in at a dealership. I have about $7000 in equity on the vehicle (owe about $14,500).

I now feel like I'm driving around in a giant inefficient douche mobile. Should I trade the car in for something more reasonable? What should I do?

[daverobev]

If you don't drive far ever/have access to another vehicle - Nissan Leaf for ~$7k. Perfect for a round trip.

Otherwise - Camry, Corolla, Civic, Elantra, Sonata... whatever fits you best, for $10k or less. But yeah, driving an SUV is stupid unless you need the ground clearance, towing ability and whatnot on a regular basis.

[MrUpwardlyMobile]

Could add a Ford Focus to that list of reasonable cars.  The last time I looked at a Ford Fiesta, it’s side rear side impact ratings were not what I’d be willing to put my family through.

[Metalcat]

Do whatever you want to do.

Why did you buy this car in the first place?
If those reasons are still good reasons, then analyze the cost and see if it's worth keeping.
If those reasons aren't good reasons, then get something that meets your needs better.

Basically, if you wouldn't buy it today, then sell it.

[Miss Piggy]

How does a used vehicle depreciate $5000 in 3 months? Legit question...I've never experienced that.

[Moronic Money Monkey]

How does a used vehicle depreciate $5000 in 3 months? Legit question...I've never experienced that.

I know, $5000 is a real kick in the crotch.

Purchase price of vehicle was $26,998 (this was within $300 of the kelley blue book value at the time). I entered my car into kbb.com yesterday and it estimates that I can get $21,500 for it as a trade in. Difference is $5498. Very possible that I didn't enter in all the car's options correctly, but I was pretty close. Also it's been almost 4 months since I bought it, not 3, not that that makes a huge difference.

[daverobev]

How does a used vehicle depreciate $5000 in 3 months? Legit question...I've never experienced that.

I know, $5000 is a real kick in the crotch.

Purchase price of vehicle was $26,998 (this was within $300 of the kelley blue book value at the time). I entered my car into kbb.com yesterday and it estimates that I can get $21,500 for it as a trade in. Difference is $5498. Very possible that I didn't enter in all the car's options correctly, but I was pretty close.

You're comparing two different numbers.

Sell it privately. List it at what you paid for it, see if there are any bites. If not lower by a couple of k. In fact, if it's in really nice condition, list it for a couple of k more than you paid!

[Moronic Money Monkey]

You're comparing two different numbers.

Sell it privately. List it at what you paid for it, see if there are any bites. If not lower by a couple of k. In fact, if it's in really nice condition, list it for a couple of k more than you paid!

Yes. The private party sale estimate is $24,500. So $2500 difference.

I was being conservative/assuming the worst.

[mschaus]

Great job recognizing what’s going on, Monkey OP! Yup, your best bet will be to sell it privately, since the effort will be worth a few thousands of dollars.

Finding a private buyer with $24.5k cash is non-trivial, however, but worth the effort. Go for it with craigslist, cars.com, and whatever else is popular these days. You’ll have to conduct the transaction at your bank that holds the title so that the buyer can leave with the car and title together.

I previously wrote in more detail the process of selling a car without the title in hand:
https://forum.mrmoneymustache.com/welcome-to-the-forum/how-to-downsize-my-car-situation-without-having-cash/msg2212106/#msg2212106

For alternative vehicle selection, I really like this graphic MMM made in the “so I bought an electric car” article:
https://www.mrmoneymustache.com/wp-content/uploads/2016/10/car-decider3.jpg

Also highly related:
http://www.mrmoneymustache.com/2012/09/04/its-never-too-late-to-ditch-your-gas-guzzler/

Let us know how it goes!

[ericrugiero]

As pointed out above, most of the $5K "depreciation" is the difference between retail price and trade in price.  This is the profit the dealer makes.  Selling it as a private party is the way to go. 

It doesn't make sense to keep this vehicle because everything will be more expensive on it especially the gas mileage. 

I went through the same thing with a Chevy Silverado 4x4 that I had bought to drive back and forth to work because I needed to get there in the snow. It was a great vehicle that I really liked and the hauling capacity was pretty nice occasionally.  At the end of the day, it just made more sense to buy a used set of wheels and put snow tires on them for my car ($500 total).  I lost about $2500 on the truck plus the extra gas (which I'm not sure I want to know). 

[SwitchActiveDWG]

If you don't drive far ever/have access to another vehicle - Nissan Leaf for ~$7k. Perfect for a round trip.

Otherwise - Camry, Corolla, Civic, Elantra, Sonata... whatever fits you best, for $10k or less. But yeah, driving an SUV is stupid unless you need the ground clearance, towing ability and whatnot on a regular basis.

