Should I Sell My Car??

[Obiwan]

Hello All,

I've been having a dilemma on whether I should sell my car or not, so i thought i would seek the wisdom of the folks here.

I have a BMW with just over 100k miles. These cars are notorious for costing high $$ in maintenance especially when they start getting to higher mileage like mine. The car is worth about $16k - $17k per KBB, and I owe about $12k.

The options I have been battling with are whether to:
1. sell the car, take out the $4k - $5k equity and use that to buy a cheaper car outright; or
2. sell the car, buy a car that is less expensive to maintain (toyota, honda or nissan), apply the $4k equity and take out a car loan for $12k; or
3. keep my car.

The way i see it, the advantage of option #1 is that i would reduce my debt and get rid of the expensive car maintenance. The downside is that any car i would be buying for $4k-$5k would probably be a higher mileage car that may also start having mechanical problems (although cheaper to maintain). option #2 is seems attractive because i could get into a slightly new car with cheaper maintenance. the problem is that i end up where i started, with a $12k loan and a car that could be more reliable.

Any suggestions would be really really appreciated.

Thanks!!

[alphadore]

If I were you, I would sell the car due to high depreciation in value. You will lose anywhere between 10% to 15% of the car's fair value each year just by keeping it.

[bjl584]

Are you thinking about selling the car outright to a private party or trading it in?

A few things to consider when sellign your car outright:

1) KBB is useless. It gives you a baseline, but you have to look at compareables in your area to get a better idea of what you can sell your car far. Check auto trader, type in your make and model, type in your Zip code, and search out about 100 mile radius.

2) When selling things outright, things that are priced below $10,000 usually go fairly quickly. Above $10,000 you may be in for a long wait. Most people don't have that kind of money laying around. They will try to get financing, they will want to give you some cash now and finance the rest. It could turn into a circus.

3) What is your plan once you do sell your car? There may be a week or so inbetween the time you sell it and the time that you are able to get into something new. Unless you have a second car, you could run into a transportation problem for a short period of time.

4) Being that you still have a loan on the car, it is going to complicate matters if you sell to a private party. The title is being held by your bank. It will need signed over to the new owner once they can prove they can get financed.

I would say that the easiest thing to do would be to trade your car in on something used at a dealership. You will probably take a hit on the trade, but it will get you out of your car immediately, if that is your goal.

Another option would be just to keep it until it's paid off, or try to accelerate the pay off by doubling up on payments.

[photo]

Like Brian said, you will probably have a hard time selling it. People buying used cars are probably not interested in a car with over 100,000 miles, selling for at least $15,000, and is high maintenance to boot.

[Gary Barzel]

Option #1 does seem to be better than your other two options, if you are worried about getting a higher mileage car in return there are options you can get for that price for lower mileage, although I'm not sure how basic of a car you are looking for. If you want to settle on something that's not as cheap and you have the mileage to worry about, there are some makes that work better then others when it comes to higher mileage, speak to your mechanic, ask him what cars generally last longer and cost less to repair.

[disneysteve]

Originally Posted by Obiwan

The options I have been battling with are whether to:
1. sell the car, take out the $4k - $5k equity and use that to buy a cheaper car outright; or
2. sell the car, buy a car that is less expensive to maintain (toyota, honda or nissan), apply the $4k equity and take out a car loan for $12k; or
3. keep my car.

It really depends on your overall financial picture but I would lean toward option #4. That would be a modification of #2. Sell the car, buy a car that is less expensive to maintain, apply the 4K equity and borrow just enough to get something decent and relatively low mileage. I would NOT borrow 12K. Doing that would accomplish virtually nothing since you'd have the exact same amount of debt you've got now. You can certainly get a very good used car for under 10K which would mean borrowing no more than 6K. That would cut your current car debt in half. And chances are you could find something for 8K or so and borrow even less.

[James Hoehner]

Personally, I'd sell the car merely for the fact of crazy high maintenance costs. German cars are notorious for that. Everything from Mercedes, BMW, to VWs

[greenskeeper]

option 1

then take your old car payment and put all or part of it towards a car maintenance fund.

unless you have other pressing debts, then use the old car payment to pay them down or EF.

[maat55]

My personal philosophy on personal finance is to remain debtfree (other than my mortgage). I would do option 1 and apply your current payment towards a car fund or paying off any high interest debt.

[Frugal]

I don't know, someone said people aren't usually interested in anything over 100 k, but if it's a good car, it can last well beyond 200 k. I bought my car about about 240 k, it's a 1991, and it now has about 244 k miles on it. Drives really well, but also had $5,000-plus put in it to I think rebuild the engine, and everything to make it run well. Runs better than my spouse's much newer car, at times! They can still sell, it depends on the market. In my opinion...

[Obiwan]

Thanks everyone for the responses. I looks like the general consensus is to sell the car. I'm kind of leaning towards option #4 as proposed by DisneySteve.

I guess i should add a couple more facts just in case this changes the answer. I bought the car about 2 years ago from the original owner who bought an extended warranty and service/maintenance plan from BMW until 100k miles. so, all the previous service work has been done at the dealership (i have all the records). Within the last 6 months, i have replaced the spark plugs, the drive belts, and radiator hoses under the service plan, so those parts are new. I have also flushed and serviced the transmission and replaced the front brake pads and rotors and four new tires.

I say all this to say that the car hasn't actually cost me alot of maintenance $$ YET, but who knows. I friend recently told me that I should not be taking actions on what might happen especially since i could turn around and buy a seemingly more reliable car only to then have maintenance issues.

Either way, the car is still relatively expensive to maintain since stuff like tires, oil changes and gas (V8 engine) are expensive.

Just thought i would add that to see if it changes anything. Thanks again for all the responses, please keep them coming!!

[disneysteve]

I don't think the added info changes the story. It is a costly car for even routine maintenance and if something more significant breaks, then you are really talking big bucks.

Assuming you are otherwise debt-free, have an emergency fund, etc., I'd be okay with my original option #4. $4,000 isn't much for a decent used car these days but $16,000 is way too much. Borrow a few thousand and shop in the 8K range with a max of 10K, thus reducing your debt by 50% or more.

[Obiwan]

Thank you Steve!

Unfortunately my finances are a mess, so i probably have no business driving such a high maintenance car. The car goes up for sale today...

[disneysteve]

Originally Posted by Obiwan

Unfortunately my finances are a mess

Depending on what that means exactly, my advice would change. If you have other debt, don't have an EF, etc., then I would sell the car and buy something with the 4K you get and not borrow any more. My option #4 is only if everything else is pretty well taken care of.

[Obiwan]

i was actually thinking of posting my budget to get some advice on that, i will do so shortly. I do have a considerable amount of debt.

[disneysteve]

Originally Posted by Obiwan

i was actually thinking of posting my budget to get some advice on that, i will do so shortly. I do have a considerable amount of debt.

I think that's a great idea. Just do it in a new thread to get the most input. If you put it here, people won't see it.