Paying off vs trading-in car

[Mide]

So I have a 2015 Volvo S60 that I'm not really digging anymore. I owe around 14k on it and I think it has depreciated to around 20K (trade-in) or so. I bought it for 26k so it's lame that this European car has depreciated so much within 8 months. (I'm used to Hondas and Toyotas which kept their value for much longer.

I'm wondering what I should do if I know that I won't keep the car long-term. I could trade it in so that I can get more for it while it's still worth more, or pay off the car and essentially just wait until the warranty gets close to running out. Not sure if there is even any benefit to paying off the car so I'll have the title in hand before going in for a trade-in. Any ideas on maximizing the $ I could salvage from any transaction?

 

[gorcorps]

You could look into trading it in. I don't see anyone giving you the full $20k but if somebody is willing to come close go ahead and deal.

 

[dave_the_nerd]

The sooner you pay it off, the less interest you pay over the duration on the loan. The sooner you trade it in, the more money you get on a trade (or sale.)

If you can't go back and not buy the car in the first place, and you want to get rid of it soon, then there's really no time like the present.

As far as your comment about depreciation; is this your first new car?

 

[PricklyPete]

Just curious what you don't like about the car.

 

[gorcorps]

The sooner you pay it off, the less interest you pay over the duration on the loan. The sooner you trade it in, the more money you get on a trade (or sale.)

If you can't go back and not buy the car in the first place, and you want to get rid of it soon, then there's really no time like the present.

As far as your comment about depreciation; is this your first new car?

I'm frankly shocked that he's already in the black (potentially) by having more trade in value than the pay-off amount. It usually takes longer than that given how much value cars lose immediately.

 

[SearchMaster]

You're not going to get as much trading it in as selling it private party. Selling it yourself is a huge PITA (buyers not showing, lowballing, wasting your time, etc.) but it could net you a few thousand more dollars. A quick search of Volvo S60s on AutoTrader in my area (Atlanta) shows the lowest advertised price as $21,250 and the highest as $30,940. So depending on condition and miles, your car might be worth $24K-$25K on the open market. You'd have to decide if that price difference is worth your time.

 

[jlee]

You're not going to get as much trading it in as selling it private party. Selling it yourself is a huge PITA (buyers not showing, lowballing, wasting your time, etc.) but it could net you a few thousand more dollars. A quick search of Volvo S60s on AutoTrader in my area (Atlanta) shows the lowest advertised price as $21,250 and the highest as $30,940. So depending on condition and miles, your car might be worth $24K-$25K on the open market. You'd have to decide if that price difference is worth your time.

I've not experienced any major problems selling any of my vehicles - sure it's not as easy as trading in, but it's not that bad. I do usually have niche-market vehicles, though, which may provide a different experience than more mainstream cars.

 

[SearchMaster]

I've not experienced any major problems selling any of my vehicles - sure it's not as easy as trading in, but it's not that bad. I do usually have niche-market vehicles, though, which may provide a different experience than more mainstream cars.

And it's a higher dollar car so the person buying should be easier to deal with than those buying a 1993 Buick. But still, since he'll be using the money from the buyer to pay off the loan, he may have to meet the buyer at the bank, get certified funds, etc.

 

[Mide]

What I don't like about it is goes into the realm of me not doing full research and going into a dealership with the wife and having her steer me towards this car. Essentially I'm one who likes keeping cars for a longer time and working on them as they get older. The car doesn't have a dipstick and only has a pseudo-functional electronic oil meter. This makes it much harder to do your own oil changes. I should've researched more.

The second part is that my wife liked the interior, which was good, but again I usually go and have experience with Japanese cars that keep their value a whole lot more. For example her Prius was purchased for $20k and in 3 years I could still get around $12 on the private market. This car has depreciated a whole lot more in only 8 months so that bugs quite a bit.

I've purchased new and used many times so I know about the whole new-car depreciation, but I guess I let emotions dictate a decision during a purchase instead of reminding myself that it's a European car that would both depreciate more and it would need a bunch more maintenance down the road vs an Acura or Lexus.

Yes I know that I could try to just pay off the car and sell it on CL, but there are not a lot of people looking for Volvos and yes it does take a long time to actually make a sale.

 

[dave_the_nerd]

What I don't like about it is goes into the realm of me not doing full research and going into a dealership with the wife and having her steer me towards this car. Essentially I'm one who likes keeping cars for a longer time and working on them as they get older. The car doesn't have a dipstick and only has a pseudo-functional electronic oil meter. This makes it much harder to do your own oil changes. I should've researched more.

A lot more cars are like that these days. 'specially European and/or luxury brands. Following the "if you have to ask how much it costs to maintain, you can't afford to maintain it."

But they're also engineered to need a lot less maintenance. If you actually get some emotional boost from being "useful" by doing your own car maintenance, maybe it's time to switch hobbies? I can personally vouch for woodworking being pretty rewarding. And the tools are freakin' awesome. ()

Why would having an electric dipstick make it hard to change the oil yourself, though? I put the oil in the oil hole, not the dipstick hole. Maybe I've been doing it wrong.

The second part is that my wife liked the interior, which was good, but again I usually go and have experience with Japanese cars that keep their value a whole lot more. For example her Prius was purchased for $20k and in 3 years I could still get around $12 on the private market. This car has depreciated a whole lot more in only 8 months so that bugs quite a bit.

