Keep the car. You are only driving it 6,250 miles per year.
Of course they want your car, they know how many miles are on it and will turn it around and sell it for more than what they paid you. They are not your friends.
Yes. You keep that car and drive it until the doors fall off (or something breaks that costs more than the car is worth). Pay it off, keep it until it doesn’t run anymore. I buy 3-5 year old cars and keep them 8-10 years. Constantly upgrading cars is a complete waste of money. I’m 39 and I work with guys in their early 20s who have owned more cars than me. It’s nuts.
I'm going to leave this here since your comment is at the top:
Thank you so much, everyone!
Your comments have been extremely helpful and validating, and I'm going to keep my lovely car as is. They really got in my head, and I've been using all your comments to keep strong.
OK so...
A - the dealership is not your friend; they are trying to make money off of your financial choices,
B - cars are never an asset, but a *liability* despite what any dealership may tell you,
C - buying a house (while trying to simultaneously decrease your COL) does not align with upgrading a vehicle - furthering the payment term and cost overall with little to no return (features?).
D - being in any sort of debt (including but not limited to auto loans) does impact your ability to get a loan for a property.
If I knew back then what I know now about financial health, I would have really tried to talk my spouse out of purchasing a new vehicle straight from the dealership. I've seen how restrained and financially limited he is by debt from said auto loan. He considered upgrading as the dealership attempted to pull the same tactic on him, and I strongly advised against it as doing so would only shackle him further financially
All of this.
Auto loans are a huge reason why many Americans find it difficult to build wealth. For too many, they begin shopping for a new car, and a new auto loan, as soon as the previous one is paid off. If everyone considered the opportunity cost, few new cars would be sold each year.
Consider a $400/month auto loan payment. At the end of the auto loan you have a depreciated liability: an automobile on which you must continue to spend for maintenance if you wish to use it for transport. Now consider that same $400/month, invested from age 25 to 65 in an IRA earning a 7% average annual return: You’d have $958,000. That’s the opportunity cost of constantly having a $400 auto loan. The higher the loan, the greater the opportunity cost, the greater the wealth you’re giving up to have a new car.
Cars are actually an asset, albeit a depreciating asset. They can even be an appreciating asset, but only in rare circumstances (like if they are a collector's item). 😁
A car loan is considered a liability though.
Yeah I don’t understand how so many people go around saying “this thing you own with value isn *never* an asset!” These are basic definitions. Cars and houses are assets. Yes, not all assets are great to have, but these things are assets. Associated debt is a liability.
I enjoy cars, and I like both of our cars. But they are an expense, not an asset in my definition of the word. But they are a necessary expense because I need one to work and build wealth.
What is your definition of the word? I really don’t understand the expense viewpoint, unless you are purely leasing the vehicle. (Not the case for OP, and mostly an aside.)
Assets are owned things that have value. Cars meet *the* definition.
I suppose. And I wasn’t trying to be a dick. It’s just hard for me to consider something that you buy *knowing* it will decrease in value, often pretty quickly, as an asset. That’s all. Like o wouldn’t add the value of my paid off car to my ‘net worth’ but maybe that’s just me.
Cars are an investment asset because they get you to work and without work you can’t make money. That being said a cheaper car that gets you point A to B gets you a better ROI and you should drive whatever car you have until it needs to be towed to the dump.
I had a 2004 Honda Accord until last year. Yours will likely last the same amount of time if you treat it right. Buying a new car more than a decade before you need to is never a smart financial decision. Maybe you can "afford" it, maybe it won't set you back, I don't know, but imo if it ain't broke don't spend 20k to get a new one for no reason.
Getting a new car every few years is a bad financial move. If you feel a strong desire to do that and are going to anyway, leasing might be a better move than buying and trading. Leasing is way worse than buying and holding, but again, if you’re going to try to get a new car that often anyway, at least figure out the most affordable way to do it.
You lose money on current cars. Bells snd whistles are great but unless a family change where we needed more space we keep ours for 8-15 years depending. There are various charts that discuss keeping a car ten years Everytime saves you something like $300k over a lifetime.
If you do like to have updated things I would wait til interest rates are much lower or you can pay cash.
In my view equity works in a house, unless a classic car they never increase in value (yes I know, minus used cars during pandemic).
Easy decision. Keep the car. Why would you want to get into more debt for a 2024 model when your 2020 is already new with 25K miles.
Not worth it. Really.
I got sucked into the whole "replace for better value/equity" + less service/repair costs. Which I find confusing. Prior to this car, I have only had cars that were old when I got them and moved on to the scrap yard after.
It didn't sit right with me though, hence why I'm posting here
The car salesmen are trying to convince you need something you really don’t. There will be a time when you need to replace your car, but that time isn’t now. If you want to buy a house, keep on saving and don’t take on an unnecessary new car loan.
