Let me clarify… I have a 2010 Civic EX now, and expect to get 3-4k out of that as a trade in (based on what I owe) and then toss 4k on top of that for a down payment. The car, I expect, will cost mid-20s.
26/35 FWD stick
26/32 FWD auto
25/31 AWD auto
The CX-7 has been around a few years, so you should be able to find a used AWD version in your price range. Just make sure they’ve been using synthetic oil and premium fuel; it’s got a turbo 4cyl. If they haven’t, run away.
Well, you asked what I would do and the answer is still the same. I’d invest the money in a money market fund, put it into a home or home improvements, etc. but not on a depreciating item such as a car; especially when a 2010 model Honda is currently in the mix.
With the smoke and mirrors involved in car sales transactions it can often be near impossible to determine what you’re really being allowed as trade and so on.
If a higher end car is important enough to sink your current car and windfall into then proceed on with it and make sure any numbers a dealer gives you add up before you sign off on anythng.
I’m just saying that dropping down a year or so from what you currently have into a vehicle that may have a shaky history is not something I personally would do.
I’d put a bit of money in the Civic (new audio system for example) and drive it for another 5 years. Maybe put a premium set of quiet-riding tires on it (I know Civics can be noisy).
Right now you’re in a great position with a low cost car, I wouldn’t turn it into a high-cost situation by selling early.
Judd and his money shall soon be parted.
“A Judd and his money” 
I think I am going to pass on the upgrade. Based on discussions I have had IRL, with you guys and others, I am going to hold onto the civic for a while longer. Thanks for the feedback.
Judd
I’d support sticking with the '10 Civic EX. I have an '03 EX that is simply been a great car and I expect to keep it for at least 10 more years and up to and over 200K miles.
As for your windfall you could pay down any credit card debt until you have zero balances on those high interest debt. If you hare already at zero you could pay off the current car loan unless it is one of those 0.9% promotional rates. The stock market might pay off with some decent gains if you are willing to risk it.
Any transaction involving a car is a “cost” either in fees, interest, or depreciation. Paying off debt is the best thing to do first. Then investing is next. Play your cards right and you will be in a better position to get your next car, perhaps without needing any financing to swing the deal.
To counter saving the money if you can spare it, I will say this: You live only once. Do it right the first time.
@Who Who? What do you think “doing it right” would mean? A different vehicle?
@UncleTurbo - paying off debt before investing isn’t always a wise idea.
Case in point - my mortgage is 3.25%. When you consider that the mortgage is tax deductible, I need to return 2.47% annually after tax to make investing a better return than paying off the debt early (I agree that the balance on the mortgage should be dropping continually with a reasonable term). If I can get 5% APY on a taxable bond with a similar maturity date as the mortgage (remarkably not hard to do), then I’m yielding 3.48% after tax. I’m better off investing in a safe investment and staying liquid than I am in paying off the mortgage early.
While you’re right as far as the numbers go, many more people end up in trouble financially from too much debt than too little. Remember that paying off a loan has a guaranteed rate of return, unlike most investments.
That said, I have a mortgage. For now.
Absolutely pay off any credit card loans, I’d get rid of all loans except mortgage.
As far as I can tell your numbers are accurate, however the landscape right now is littered with people who’ve lost their jobs and lost their houses that would not have if they’d paid their mortgages off.
I have a mortgage for a different reason. A company bankruptcy and a divorce. There went my former house. However, if I’d had no mortgage I’d be able to retire for life right now.
IMHO having your house paid for is the single biggest and most important thing most working people can do.
eraser1998: Where did I say anything about paying off a mortgage? I said credit card debt. Perhaps the OP doesn’t have any of that which is great, but most folks are carrying some and sometimes a lot of credit card debt at 9.0% and higher. I also said not to pay off the car loan if it was a promotional low interest rate.
Your point about not paying off the 3.25% mortgage is valid, just not what I was advocating at all.
Quote from judd: What do you think “doing it right” would mean? A different vehicle? Unquote
Yes, if you can afford it and if it will make you happy.
“…if you can afford it and if it will make you happy.”
The car by itself can make you happy for a few weeks. Money only buys happiness if it leads to shared experiences. That can certainly be the case with cars, but not without people to share the experience.
With gas prices high and going higher, I’d like to have a Civic. BMW and Lexus probably require high octane premium gas.
Snow tires are probably more important than AWD in ice/snow conditions.
Also, Mr. judd, you might want to check with Mr. jtsanders before you dare to have a little bit of fun but I don’t think so.
When in doubt, to heck with the money. Go for it!
You guys are like a devil on one shoulder and an angel on the other trying to give advice.
Just call me Mr. Buzzkill. I wasn’t advising against buying the car, just saying that without, say, fellow BMW drivers to share driving experiences with, it will lose it’s shine quicker. With friends to enjoy the experience with, the thrill could last forever. Have you seen the TV show Car Crazy? Everyone interviewed enjoys their cars, but their rides are a focal point for enjoyment with others. Many of the restorations are family affairs and those interviewed say they enjoy the cars all the more because of the people they share the experience with. The host knows this from his own experience and is always anxious to point it out. He highlights a letter every show and it always involves people enjoying their cars with others; especially family members.
mountainbike -
Note that I’m only advocating conservative investments here, like investment grade corporate bonds. The failure rates of these are very low. Your only real risk is if interest rates rise such that the market value of your bonds drops below your purchase price. If you lose a job or hit another financial hardship, you can still sell your bonds and use the money to make mortgage payments. If that happened to me right now, I would have a net rate of return of about 11% per year on these bonds, simply because the values have increased. I have no intention of sellling, though, as the yield to maturity is still high enough that finding a replacement investment (safe with better rate of return) isn’t easy, and they yield well over my mortgage rate. On my 15 year mortgage, with the yields I’ve been buying at (around 5%), the spread should pay out near $40,000 over the life of the loan.