New Or Used: Keep Fit Or Blow It?
Last year my Ranger blew up on me and all I had to my name was about $500 and a motorcycle. I’d gone through a string of bad cars and decided to go the new route, trading in the motorcycle (it was impossible to sell, no bites) and getting a 2011 Honda Fit. It’s a great car, and as it’s brand new, has needed no maintenance. I’m now making a loan payment of $230, with an extra $60 in insurance.
One of the reasons I didn’t get a loan for a used car was that the used car market here in Oregon is particularly awful. It seems that the cheap, well-maintained $3000 Honda Civics and Toyota Corollas with 110k on them from five years ago are all gone (or not up for sale).
Indeed, even as prices for used cars go up into the $8k range (and beyond), it seems the cars just get later in model year, but not higher in actual quality with attention to proper care and so forth. For the most part, my experience has been that the used car market here has dried up. You have a choice of cars, all with 140k on them and in various states of disrepair, your only choice is how expensive and what year you want. I kid you not, there was a local craigslist ad here in town for a 1987 Toyota Camry Wagon that said $5200 FIRM on it. Oh, goodness.
I’ve put the Fit online, and have some bites but I have no idea if I want to sell it or not. The idea is to come out with around $5000 in cash, spend $4000 on a car and keep $1000, plus the added benefit of around $300 in savings each month. I have a couple of questions for you.
First, how difficult is it to sell a car you still don’t own (the Fit)? Is it a total pain?
Second, is the used car market starting to come down a bit in exorbitant pricing? I’m starting to see a *few* cars online that might be worth the trouble but I’m still leery.
Should I make the move to my comfort zone, a used car and no payment, or should I keep the stability of my new car?
It sounds like you have commitment issues, not car issues.
There is nothing wrong with paying off a loan and enjoying 10+ years of no payments. Throw in 30+ mpg’s, minimal maintenance for a lot of that long haul, and a past track record for exceptional reliability, and it looks like you have finally found yourself a keeper.
I realize that it’s tough to read an enthusiast site and buy nothing for 10 years plus. On the other hand, the Fit fills in a nice niche that was partially occupied by the Mazda Protege 5 back in 2002.
Sporty, fun to drive, cheap to own.
I would argue that the Protege is a competitive vehicle in today’s world, and that a decade from now the Fit will settle in that same square hole.
Keep the Fit, and invest in your long-term sanity.
Steve nailed it: you need to focus on your sanity. Reselling a car for your “payoff+profit” asking price isn’t gonna work smoothly. I guess if you wait long enough, the right buyer will come along…but that’s not a healthy outlook.
I’ve heard that the sky-high, 2-5 year old used car market is letting up a little bit in some urban areas, but will it last? I have too much uncertainty in the economy, political elections or not. And if the economy gets worse, used cars are a better option. Combined with the, um, automotive density of Oregon (relative to my Houston habitat) and that you want an inflated(?) asking price/profit margin for your Fit, I can’t give you the answers you wanna hear for questions 1 and 2.
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It sounds like you aren't enjoying your payment+insurance. If you were going to keep the insurance coverage anyway, maybe it makes sense to refinance the car. My credit union is offering 2.25% interest on used car loans. That would reduce your payment in two ways: lower interest rate and re-setting the 5 year term. Having no loan and only liability insurance might save money, but you'll be adding risk. What if the $4k car you purchase needs repairs? What if you're saving lots of money by canceling your comprehensive and collision insurance but then you have a collision? Since your car is already 2 years old, you've taken the worst part of the depreciation hit. There isn't much sense switching out now after most of the financial damage has been done.