By on August 26, 2012

Anonymous writes:

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?

Steve Says:

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.

Sajeev says:

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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47 Comments on “New Or Used: Keep Fit Or Blow It?...”

  • avatar

    You’re in Oregon and have a Fit. Take a drive through Utah and Idaho – enjoy the good life.

  • avatar

    What it seems like you are asking is, “Is my Fit worth $AmountOwed + $5K?”

    Since you don’t give us the mileage or the amount owed or a good indication of the condition, the answer is “I dunno but probably not.”

    But if you do get the deal you want and buy a $4K car, you’re going to end up with… A $4K car. Maybe it will have some problems, maybe not; it will be older and have a lot of mileage.

    If you have been taking care of your Fit, you will not get what it is actually worth. If you have not been taking care of it, you will absolutely not get what you need to do the deal you want to do.

    If you’re not having a real problem meeting $230/month, why ask for new headaches? Keep this car until it’s paid off and then keep it until your *needs* change.

    Yeah, this is an enthusiast site but many of the enthusiasts here are realists first and enthusiasts second (which is probably the way to be unless you are financially very secure or have serious mechanic skills). You will find that plenty of us have the “Don’t Laugh, It’s Paid For” bumper stickers on our cars.

    Sometimes, they’re holding the bumper on.

  • avatar

    My Nissan cube still has the wheels on it. I’m going to drive it till they fall off. Almost 60K miles and still have the original front tires. I agree with the above advice. I’m in an almost identical situation and find it very very comfortable. Your fit has to be as good as my Nissan and thinking back through the years (driving for about 55 years) that’s a good place to be.

  • avatar

    Shuffling cars: the Great American Way to stay poor.

    • 0 avatar

      My sentiment exactly. In the long run, it is cheaper to buy new and drive it into the ground.

      • 0 avatar

        It’s even more advantageous to do it with cash: note how much more you pay in total even with small interest. However, there may be issues. For example, car may not be reliable enough to last 10 years. I only drove 2 cars into the ground: a Neon and Galant. Neon lasted 9 years and I got rid of it when hydraulic valve adjuster started ticking. Galant lasted 12 years, but I wish I junked it sooner, considering how much I spent on repairs in its final year. I heard good things about Fit, but 10 years is pretty long, I dunno… If it were a 1985 F-150, which is cheap to repair, it could last that long easily, when away from rust. But a compact like Fit, good as it is, does not instill that much confidence.

      • 0 avatar

        Peter Zeitcev,

        I would not worry too much about small cars, most today can easily last you 150-180K easily.

        I know of too many small cars like the fit that have made it that far, provided it didn’t turf an automatic before then. I took a 1983 Civic up to almost 183K, back in the late 90’s, and the ONLY reason I sold it was it was rear ended, and while it still drove fine, it leaked water like a sieve inside and it grew mold in the back seat as it was damp all the time.

        I got almost the same amount of miles on a bit larger ’88 Honda Accord and, it too, was rear ended and I sold it due to the same issues, massive water leaks inside, wreaking havoc on the electricals, such as the power door locks, and the sunroof. It was also in need of some major TLC mechanically too, but it CAN be done, and I would wager than any modern small car will do the same.

        I currently have 115K+ on a 2003 Mazda Protege5, with the sport stick auto and it’s been ticking a long just fine for my first 6+ months of ownership. True, that’s puppy miles, but it is rust free and in excellent shape and I expect it to last at least as long, or longer than either of the 2 above mentioned Hondas.

    • 0 avatar

      tparkit nailed it. It seems people who ‘save’ the most always fall the farthest behind.

      In mechanical systems, every interface/operation has an inefficiency. In finance, every transaction has an innfficiency. Every time you buy & sell something, you lose that little bit. Sure, sometimes you come out ahead, but like playing the house, the odds are strong that you will just errode your money away.

