In 2022 my car (a 2010 Nissan Versa) kicked the bucket. The engine was broken and needed to be replaced. Rather than spending even MORE money on repairs (I had spent a few thousand or so on various other parts at this point), I decided to buy a newer car that would, presumably, require fewer repairs in the short term.
I bought a 2021 Honda HRV for ~$20,000 at 7.59% APR. I pay $414 a month and have $16k left on it. I bought this car under the worst possible circumstances:
- Used car prices were very high at this time
- Interest rates were high due to inflation
- I needed a car because my previous one had died so I didn’t have the luxury of time
My hope, at the time, was that inflation would be tamed and interest rates would eventually be lowered, wherein I could refinance the loan. I no longer believe this is a possibility within the next 4 years or so. I was also hoping to find something small and cheap like a Honda fit, but I learned that they had stopped producing them. An HRV seemed like a sensible kind of car given the modest physical needs of how I used a car at the time
So, here’s my question: Should I just sell my car for something older? Maybe like a 2015 or so? Or should I just stick with my current machine until it’s paid off and try to refinance after 2028?
If I could go back in time, I would’ve sold the Versa in 2020 or so, before I had spent a bunch of money on repairs. Hindsight is 20/20 though
Probably better to just keep it. Probably.
Interest rates haven’t changed much since 2021 (they may even be higher?). Unless your credit score has massively improved to potentially secure a lower rate on a new finance, it’s probably not going to be any better than the 7.59 you have now.
Do you think you could sell your HRV for $16,000 in a private sale? Even at that, you’d be breaking even with the payoff, and the replacement would be 100% out of pocket (or a new finance at whatever current rates are).
Do you have your eye on something already as a replacement? If so, how much would it cost? Do you think you could tack that amount (or part of it) on to the $16K sale price of your HRV to help pay for it?
Ultimately, those are only things you can answer. I’m more of a play it safe /devil you know person, so I would probably just stick with it but pay extra on principal to help pay it down quicker and reduce interest on the loan.