Non Running - Trading in a Car (2005)

Please help me!

Think twice

Say you are upside down by $6000, owe $15k get $9k for trade in/private sale.

Those $6000 equate to 1,875 gallons of gas @$3.20

If you drive 20,000/year you burn:

your SUV @18 mpg burns 1,111 gallons per year

Buy econobox @32 mpg burn 625 gallons

Difference is saving 486 gallons/year.

Times $3.25/gallon equals $1580 savings per year.

You have to wait almost 4 years (4x$1580) before you are saving any money. Your SUV depreciated most the first 2 years so hold on to it instead, and try to drive less.

This crude analysis does not even figure the extra cash you will have to pay for the new car, higher insurance costs too maybe.

I'd keep it for now

Nice!

ok, so you don't recoup the money until 4 years out, IF mileage stays the same and if the cost of gas stays the same. But maybe he's only getting 12 mpg, which is very possible, and maybe he's already limiting his mileage. So now it's less than three years, perhaps. But, what about the possibility that his conscience is telling him it's time to get a gas saver/hybrid, not to mention that you might look for lower payment options. When my wife bought her Civic hybrid 2 years ago, she got a 2.9%/29 month payment plan. We love the car, too, lots of fun.

The other issue is, don't trade the SUV, you know you'll lose more money there than to sell it outright.

Some are predicting $4 per gallon by this summer, FYI.

First find out what your SUV is really worth. Google "Kelly Blue Book". Also compare the interest rates your paying on your SUV now vs the projected interest on your new car. Rates are going down. Even if the poster above is right and it takes 4 years to recoop your losses on your gas, you can still drive most vehicles for much longer than 4 years. Which means the gas you save in those subsequent years can almost pay for your next vehicle. I had a pick-up that was getting about 16-18 mpg and bought a Sentra that gets over 30 mpg. With all the driving I have to do I figure I was saving over $50.00 a week when gas was below $3.00 a gallon. It's much more now and going higher. By the end of my 4 year loan I will have saved enough on gas to pay for almost all of the costs of the car. Keep in mind too that the parts for an SUV are much more expensive. Compare the price of tires, brakes, front end parts, alternator, battery, water pump, etc on your SUV vs a small car. I say dump the SUV. You'll be much better off in the long run.

Mike Lundgren wrote:

ok, so you don't recoup the money until 4 years out, IF mileage stays the same and if the cost of gas stays the same. But maybe he's only getting 12 mpg, which is very possible, and maybe he's already limiting his mileage. So now it's less than three years, perhaps. But, what about the possibility that his conscience is telling him it's time to get a gas saver/hybrid, not to mention that you might look for lower payment options. When my wife bought her Civic hybrid 2 years ago, she got a 2.9%/29 month payment plan. We love the car, too, lots of fun.

The other issue is, don't trade the SUV, you know you'll lose more money there than to sell it outright.

Some are predicting $4 per gallon by this summer, FYI.

If you conscience tells you to get a hybrid, you are an idiot. Also, how the hell can a Civic hybrid be "lots of fun"? Unless it gives you a b****** every few hours, there is nothing fun about an econobox. It is simply transportation from point A to point B. I really don't understand why people buy a hybrid instead of a basic car for a few grand less. The hybrid aspect doesn't save you nearly enough.

Lastly, maybe he only drives 10k miles a year. I drive 6k or so. Thus, it would take me 10 years to make up the difference.

I drive on average 20 a year. Not looking at a hybrid..i am toying with the honda fit.

I am glad flagpole did not chime in with his "expertise."

I think your best way of doing it would be selling your SUV yourself. You're likely going to take a hit on it given the current gas prices and projections of even higher ones. But you're going to take a bigger hit if you trade it.

If I were in your place and had that $5,000 to throw into this that you mention, I might think about getting something like a 3-5 year old Kia Rio or Hyundai Accent and using that for the bulk of my driving while keeping the SUV until I've paid down what I owe and just driving it when I want something bigger.

thank you wrote:

I am glad flagpole did not chime in with his "expertise."

You spoke too soon brother.

Actually though I don't have expertise in this area because I've never bought a car that I didn't think things through with so that I was displeased with the purchase less than 3 years later.

BUT, if I were suddenly in your situation, I would do what HRE said (with one exception). I'd sell that behemoth and take the $5000 you have extra and buy a smaller used car with that and JUST drive that -- insurance is less, NO car payment, and gas is less. If you're upside down on the SUV well, as Dave Ramsey says, just chalk that up to "stupid tax".

Regarding the price of gas though, let's say that gas went up to $5 a gallon from $3 a gallon (it's actually $3.45 here in Columbus, OH today). That's a $2 a gallon increase. My small car has a 12.8 gallon tank. This means that in this worse-case scenario I'd have to pay $25.60 more per tank of gas. In a more reasonable near-term scenario, going from $3 to $4 a gallon, that's just $12.80 more per tank of gas. If you're living on edge so much so that an extra $12.80 per fillup is causing you serious grief, then you need to re-examine your expenses.

