Would You Do This to Buy a Cash Car?

[holidaymama]

So a year ago, we decided it was time to get rid of our 2001 vehicle that had over 200,000 miles as we averaged about $250 in repair a month. We ended up buying a 2008 CRV which now has 100,000 miles on it for a little less than $13,000. A year later, we owe $12,000 something and it's worth about $10,000. 

I HATE having a car payment, especially with no end in sight and a surprise baby on the way, so the money I thought we would have when I was done with grad school will be daycare. (The only other time we had a car payment was about 5 years ago and we paid it off in less than a year). 

Would you sell the CRV, take the $2000 loss and buy an older vehicle with about the same amount of miles and we would pay cash? My hubby hates that we would take a loss, but in the long run we would definitely come out ahead, wouldn't we?

I was the one that got trapped into the having a newer model...we had a 2001 and our truck is a 2003. Now I feel like a fool and am pissed and hate the $300/month we are throwing away. I would probably keep putting $200/month away for repairs and eventual replacement of the other vehicle.

[littlest birds]

If you have the cash available to accept a $2000 loss and then also pay cash for a new car, why not use that cash to pay down your car loan?  Then the end would be in sight?  I think the CRV is a good car that should still last you a long time reliably and anything else would just make up for the difference in shorter life and more repair costs. 

Another car with only 100,000 on it is still not going to be super-cheap unless it's a lot smaller or a less long-lived model. 

Our vehicles are 1994 and 1995 right now and it has been a very long time since we had a car payment--however we are struggling with reliability and putting as little wear on them as possible.  We do not have to drive daily and we avoid even local trips.  I wish I could afford to buy your CRV for 10K.  I'll probably go a little cheaper than that but not much--if I can manage it. 

[holidaymama]

We are looking at several that are 2002-2004 age range, less than $5000...so $7000 with the loss. We could def. put a chunk down, but then we would have at least another year of car payments with the CRV. It's still a $5000 difference we are talking about. Did I mention cars suck ;-(

[crunchy_mommy]

Did you run the numbers with interest etc.? I agree that it may make more sense to use the cash you have to pay down the car loan... in the end you might end up slightly ahead if you sold this car & bought an older one, but you'd also probably spend more in maintenance... IDK. I would consider it, but I'd first spend some time calculating interest, payments, savings if you made extra payments, repair costs on an older car, differences in gas mileage, etc.

[littlest birds]

Cars do suck, but getting down to one year of payments sounds like a tremendous relief. 

Theoretically, getting a car five years older means chances are you will have to replace it/ face major repairs five years sooner.  If you can suffer through that year of payments then you will have years of reliability.  If that year is going to really mess things up for your finances then maybe switch, but as an investment in your future I think you have a really good car now that will last a long time.

[holidaymama]

Thanks ladies! The more I think about it, the more it does make sense to keep it an pay as much as we can before we start daycare and then maybe be able to pay it off next year with a tax return. 

I would put our entire tax return on it except that we have a few things to get for baby and then pay for baby's delivery. However, I can probably but at least 2k on it.