      If you have a loan, you will not walk away with much (if any) cash after selling. There’s a reason so many people roll over car loans. I checked AutoTrader, and I honestly believe a 5-yr-old, $3k, 110k mi, good used car doesn’t exist (and probably never did). You never get more than you pay for, so a *cheap* used car will almost cause you to bleed out. The difference between that and a car loan is that after you are done pumping money into the loan, you have a car that you can drive for another 10 yrs.

      If you have a car that is still nice, meets your needs, works reliably, & is cheap to operate, dear-God-WHY would you want to replace it with something that isn’t as nice, isn’t as reliable, and is more expensive to operate? (That’s what you’ll get buying used in that price range.)

    • 0 avatar

      So true, I wonder where my money went! Stop shuffling cars!

  • avatar

    Bought a 2007 fit with 25K km last year. Super expensive, but that’s the market we are in. Doesn’t matter though, I love the little thing: I get around 40 mpg for my long, highway based commute; spend nothing on maintenance; can fit most Ikea furniture on it. Now I’ve been showing the city to my in-laws so the car is completely full, including my son in his car seat. No sweat, comfortable enough for all the trips. We will be driving to Seattle soon and will spend a few days. There is no need to rent a larger car. My only regret is having bought the DX version. I miss electric locks.

    • 0 avatar

      Yours Fit works with the child seat? Neither my wife or I can sit in front of ours (rear facing) without having the front seat completely, uncomfortably, upright. We do have the 2nd gen version, but right now it looks like we need to sell it in order to keep our family needs to one necessary vehicle per trip. Although, both of us are 6’2″. Kind of sucks as this car was supposed to be the keeper, and our next car was to be another toy.

      Looking around the only other wagon-ish option seems to be the Jetta wagon, everything else is a piss poor version of a compact car on stilts (all CUV’s we/she test drove) or only comes with automatic transmissions, which neither of us will spend our money on. On a side note, yes, every CUV we drove absolutely sucked, even the VW and the Ford. I couldn’t find her a CX-5 to test, but our experience so far is leading us to the “never” camp for that vehicle class.

      • 0 avatar

        It makes more sense to get a new car seat than a new car, doesn’t it?

        I had the EXACT same problem with my ’07 Fit. We had one of those convertible car seat/infant carriers. I think it was Safety 1st? Anyway, the thing was massive and would ONLY install directly behind the passenger seat. In the middle, which is statistically the safest place to install even though you can’t use LATCH, my seat was so far forward I simply couldn’t drive. Behind the passenger seat was the only option, which also meant any time we took my car (wife has an ’02 Camry which has none of these issues), her knees were in her chin.

        I finally had enough and got a Britax Marathon from Amazon. It’s rear and forward facing, but most importantly has a VERY small footprint on the seat. Even rear facing (which we moved out of a month ago), it allowed the passenger seat to move back almost 6 inches. Now that we’re front facing, my wife has all the legroom she needs.

        The moral is, explore your options before taking drastic action. You can spend $200 on a new seat and save yourself the expense of getting a new car. And rear facing is a short term situation… a new car is definitely not.

      • 0 avatar

        chairman kaga

        I would absolutely agree, I’m just not that flush with info on different seats. I’ve tried two so far and both require the seat to be upright when in the rear facing position. Thanks a ton for the recommendation, I’ll check out the Britax.

        She’s annoyed at the Fit’s legroom as is (their “SAE” measurements for legroom as suspiciously optimistic, same as a Jetta…which means someone is doing it wrong or lying) so there’s definitely an element of looking for a problem at play.

      • 0 avatar

        The Britax recommendation cam from the forum. My wife did research on the safety testing and it’s actually one of the bette seats you can buy.
        I THINK Babies R Us lets you test fit demo models? It might be worth your time to just try out a few different manufacturers. We found that most of the convertible seats that use a detachable base just will not work in the Fit.

