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  • Trade car in?

    Hey everyone!

    With how crazy the car market is right now, wanted to lay out a scenario and see what you all think. Had to buy a new (to me) car after my trusty 2008 Acadia died. Opted to buy a newer (used) car with low miles as I got a great deal on it and knew it would be reliable. Long story short I'm a little over $6k into my $18k 5 year loan (2.1%), but with the used car market the way it is currently, I have the opportunity to sell it for $22k.

    Long story short, what are your thoughts on selling and starting a three year lease on something similar while the market cools off, then going back into the used car market. As a reference I'm entering intern year and am trying to keep my COL as low as I can so this crossed my mind. Figured for the time being the lease would be cheaper and more reliable but I also realize this is pretty much putting money into nothing.

    Would love to hear the thoughts of people much more experienced with their finances than I. Thanks everyone!

  • #2
    Just keep your current vehicle.

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    • #3
      I know this probably isn't the answer you want, but if your goal is to keep expenses low, I'd sell the car and buy a cheaper one for cash. Everything else, in my opinion, is just a (somewhat understandable - I'm not knocking it) excuse to get a newer car while feeling like you're being financially savvy.

      With that being said, during residency I used a comically high % of my savings to buy a certified pre-owned 3-year old BMW. It made me happy, had expensive repairs covered entirely under warranty, and then made me less happy when I started to realize I might run out of savings by the end of residency and how dumb that was. I started budgeting more carefully and found money to save. I consider it a reasonably inexpensive way to have learned my lesson. Would I recommend that route? YMMV.

      In your shoes I'd probably just keep the car you already have and be glad that after you pay off the loan you'll hopefully have an asset that depreciated less than you thought it would.

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      • #4
        I traded in my 2011 Outback for a new 2021 RAV4 Hybrid XLE in February. Long story short, after reading in the WSJ about how people were getting shafted at the dealer, I (luckily) got the parent company to cough up about $9k as a refund for all the overpriced junk the dealer threw on there (all of which went to principal reduction and I’ll own it free in clear in about 19 months). The market is not functioning normally; do not buy a new car. Keep your current set and pay it off. That “extra” $4k will be eaten by the sticker cost of a newish car easily…

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        • #5
          Agree 4k will be eaten by dealer fees, taxes, registration ect...

          options I would personally consider:
          1. Keep it and when you finish residency you will likely have decent equity and can trade it in for a better car
          2. Find a private sale car that you can buy outright upon selling your current car
          3. Lease only if you can find an aggressive advertised low monthly payment vehicle like sub 280$

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          • #6
            Fine as a plan, but sign the lease before you sell the old one. Availability of vehicles is terrible right now, GM still hasn't fulfilled orders from 10 months ago, someone I know was quoted a year to get a replacement panel for an accident, and a friend who sold his 15 year old truck a year and a half ago for $10k more than he bought it hasn't been able to find any replacement for his next construction project.

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            • #7
              Keep the car.
              Not to sidetrack, if purchasing a new vehicle, any data or feel for wait times? It seems like the only option is to shop what is on a dealers lot. Not a good position for a buyer now.

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              • #8
                Finding a good lease is almost impossible now. I've been leasing for years. Yeah, you could sell yours for a profit, but it'd get eaten up by getting a lease.

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                • #9
                  Thanks for the advice everyone! I think I'm just going to keep it for now, it's reliable and I'll easily be able to get another 6-8 years out of it (so out of any possible fellowship+first couple attending years). I spoke to my dealer this AM and their cheapest leasing deal is around what I'm paying monthly for this, for a "worse" vehicle - so I think i'm just going to ride this out.

                  Thought this might be a way to get a one-up on the system after seeing a news article about people trading in their cars, but there's always two sides to the same coin I suppose. Selfishly, part of me wanted to trade up

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                  • #10
                    Originally posted by Urojet View Post
                    I know this probably isn't the answer you want, but if your goal is to keep expenses low, I'd sell the car and buy a cheaper one for cash. Everything else, in my opinion, is just a (somewhat understandable - I'm not knocking it) excuse to get a newer car while feeling like you're being financially savvy.

                    With that being said, during residency I used a comically high % of my savings to buy a certified pre-owned 3-year old BMW. It made me happy, had expensive repairs covered entirely under warranty, and then made me less happy when I started to realize I might run out of savings by the end of residency and how dumb that was. I started budgeting more carefully and found money to save. I consider it a reasonably inexpensive way to have learned my lesson. Would I recommend that route? YMMV.

                    In your shoes I'd probably just keep the car you already have and be glad that after you pay off the loan you'll hopefully have an asset that depreciated less than you thought it would.
                    Excellent and appropriate use of "YMMV" if I do say - lol

                    Comment


                    • #11
                      Originally posted by Tim View Post
                      Keep the car.
                      Not to sidetrack, if purchasing a new vehicle, any data or feel for wait times? It seems like the only option is to shop what is on a dealers lot. Not a good position for a buyer now.
                      I could order something new, with a few month turn-around but never was really looking to buy so was at the liberty of whatever leasing deals they had on the lot. I'm a GM lifer because of family history and it seems that production is starting to catch up a bit. Decent amount of trucks and smaller SUVs available, but if you're waiting on a larger SUV at MSRP you're going to be waiting a while unfortunately.

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                      • #12
                        Originally posted by Tim View Post
                        Keep the car.
                        Not to sidetrack, if purchasing a new vehicle, any data or feel for wait times? It seems like the only option is to shop what is on a dealers lot. Not a good position for a buyer now.
                        Months, I was told, especially for a hybrid or electric (I got a Toyota). I got dumb lucky that the RAV4 Hybrid I bought was delayed in the port (literally onboard a container ship). I “missed” out on another RAV4 Prime (plug in hybrid version) literally by five minutes on the paperwork, and as much as I hate cars and everything about them, I’m glad I got what I got when I did. It’s nuts out there…

                        Addendum: the dealer said they knew my car was on the ship, but it was impossible to predict when it would get unloaded. Original estimate was six weeks, ended up being seven days. And they tried to say if I didn’t close on their timeline, they would sell to someone else. Well, that attitude didn’t last long after a phone call with the dealer’s corporate office.
                        Last edited by F0017S0; 04-15-2022, 09:57 AM.

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                        • #13
                          I'm at 10 months and counting for the new car I ordered. It was scheduled to go into production at the beginning of January but obviously that didn't happen.

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                          • #14
                            financially it's not a bad idea, just complex.

                            however if you go from an $18k used car to a lease (almost by definition new) that will be the last not-almost-new car you ever drive.

                            going backwards in car tech/luxury is really hard.

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