Question Regarding Cars

[Reldon]

Hi All,

My friend asked me this question and I didn't know the right answer. I was hoping I can get some advice from here so I can let her know what would be the best option.

She currently owns a car that she has paid off. She wants to sell it for 24000 dollars and purchase a cheaper car such as a Yaris or a Fit for 12000. She doesn't know if it would be a smart move. Can someone help me with this question?

Thanks.

[Broken Arrow]

Um....

Well, there's not enough detail to tell. For example, what kind of car does she have now? How does she plan on selling it to get $24k for it? Does it have to be a Yaris or a Fit for 12K? (Although I admit I am enamored by the Yaris liftback. )

Generally speaking though, I think it's always a great idea to downgrade your vehicle to something sensible. I know. It's so boring and dull of me to say that! However, if you're trying to get your finances under control and gain some serious financial traction, this is just one of those many wonderful ways to do so.

Some day, when I am financially healthy enough to do so, THEN I might consider getting a joy ride.

[Fern]

I think it partly depends on the age and overall condition of the current car. Cars depreciate with each passing year. You can check the blue book value of used cars on www.edmund.com (or is it www.edmunds.com)?

If the Yari/Fit gets better gas mileage than the current one and she does a decent amount of driving, it's something to consider, altho with a newer car she will likely pay higher insurance. And here in CT we also pay the lovely car tax, which is higher for newer cars.

[cschin4]

Doesn't sound like a smart move to me. If the car is paid off, she should just keep it and continue driving it as long as she can if she is looking for the best financial option. Her car may not be worth nearly as much as she thinks. And, then to buy a new car there is money lost on the purchase such as taxes, etc.

[disneysteve]

Does she have a particular need for the money? That would be important to know. Otherwise, why is she considering selling? She's got a paid off car that is costing her nothing but gas and maintenance. And I'm guessing at that price it is something much larger and far safer than the models she is considering.

[bigsaver]

Probably should keep what they have since they have already taken the big hit on depreciation. I personally don't buy new cars since they are a big waste of money. New car is about 25k. I can get that car in a 10 year old version for 2-3k. When you factor in the fact you could be earning interest on that 25k which would be a thousand a year or so, that would easily pay for the repairs on the used car. Also, the insurance is cheaper and you don't need to have theft or collision.

[poundwise]

There is not enough information to give a responsible answer, in my view.

What kind of car is it? How old? How many miles? It is worth $24K on the market?

Why would this friend be considering the change? Looking for better gas mileage? Looking to just get a newer car or to dump an older one? Needs have changed? Looking to 'cash out' some of the equity?

More details would be helpful.