      • 0 avatar

        I have to agree with the Chairman, Britax are also one of the highest rated seats for safety. And you will be turning that seat around before you know it. And when you do you will regret not having the economical Honda. Or you might want another kid and end up with a >30k minivan. My kids are now old enough 8 &11 that I have been able to downsize to a Fiat Cabrio. They fit fine in the back and love riding in it. And the 11 year old already has her eye on it for her 1st car in 5 years. But it would not have worked when they were still in car seats, no 2 door will really. But the fit seems like a great long term choice for a small family to me

      • 0 avatar

        thanks guys…just flew this by the wife (along with a forum pic of the seat fitting) and she shot me down pretty hard anyway. There’s also our two dogs to consider (woops), neither of which is small by any measure. I can’t say I’m too upset in the end, the legroom just wasn’t enough, and while the Fit has been fun, the JSW is by far a nicer place to be, and has a far better resolved suspension. Besides, checking used car prices reminded me why we bought it in the first place, at 60k miles it’s worth a ridiculous amount of money. It’s almost a straight up trade for a much lower milage 2.5 manual. Both have the same highway milage but I’m under no illusions that the bigger car will actually match the Honda day to day on that front, but it will be close.

  • avatar

    The Honda is a premium small car, and the way to come out ahead of ANY car deal is to KEEP IT. Or you can buy a CPO car and KEEP IT. But you pay it off and keep it for another 5 years, you don’t trade it in, or sell it to some one else. The usual way of things is you get married, settle down with TWO cars, one paid off and the other one in process of being paid off. (You can argue over who gets to drive the new one, but…)

    As soon as the second one is paid off, sell the first one or trade it in. 15 years ago, you had to WORK at buying a reliable car to do this with, now you have to work at buying one that WON’T hold up for 10 years.

  • avatar

    Everyone else, including Steve and Sajeev have beaten me to it, keep the Fit and use it for all its worth – and it’ll be plenty useful for whatever you may throw at it, except be an off road vehicle.

    That said, having just owned the car a year, you are likely still much underwater with the loan.

    Just keep it and drive it at least 3-5 years after it’s paid off. A 150-200K should be doable with it.

    You’ve succumbed to the in debt we trust we in the US seem to have fallen into, buy, regret, sell, buy again, ad infinum and you never get ahead. Pay off the loan and then decide if you want to sell it.

    I doubt you will save much in the long run by doing so, so bite the bullet and keep it.

    I have a loan on a nearly 10 YO car, the above mentioned, 03 Mazda Protege5 that is low mileaged for its age (115K+), and in excellent shape. I bought it used at a new car dealer in like CPO purchase as it had several things done to it, including a FULL SYNTHETIC oil change, so I didn’t have to do a thing to it when I bought it – and it’s been fantastic so far and super fun to live with, car payments not withstanding.

  • avatar

    “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?”

    Some details missing here, but my guess is that the original purchase might not been as favorable as hoped for. First of all, a motorcycle was traded in for the Fit, so my guess is a bit of equity evaporated their. The second thing is that the post boils down to reducing the monthly commitment to naught by trading again for a used car.

    As pointed out and is ostensibly so, this isn’t wise financially, but judging from the whole experience, the reader got hooked into only looking at the monthly payment at the time of purchase, and might have ended up with some buyer’s remorse after. The logic of his reasoning seems focused mostly on the monthly cash flow aspect, and not things like how low to enjoy a car after its been paid off, and the increased cost of maintenance of buying a used car.

    Generally speaking, once you make it has the 12 year mark, you don’t regret driving the same car, because you’ve accomplished so much else with the money that you save.

  • avatar

    With the Fit, you have a predictable payment obligation of $230 per month, plus insurance.

    With the used car, you have unpredictable payments, depending upon how bad the car is, plus insurance. That lack of predictability can do real damage to someone with modest cash flow.

    Given your luck with used cars, I will presume that picking a good one, instead of buying someone else’s problems, isn’t one of your best skills, so you should also be wary of making another mistake.

    I’d probably keep the Fit. Maintain it well, garage it, and rent cars for long trips in order to keep the mileage off of your own. Eventually, the payments will end, and you’ll have a known quantity that you can probably trust, instead of a mystery beater that may end up beating you.