No love for the Prius?

[Moronic Money Monkey]

Thank you everyone for your helpful replies.

Re: Private Sale
I don't think I can go the private transaction route without losing my mind. I've picked up freelance work in addition to my regular job. So now I work 60 hours a week, I have a 6 month old child and an elderly, infirm dog that needs extra attention. Adding the stress of trying to find a car buyer on my own might break me. It's possible I'm overestimating the amount of stress this will add. My finances aren't a total dumpster fire. I'm on track to have all debt paid off by the end of this year (trading down in car would accelerate this), except my rather modest mortgage. So, I think I'm just going to eat the $2000ish penalty for selling to a dealer. I'll save roughly that much in fuel in a year.

Re: Replacement vehicle choice
I've been pricing out cars. The Ford Fusion Hybrid seems to offer a good value. I can get a newer model year with fewer miles than the hybrid versions of camry, sonata, prius for the same price. Does anyone have an opinion on the Ford Fusion?

I'm wary of buying any car that has like 90k+ miles. Am I being silly?

[Miss Piggy]

Since you're into Fords, have you checked out any of the used Energi models? I have a C-Max Energi and I absolutely love it. I rarely have to put gas in it. The used ones are WAYYYYYYY cheaper than what I paid, and last I checked, there were plenty of them available, mostly, I'm guessing, because many people leased them (they didn't want to dive right into the new technology), then turned them in at the end of the lease because Ford wanted an exorbitant price to buy the leased vehicles. With your commute, a plug-in could save you from having to buy gas except for longer trips.

Off the top of my head, I can't remember which other models come in an Energi option (plug-in hybrid), but they're worth checking out.

[aceyou]

Thank you everyone for your helpful replies.

Re: Private Sale
I don't think I can go the private transaction route without losing my mind. I've picked up freelance work in addition to my regular job. So now I work 60 hours a week, I have a 6 month old child and an elderly, infirm dog that needs extra attention. Adding the stress of trying to find a car buyer on my own might break me. It's possible I'm overestimating the amount of stress this will add. My finances aren't a total dumpster fire. I'm on track to have all debt paid off by the end of this year (trading down in car would accelerate this), except my rather modest mortgage. So, I think I'm just going to eat the $2000ish penalty for selling to a dealer. I'll save roughly that much in fuel in a year.

Re: Replacement vehicle choice
I've been pricing out cars. The Ford Fusion Hybrid seems to offer a good value. I can get a newer model year with fewer miles than the hybrid versions of camry, sonata, prius for the same price. Does anyone have an opinion on the Ford Fusion?

I'm wary of buying any car that has like 90k+ miles. Am I being silly?

Huge kudos for realizing you made a mistake and for being willing to take action.  You'll go far.  Ok, here's what I'm thinking...

Regarding private sale, I kinda see your perspective on wanting to just take it to a dealer.  If it were me, I'd still go private sale, but I won't judge you on that one. 

Regarding your statement of a 90k+ miles car...you're not only being silly, you are costing yourself a small fortune over time to be silly. 

My wife and I have about 650k net worth, we have a gross income of 160k/year, and we are 35 years old.  We can afford any care we want.  Neither of us have EVER owned a car worth over 6k, and have no intention of starting soon. 

Insurance savings.  The main thing is to buy a car that's cheap enough to justify getting PLPD insurance.  I pay $360/year to insure my 2007 Prius (bought in 2016 for 5k with 165k miles on it at the time).  My wife pays $360/year to insure her 2008 Prius (bought in 2016 for 6k with 160k miles on it at the time).  We pay $720 per year combined to insure 2 vehicles!

We can do this, because we can justify shelling out 5k to buy another Prius if one gets totaled. 

If you bought a car with let's say 60k miles, could you afford to pay cash for it AND have enough reserves to justify not getting full coverage insurance?  If not, you are going to pay dearly. 

Repairs.  I've had $300 in repair bills for my Prius in the 2.5 years I've owned it.  My wife has had about $700 in total.  This is a drop in the bucket.  Certainly not a reason to not get an older car.

Depreciation. The just don't depreciate much.  I can buy it for 5k, drive it for 7 years, and sell it for 2k.  That's about 400 in depreciation per year.

Investing the difference.  Because I have so little cash tied up in cars, those extra thousands are in VTSAX earning compound interest.

No loan payments.  Enough said there. 

There are so many pros to buying a cheap reliable gas sipper.  We aren't buying cheap cars DESPITE being worth over 600k.  We are worth over 600k BECAUSE we drive cheap cars. 

