Trading a car to lower debt?

So my daily driver is currently a 2018 Subaru Crosstrek with a manual. I have put 18,300 miles on it so far this year and will have 20k ish miles on it at 1 year of ownership. Now that I have the Land Cruiser I don't need something with awd since I only need it like 5-6 times a year. My commute is 75 miles a day. 

I owe $21k on it currently (loan started at $26.5 since I had to roll negative from an out of warranty 1.0 fiesta that was exhibiting head gasket/cracked head symptoms that 1.0s are notorious for)

This is my only debt.

I am considering trading it in on something in the $13k and lower range

Looking at a few 17-18 Fiesta 1.6 hatches since that drivetrain is bulletproof. And they have like 3k worth of incentives on them and I did enjoy my 1.0 fiesta.

Trading it on a fiesta I would be debt free in 18 months or less.

What is the value of the Crosstrek? Meaning, how far above or below water are you on the loan? 

Not a bad idea, but just make sure you get out your pen and paper/calculator/Microsoft Excel and actually figure out what you're doing money wise. 

FWIW, I'm doing something similar. We just got a big loan on a new minivan for the wife, so I'm going from 2 cars worth ~$8000 combined to one car worth $2-5k. Wife's previous car (which is for sale) is worth about $2k.

In reply to mtn :

I believe I am positive in the crosstrek, I'm either even or positive. Msrp on it is $24350, invoice is like $22700. I can't find trade in pricing on a car this new. Kbb doesn't list it, nada doesn't either.

You will not get msrp or invoice prices when you trade in a USED car with 18k miles on it.  

How much do the books say the trade-in value of a 2017 Crosstreks?  That is closer to what you will get.  

In reply to John Welsh :

$19.5-22k

Somewhat hard since the 18 is significantly better than the 17.

Sorry to say but you are upside down on it. Theres no way around it. I have a 2017 Elantra sport. it was about 22k, currently i have 16k on it and trade in value is 13-15k. different vehicle I know but same principle.

I'd have to agree with John, especially as you're looking at a "high mileage" trade in.

What's the motivation for getting rid of the Subaru other than trading a larger loan for a smaller loan? Yes, I get the bit about being debt free sooner, but IMHO you're doing your trade in at the worst possible time on your car's deprecation curve.

If you're able to pay off the Fiest in, say, 18 months, you might be in a position to pay off the Subaru in maybe 24-28 months? If you then keep the Subaru for another 4-5 years you're financially in a much better position than realising the current paper loss on the Crosstrek's value.

In reply to MrChaos : Selling used cars is how people in the car sales business make a profit.  Selling new cars, few if any customers leave much meat on the bones.  New car costs are well known! Most people have overly high expectations of trade in values.  

The point is your trade in won’t be worth what you think it’s worth and that car you buy is at least 25% pure profit.  

The car you buy is sure to have some delayed maintenance.  That will catch up quickly in the form of unexpected repair bills.  

You’re swimming with sharks while  bleeding. hope your plans don’t wind up costing you an arm and a leg.  

In reply to frenchyd :

Eh? The way I read MrChaos' post is that he's looking at new Fiestas that have been cluttering up the dealers' lots for a year or two.

Take it to Carmax, see what they will give you, see how close that is to paying off the loan balance, and go from there.  Thats the easy button!

The Crosstrek isn't really good at anything. It's slow, has so so gas mileage (I average 29.6mpg), and boring.  All it has going for it is AWD and Android Auto/Apple CarPlay. I dont need awd anymore and I only needed it like 3 times this year/last year, I dont trust the long term reliability of the FA20 and I am wanting to trade it while there is still a big demand for the 2018 and I don't really feel like putting 20k+ miles a year on a $24k car when a $13k car can do the same thing with better gas mileage.

Yea hate to agree with everyone else but you'll be swallowing some negative on that Subaru. Paying you anywhere close to MSRP for it means the dealer has to convince someone to pay at or over MSRP on a used vehicle. You may still come out ahead debt wise but you're gonna be upside down on it. 

Yes, if I had to guess on trade-in, I'd wager you're going to eat at least $3k.

If you're struggling with the value of a rapidly depreciating asset, I don't see how buying another rapidly depreciating asset really helps.

If you're actually above water on the Subi (you need to find out), sell it outright, payoff the loan, and buy a $4k Prius or something. Use depreciation to your advantage instead of having it work against you.

The only way I see this happening is if you want out of the car, but not really as a debt lowering proposition. 

13k fiesta + 1k taxes and fees + 3k to get out of the subaru = 17k 

you are saving 20% if that. 

Also, the difference between 30mpg vs let’s say 40mpg on the new car is nowhere near as much as 20 vs 30mpg ... the savings at that point are very small.

Keep the Subaru. 

If the new fiestas are just lingering on the lot, imagine the depreciation on it.  If you could pay that off in 18 months then you can pay most of the Subaru off and more than likely be above water on it at that point.  Then you can consider selling it, paying off the loan, and taking the extra cash and buying a used car outright.