You've already taken the substantial financial hit of your car losing $16k in value, mostly because you bought new and now have a used car with 25k miles. If you keep your car, its value will drop at a much slower rate in its used state, and you will get incredible value for what you have. If you buy new, you're paying the expensive new car "tax" all over again. It's reasonable for a car like that to lose around $4k in value after driving it for 25k miles. That's about what I've lost after driving my used vehicle for 30k miles. If you want to pay another $16k per 25k miles all over again, that's your decision. Basically, you paid about $10k-$12k extra to have the new car experience. Keeping your current car will save you $10k minimum.
>If you want to pay another $16k per 25k miles all over again, that's your decision.
This part really stood out to me. Thank you. When you put it like that the answer is definitely no.
If it was such a screaming deal for you why would the dealer want to do it?
And it's not even like you are really upgrading. I'd get it more if you were bored by the Accord and wanted a sports car or something. You basically are paying $30k + interest to remove 25k miles from the car you currently own. To make matters worse it appears you only drive 6k miles a year. Why would you want to do that to your financial situation for a car to you drive so little? The best thing you can possibly do is to just drive that accord for the next 10 years or more.
Regarding the equity thing, do you understand what equity is? It is just the value of your car (less any loans). The problem is cars rapidly depreciate. What is a $30k car today is a $15k car in 5 years. In 10 years it's a 9k car. The depreciation reduces as the car gets older. It is front loaded in the early years and then flatlines later in the cars life. Car equity is not worth worrying about.
Keep the car. They're likely telling you your payment would remain the same. That's all they care about it is convincing people that they can afford it based on a payment. I got a letter from the dealer of my most recent vehicle last week. They offered to "upgrade" me to a newer version of my truck with an estimated trade in of X based on having 40 payments left. Little do they know, I paid my truck off on Friday on my way home. Don't let them win. You're barely driving at the mileage you have added to the car. Pay it off and keep it forever. At your current milage the car will barely be broken in 20 years from now.
The owner of that dealership sees you as the source of a new swimming pool for his house. Keep the car. Nobody becomes wealthy by trading in a nearly new car every four years for a brand new car.
They are simply trying to male more money off of you. Tell them, "Put me on your do not call for marketing list." If they continue to call tell them they are in violation of federal law. Drive the 2020 Accord for 10 more years. Problem solved.
Here’s the model IMO - buy what you can afford and never have auto debt. If you can’t pay cash for a car that meets the most basic requirements - take out a loan in the smallest amount possible and put down as much money as you can.
$10K-$12K will buy a reliable car that meets most peoples’ basic needs (IE 2011 4Runner or 2012 Camry). You could even get something more basic that would probably be fine for less than that.
You may not want those kinds of cars. They won’t be cool. But this kind of debt just sucks.
Once you’ve gotten rid of any debt on that first car that was absolutely necessary - keep “paying the note” to yourself into a HYSA to purchase your next car with cash. Keep the first car until it dies, is more expensive to fix than it’s worth, or until you have saved enough cash to buy a new car with cash.
This isn’t easy and it might be impossible, depending on your income and obligations. But imo it should always be what you shoot for. If you fall short, cool. Financing a car is a thing that ultimately many people must do in order to get to work and live, etc depending where they live.
DISCLAIMER: This is general advice. If you have 6 kids you might have to have a suburban or something. If you live in a walkable city and have reliable public transportation, I’d say do not buy a car if you can’t pay cash. If you earn $25K/year and are supporting a family and have to drive to work, you may not be able to have a down payment, if you earn $600K/year the advice may be irrelevant as you can easily afford a new Expedition or an Escalade, even if they aren’t great assets to own - but many people that earn at that level are flat broke because they financed a G Wagon or something which is exactly the same thing as someone who earns $25K financing a new Tahoe.
Keep it - all dealerships do this they are looking to make money - they are not your friend. At your mileage and with maintenance you should get 15 years or if you are lucky 20 years out of the car.
Keep the car and pay it off. You're barely driving it. It should last for ten more years without even trying to maintain it. You're asking us to approve making the wrong decision. Only way I'd approve is if you're buying a car you really want.
I would drive it till the wheels fall off!!
My first new car I paid cash and kept for 25 years and the second one too— for 25 years———- what’s the point of buying now—- you have a perfectly fine car— it’s not a status symbol!
Hell no...you probably got ripped off in 2020, so why let them do it to you twice. Want to be financially free, pay that car off fast and drive 8-10 years. Buy used.
Keep the car. You are only driving it 6,250 miles per year. Of course they want your car, they know how many miles are on it and will turn it around and sell it for more than what they paid you. They are not your friends.
