Another car dilemna

[Yooper]

I am sure there will be lots of similar threads coming.....

We currently own two cars. Both paid off. We only need one and have operated with one most of the time in the recent past. We acquired our second car free from a relative last spring. It is an older car but very reliable, good gas mileage, cheap to insure, and meets all of our needs. Since that time, we have been trying unsuccessfully to sell our first car. We have not even gotten a nibble. The market is flooded and I really do not see much hope for selling it anytime soon.

We really do not want to get stuck with two cars in the winter. Our driveway does not work well with multiple cars, the insurance on the newer car is killing us, and we just do not need it.

The car we are trying to sell is a 2005 Honda CR-V. I love love LOVE this car, but it is more car than we currently need. No one wants to spend as much as it is worth in this economy. And we are asking well below Blue Book.

We have been discussing our options. As it currently appears that we are "stuck" with this car, we are trying to get ourselves in the best position possible. Before we acquired the free car, we were considering purchasing a Honda Fit to replace our CR-V. Keep in mind that we do not NEED two cars, this is almost a leveraging thing at this point. The free car is worth almost nothing. Here are the options we see:

1. Keep both cars and try to sell the CR-V in the spring. Risk being that the economy tanks even more and we still cannot sell it then.

2. Sell CR-V to dealer for far far less than it is worth.

2a. Take the money and run. The only local dealer that would consider taking it off our hands will only give us $11K walk away, when it is worth $18K private party sale.

2b. Trade it in to dealer and buy a new or used Fit. The same dealer would give us $14K if we trade-in towards the purchase of another car.

The only reason we are considering 2b even though we do not need another car is that we figure the Fit would be easier to sell later on....like in the spring. It would also get better gas mileage and be under warranty which our CR-V no longer is. While we do not need it, we likely would drive it. It would be safer than our older car and gets better mileage so we would be inclined to drive it and use the older car as a back-up. Sort of like, if we are going to be "stuck" with a car, we might as well have the best possible car to get "stuck" with.

Help!

[CarrieMF]

why would you buy a new vehilce just to sell it in 5 months? What if you do that & you can't sell the fit, then you're in the same situation you are now.

What I would do is park the CR-V, take the insurance off of it(keeping theft only). Then drive the other one. In the spring then you can try to sell it again, but you may not. I'd take it to a dealership & get the $11,000 IF after you get the insurance lowered you can't make ends meet. You could pocket the $11,000 too into a savings account.

If nobody will pay $18,000 it isn't worth that.

the only reason the dealership will give you $14,000 if you buy another vehicle is because then while they're getting 1 vehicle, they're also getting rid of another one.

[Yooper]

Originally Posted by CarrieMF

why would you buy a new vehilce just to sell it in 5 months? What if you do that & you can't sell the fit, then you're in the same situation you are now.

Well, not exactly the same situation. Both cars are worth about the same monetary value but the Fit would be more "useful" to us because it gets better gas mileage, costs less to ensure, would be under warranty, and would be in higher demand if we did choose to try selling again. I fear that the market is only going to get more and more difficult for selling an SUV whereas a small, fuel efficient car would be easier to unload at any time.

Originally Posted by CarrieMF

What I would do is park the CR-V, take the insurance off of it(keeping theft only). Then drive the other one. In the spring then you can try to sell it again, but you may not. I'd take it to a dealership & get the $11,000 IF after you get the insurance lowered you can't make ends meet. You could pocket the $11,000 too into a savings account.

So far, the CR-V has been parked for 6 months. This is not even close to an "end meeting" situation. While things may change, at this point we are living far below our means and have been for over two years as we saw this financial situation coming. At this point, we are trying to recoup as much as we can from our "capital", being the CR-V. I am wondering if it is a smart move to basically "swap out" a hard to sell car for an easier to sell car. We would keep the Fit through the winter as no one buys any kind of car in the winter around here and we do have several long car trips planned for the winter where the Fit would be handy. If we really like it or the older car dies, we can keep it and be fine with it whereas we know we do not want the CR-V long-term due to bad gas mileage.

Originally Posted by CarrieMF

If nobody will pay $18,000 it isn't worth that.

That is very true. Blue Book has not kept up with the market situation. No matter what, we are getting out on pretty good terms as the car was only $23K new and we paid cash (so no financing charges or interest). If we take the $11K cash, we only paid $4K/year for a very nice car and if we take the $14K swap, we only paid $3K/year for a very nice car.

Originally Posted by CarrieMF

the only reason the dealership will give you $14,000 if you buy another vehicle is because then while they're getting 1 vehicle, they're also getting rid of another one.

Yep. I am looking to capitalize on that. The question is, would it be purely financially smart. We can walk away with a new Fit free and clear that could be used for a time then sold for not much less or we can sit on a car we currently cannot sell (we are asking $15K and have not gotten any calls) and do not want to use. So theoretical $15K, actual $14K in car, or actual $11K in cash? Complicated, eh?

ETA - In case it was not clear, we would get the new Fit as an even trade, they cost less than the $14K we were offered as trade in. We would not owe any actual cash in the deal. So it is not so much "buying a new car" as swapping our current car for a new car.

