Last post on Nov 20, 2013 at 9:45 AM
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Car Buying, Car Selling
#3097 of 3350 Re: Trade or sell a car? [timadams]
Jan 28, 2013 (12:07 pm)
Thanks for the lecture. No, I don't trade cars every 2 years--I had my last 2 cars over 5 years each. That's why I'm not sure which way to go may be the better personal option. No, it's not finances. I took the 6 year loan to get the payments low when I need a low payment and I pay extra when I can, as well--that's how I got a $30k loan to $18.8k in 2 years. If NMAC wants to give away 0% for 60 months or 1.9% for 72 months, then I might as well take advantage of it and use my money to pay off thinks that will have higher interest rates.
I have 3 children and they are only getting bigger and when the 5 of us go places in my car, someone always complains of being cramped. We do have a Sienna, so please don't suggest I get a van or SUV. I was thinking about something like a new Accord or Altima.
This is the first car I've ever owned that used premium and I'm no longer having fun paying the premium for it (I get 21-22 mpg back & forth from work, not 25). At 11k miles per year at 22mpg, that's 500 gallons per year at $4 per gallon (right now, this is the cheapest premium has been for a while) or $2000 a year. In a new car getting 28 mpg on $3.30 regular fuel, that's $1296 a year, or $704 a year cheaper--quite a bit more than the $88 calculated above.
I was just wondering if anyone out there had any helpful advice for this question or not. Maybe it really is a stupid question; but, I'd rather get advice than a lecture from someone who doesn't know me.
#3098 of 3350 Re: Trade or sell a car? [uga91]
Jan 28, 2013 (2:22 pm)
I took the 6 year loan to get the payments low when I need a low payment and I pay extra when I can, as well--that's how I got a $30k loan to $18.8k in 2 years. If NMAC wants to give away 0% for 60 months or 1.9% for 72 months, then I might as well take advantage of it and use my money to pay off thinks that will have higher interest rates.
Absolutely! I do this all the time.
As for the premium concern, you absolutely can run regular fuel in your Maxima. The computer will take care of the timing so you won't feel any ill effects. It could impact your mileage, however. You'll have to test it and see.
But, putting cost aside, if you need a bigger car, then you need a bigger car.
While I can't predict the future value of your trade-in, it is usually best to pay it down as much as possible. You would only be gaining equity with every month that goes by. So try to hold out as long as you can. At the same time, you gotta do what you gotta do. I just don't think any midsize sedan is going to give you a whole lot more room, but that's another topic.
As for "getting it off your credit report," don't worry about it. When you tell the dealership "I sold that car," everything will be fine. They can work with their lenders to straighten it out.
#3099 of 3350 Re: Trade or sell a car? [uga91]
Jan 29, 2013 (9:41 am)
You are correct in taking out the loan for as long as possible when the interest rate is low. It is like getting money for nothing. I do it on every car and I am in a position where I can pay off a loan in two years. Also, having a long history of paid a agreed loans is very helpful to a person's credit score.
Really, only a person unfamiliar with finance concepts would suggest anyone taking out a loan for more than 2 years is purchasing a vehicle they can't afford. If that were the case, most of us would be driving a Yugo.
One thing to consider regarding selling your Maxima to a private party or trading it on a new vehicle is you won't get the sales tax break if you sell to a private party, in most states. This can be considerable. If your car trades at $20,000 and the sales tax rate is 6% the sales tax break on the new purchase is $1,200. This means the private sale would need to be more than $21,200 to be more of an advantage than trading the vehicle.
It is likely a Nissan dealer will offer more for the Maxima. Use Kelly Blue Book and NADA for the value of the Maxima which will give you a good idea of what the vehicle is worth. With a fairly clean vehicle I have always found a dealer willing to meet the KBB or NADA values. Any dealer who does not come close is, in my opinion, lowballing the trade value. At a minimum get up a leave, better to leave and go to a different dealer.
Finally, at 11,000 miles a year the expected savings in gas would be more than $500 not $88 as you noted.