    • 0 avatar

      With rental rates what they are, if you take long trips, it’s ALWAYS cheaper (not including depreciation) to rent a car for long trips.

      I vist my grandmother once a year & the real cost of our vehicles are like $0.45/0.65/0.38 per mile.

      I don’t even think twice about renting an econobox for $30/day for 5 days to do 2000 miles….

      • 0 avatar

        2000 miles in an econobox? Fun… LOL

        Seriously though, I rent cars a lot, here in tourist land Florida, we can rent full size cars for $30 a day, econoboxes are more like $15/day. I do it to get better fuel economy mostly and/or more room, our cars are small and/or not very efficient, and of course to keep miles off my own car. But I cant say it’s more economical, especially for someone like the OP who has a very efficient car already. He won’t save on gas, which is the bulk of the cost of a road trip. He will save on wear and tear, but on a new Honda that’s a negligible savings. Even an extra 5k a year in road trips over 10 yrs won’t make a huge difference in how much maintenance the car will need.

        Maybe if he had something impractical like a Mustang GT, but for his situation I don’t see the point of rentals.

      • 0 avatar

        I’ve found the true cost of even the cheapest car with nothing wrong at the outset, is around $0.45-$0.50/mile. This is not including depreciation. At $0.45/mile, and subtracting insurance cost from that as well as gasoline you might be at $0.35/mile.

        Assuming the rental is the SAME fuel efficiency as your main car, 2000 miles at 0.35/mile in WEARABLES ONLY is $700. $150-$200 rental is still a no-brainer over the $700 you’d pay in wearables.

        Of course this only applies to people who maintain their car —
        If you don’t care if the AC works, your window motors are broken, your shocks are shot, and your brakes squeal, maybe it’s cheaper to drive your own car that distance.

        I also agree for short distances, or in special situations a rental may not be better.

        For just need to covering ${X_VERY_LONG} distance at ${Y_cheaprate_permile} in ${Z_Short_timeperiod), you can’t beat a rental.

      • 0 avatar

        “But I cant say it’s more economical, especially for someone like the OP who has a very efficient car already.”

        The primary cost of car ownership is depreciation. A driving vacation essentially amounts to a big bundle of depreciation shoved into a relatively short period of time. If you can outsource that depreciation to someone else (i.e. the rental car company), then financially, you may very well be better off.

      • 0 avatar

        @pch101: I always keep my cars until they run into the ground so deprecation isn’t an issue.

        Even so, depreciation makes the case even stronger for a rental…From my own 8 months of records, the primary costs vary by car:

        2005 STi: parts & labor as things break.
        2011 Sorrento: gas
        2005 gsx-r 600: service

      • 0 avatar

        Not sure where you get your numbers, but $0.45/per day NOT including depreciation doesnt seem correct. I track all my car expenses, and my most expensive cars operating costs are $0.24/mi, my other car is $0.12/mi, and that’s including fuel costs, which is by far the biggest cost for me. Assuming the rental gets the same mileage as the owned car, fuel is a wash, so all you are saving is maintenance and depreciation/wear and tear.

        My point is, over a long period of a time, the cars value is much more dependent on condition than miles. 120k/150k, doesn’t matter, both are too high to be considered a low mileage car, and a 120k mile car that is beat up is going to be worth less than a 170k mile car that has been treated well. Same thing with maintenance… typical Hondas run to 200k easy, he isn’t really taking any big chances with running miles up 25% more.

        I rent because I want something more comfortable and more fuel efficient on long trips. Saving on wear and tear is a bonus, and I only do it when I can rent cheap specials anyways, so the cost is minimal. But I do not fool myself into thinking it is cheaper to rent a car than drive my own.

      • 0 avatar


        I’m pretty sure both edmunds & the fed gov pretty much agree with me.

        a 20mpg car at $4.00/g is $0.20/mile in GAS ALONE. Now add insurance, liability, consumables, oil changes/filters, belts/hosts, brakes & rotors, etc.

