In 2022 my car (a 2010 Nissan Versa) kicked the bucket. The engine was broken and needed to be replaced. Rather than spending even MORE money on repairs (I had spent a few thousand or so on various other parts at this point), I decided to buy a newer car that would, presumably, require fewer repairs in the short term.

I bought a 2021 Honda HRV for ~$20,000 at 7.59% APR. I pay $414 a month and have $16k left on it. I bought this car under the worst possible circumstances:

  1. Used car prices were very high at this time
  2. Interest rates were high due to inflation
  3. I needed a car because my previous one had died so I didn’t have the luxury of time

My hope, at the time, was that inflation would be tamed and interest rates would eventually be lowered, wherein I could refinance the loan. I no longer believe this is a possibility within the next 4 years or so. I was also hoping to find something small and cheap like a Honda fit, but I learned that they had stopped producing them. An HRV seemed like a sensible kind of car given the modest physical needs of how I used a car at the time

So, here’s my question: Should I just sell my car for something older? Maybe like a 2015 or so? Or should I just stick with my current machine until it’s paid off and try to refinance after 2028?

If I could go back in time, I would’ve sold the Versa in 2020 or so, before I had spent a bunch of money on repairs. Hindsight is 20/20 though

  • Canopyflyer@lemmy.worldEnglish
    1·
    14 days ago

    This is exactly why an automobile should be treated as a depreciating asset, rather than an investment.

    You fix a car if it will cost less than half of its value at the time of the repair. If it cost more than half, get rid of it at the first opportunity. There are caveats to that rule of course. So don’t fault yourself for buying another car.

    You had some bad luck and that is just a part of owning a car. In commiseration, I invested $2500 into an Acura TL that I dearly loved for timing belt and some other 100K maintenance items. Only to have its transmission blow up less than 4 months later. The $2500, plus the transmission replacement would have been well over half the value of the car. I traded it. For a car that I still own and absolutely loathe, but it’s been reliable and I’ve put over 160,000 miles on it. My oldest kid now drives it.

    The short answer is:

    Keep your current car. It’s basically new. From a manufacturer that is notable for the reliability of its products. You also know its maintenance history, which is incredibly important.

    Have your payments kept ahead of depreciation? Meaning, can you sell your car for enough to pay off your loan? Just so you know, that’s almost always “no”, but your results may vary. You would also be forced to buy another car. 7.59% APR sucks, but are you able to get a better rate now on another car? Do you have the down payment for another car? Again, you may not have any money left over from selling your current car and paying off the lien.

    If you can refinance it at a lower the rate, then absolutely that is the path you should take. If not, then taking a more global look at your finances are in order to make the payment more palatable.