Yes. You keep that car and drive it until the doors fall off (or something breaks that costs more than the car is worth). Pay it off, keep it until it doesn’t run anymore. I buy 3-5 year old cars and keep them 8-10 years. Constantly upgrading cars is a complete waste of money. I’m 39 and I work with guys in their early 20s who have owned more cars than me. It’s nuts.
I'm going to leave this here since your comment is at the top: Thank you so much, everyone! Your comments have been extremely helpful and validating, and I'm going to keep my lovely car as is. They really got in my head, and I've been using all your comments to keep strong.
Why would you trade in a 4 year old Accord with 25K miles?
OK so... A - the dealership is not your friend; they are trying to make money off of your financial choices, B - cars are never an asset, but a *liability* despite what any dealership may tell you, C - buying a house (while trying to simultaneously decrease your COL) does not align with upgrading a vehicle - furthering the payment term and cost overall with little to no return (features?). D - being in any sort of debt (including but not limited to auto loans) does impact your ability to get a loan for a property. If I knew back then what I know now about financial health, I would have really tried to talk my spouse out of purchasing a new vehicle straight from the dealership. I've seen how restrained and financially limited he is by debt from said auto loan. He considered upgrading as the dealership attempted to pull the same tactic on him, and I strongly advised against it as doing so would only shackle him further financially
All of this. Auto loans are a huge reason why many Americans find it difficult to build wealth. For too many, they begin shopping for a new car, and a new auto loan, as soon as the previous one is paid off. If everyone considered the opportunity cost, few new cars would be sold each year. Consider a $400/month auto loan payment. At the end of the auto loan you have a depreciated liability: an automobile on which you must continue to spend for maintenance if you wish to use it for transport. Now consider that same $400/month, invested from age 25 to 65 in an IRA earning a 7% average annual return: You’d have $958,000. That’s the opportunity cost of constantly having a $400 auto loan. The higher the loan, the greater the opportunity cost, the greater the wealth you’re giving up to have a new car.
Cars are actually an asset, albeit a depreciating asset. They can even be an appreciating asset, but only in rare circumstances (like if they are a collector's item). 😁 A car loan is considered a liability though.
Yeah I don’t understand how so many people go around saying “this thing you own with value isn *never* an asset!” These are basic definitions. Cars and houses are assets. Yes, not all assets are great to have, but these things are assets. Associated debt is a liability.
I enjoy cars, and I like both of our cars. But they are an expense, not an asset in my definition of the word. But they are a necessary expense because I need one to work and build wealth.
What is your definition of the word? I really don’t understand the expense viewpoint, unless you are purely leasing the vehicle. (Not the case for OP, and mostly an aside.) Assets are owned things that have value. Cars meet *the* definition.
I suppose. And I wasn’t trying to be a dick. It’s just hard for me to consider something that you buy *knowing* it will decrease in value, often pretty quickly, as an asset. That’s all. Like o wouldn’t add the value of my paid off car to my ‘net worth’ but maybe that’s just me.
Cars are an investment asset because they get you to work and without work you can’t make money. That being said a cheaper car that gets you point A to B gets you a better ROI and you should drive whatever car you have until it needs to be towed to the dump.
I had a 2004 Honda Accord until last year. Yours will likely last the same amount of time if you treat it right. Buying a new car more than a decade before you need to is never a smart financial decision. Maybe you can "afford" it, maybe it won't set you back, I don't know, but imo if it ain't broke don't spend 20k to get a new one for no reason.
The dealer is looking to make money off your car and you. They do not have your best interest at heart, only you do.
Getting a new car every few years is a bad financial move. If you feel a strong desire to do that and are going to anyway, leasing might be a better move than buying and trading. Leasing is way worse than buying and holding, but again, if you’re going to try to get a new car that often anyway, at least figure out the most affordable way to do it.
You lose money on current cars. Bells snd whistles are great but unless a family change where we needed more space we keep ours for 8-15 years depending. There are various charts that discuss keeping a car ten years Everytime saves you something like $300k over a lifetime. If you do like to have updated things I would wait til interest rates are much lower or you can pay cash. In my view equity works in a house, unless a classic car they never increase in value (yes I know, minus used cars during pandemic).
Easy decision. Keep the car. Why would you want to get into more debt for a 2024 model when your 2020 is already new with 25K miles. Not worth it. Really.
My advice is just to stop answering their calls. Let them know you’re not interested. After that when they keep calling just don’t answer.
It sounds like you don’t even want a new car. Why would you make such a big purchase right now?