        Would love to see what cars you have & condition to see this $0.12/mile for TCO.

      • 0 avatar

        Gas isn’t $4 a gallon (yet LOL), and both my cars get more than 20mpg. Our MR2 Spyder is driven very little, and we spend very little on maintenance, so it is at $0.12/mi over the 3 yrs or so we have owned it. I also do my own maintenance, which helps. Gas is by far the most expensive part, but all those other things you mentioned, while adding to the costs, don’t add a tremendous amount. That obviously depends on the car, but looking at a Honda Fit which needs very little special maintenance isnt going to cost a lot more if he takes a couple road trips a year.

        You have to pay insurance on your car regardless of how much you drive it, so it doesn’t count in this example. Gas doesn’t count either, since you pay for gas regardless of which car you drive. So the only costs you can use when comparing renting vs driving your own car is maintenance and depreciation.

  • avatar
    Polar Bear

    Sky high used car prices will not seem so high when you discover how much value your Honda has lost since new. This is sunk cost, money you will not get back, so in theory it should not influence your decision to keep the car longer or not. But in practice there is security and peace of mind in keeping a car you had since new as you know its history and that it has never been neglected, abused or crashed by someone else.

    Your Honda is a used car already, even if it was used by you. Why trade it for another older used car with the risks that would bring? You say you had a string of bad cars, which sounds like your previous used car deals have not gone so well. This gets frustrating after a while.

    Unless I had problems paying the monthly installment I would keep the Honda. Be kind to it and it will provide many years of reliable transport.

  • avatar

    I love this website for the posts that all of you have written, and also for the article of course! Posts/Articles like these have helped me to adopt a more financially healthy life

  • avatar

    I drive $3000 or less beaters, I commute 30+ miles to work…I am a hard core “car guy”, and I have a place to work on cars, air tools, etc, so the maintenance costs for me are only parts costs. I also have 4 different beaters to chose from, so on the rare occasion one won’t start, I have several others to choose from.

    If you still had a motorcycle, maybe a beater would be an option, but as your ONLY option, it would have to be a pretty nice used car…so nice that it wouldn’t be a beater. The big reason I like beaters is that I can justify switching them up on a yearly basis if they are only $2000 cars…on a car as new as your fit, it’s not so much of an option.

    Perhaps you would have better luck buying a beater in SF or Seattle, or something?

    AS far as selling a car with lien this is what happened when I sold my jeep…I told the prospective buyers, and they were ok with it, but it required trust on both of our parts…

    First I had to give my ORIGINAL title to the prospective buyers…their bank paid off my bank…I called and called my bank all day, and at some point, the computerized message said my balance was positive $2000 (…the purchas price = pay off + $2000)
    The new owners came to pick up the car later that day.

    • 0 avatar

      I don’t know about SF, but here in the Seattle area, figure a minimum of $5K for a decent car – anything under that, figure at least $1K of needed repairs. Maybe less if you are buying something that nobody else wants (eg Grandma’s 1996 Buick Century). I find it increasingly difficult to recommend used cars to any of my friends.

      I have a fleet of 10+ year-old cars and do my own maintenance. I’m planning on keeping my existing cars going for another 10 years, but that wouldn’t be economically possible if I didn’t do my own work.

      I agree with the others – keep the Fit, work OT or a second job if needed.

  • avatar

    hey! i have a 2003 protege5. it lives in california. it’s got 66k miles on it and some scrapes and a touch of the lurgi. recently checked on the blue book site; it had jumped over $1000 from its trade-in value from a year and a half ago (last time i’d checked). what gives there? how can an older car be worth more money?

    • 0 avatar

      First, congrats on a great car. With so few miles, that car is a great prize.

      Second, supply & demand. With fewer used cars on the market, more people wanting used cars, and the residual (real) value of cars increasing because they last longer, prices have gone up over the last few years. The value of my car has pretty much held steady for a few years, despite it getting older & having more miles on it.

