Most people have a car payment. Sometimes it just makes more sense to sell the car you own and get a used one. Even if the used car is a clunker! From a financial perspective the minute you drive off the car lot your vehicle drops in value a minimum of 30%.
If you spent $20,000 on a car and now it’s worth $14,000 you just lost $6,000 dollars. Add in interest over the course of five years (if you own the car that long) and you’ll pay another $4333.
In five years you’ll be lucky to get $10,000 selling it, seven years maybe $6,000. Trade the car in and get $3,000. Bottom line is you’ll have nearly $25,000 into the car by the time you pay it off not counting normal maintenance.
If you purchase a five year old car you’ll get it for a heck-of-a-lot less and it’s still pretty new.
The point is you’ll eliminate quite a bit of debt on a loser investment. You’ll also save on your monthly payment.
Take a look at your situation now and determine the true value of your car (Kelly blue book) and what you owe to make a determination.
Hey, there’s no harm in owning an older car even if its ten years old. Make yourself a goal of purchasing a new car with cash) after you’re out of debt. Driving an old car will give you incentive to finish your debt plan.
To Debt Free Living!
David…
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