If you do your homework and buy a long lasting car that has been taken care of well, 150k miles is a BABY.

Good luck!

[Turnbull]

I'm wary of buying any car that has like 90k+ miles. Am I being silly?

I've hardly ever bought a vehicle with less than 90k miles. Maybe two in 26 years of driving. I would feel silly buying one with less than 90k.

[I Want to Believe]

Most of our cars have been 90k+ mileage, and cheap second hand runarounds. We recently spent the grand sum of £150 on a 20+ year old car with only 24k on the clock. When you add the 3/4 tank of gas and a new battery that was included, it would have been around half the price we paid.

[Loretta]

If you have upcoming projects or bigger household tasks that require the Explorer’s size and whatnot, then I would use it for them and then take a breath and try to sell.  If you just found MMM, I would not leap into selling just yet, especially if your preferred way to sell it would be taking it to a dealer and losing a little more money on it. 

[AlexMar]

You are high income and would pay off the Explorer by the end of the year, if I'm reading correctly.  Honestly, I'd just keep it and pay it off.  But plan on taking VERY good care of it and keep it at least 10+ years.  The biggest wealth destroyer is the never ending payments.  It's people getting new cars constantly with ever increasing payments.  The gas, while not really trivial, is just not THAT big of a deal.  I mean, you drive 16 miles round trip.  That's not even 1 gallon of gas even on an Explorer.  Would having the larger vehicle be worth a little extra gas?  I think so.

And again, my advice is based on you seemingly being high income.  Aceyou makes some great points about all the other savings but that may not be a big deal if you earn a lot of money.  In fact, a $25k car isn't all that outrageous, really.  It's pretty responsible considering the average new car is $30k and people with decent incomes often spend $60k+.  Buying a $25k car and paying it off can be very mustachian :)

[wageslave23]

I'm with AlexMar.  Since you already own it and will take a big hit on resale plus the hassle of looking for a new car, I'd consider keeping it.  The MPG is not a big deal since you barely drive it.  Those advocating high mileage vehicles must not mind having to deal with taking it to a mechanic or being stranded.  To me, the hassle of dealing with a breakdown is the bigger cost compared to the actual repair bill.  If you are working 60 hrs a week, is it worth to you to have a reliable car you don't have to worry about breaking down?  I think thats worth about $500/yr right there.  Plus, the bigger size is more convenient for a family, so its not like you aren't getting any extra value from owning it compared to a prius, etc.   Make sure your other car is small and fuel efficient.

[Brother Esau]

If you don't drive far ever/have access to another vehicle - Nissan Leaf for ~$7k. Perfect for a round trip.

Otherwise - Camry, Corolla, Civic, Elantra, Sonata... whatever fits you best, for $10k or less. But yeah, driving an SUV is stupid unless you need the ground clearance, towing ability and whatnot on a regular basis.

No love for the Prius?

Subaru?

[Johnez]

Do whatever you want to do.

Why did you buy this car in the first place?
If those reasons are still good reasons, then analyze the cost and see if it's worth keeping.
If those reasons aren't good reasons, then get something that meets your needs better.

Basically, if you wouldn't buy it today, then sell it.

Best answer.

If it's working for you, just drive it till it dies. Even if you double the gas mileage with a different vehicle, you'll save what...$3 a round trip? That's a whole whopping $780 a year. Not much, and will be eaten by the cost of transactions. Unless you're planning on biking to work or getting a beater, I say just keep it.

[Moronic Money Monkey]

Once again, thank you everyone for the helpful replies.

I’m leaning toward trading the Explorer and getting a cheaper hybrid.

I’ve made some initial inquiries with dealers and I’ve received tentative offers as high as $24,500 for the Explorer, pending inspection. Could be a bs “offer” though. The penalty for trade in *might* not be as bad as I was estimating.

By switching to a hybrid. I estimate annual fuel savings to be about $2000/year. We’be been driving the Explorer a lot outside of my commute. Plus I think I could slash my insurance by about $500/year.  Present value over a ten year life of a hybrid discounted at 7% is $17558. Plus I could vaporize $14,500 in existing car debt. Total present value of savings is about $32,000. That’s hard to pass up.

I will miss the use of a big car a bit but not enough to forgo $32k. I do want a reliable car, so I’m looking for a relatively new, low mileage hybrid. Ford Fusion 2014-2016ish with 40k miles is roughly $12000. IF I can realize close to $10k in equity with a trade in and kick in a few thousand, I think I’m set. Gonna try to get that done.