  • avatar

    There is no way your selling a 2011 Fit with a $230/mo payment for a profit of $5k, unless you only have a 3 yr loan and got a ton of trade in value on that motorcycle. And even if that’s the case then you would still be better off keeping it for 10 yrs like everyone else said. You have a super low payment, any $4k used car you buy will cost you almost as much in maintenance as your payment now. We have a 10yo Honda CRV with almost 200k miles, it’s still going strong, we use it for road trips even. Your Fit is an awesome car in the tradition of old school Hondas, and if you got the Sport version it’s a good looker too. Keep it nice, don’t abuse it and it will always be worth money.

    • 0 avatar

      I’m pretty sure I’m looking at his ad in my Oregon town. He’ s asking $16,500 & it has 9700 miles. Sport w/ auto. A new one is $18,700 MSRP. I agree with the consensus advice here.

  • avatar

    Listen, Anonymous, you read the market correctly when you bought your Fit. Don’t sabotage yourself now by selling too early.

    I won’t tell you how long it took me to find my low-mileage Cobalt for $7,000 a couple years ago, but suffice it to say that I paid heavily in time and gas to track it down. I also, like you, found an enormous number of clapped-out used cars going for obscene prices.

    You’re itching to bail on your car loan, and that’s understandable. But you’ll be just like the people bailing on their stocks just as they’ve bottoming out.

    You’ve already paid heavily for the privilege of trouble-free motoring and a reasonable shot at keeping it long after the loan is up. Selling the car now is not going to allow you to recoup your investment. The only way you will come out ahead financially is to keep the car and get your money’s worth out of it.

  • avatar

    The second-gen fit lacks most of what made the first one magical, having driven both and dozens of competing vehicles, I’d ditch it. The driver in question here is grad-student poor, and knows enough to come to this site, so let’s take that into account. Here’s my hooniverse-ian assessment:

    Most normal people are afraid of $1-2k beaters, which means that those cars haven’t gone up in value at all during the recent rise, and there are many good options available if you know how to assess whether a car has actually been properly maintained and know how to keep on top of any whiff of a problem. 2011 Fits on the other hand are worth cash even if they’ve been beaten mercilessly. The math here is simple, IF the original poster knows how to stay on top of an old car: the Fit or any other 2011 model is a losing proposition.

    Nobody seems to want to comment on the op’s first question, including SM and SL: yes you can sell a car with a loan on it, just call the lien holder and find out whether you can pay it off when you get the purchase price, or whether they will handle the transfer directly. Not a problem, and necessary to know what it will really cost you to do this if you proceed. Warning though: if you can’t tell the difference between a dying fuel pump and a bad relay, then keep the Fit. Like most religious experiences, saving money by having an old beater first requires a lengthy term of humble self-sacrifice.

    • 0 avatar

      I think that just the fact that he is asking the question shows he doesnt really have the life experience to be ready for the trouble of owning a true beater. Plus he has a history of bad used cars, shaky financial background and he’s a student, which usually means no time to concentrate on car maintenance. A $230/mo payment with the almost guarantee of no real repairs for a decade is nothing. Also, I think I ignored the question because it doesn’t really matter. He isn’t getting $5k cash out of his potential car sale, and if he has $5k cash on hand he is still better off keeping it in the bank and making the very low payment, even if he has to dip into that savings every once in a while when he has a tight month. He already took out the loan, so whether or not it was a good idea is moot. If he had a $500 note, sure, but not for $230. And even insurance at $60/mo is nothing, i bet he’s paying half that for the required insurance, so at most he would save $30/mo by driving a beater without full coverage.

  • avatar
    slow kills

    The important thing is to get another motorcycle.

    The worst part of a financed car is the comprehensive insurance payments which uses money you want put to paying off the loan. Pay that thing off as soon as possible, drop insurance to the minimum, and get a bike.

  • avatar

    One other thought occurs to me… If the original loan involved a pretty awful interest rate, there might be some value in shopping around, even now, for a better one.