The depreciation is mostly up-front, and then levels off; it's not linear. If you buy your car for $30k and it's worth $20k a year later, it'll still probably be worth $18k a couple years after that. Same with the Prius - it was probably ~$15k as soon as you drove it off the lot, and ticked down slowly from there.

I would also point out that, once a car has depreciated, it's depreciated. You can't get that money back by buying a new car. Even if it does leave you feeling a little raw. See also: sunk cost fallacy.

I've purchased new and used many times so I know about the whole new-car depreciation, but I guess I let emotions dictate a decision during a purchase instead of reminding myself that it's a European car that would both depreciate more and it would need a bunch more maintenance down the road vs an Acura or Lexus.

It sounds like you let your wife dictate the decision. There's nothing wrong with that, in the grand scheme of things.

 

[Subyman]

Trade it in. A $20k trade in is worth more than $20k from a private party and then buying a car. Most states don't charge sales tax on the trade-in amount.

 

[Demo24]

The second part is that my wife liked the interior, which was good, but again I usually go and have experience with Japanese cars that keep their value a whole lot more. For example her Prius was purchased for $20k and in 3 years I could still get around $12 on the private market. This car has depreciated a whole lot more in only 8 months so that bugs quite a bit.


Yes I know that I could try to just pay off the car and sell it on CL, but there are not a lot of people looking for Volvos and yes it does take a long time to actually make a sale.

What Dave said, but another point to make is that Prii hold their value incredibly well for any type of vehicle so that's not a great comparison. Volvos however do not, especially initially and then they drop less significantly. If you keep a car a long time though, does it really matter?

 

[JulesMaximus]

I'm frankly shocked that he's already in the black (potentially) by having more trade in value than the pay-off amount. It usually takes longer than that given how much value cars lose immediately.

Yeah, new those cars start at around $34k. He must have put a huge amount down and done a 2 or 3 year loan on the rest to only owe 14k after 8 months of payments.

 

[bamx2]

If you go to the dealer for your repalcement car, trade it but negotiate hard and check the #s very carefully (at home ). You situation is one that they really try take advange of people in.

 

[DeviousTrap]

The sooner you pay it off, the less interest you pay over the duration on the loan. The sooner you trade it in, the more money you get on a trade (or sale.)

If you can't go back and not buy the car in the first place, and you want to get rid of it soon, then there's really no time like the present.

Be careful here... you're right in that there's no time like the present, in that you'll obviously get the more dollars for the car today, than you will next month. But that does not mean it's prudent to sell the car today.

Your cost per mile (in depreciation) is higher the newer the car is. In other words, if you drive this car for a year you might lose $10k in the first year in depreciation. In the 2nd year, you will loose significantly less than $10k, say hypothetically $5k. So in the 2nd year, your cost per mile was half of the first year's operating cost. This relationship almost universally holds true for cars, up until the point where you spend more in maintenance on an older car, than it depreciates.

Not that cars are in any way investments, but if you want to do some real month, you should only be selling the car now (after 8 months) if you think the car you will buy as a replacement will loose less value than your car will in the next X period of time.

 

[DeviousTrap]

Why would having an electric dipstick make it hard to change the oil yourself, though? I put the oil in the oil hole, not the dipstick hole. Maybe I've been doing it wrong.

Thank you for that, I laughed. Was looking for a good way to say the same thing myself :thumbsup:

 

[Mide]

Haha, yes I may have been using the dipstick wrong.

Yes I did let the wife dictate this decision, but yeah oh the regrets.

Good point on the tax regarding a trade-in. I'll ponder that more. In the end there isn't any inherent problem with the car. I have enough cash to pay off the car super pronto but it's just the whole thing with paying off something that you don't really want anymore. 1st world problems I know.

Thanks for the responses.

 

[tortillasoup]

I have an '04 S60 so I'm curious about the fuel economy of your car. Long term, I cannot recommend these cars at all. They're such money pits and unreliable trash and yes, poor resale value.

 

[NutBucket]

Oh but those seats are so awesome. Just sitting in a new XC90 had me ready to drop $60k for it!

 

[Mide]

Fuel economy I'm getting 27-28mpg mixed driving. Better than the old engine vs the newer Drive-E, but nowhere near the 35mpg advertised.

Yes the seats are pretty nice, but the blind spot on the right-side is annoying because of the sloping door.

 

[postmortemIA]

Market for new Volvos is very limited - they don't sell many of these at all. Some models like S80 sold only few hundreds per month for the whole US. And that number for S60 is low thousands per month. Do you really think you can find a buyer for it in a fairly short time frame, willing to pay reasonable price?

 

[NutBucket]

It's pretty funny when you go on Volvo's site and look up CPO only to find a few dozen cars total.

 

[draknon]

Fuel economy I'm getting 27-28mpg mixed driving. Better than the old engine vs the newer Drive-E, but nowhere near the 35mpg advertised.QUOTE]

Fueleconomy.gov and the window sticker both list the car at 24 city, 28 combined, 35 hwy. It sounds like you're getting almost exactly what was advertised for mixed driving.

 

[NutBucket]

That's what I was thinking too when I first read that. But I was lazy so luckily someone else looked it up

 

[Mide]

That's what I was thinking too when I first read that. But I was lazy so luckily someone else looked it up

Yeah I guess I should've added that I have taken some long highway-only drives and I never got close to 35. It has always been 27-28ish with both mixed and pure highway. If it's only city it goes down to 24. I'm not disappointed that much in the MPG though considering the HP is so much.