Financially Better to Sell Car or Keep

Mkh198 on 19/03/2017 - 22:11
Last edited 19/03/2017 - 22:57

My partner took out a loan on a new Nissan Navara almost 3 years ago on 1% finance. It is nearing the end of the 3 year loan and there will be an $18 000 balloon payment at the end. He doesn't have the money for the balloon repayment so will need to re-finance it. I believe that keeping a new car for many years (providing it continues to meet your needs) is financially the best option.

My partner is of the belief that if he sells it privately for $28000 he would make $10000 out the sale and be better off buying a new car again to avoid increasing costs as the car gets older (car currently has 80 000km on the clock). Furthermore he said at least he could get $28000 for it now but in 5 years time the car wouldn't be worth much.

He also has a $14000 personal loan at 10% interest and 2 x 0% balance transfers at ~ $2000 and $8000. Earns approx $70000 a year

What are everyone's thoughts?

Financial

Comments

  • altomic on 19/03/2017 - 22:24
    +15

    sell navara.

    then he should buy a car he can afford

  • [Deactivated] on 19/03/2017 - 23:10
    +2

    My thoughts are.
    Why would somebody earning 70,000 a year require a personal loan and a new nissan navara on finance?
    Has somebody in the family needed emergency medical/dental procedures or does he use the navara for work?

    Sell the car - Get a used car he can afford.

    Objectively if he does not use a ute for work, he'll be financially better off spending <20k on a car.

    • BensonP on 20/03/2017 - 08:49
      +4

      I earn 70k and financed a brand new car.

      It does make sense sometimes, as the car I purchased was very well priced, and the interest rate was lower than my home loan.

      And as the vehicle is more than 95% work use, the depreciation offsets my taxable income.

      Obviously people need to do their research before buying, but you CAN be better off financing.

      • [Deactivated] on 20/03/2017 - 15:02

        You use it for work. So its a perfectly good deal and makes a lot of sense. In your shoes I would do the same but for me, I would probably never have to use my vehicle for work so that factor is out for me.

  • Master Bates on 19/03/2017 - 23:32
    +1

    Sounds like your partner needs some no nonsense financial advice, I recommend Scott Pape

  • [Deactivated] on 19/03/2017 - 23:37
    +1

    Sell the car, pay the debt with 10% interest. Then, if really need a car buy a 10 yo car for 5k. It's not like it will cost him 10k on maintenance.

    I bought a car with 70km on it and have ever added petrol, water and oil in the past 4 years (with mandatory filters, etc. ).

    I think it's a misconception that new cars cost less. Depreciation is big for new cars.

    • spackbace on 20/03/2017 - 01:56

      Sell the car, pay the debt with 10% interest.

      Re-read the post… Selling the car pays the debt

      • chumlee on 20/03/2017 - 05:46

        Only if he gets $28k for it and only if he uses the $10k profit to pay of the personal loan at 10%

        • mskeggs on 20/03/2017 - 10:43

          But then he has no car at all.

    • mskeggs on 20/03/2017 - 10:43
      +2

      I think it's a misconception that new cars cost less.

      I don't think anybody, ever, has claimed this.

      • altomic on 20/03/2017 - 19:55
        +1

        I don't think anybody, ever, has claimed this.

        ever

        • [Deactivated] on 21/03/2017 - 00:09

          "I believe that keeping a new car for many years (providing it continues to meet your needs) is financially the best option."

  • FeRGan on 20/03/2017 - 01:48

    This is only semi relevant, but I wondered if anyone gets a mobile mechanic to look over a used car before buying.

  • Mkh198 on 20/03/2017 - 07:52

    Thanks everyone for the comments. A less then ideal situation I know. Initially when he bought the car 3 years ago he had no debt- but then a business loan for another business venture that didn't work out and losing his job resulted in things spiraling out of control.

    Is there a good article/website etc anyone can recommend about the depreciation costs of new cars vs keeping old cars that I can show him or help to explain to him?

    On a second note are there over the phone financial councellors in Australia?

    • altomic on 20/03/2017 - 20:10

      more importantly, what does he need a car for? does he need to carry a lot of stuff for work? does he need a navara? does he need a 4 x4 truck? could he get by with a regular sedan?

      the best way to check out values of cars is to look at what cars originally sold for new and then check carsales for what they sell for now.

      e.g. when I bought my current car it was worth $45,000 new (I got a deal on a near new model (6 months old and 6,000kms on the odometer) and paid $33,000). now the same model goes for between $29,000 and $36,000 -this is comparing the same particular model, similar KMs (mine has 52,000 - I searched 40-60,00), diesel, leather interior, etc.

      phone financial councellors will say pay off interest accruing debts first.

    • Euphemistic on 21/03/2017 - 07:26

      Lost job, too much debt: time to sell the car, and buy and older one. Cut down the debt as much as possible.

  • chumlee on 20/03/2017 - 08:02
    +7

    www.financialcounsellingaustralia.org.au

    Unless you are a recent uni grad starting a job at Westpac, it never makes financial sense to buy new over keeping a perfectly good car you bought new a few years ago

  • [Deactivated] on 20/03/2017 - 08:05

    Look up "RAA vehicle running costs" then find Nissan Nav. under 4x4 utility.

    It gives you ongoing costs but also the estimated car value all based on 5-year calculation. For 3-year car you may need to use other resources.

  • captobvious on 20/03/2017 - 10:56

    I'm assuming this is a D40 navara. It is unlikely he will get 28k, not in this current market.
    the profit so to speak would be better spent on a shitbox to get around in, save the money and then buy a better car. otherwise find 18k. pay it off, keep it.

  • Euphemistic on 20/03/2017 - 14:12
    +1

    Sell Vehicle. Buy cheap one. Pay off all debts as quickly as possible. Buy a $15k ute (if needed for work) or a $5k wagon, save some money for potential vehicle repairs.

    I bought a 2007 Navara for $17k, 130,000km on the clock. Looks good enough parked next to a 2014 model (same colour) in the carpark at work today and should run for another 100,000km with regular servicing. Taking my own advice I've probably spent too much as I don't need it for work, but I don't have a whole bunch of debts hanging over me… and I wanted a ute.

    On $70k there should be no reason to have a car loan, a personal loan at 10% and $10k worth of credit card debt. Stop buying shiny things, until your debt is a LOT smaller!

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