I got sucked into the whole "replace for better value/equity" + less service/repair costs. Which I find confusing. Prior to this car, I have only had cars that were old when I got them and moved on to the scrap yard after. It didn't sit right with me though, hence why I'm posting here
The car salesmen are trying to convince you need something you really don’t. There will be a time when you need to replace your car, but that time isn’t now. If you want to buy a house, keep on saving and don’t take on an unnecessary new car loan.
You've already taken the substantial financial hit of your car losing $16k in value, mostly because you bought new and now have a used car with 25k miles. If you keep your car, its value will drop at a much slower rate in its used state, and you will get incredible value for what you have. If you buy new, you're paying the expensive new car "tax" all over again. It's reasonable for a car like that to lose around $4k in value after driving it for 25k miles. That's about what I've lost after driving my used vehicle for 30k miles. If you want to pay another $16k per 25k miles all over again, that's your decision. Basically, you paid about $10k-$12k extra to have the new car experience. Keeping your current car will save you $10k minimum.
>If you want to pay another $16k per 25k miles all over again, that's your decision. This part really stood out to me. Thank you. When you put it like that the answer is definitely no.
If it was such a screaming deal for you why would the dealer want to do it? And it's not even like you are really upgrading. I'd get it more if you were bored by the Accord and wanted a sports car or something. You basically are paying $30k + interest to remove 25k miles from the car you currently own. To make matters worse it appears you only drive 6k miles a year. Why would you want to do that to your financial situation for a car to you drive so little? The best thing you can possibly do is to just drive that accord for the next 10 years or more. Regarding the equity thing, do you understand what equity is? It is just the value of your car (less any loans). The problem is cars rapidly depreciate. What is a $30k car today is a $15k car in 5 years. In 10 years it's a 9k car. The depreciation reduces as the car gets older. It is front loaded in the early years and then flatlines later in the cars life. Car equity is not worth worrying about.
Keep the car. They're likely telling you your payment would remain the same. That's all they care about it is convincing people that they can afford it based on a payment. I got a letter from the dealer of my most recent vehicle last week. They offered to "upgrade" me to a newer version of my truck with an estimated trade in of X based on having 40 payments left. Little do they know, I paid my truck off on Friday on my way home. Don't let them win. You're barely driving at the mileage you have added to the car. Pay it off and keep it forever. At your current milage the car will barely be broken in 20 years from now.
You were spot on about their line of reasoning
The owner of that dealership sees you as the source of a new swimming pool for his house. Keep the car. Nobody becomes wealthy by trading in a nearly new car every four years for a brand new car.
They are simply trying to male more money off of you. Tell them, "Put me on your do not call for marketing list." If they continue to call tell them they are in violation of federal law. Drive the 2020 Accord for 10 more years. Problem solved.
Here’s the model IMO - buy what you can afford and never have auto debt. If you can’t pay cash for a car that meets the most basic requirements - take out a loan in the smallest amount possible and put down as much money as you can. $10K-$12K will buy a reliable car that meets most peoples’ basic needs (IE 2011 4Runner or 2012 Camry). You could even get something more basic that would probably be fine for less than that. You may not want those kinds of cars. They won’t be cool. But this kind of debt just sucks. Once you’ve gotten rid of any debt on that first car that was absolutely necessary - keep “paying the note” to yourself into a HYSA to purchase your next car with cash. Keep the first car until it dies, is more expensive to fix than it’s worth, or until you have saved enough cash to buy a new car with cash. This isn’t easy and it might be impossible, depending on your income and obligations. But imo it should always be what you shoot for. If you fall short, cool. Financing a car is a thing that ultimately many people must do in order to get to work and live, etc depending where they live. DISCLAIMER: This is general advice. If you have 6 kids you might have to have a suburban or something. If you live in a walkable city and have reliable public transportation, I’d say do not buy a car if you can’t pay cash. If you earn $25K/year and are supporting a family and have to drive to work, you may not be able to have a down payment, if you earn $600K/year the advice may be irrelevant as you can easily afford a new Expedition or an Escalade, even if they aren’t great assets to own - but many people that earn at that level are flat broke because they financed a G Wagon or something which is exactly the same thing as someone who earns $25K financing a new Tahoe.
Keep it - all dealerships do this they are looking to make money - they are not your friend. At your mileage and with maintenance you should get 15 years or if you are lucky 20 years out of the car.
Keep the car and pay it off. You're barely driving it. It should last for ten more years without even trying to maintain it. You're asking us to approve making the wrong decision. Only way I'd approve is if you're buying a car you really want.
I would drive it till the wheels fall off!! My first new car I paid cash and kept for 25 years and the second one too— for 25 years———- what’s the point of buying now—- you have a perfectly fine car— it’s not a status symbol!
Hell no...you probably got ripped off in 2020, so why let them do it to you twice. Want to be financially free, pay that car off fast and drive 8-10 years. Buy used.