Anonymous (no, it’s not Sajeev) writes:
Hi Sajeev and Steve,
I’m toying with the idea of selling my 2009 Honda Fit with an unethical 5-speed manual and trading down to a Panther, a VX10 Camry (in wagon form if I can find a decent one), or a B-body bubble wagon if I had my way. My wife and I have 1 young son and another may be on the way soon. The Fit currently fits (get it? I’m here all night) all of our junk and I love its gas mileage, handling, and low cost of ownership. Its also fully paid for. My wife and I completed advanced degrees in 09, and through a combination of black magic and hard work, we both have good jobs. For the excellent B&B financial advisers, we’re down to $35k of student loans and have a good nest egg stashed away. Free cash flow generally goes to savings and paying down student loans. Our other car is a 2011 Caravan purchased new in part due to its Baruthian driving qualities and crazy prices for used Ody-enna vans. We bought the van sooner than anticipated due to some internal family car shuffling and are very happy with it. We owe $16k on the van, so we’re not under water, and at 2.3% interest, the loan is essentially free money and far less than the 6.8% on the student loans.
Here’s my dilemma: I bought the Fit new because used car prices were obscene and I expected it to hold its value well. It has – I’ve seen similar examples listed at Carmax for damn near what I paid 4 years ago. I’m venturing I could unload it for about $13k private party and eat a $2.5-3k depreciation loss, making it the best performing asset I own. With fuel-efficient used car values still artificially high, I’m leaning towards selling it during a bubble rather than drive it till the wheels fall off.
I grew up driving a 1994 Crown Vic with a landau top that I adored but had to part ways with due to a relative needing a car (I didn’t buy it so it wasn’t my call). Last I heard, it had 240k on the clock and was still going strong. Given my first hand experience with the big cat combined with the obscenely cheap prices these things command on the used car market, I am thinking about buying a loved Grand Marquis in the 3-6k range if I can find the right one, pocketing $7-10k, and handing it over to Aunt Sallie Mae (no Vic’s unless they have landau tops – I hate asking “is that a cop?”).
The MGM and its superior highway ride would be a better long term vehicle as our family expands, but would burn a lot more gas than the Fit – I figure an extra $1000 in gas per year. I always coveted my friend’s VX10 Camry and have seen some good examples go for little money in these parts, including two immaculate and rare wagons. This would be better on gas, but not as luxurious as the MGM. Also, for the same money, the MGM would be 7-10 years newer. If I had my way, a B-Body wagon would be my personal pick, but parts and reliability are iffy. Such a car also may cause some “unpleasantness” at home.
Crazy-ist of crazy ideas would be to sell the van to replace with an MGM, but I’d eat a larger depreciation loss and that may cause issues at home. We also already toyed with getting an MGM when we purchased the van and putting extra money towards student loans, but we determined a van would be the best long-term solution.
I haven’t done the math in a while, but factoring in the extra compound interest if we don’t make a big lump sum payment vs a lump sum payment but a theoretical $80-100/mo drop in extra payments due to increased gas cost nets out to a mild present value win for selling the Fit all else being equal. That’s on a spreadsheet, though, and we’re on track to kill the student loans in the next few years without the lump-sum payment.
Has parenthood caused me to lust for the forbidden Panther fruit, or is this actually a good idea?
Nostalgia ought to be a four letter word. Especially when it comes to cars.
Let me explain why. Most people who remember a car from days of yore will remember the ride, the interior, the music they listened to. They may even recall all the love and care they had for that ride back in the day.
What they can’t do is compare that distant past companion with their current commuter. The reason is most cars these days have a level of handling and performance that would make a car from a generation back truly envious. The Fit of 2007 will offer a surprising level of room and comfort compared with a 1994 Crown Vic, while offering nearly twice the fuel economy and a far better level of long-term durability.
If you want to buy a beater to help retire a debt, I’m all for it. But I would expand the search far beyond a Panther. Life should be about enjoying new things, and in the older used car market, you need to put condition first, second and third.
You will also need to put about $1000 worth of repairs and preventive maintenance into the initial calculations, and higher repair costs in the long run. Insurance will be less… but the total cost of ownership between the two models is likely not nearly as much as you are imagining at the moment.
Oh by the way, your question is timely. I wondered whether I should sell my first generation Insight for an immaculate old Saab 900 that cost me less than $1000 and should easily serve me for another five to seven years. I’m keeping the Insight. The more modern Insight is far easier to keep going and the driving experience is far less… archaic.
Nostalgia should be a four letter word? Even though I love Mister–another four letter word–Lang like family, he’s completely, utterly, SHAMEFULLY wrong. Because you want to cash out your Fit’s equity and use it for far more useful things. Good for you! Plus, you actually like Panthers and you deserve one.
What am I missing? Absolutely nothing, that’s what.
You had to give up a Panther for a good reason last time, so you deserve another one. Like any other car out there, find one with the most service history and fresh parts (like tires and brakes) to keep the long-term cash outlay to a minimum. Carriage roof examples are far from uncommon, so wait until you find one with maximum Americana. Because, you are worth it!