I’m writing I started writing this post as I sit waiting to complete the process of selling my car. It’s something I’ve been thinking about for some time now. In all honesty, it was something I considered doing within months after having bought it!
When I graduated from college in May of 2000, my parents lent me their 1984 Honda Accord. I loved that old car. My Mom had bought the car from a friend of my sister a few years prior for a couple hundred dollars. To say that we ran that car into the ground would be an understatement. Everyone drove that car at some point in the first few years before it became “mine”. It finally died in October of 2000, on the interstate, at 3 a.m., as I was on my way home from a long shift as a waitress at a bar.
My Dad, a master mechanic who owns his own shop, had warned me that the car wouldn’t last much longer. So I’d been saving towards the purchase of a new car, and had a nice sized down payment ready to go when it died. Of course, that didn’t stop me from crying when he refused to go get the old Accord off the side of the road and fix the transmission. It makes sense that he didn’t want to put that kind of money into a 16-year-old car that my Mom had only paid a couple hundred dollars for.That didn’t make me any less sad to let it go.
So, with a little prodding, I bought a brand new 2000 Honda Accord. I arranged for a 5 year loan from a credit union, and proceeded to throw every penny I had into it so it was paid in full after about 2 years. I was proud. I planned to get at least 10 years out of that car. I was also stupid; I let lifestyle inflation take over what used to be my car payment, and never started a new car fund.
At the start of 2011, the Honda was still going strong, even after several accidents (none my fault) and less than stellar attention to details on my part (An oil change every 3,000 miles?!? Really?!?) But I was working for a company that was moving me across the country. I was concerned that the Honda wouldn’t make the 3000+ mile drive. And even if it did, I didn’t know anyone out there. How would I find a mechanic I could trust for all the inevitable repairs an old car needs (especially when you forget to change the oil every 3000 miles!)? I was making great money at my job. So, I took the money I had in savings and used it as a down payment, and bought a new car.
I made some smart choices, and some not so smart choices. I compared the lowest cost cars across all the makes, and checked all the safety and reliability ratings. I went to a multitude of dealerships. I researched getting the most bang for my buck in a car that suited my current needs. But then I totally failed by not looking into financing, and just going through a dealer. My excuse was that I didn’t have time. And plus, I was making great money! I could easily pay off the car in less than a year! The interest rate didn’t matter!
I bought a 2011 Nissan Versa in February of 2011. By March of 2011, I told my boss I was done. He begged me not to quit, and finally we came to an agreement that I would move back to my home state, and work from there. I moved back home, socked away every penny I could. A couple of months later I turned in my notice, with enough money in the bank to cover 6+ months worth of expenses.
I returned home to the house that I hadn’t yet sold, and the Honda Accord I hadn’t yet figured out what to do with. My gut told me to sell the Versa, cut my losses, and drive the Honda until it finally died. Everyone else told me that was a stupid idea. Why would you sell a brand new vehicle and keep a car that might die any day? Do you know how much money you’ll throw away on depreciation after only a few months? So, I kept the Versa, and sold the Honda to my Dad.
I’ve regretted that decision ever since. First, the amount of interest I’m paying is ridiculous. And with a bankruptcy on my credit report, banks and credit unions aren’t exactly beating down my door to refinance. The Nissan is a great car. But the Hatchback body style makes it a little “top-heavy”, and with the narrow body it doesn’t drive well when it’s windy, or raining, or in the snow, or on ice. It doesn’t particularly like pot holes either. Any one of which is almost a daily occurrence in my home state. On an emotional level, the car is a daily reminder of mistakes I made in the past, a job I should have never taken, and people who made me miserable.
So, at the beginning of 2013 I decided to start seriously looking at how selling the Versa would affect me financially. Emotionally, I already knew it was what I wanted to do. But, if I want to reach Financial Independence, I can’t just make decisions for emotional reasons. So, I checked into Blue Book values on the car. I researched online to find out what similar cars were selling for. I got quotes from CarMax, CarBuyCo.com (didn’t go nearly as smoothly as they say), and I tried talking to people at the Nissan Dealership (I never did get anywhere with that, as once I said I was not using it as a trade-in, I kept getting the “Oh, I’ll have to have someone else contact you” run around).
I also started talking to people about my plan. That was the hardest part. My BF is convinced the Nissan was a “death-trap” (Consumer Reports didn’t rank the 2012 Versa coupe very well for safety, but the 2011 Versa Hatchback did very well), and was all for me selling the car. But he only supported it if I was buying a nicer, newer car. In his mind, a car payment is a part of life. Of course, his company supplies him with a nice, fully loaded Ford truck that is replaced every couple of years, and he’s got a fully funded, stable pension that he can take after next year, so he really doesn’t understand where I’m coming from financially. My sisters thought I was insane. Of course, they benefit from me having a nice, newer car for when we go places (I always drive).
I started talking to my Dad early on about my plan. His business deals with maintenance on Fleet vehicles, but many of the people he deals with professionally bring their personal vehicles to him as well. It seems as though the majority of his customers purchase a new vehicle, drive and maintain it for 10+ years, and then when the first major repair is needed, decide to sell. Many of them come to him when they’re looking to sell, or when they need to find a cheap vehicle for a child or friend. He seems to always have a few vehicles around the shop that the owners are looking to sell. It was a great place to start in my search for a nice, but cheap used car!
Of course, my Dad has always been of the camp that if you can afford it, you buy new. “Why buy someone else’s problems?” So he wasn’t exactly supportive of my plan, and immediately started in about how bad of idea it was. He argued with every reason I had for wanting to sell the Nissan. Finally, out of desperation, I said the thing I knew would work: Dave said sell the car!*
As it turns out, my Dad had been toying with the idea of selling the Honda to either purchase a Lincoln with some electrical problems, or to put the money into finishing the Avanti he’s been fixing up for years as his Toy. The electrical problems on the Lincoln made it undependable, so it wasn’t ideal for me to buy. But the Honda! As the original owner, I was responsible to every ding, nick and scratch on the thing! He’d put a lot of work into it in that past two years, so it’s in better shape than when I sold it.
So, we reached an agreement. I sold the Nissan, and used the money I got back to buy the Honda. He even agreed to replace the tires and the muffler, which hopefully covers anything it will need for a while. On the plus side, should anything go wrong with the Honda, I have a trusted mechanic who usually only charges me for parts (Love you Dad!). Plus he usually lends me his car while my car is being fixed, so I don’t even have to worry about being out a vehicle!
Whew! Lengthy post just to say I sold a car! Anyways, here’s how the numbers look:
Sold the Nissan Versa: +$9000
Settled Loan on Versa: -$6,814.53**
Bought Honda Accord: -$2,000.00
So, I’m pocketing $185.47, and saving $250/month on a car payment for almost 3 years, if the Honda lasts that long. Plus, my payments for insurance, plates and registration will be greatly decreased. And, unlike last time, I’ll be saving that money. I’m hoping to get at least a couple of years out of the Honda. Should anything happen, my Dad will likely be able to find me another vehicle for cheap. You never know what the future holds. But I’m hopeful this is one more step towards the future I’m trying to build!
– Ms. W
What do you think of my plan? Would you have done something differently? Where do you stand on the new vs. used car debate?
*My parents have been reading and listening to Dave Ramsey for years. My Dad fully supports his ideas, but has struggled with actually adhering to them. Recently they’ve been taking the Dave Ramsey classes at a local church.
** The payoff on my Nissan is a high estimate, so there’s a possibility I might get a little back, depending on when they process the payment, and how the interest gets calculated.
At this time, there are no sponsored links on this blog. I do not receive any money when you click on another site. I am simply including the links for reference.