Does it make sense to sell 2-year-old car and buy a new one?

[GuitarDaddy]

Ahh! The age old question

Unfortunately there is no universal right answer. Applying financial logic to a car buying desicion is almost impossible as there are way too many factors to consider.

Pure numbers say the best option is to buy the cheapest reliable car and drive the wheels off of it, or even better forget owning a car period and get a bus pass. But that totally ignores the value of reliability/warranty (peace of mind), lost time due to maint. and breakdowns, and the value you place on style, comfort, and appearance.

For instance if you frequently travel or entertain clients in your car it makes more sense to upgrade than if your driving it 50mi roundtrip to a factory job.

When it comes right down to it, a vehicle is a very personal matter and only you can determine its value to YOU.

 

[JulesMaximus]

Originally posted by: PAB

Originally posted by: Lucky
I paid 17.8K for new car 2 years ago. Put 4500 down. Took out a loan for 13.3K.

At this point, I could sell the car for around 13.5K. I have $8730 left to pay off.

Would it make financial sense to sell the car, take the ~$4700 leftover, and roll that into another car? It seems to me that that I am not losing much.

The only reason I am considering this is because the car has 48K miles and with the great resale value, there doesn't seem to be much downside unless I'm missing something. I'd have to make 2 more years of payments but then again the car would be 2 years newer, have warranty, etc.

You bought something from detroit, didnt you?

No, he's not upside down in this car. Must not be an American car or a Korean car for that matter. Those aren't worth sh!t after a year or two.

 

[IHateMyJob2004]

Does this make sense:

I'm going to buy a new car every 50,000 miles.

I have my own answer ... but I think everyones response would be the same.

 

[JS80]

why don't you just lease?

 

[bctbct]

Originally posted by: JS80
why don't you just lease?

obviously he drives high miles. not good for a lease.

 

[b0mbrman]

The question everyone else is answering is "Does it make sense to buy a new car knowing that I will sell it in two years."

Here's a different (and better IMHO) way to think about: the price you paid for the car (and by correlation, the amount you have already lost in depreciation) is a sunk cost. It is a sunk cost because at this point, you cannot go back in time and undo the purchase of your car.

You should be comparing future cost for how long you expect to keep this car/its potential replacement.

Find:
Sum of annual depreciation, interest (or opportunity cost), insurance, taxes and fees, fuel cost, maintenance, and repairs of current car

Subtract that from:
Sum of annual depreciation, interest (or opportunity cost), insurance, taxes and fees, fuel cost, maintenance, and repairs of potential replacement car

Note: Edmunds.com's True Cost to Own (SM) is a good starting point for finding these numbers

The difference between these two numbers is the annual added cost of getting that replacement car. Compare that number to the utility you will receive from driving the replacement car rather than your current car and you have your answer. That is, suppose you find that the annual difference you will pay is $3000, is it worth $3000 a year to you for your car to be the replacement?

Oh...and next time, don't buy a new car knowing that you will sell it in two years

 

[dxkj]

So basically you would have paid $4500 for 2 years of driving the car?

$2250 a year for a car with warranty is good deal. go for it!

 

[Lucky]

Originally posted by: dxkj
So basically you would have paid $4500 for 2 years of driving the car?

$2250 a year for a car with warranty is good deal. go for it!

Slightly more with interest, but yes, around there.

thanks for the additional advice folks.

 

[xrax]

A 2 year old car with that kind of mileage and has been in an accident is not going to sell easily. It is automatically ineligible to be a certified used car with the mileage and accident history.

 

[Lucky]

Originally posted by: xrax
A 2 year old car with that kind of mileage and has been in an accident is not going to sell easily. It is automatically ineligible to be a certified used car with the mileage and accident history.

Certified? I'd be selling private party.

And accident? What accident? I'm not required to disclose accidents which have not impacted the structrual safety of the car.

 

[spidey07]

Originally posted by: JS80
why don't you just lease?

Bingo!

Why not lease? It may work out to your advantage. You may even get a better rate to financing like 2-4% on your lease.

 

[Lucky]

good lord folks. I cant lease, I drive 25K miles/year.

 

[xrax]

Originally posted by: Lucky

Originally posted by: xrax
A 2 year old car with that kind of mileage and has been in an accident is not going to sell easily. It is automatically ineligible to be a certified used car with the mileage and accident history.

Certified? I'd be selling private party.

And accident? What accident? I'm not required to disclose accidents which have not impacted the structrual safety of the car.

if you filed an insurance claim or if there was a police report written there is a good chance that it is on the CARFAX report.

 

[Lucky]

Possibly. I've never had reason to spend $20 and check. From personal experience I know of several car/trucks that have had major accidents/fires and did not show up on carfax.

 

[CTrain]

I forgot that you were in an accident with over $9k of damage.
I don't see how can you sell that car for anywhere near $13.5K

 

[Lucky]

Originally posted by: CTrain
I forgot that you were in an accident with over $9k of damage.
I don't see how can you sell that car for anywhere near $13.5K

I'm not required to disclose it.

It was repaired to OEM standards. Wasn't a hack job or anything, just something that kind of tips the scales for me.

 

[b0mbrman]

Originally posted by: Lucky
Possibly. I've never had reason to spend $20 and check. From personal experience I know of several car/trucks that have had major accidents/fires and did not show up on carfax.

Might be worth $20 before you make the choice to sell...

Hell, I'd pay $20 just to avoid the chance of an awkward moment when a buyer throws it in my face

 

[erub]

in my family, we get rid of cars after 50-60K..but then again my uncle is an car dealer, haha

well they are all getting kind of old by this point (6-8 years)..parents each drive 8-10K miles per year