#3100 of 3350 Re: Trade or sell a car? [billy3554]
Jan 29, 2013 (10:48 am)
One thing to consider regarding selling your Maxima to a private party or trading it on a new vehicle is you won't get the sales tax break if you sell to a private party, in most states. This can be considerable
I didn't even think of this--good idea, thanks.
#3101 of 3350 Re: Trade or sell a car? [qbrozen]
Jan 29, 2013 (10:51 am)
As for the premium concern, you absolutely can run regular fuel in your Maxima. The computer will take care of the timing so you won't feel any ill effects. It could impact your mileage, however.
I feel funny running regular whent they recommend premium--besides, if mileage comes down, then I'm not really saving anything in the end.
Thank you for the suggestions.
#3102 of 3350 Re: Trade or sell a car?
Jan 29, 2013 (11:12 am)
While 1.9% is pretty cheap as far as loan interest, it is still higher than you can earn in a savings account, money market fund, short-term CD rates or anywhere else you can deposit money at low risk for 2-6 years. So, despite what the previous two posters indicated, borrowing at 1.9 percent isn't a particularly shrewd move. It's not a horrendous decision, granted, but it's certainly not "free money" in today's interest climate. Borrowing at 0% is a different story, so if you had said you took out a loan at 0%, I wouldn't have assumed you took out a 6-year loan due to affordability.
After making 24 payments on a 72-month $30k car loan, the balance should be $20,377. So, you've made about $1,500 in extra payments, or $62 extra per month. That's good, but it only reduces the loan term to 5.25 years. I would encourage paying even more extra every month to shorten it further.
As for selling the Maxima, you could probably buy a replacement car that has a bigger back seat and gets better fuel mileage, but both changes would be relatively modest, I would wager. It's easy enough to look up interior dimensions in Edmunds, and a 4-cylinder car would get better mileage than your Maxima. If that's what you want to do, go for it. Perhaps a different car really would satisfy your desires and needs better. From a lifestyle perspective, it might be justifiable.
But don't pretend that it makes financial sense to sell or trade a two year old car. You've already taken the biggest depreciation hit, and there are transaction costs that are difficult to avoid. Getting modest gains in MPG or saving one cent per mile by using non-premium fuel, however, wouldn't come close to the depreciation and transaction costs involved with buying a new car.
#3103 of 3350 Re: Trade or sell a car? [uga91]
Jan 29, 2013 (1:07 pm)
I have 3 children and they are only getting bigger and when the 5 of us go places in my car, someone always complains of being cramped ... I was thinking about something like a new Accord or Altima.
Isn't the Altima smaller than the Maxima?
#3104 of 3350 Re: Trade or sell a car? [timadams]
Jan 29, 2013 (3:31 pm)
My take on financial transactions such as this is very similar to yours. A move like this might be very satisfying in getting rid of a car you no longer like, but financially, it is hard to justify.
#3105 of 3350 Re: Trade or sell a car? [timadams]
Jan 30, 2013 (5:37 am)
Well, I bought the car in January, 2011, so my first payment was in March, 2011--meaning I've made 23 payments and not 24. No big deal. Either way, I'll probably ditch this plan, anyway. The 5 of us ride in the car maybe twice a month and I really do enjoy driving it--so my thinking out loud was probably all for naught, anyway.
#3106 of 3350 Re: Trade or sell a car? [uga91]
Jan 30, 2013 (6:41 am)
The Maxima would be vastly more fun to drive than a 4-cylinder sedan, for sure. If any of your kids are still in car seats, I can see why the back seat might be tight. But if they are old enough to forego car seats, then I would think the back seat would be fine for three kids. I used to have 5 people in my Maxima quite frequently, at least for short trips. Since you have a van already, that would be the family truckster, but that depends on whether the van is available when you need it.
I really didn't intend to lecture you or pass judgement. I was simply pointing out factors involved with depreciation, sales taxes, fees and car dealer profits all cost money for consumers. That's not to say everyone should drive their cars for 10 years or more - though that is clearly the way to minimize costs. Needs and desires change. But trading one sedan for another for modest gains in fuel costs and interior dimensions are hard to justify on a purely financial basis.
Good luck with whatever you decide.