[FINate]

What's done is done. A 16 mile round-trip commute is pretty short, 8 miles each way. My suggestion: Commute by e-bike. You'll get some exercise, but hills and headwinds are not a problem. Should take ~30 min each way. Pennies per day to operate.

Use the car/SUV for weekend outings and road trips. With less driving your gas and insurance costs will decrease. IMO, if you go this route you're better off getting a simple non-hybrid economy car and avoiding the premium price tag for a hybrid as you're not going to put that many miles on it.

ETA: Time to commute by bike will depend a lot on the route, number of stops, etc.

[AlexMar]

Once again, thank you everyone for the helpful replies.

I’m leaning toward trading the Explorer and getting a cheaper hybrid.

I’ve made some initial inquiries with dealers and I’ve received tentative offers as high as $24,500 for the Explorer, pending inspection. Could be a bs “offer” though. The penalty for trade in *might* not be as bad as I was estimating.

By switching to a hybrid. I estimate annual fuel savings to be about $2000/year. We’be been driving the Explorer a lot outside of my commute. Plus I think I could slash my insurance by about $500/year.  Present value over a ten year life of a hybrid discounted at 7% is $17558. Plus I could vaporize $14,500 in existing car debt. Total present value of savings is about $32,000. That’s hard to pass up.

I will miss the use of a big car a bit but not enough to forgo $32k. I do want a reliable car, so I’m looking for a relatively new, low mileage hybrid. Ford Fusion 2014-2016ish with 40k miles is roughly $12000. IF I can realize close to $10k in equity with a trade in and kick in a few thousand, I think I’m set. Gonna try to get that done.

Sounds like a good plan.

[AlexMar]

What's done is done. A 16 mile round-trip commute is pretty short, 8 miles each way. My suggestion: Commute by e-bike. You'll get some exercise, but hills and headwinds are not a problem. Should take ~30 min each way. Pennies per day to operate.

Use the car/SUV for weekend outings and road trips. With less driving your gas and insurance costs will decrease. IMO, if you go this route you're better off getting a simple non-hybrid economy car and avoiding the premium price tag for a hybrid as you're not going to put that many miles on it.

ETA: Time to commute by bike will depend a lot on the route, number of stops, etc.

I recently bought an ebike and commute 12 miles to work.  Takes me 35 - 40 minutes vs 25 minutes via car.  The extra 15 minutes each way is only 30 minutes "added to my day" and I'm getting nearly 1 and 1/2 hours of exercise and saving money doing it!  I ride 2 - 3 days a week.  I have actually really loved it.  I wouldn't do it if I had to ride in the street though, we have great sidewalks and bike paths all the way.

I would note that OP's latest post suggests he does put a lot of miles on the vehicle and gas savings would be substantial.

The only problem was that the ebike cost as much as a car!  But I'm banking on it lasting for decades with the occasional battery swap.

[Jon Bon]

At least be willing to post the car for sale private party. Its free and takes all of 10 mins. You can usually tell by the emails if you have a legit person or a crazy one on the other end.

What would you do for $2000? How many hours do you have to work to make that much money in the bank free a clear? Probably a hell of a lot more then the 5 hours you might spent selling the car.

I feel you have a responsibility as a red blooded Mustachian to not let the dealership take your money!

[Just Joe]

I'll also mention the bike. A recharge costs a nickel according to my Kill-A-Watt meter. I ride about 9 hilly miles each way. More or less 15 mph most of the way. I'm in such a good mood when I arrive. Fresh air, slow enough to notice the world around you, you smell things, hear things and be sure to pick a quiet route even if it adds a mile or two for your trip. $1200 for my DIY middrive build or $1200 for our JueShuai 48V "mountain" ebike (its not really a mountain bike, good general purpose bike, we added fenders and panniers). 

I wouldn't trade cars for the numbers you are quoting. Just drive less. Optimize your life a little more to save the money. Keep the SUV forever. Downsize later when you aren't upside down.

if you do take up bicycling - do some bicycle safety self-study. If you ride with metaphorical blinders on, you'll get hurt but if you ride with your eyes open and your mind clear, its a great way to get around.

[FINate]

DIY is an option if you already have a suitable bike and are willing to tinker. Or, Rad Power Bikes run about $1500 new (https://www.radpowerbikes.com/products/radcity-step-thru). From what I can tell, the quality is adequate and the overall setup and range are ideal for most situations. The hub drive is less capable on hills (would go with mid-drive if you have steep or long hills), however it's easier on the drivetrain (less wear on the cassette/chain/chainring).

Another option is to watch Craigslist for someone decides to sell their expensive ebike after not really using it.