    For example:
    A $12K loan for 60 months at 8% is $243/month.
    A $12K loan for 60 months at 4% is $221/month.

    I’m guessing our friend went through the dealer for financing, since he also did the trade there. I don’t know what the original loan terms are but there might be some opportunity for payment improvement, if a bank can be persuaded to do better.

  • avatar

    Selling the Fit after less than 2 years is a bad move as many commenters have already said. You should keep driving it. But not until the wheels fall off. That’s a bad idea too. A car in its dying throes is like a person in his last days- the repair costs will skyrocket. When to sell your car? There are 2 psychological barriers at work on the used car market:
    1. the 100k psychological barrier. People fixate on this number 100k. Anything above 100k, and alot of buyers will balk. They figure at 100k, the best years are behind it. It’s like ‘over 30’ in the dating world. Used car value takes a big hit after the 100k mark. Sell your used car before it hits 100k.
    2. the $10,000 psychological barrier. Above $10,000 people think ‘that’s a lot of money!’. And it is. A lot of people do not have that much money lying around. And getting a loan for a used car bought from a private seller is a hassle. When you try to sell a used car that is over $10,000, the number of buyers drop off precipitously.

    So in short- sell the Fit when it reaches 90k. Sell it for $9000.

  • avatar

    I’m in a way in sort of a similar situation. I have an ’07 Fit with about 90k miles. Base model, 5 speed, I’ve added keyless entry, tint and iPhone integration, 10k of CPO warranty left. It has yet to experience one single mechanical issue, although as of late my fuel economy has TANKED (consensus is it’s the ethanol).

    Oh, and it’s been paid off for going on 3 years. My wife and I went after the loan with a fury, paying off $13k in less than 2 years, and have been socking away almost $500 a month into new car CDs for both of us (she has an ’02 Camry that’s long since papid off, although starting to get to that point of needing expensive quarterly repairs). Yes, we drive far below our means.

    ANYWAY, I have a touch of car lust. I want a Focus ST badly. It checks all of the right boxes, even though I haven’t driven one yet. My biggest issues with the Fit are comfort (I’m just over 6′ and driving for more than an hour or two is torture) and power. Merging into freeway traffic here in Austin requires prayer to any number of deities. But the thought of blowing our entire car fund on a new, almost $30k car for me, when my wife is clearly approaching that terminal point herself, is clearly a bad idea. So I just suck it up, look for little upgrades I can do to the Fit, and wrench on my Alfa (someday I’ll be able to drive it again).

    Bottom line for both of us – it’s not worth the hassle or the expense. The Fit os the last great car Honda made, Enjoy it! It’s iconic! It’s damn near perfect! Get some stickier tires and upgrade the rear sway bar if you want. Make it livelier and more comfortable. Just don’t get rid of it. Not yet.

  • avatar

    As far as selling a car you owe on, no big deal. I did it a few months ago. Talk to your bank or credit union, they can help you get the details worked out.

    Finding a buyer could be tough. Seems like most people who can swing a barely used car will just buy new. I had a two year old Mini, low miles, pristine, listed for about 5 grand less than I paid, and got no bites for months. Finally sold it to an acquaintance who knew she was getting a deal. I’m in Oregon too, BTW.

    I didn’t really need the car so taking the hit was worth it to get out of the payments. But you need a ride, and the Fit is probably one of the better deals around, and should last a long time with minimal trouble. If you can make the payments, I’d keep it.

  • avatar

    Ugh, I hate my Protege5. How someone never got a good class-action lawsuit going against Mazda is beyond me. They MUST have known about the rust issues.

    • 0 avatar
      Kevin Jaeger

      The small Mazdas are fine cars but I’ve certainly seen a disturbing number of prematurely rusted Proteges and 3s up here in Canada. I hope Mazda has solved this problem by now and some seem to have held up fine. But the ones that rusted look like the earlier rust buckets from the malaise era.

  • avatar

    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.

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