I went to www.fueleconomy.gov and used their Compare Feature.

'18 Crosstrek manual: annual fuel cost for 15k miles per year = $1,750

'18 Fiesta manual:  annual fuel cost for 15k miles per year = $1,450

Your potential savings could be $300 for the whole year!  Or, $25 per month.   Over 52 weeks that's $5.77 per week or about the price of one combo meal.  

Keep the Subaru. 

Maybe sell the Land Cruiser that you state you need the 4x4 about 5-6 times per year.   

Slippery said:

The only way I see this happening is if you want out of the car, but not really as a debt lowering proposition. 

13k fiesta + 1k taxes and fees + 3k to get out of the subaru = 17k 

you are saving 20% if that. 

Also, the difference between 30mpg vs let’s say 40mpg on the new car is nowhere near as much as 20 vs 30mpg ... the savings at that point are very small.

Keep the Subaru. 

Yeah, all that work to get the car note $4k lower doesn't really make any sense. 

You could probably save more buy selling the Subaru and driving the Land Cruiser. 

And I'm with John, why did you buy ANOTHER vehicle to use 5 times per year? That seems a little off to me.

z31maniac said:

 

Yeah, all that work to get the car note $4k lower doesn't really make any sense. 

You could probably save more buy selling the Subaru and driving the Land Cruiser. 

 

One of the few situations where you probably could not. Assuming 55% city, and using 18k miles a year and whatever gas prices Fueleconomy.gov has right now it is a $2000k difference in fuel costs annually. 

mtn said:

z31maniac said:

 

Yeah, all that work to get the car note $4k lower doesn't really make any sense. 

You could probably save more buy selling the Subaru and driving the Land Cruiser. 

 

One of the few situations where you probably could not. Assuming 55% city, and using 18k miles a year and whatever gas prices Fueleconomy.gov has right now it is a $2000k difference in fuel costs annually. 

 

2thousand thousand is how much? I'm not good at math. 

If you're saying it's a $2k per year more in fuel, that's an additional $170/month than current fuel costs, which I'm dropping the payment and insurance on car makes sense. 

Unless the payment/insurance on the Subaru is less than that $170/month difference in fuel costs.

Or maybe I misunderstood your example, I've been working since 5am today. 

z31maniac said:

mtn said:

z31maniac said:

 

Yeah, all that work to get the car note $4k lower doesn't really make any sense. 

You could probably save more buy selling the Subaru and driving the Land Cruiser. 

 

One of the few situations where you probably could not. Assuming 55% city, and using 18k miles a year and whatever gas prices Fueleconomy.gov has right now it is a $2000k difference in fuel costs annually. 

 

2thousand thousand is how much? I'm not good at math. 

If you're saying it's a $2k per year more in fuel, that's an additional $170/month than current fuel costs, which I'm dropping the payment and insurance on car makes sense. 

Unless the payment/insurance on the Subaru is less than that $170/month difference in fuel costs.

 

Or maybe I misunderstood your example, I've been working since 5am today. 

I think I misunderstood what example I was trying to make, but my point is that it would be about $4k a  year in fuel costs if he drives the Land Cruiser. Probably not a good move long term. 

mtn said:

z31maniac said:

mtn said:

z31maniac said:

 

Yeah, all that work to get the car note $4k lower doesn't really make any sense. 

You could probably save more buy selling the Subaru and driving the Land Cruiser. 

 

One of the few situations where you probably could not. Assuming 55% city, and using 18k miles a year and whatever gas prices Fueleconomy.gov has right now it is a $2000k difference in fuel costs annually. 

 

2thousand thousand is how much? I'm not good at math. 

If you're saying it's a $2k per year more in fuel, that's an additional $170/month than current fuel costs, which I'm dropping the payment and insurance on car makes sense. 

Unless the payment/insurance on the Subaru is less than that $170/month difference in fuel costs.

 

Or maybe I misunderstood your example, I've been working since 5am today. 

I think I misunderstood what example I was trying to make, but my point is that it would be about $4k a  year in fuel costs if he drives the Land Cruiser. Probably not a good move long term. 

I'm assuming the Land Rover is paid for.

So $4k per year in fuel, is still cheaper than $1750 in fuel + I'm going to assume around $500/month in payment in insurance. 

So that's still north of $3k per year in savings. 

But this is all speculation without hard numbers, hopefully our examples give OP the info he needs to make a decision.

4K lower note over 5 years at modern interest rates is what 71.00$ a month. Of that 60 of it is to principal.

If you NEED the lower payment just pay it down to what it is worth in cash and refi the rest at the lower rate and stretch the payment out. I hate that advice on a deep and personal level but it is the easy button you want and frankly with rates as low as they are it will only cost you a 100$-200$ in the long run on interest and you get some breathing room int the short term.