Trading in cars to cut budget

mazda
bmw
328

#1

We need to cut back on our expenses. We have a 2009 BMW 3 series that eats up a big chunk of our monthly salary. Cutting these payments would help significantly. It has been proposed that we trade this car in plus our 2008 Mazda 3 which is paid off and get one car. Does this make sense? I am hesitant to get rid of a car that is completely paid off. What should I expect? What questions should I be asking?


#2

I can’t imagine how you would be money ahead by doing that, compared to just selling the 3er and keeping the Mazda 3. It has 10 good years (at least) in it.


#3

Great idea to cut some overhead. How many miles on the mazda? Why not just seel the Bmw and drive the paid off car and save until you can pay the difference between it and a new one? New one another way to cut your overhead is to never buy new but instead buy a few years old at the depreciated value- It’s what a lot of millionaires due- check out a book The Millionaire Mind…


#4

Since you’ve conceded to having just one car,
duh,
sell the beemer. period.


#5

You will lose on a trade-in. When you trade cars, there are essentially two transactions: 1) you are purchasing a car from the dealer; 2) the dealer is purchasing a car (or cars) from you. The dealer wants to get the most he can from his car and purchase your car for as little as possible.

If you aren’t upside down (owe more than the value of the car) on the BMW, sell it. If you can handle life with one car, keep the Mazda 3.

I dislike lending organzations. I drove clunkers and used public transportation in order to avoid car payments. When I went to graduate school, I bought a 1947 Pontiac for $75. It made the 350 mile trip (using 2 quarts of oil) and gave me around town transportation. When I would return home, I was able to take the train and bus for the trip. At one time when I was home, I took my dad’s Studebaker to the dealer for service. The dealer had a brand new stripped down 1963 Studebaker on display with a price of $1495. I mentioned it in passing at the supper table. My parents got the idea that I should have that car. I could come up with $500 and my dad wanted to loan me $1000. I even turned that down. I hate to owe money.


#6

we owe more on the bmw than it is worth…


#7

So the Mazda part of the deal it to get enough money to pay off the BMW loan? Any way to save up enough to make up the difference on the BMW? Dealers will try to hook you into a bad deal by pushing a dual trade-in, very easy to get the bad end of the deal.


#8

Let’s see, currently you have;
BMW loan payment
BMW insurance
Mazda insurance

To maximize your money,
do NOT trade-in but sell the beemer yourself.

Then , if you choose, you can reduce the amount and type of insurance you carry on the Mazda. A paid off car no longer requires full coverage like when there’s a lien on it.
You can choose just liability and a higher deductable.

Once you sell the beemer you cancel it’s insurance, use the sale money to pay down the loan, use the monthly money that was for it’s insurance toward the loan payment, save on the Mazda insurance…cha-ching…there’s you overall savings until the beemer loan is done.

If you still believe you need to buy some old beater to get by then, once again, sell the Mazda yourself to get more money in pocket then try to find a private sale for the older car you buy.

Selling a car yourself garners more money for your car.
Buying a car from a private party garners more car for your money.


#9

It has been proposed that we trade this car in plus our 2008 Mazda 3 which is paid off and get one car.

Who made this suggestion? If it was a certified financial planner who has looked closely at your finances, it is probably good advice. If not, someone, preferably a certified financial planner, needs to take an objective look at your finances to see if this is a good idea.

In most circumstances, the best thing to do is keep paying for what you already have. Buying a new car is almost never the most financially sound alternative.


#10

Keep the Mazda and dump the Beemer. That’s a no-brainer. Since you’re upside down on the BMW there is only one way in the world that I could see you getting out of this deal unscathed and even that depends upon just how upside down you are on this deal.

Detail the BMW out until it sparkles and list it for sale with an asking price equivalent to what the payoff is along with an any offers considered statement. If the upside down part is not too ridiculous you may get lucky and get that one buyer who is afficted with Gottahaveitnow Syndrome and will cough up the payoff amount or get close enough that you won’t be left holding too large of a bag.

Of course, if you’re 5-10 grand too deep in this car and an afflicted buyer does not appear then you’re probably screwed and will wind up having to eat a lot of money.


#11

i suppose part of the problem is we need some immediate cuts in our costs and selling the car ourself takes time and also leaves us with debt…although I really like the idea of then putting the insurance saving toward what we owe.

another idea has come up. sell the mazda in an effort to put it’s worth towards the bmw thereby reducing the bmw payments and not having to sell it.


#12

yes. because we owe money on the bmw. the mazda the becomes an asset.


#13

i like this plan. problem is i need to sell ASAP. so…anyone want to buy a beemer!? :wink:


#14

There’s no way to come out ahead on this. The only sensible answer is to sell the BMW keep the Mazda and use whatever means you have to to pay off the balance on the BMW loan. In order for the bank to approve the loan (free the lein) you’ll need to pay the difference up front, but perhaps a personal loan, a family loan, or even a bredit card (if it’s not too great an amount) just to get out of the BMW drain.

Thenn you need to sit down and realistically look at why you got upside down in the first place. I have a suspicion that you never really could afford the BMW. Apologies if I’m wrong. No offense is intended.


#15

Trading in both with one car upside down while convenient leaves a lot of fudging by a dealer to give you the worst possible deal. You also are in the largest part of the depreciation curve(steep) right now in the first few years of a cars life. It flattens as they get older. Doubling the steep depreciation with two cars will only get you in worst shape.

My advice keep your paid car and save up for the potential difference to get rid of your BMW selling it yourself. If the BMW is in good shape you can visit some dealers and see what they offer besides a self sale.


#16

I think the BMW will actually cost more to keep.
Over it’s lifespan ;
Much higher repair costs,
Uses more fuel,
and possibly higher insurance rates.


#17

is there a situation that you think we could count as “acceptable” while trading in the two cars with a dealer?

for example, what type of car should i be getting for this trade? KBB tells me the bmw is worth about 30,000 and the mazda is worth about 15,000.

what would make the trade bearable???


#18

Does anyone allow “take over payments” any more ?
Is it possible to sell the remainder of the contract plus some cash ? ( depending on how those numbers add up )
Then you’ll have
no BMW payments
no BMW insurance
accepting the loss of the payments you’ve already made in the effort to have no payments to make. ( like renting or leasing up to this point )


#19

I would advise skipping those KBB values. What they list and what a car actually brings in the real world may be vastly different and odds are that neither car will fetch those KBB values that you list.

You might check out eBay Motors and do a search for your models under the “Completed Listings” prompt. My gut feeling is that you will find neither car will bring the respective 30 and 15 figures unless the right buyer just happens to stumble by at the right time.

I understand your wanting to walk out of this deal with a car gone and owing nothing but that may or may not happen. The actual figures are somewhat personal so I can understand any hesitancy about throwing those out there but it’s very difficult to figure this without knowing those numbers; especially the upside down one on the BMW.

The BMW is also a much more high tech vehicle than the Mazda and this is going to translate to higher repair costs down the road. At this point my opinion is still that the Beemer needs to go.


#20

What interest rate are you paying on the BMW? Perhaps you could take out a loan against the Mazda, if the rate is lower than what your rate is now on the BMW. Pay off the BMW with the Mazda loan, then sell the BMW privately.