I know -- you drive a million miles a week to and from work or FOR work or to visit your girlfriend or whatever. Move closer to work, make your work pay you more for the gas, get a different girlfriend, or see her less often, or make her visit you, or cut back on your beer purchases.

I find it hilarious (in a sad way) that people will bitch about gas going up 12 cents a gallon yet they will continue to pay $60 dollars a month OR MORE to a credit card company in finance charges because they don't pay their stinking credit card bill off each month -- a credit card that is filled with frivilous purchases.

Anyway, I advise to sell that car even though you are upside down on it, and go buy a decent used car for cash. Then, don't go buying a $25,000 new car again until you are a millionaire. Seriously.

I'm with Flagpole. If it's financially motivated, skip the Fit and get a used Civic. Look at total cost and not just fill ups.

It is extremely hard to make the numbers work to pay for fuel economy.

I'm assuming he'd have to sell the SUV right now for a lot less money than he could get when people aren't as worried about gas prices. Gas prices always go up in the summer and tend to drop come September/October so I might be inclined to hang onto the thing until then. But I'd probably begin trying to sell it now and see if I could get anything worthwhile for it.

Flagpole wrote:

[BUT, if I were suddenly in your situation, I would do what HRE said (with one exception). I'd sell that behemoth and take the $5000 you have extra and buy a smaller used car with that and JUST drive that -- insurance is less, NO car payment, and gas is less. If you're upside down on the SUV well, as Dave Ramsey says, just chalk that up to "stupid tax".

This won't work, he is approximatley 5-6K upside down on the SUV, if he sellls it he will have to pay that $5000 he has to the bank in oreder to be able to sell that SUV. So he has no $ left to buy that Civic you speak of.

Flagpole wrote:

[BUT, if I were suddenly in your situation, I would do what HRE said (with one exception). I'd sell that behemoth and take the $5000 you have extra and buy a smaller used car with that and JUST drive that -- insurance is less, NO car payment, and gas is less. If you're upside down on the SUV well, as Dave Ramsey says, just chalk that up to "stupid tax".

This won't work, he is approximatley 5-6K upside down on the SUV, if he sellls it he will have to pay that $5000 he has to the bank in oreder to be able to sell that SUV. So he has no $ left to buy that Civic you speak of.

Mike Lundgren wrote:

ok, so you don't recoup the money until 4 years out, IF mileage stays the same and if the cost of gas stays the same. But maybe he's only getting 12 mpg, which is very possible, and maybe he's already limiting his mileage. So now it's less than three years, perhaps. But, what about the possibility that his conscience is telling him it's time to get a gas saver/hybrid, not to mention that you might look for lower payment options. When my wife bought her Civic hybrid 2 years ago, she got a 2.9%/29 month payment plan. We love the car, too, lots of fun.

The other issue is, don't trade the SUV, you know you'll lose more money there than to sell it outright.

Some are predicting $4 per gallon by this summer, FYI.

they predict $4 a gallon every summer. save it, Nostradamus.

HRE wrote:

I'm assuming he'd have to sell the SUV right now for a lot less money than he could get when people aren't as worried about gas prices. Gas prices always go up in the summer and tend to drop come September/October so I might be inclined to hang onto the thing until then. But I'd probably begin trying to sell it now and see if I could get anything worthwhile for it.

Not a bad idea to wait until the gas prices drop a bit. I just hate debt though, so I'd like to get rid of it sooner rather than later, and if trends hold true, people don't want SUVs at all anymore, so in the fall the demand for an SUV might even be less than it is now. He may find he can't give it away in which case he'll be stuck driving it into the ground.

Sell your car privately. If it doesn't sell or you can't get enough, keep it.

Your car is worth what someone is willing to pay for it, nothing more, nothing less.

If it does sell, after sold, buy used.

Trading in is not your best bet, especially if upside down.

danno wrote:

This won't work, he is approximatley 5-6K upside down on the SUV, if he sellls it he will have to pay that $5000 he has to the bank in oreder to be able to sell that SUV. So he has no $ left to buy that Civic you speak of.

He may have to take a small loan ($5,000) to be able to sell that car. He can then pay cash for a smaller used car, continue to pay the $380 a month he was paying on that SUV and have that loan gone in 13 months. This is part of the stupid tax he's going to have to pay. Just because someone is upside down in a car doesn't mean they need to continue to pay for more car than they can afford. Let the car go and pay the stupid tax and then move on and do things the right way from then on.

When you have no payments to make on debt, you've got money with which to build wealth.

Houses aren't the only things being foreclosed on. Here in CA, the repo men are running out of space to store the cars.

Buy used... you should be able to find a bargain at an auto auction.