[Fuamami]

I'm slightly confused, but if you say you love the CR-V, why don't you donate the free car for a tax write-off, and just use the CR-V until it dies. I think the risk of the hard-to-sell car vs. the easier-to-sell car is too much of an unknown. Unless you have a huge commute and are really going to see a dramatic savings in gas, it just doesn't seem to make sense.

[cdahlgrd]

I think I would sell the old car AND your new car and replace it with the fit if that is the car you want and need. i would be willing to turn it in to the dealer, but don't tell them that until AFTER you have negotiated a cash price on the new car!!

Having cars just sitting in your driveway will diminish their value, cost insurance, and are a general headache. Get rid of the both and have a good safe, fuel efficient car that you want to drive and use for the next 5-10 years. That is my vote.

(Oh, I like the pp idea too! It takes a lot of gas to really make it worth buying a new car.)

[Yooper]

Originally Posted by Fuamami

I'm slightly confused, but if you say you love the CR-V, why don't you donate the free car for a tax write-off, and just use the CR-V until it dies. I think the risk of the hard-to-sell car vs. the easier-to-sell car is too much of an unknown. Unless you have a huge commute and are really going to see a dramatic savings in gas, it just doesn't seem to make sense.

There is a 10 mpg difference between the two cars. Let's say we drive 1000 miles per month. At $4/gal, the CR-V costs $160/month and the Fit would cost $92. Over the course of one year, that is an $800 savings, which I admit is minimal in the grand scheme of things....assuming gas stays at $4/gal. Insurance is also higher per month on the CR-V versus a new Fit. AND the CR-V is no longer under warranty and has needed some basic repairs.

But the real point is that the CR-V is going one way or the other. We do not want to keep it. There are some unrelated reasons that we want to ditch it. With the fixed assumption that we do indeed want to unload it, does it make the most sense to hang on to it until we can sell it private party for $15K (maybe), sell it to a dealer for $11K (for sure), or trade it in to a dealer for a $14K car (for sure).

The older car is only worth $500 so it is not much of a tax write-off. It is one of those "worth more to us" kind of deals. This could be a whole 'nother thread, but we see it as a must-keep because unlike newer cars, dh can repair everything on it himself and there are about a million of these same cars in the junkyard for cheap parts. In the long run, it makes much more financial sense to stick with the old car and figure out what to do with the "unneeded asset".

[Yooper]

Originally Posted by cdahlgrd

I think I would sell the old car AND your new car and replace it with the fit if that is the car you want and need. i would be willing to turn it in to the dealer, but don't tell them that until AFTER you have negotiated a cash price on the new car!!

Having cars just sitting in your driveway will diminish their value, cost insurance, and are a general headache. Get rid of the both and have a good safe, fuel efficient car that you want to drive and use for the next 5-10 years. That is my vote.

(Oh, I like the pp idea too! It takes a lot of gas to really make it worth buying a new car.)

I touched on some of this in my last post. About the older car being a good thing to hang on to, practically free to insure, and worth very little to sell.

My biggest worry is your second paragraph. The CR-V has already sat for 6 months. If we do not unload it now, we will start to drive it again. Since no one buys cars in the winter (and it would be buried under snow), it makes no sense to keep it parked in the "for sale" lot. There are times that two cars would be handy, just not absolutely necessary.

CR-V's are expensive to repair. This is a factor. Fits are too. But if we did get one, it would be under warranty for 3 years. We would definitely no longer have it before 3 years is up.

[LianneM]

I would take the cash while you can.

[jen in co]

Originally Posted by LianneM

I would take the cash while you can.

I would too....what are you asking for it out of curiousity? Maybe if you listed it at $14-15K, it would sell as a private party transaction...just no one would touch it at $18K. As long as the old car works and you're happy with it, use it and save the cash, so you have it when you need it. If you need to buy a new car later you can, but I'd lean towards cashing in on the asset you have that you never use

[momof2boys1girl]

I would take what you can get while you can

[Yooper]

Originally Posted by jen in co

I would too....what are you asking for it out of curiousity? Maybe if you listed it at $14-15K, it would sell as a private party transaction...just no one would touch it at $18K. As long as the old car works and you're happy with it, use it and save the cash, so you have it when you need it. If you need to buy a new car later you can, but I'd lean towards cashing in on the asset you have that you never use

We are asking $15K with 4WD, snow tires, and a tow package. It has been parked in three different high-profile locations, listed on AutoTrader and Craigslist, and dragged to several dealers in (and out) of town. The dealers all say $15K is a great price for it but SUVs are just not selling. Even decent gas mileage SUVs like ours. We have not gotten a single call.

I am leaning towards taking the cash. The snow flies soon

[Fuamami]

OK, now that I understand more, I'd lower the price on the CRV until it sells. Then, I'd put it in the bank and wait. If you decide you still want a Fit in a few months, go buy it. If not, you have the other car and you have the cash. Trading in a car to a dealer doesn't usually translate into a very good deal.