SUV dilemma

[Nitin]

I'm right now in a situation where I'd like to get an SUV, and 'get rid' of one of my cars.This is due to the drop in 'value' within the past 1.5-2 years of owning the car.

Now for all the details.
1) I bought my 2008 Mitsubishi Lancer in Dec' 07. Its done 30,000 miles to date. Bought for almost $26000 ( car cost $20,000 & I had to roll over $6000 from a trade in). Today's value of the car indicates about $14,000. Thats more than $6,000 in depreciation over 1.5-2 years.

$10,000 has been paid for, and a balance of almost $15,000 exists. (balance more less equals the current value of the car).

2) We'r on the family way,and I'm keen on getting my wife an SUV. Right not the options are a pre-owned certified BMW X3 or X5, as first options.

3)My 2004 Mazda 3 has been paid for,and I'd prefer to keep this a while more before I dispose it off. I'm happy with just 1 car payment,and so selling this car off isn't an option.

4) I've been thinking of selling my bike now, and if I do then about $4000 could go towards a down-payment for the next car.


Here's where I need some suggestions.

A) If I sell my car back to Mitsubishi motors, I'll get about $14K-15k for the car, which nullifies the loan I have. I basically forget about the $10 K that i have paid. I then look for a good pre-owned certified SUV and start payments all over again.

B)Having lost $6K in less than 2 years, I believe that I'll probably get only about $3-5k if I try to sell the car once I finish the loan ( in 2 years from now).
Is it worth keeping this car till then, and getting nothing?
Or should I get rid of the car ASAP, and get something that will hold its value even after 5 years?

C) I am currently paying $500 a month for the Lancer. I reckon, if I pay so much I could much rather get a premium brand for the same monthly cost. {of course, I hadn't really thought about the premium fuel requirements until 10 seconds ago!}.

There are a lot of things happening at the same time, and I feel I could use some help from my fellow BHPians. If there's anyone who's had to deal with something like this,please give me some pointers.

Thanks in advance..

Nitin

[Ym-enjn]

You already are clear in your thoughts. I think what you are thinking is correct and you should go ahead with that. Just don't increase the EMI amount.

[Nitin]

Thanks for the input,Ym-enjn.

I believe this is my aim: Sell the Lancer before the value drops even further; stay at the same monthly payments with a new vehicle; get an SUV; get a better brand now, so I'm assured of retaining the vehicle's value over a 4-5 year time period.

I do have some more homework to do though,such as get insurance rates on an SUV such as the X3, and also figure out how much the average annual costs would be on the gas consumption.

[Mpower]

Car depreciates the most in its first year. You should'nt lose much next year.

But then again, a shiny new SUV can be tempting. The new Tiguan is quite a looker.

[Nitin]

If its going to be an SUV next, I'd definitely prefer a pre-owned certified.Only because I'd much rather not be the one dealing with the '1st year and the depreciation' of a new vehicle. Had 2 new vehicles so far,and I've begun to appreciate the value of a used car with the extended warranty options.
For example, a friend of mine got a 2005/2006 BMW 535i for about $20K cheaper than the 2008, and the one he got had just about 20k miles on it. Looked almost new too.

I've looked up some listings for a few 2006 X3s, and they all cost about $20-25K, with 30-48K miles on them, on an average. Finance that at about 5-6% APR,and I should be around the $500/month mark,IMO.

[aah78]

Originally Posted by Nitin

I've looked up some listings for a few 2006 X3s, and they all cost about $20-25K, with 30-48K miles on them, on an average. Finance that at about 5-6% APR,and I should be around the $500/month mark,IMO.

If you plan to get a pre-owned X3/X5, try to get a Certified Pre Owned, or atleast one with an existing (or extended) warranty.

BMW has a full 4 year / 50,000 mile warranty (can be extended to 6 / 100,000 or 8 / 120,000) for a new car - after that you're pretty much on your own. Service will get expensive, especially if parts fail.

[Nitin]

Originally Posted by aah78

If you plan to get a pre-owned X3/X5, try to get a Certified Pre Owned, or atleast one with an existing (or extended) warranty.

BMW has a full 4 year / 50,000 mile warranty (can be extended to 6 / 100,000 or 8 / 120,000) for a new car - after that you're pretty much on your own. Service will get expensive, especially if parts fail.

Exactly. Thats what I intend getting. If its not a pre-owned certified, I wouldn't quite want to go in for a brand such as BMW. And some of the pre-owned certified cars might qualify for a 0.9% APR (although a minimum value of the car, such as $30K might be necessary). Will get more details.

[devarshi84]

as mentioned before you have already lost most of the value you can lose on your lancer. But I know that Mazda 3 is anyday a better car. It's has outsold the civic in Canada a few times.

You mentioned that lancer costs you a monthly $500, how much does the Mazda3 cost? How much does the bike cost? How much will the new SUV potentially cost?

BMW's are also expensive to maintain. To buy or not to buy is your call but after you answer these questions, you will be in the clear.

best of luck.

[the VTEC guy]

getting certified pre-owned cars is really a great option for you. specially if you are looking for premium brands. look at the 1st year depreciation you will save on the beemers or mercs. most of the dealers will also offer 100000 miles 7 year warranty at around 1500$ whatever the current mileage may be.

[Nitin]

Originally Posted by devarshi84

You mentioned that lancer costs you a monthly $500, how much does the Mazda3 cost? How much does the bike cost? How much will the new SUV potentially cost?

I'm done paying for the Mazda 3 and the bike. So I intend selling the bike now, and using that money towards a down payment. Since the 3's been paid for, I'd like to hold onto it for a while more and then look at getting something else later.

I actually need to pay only $400 for the Lancer, but I make accelerated payments. Now I figure, I'd much rather pay the $500 and get more for the money.

[devarshi84]

I told you, you will get your answer. Remember Mazda 3 and Mitsubishi lancer are both know for their fun to drive factor. And while Mazda 3 is a hot seller, your lancer enjoys the exclusivity factor.

We have been contemplating getting a new car since 2006. We are yet to take the step coz we never felt the need to replace the old car.

PS: I believe that since a car is a depriciating asset, Money should not be invested in it unless the owned asset costs more than the depriciating value of the new vehicle.

[cooldude1988765]

Pick up a certified lx470, you wont regret it.
SInce it is essentially a toyota it is extremely reliable and you can service it at toyota prices. (lx470 shares more than 90% of its parts with the landcruiser)
My uncle bought a pre owned 2000 lx470 in 2002 with 18k miles on the clock. After having done 150000 miles it is still as good as ever. Absolutely 0 problems. Did i mention he uses it off road too.

Check this

[Nitin]

At this point, I guess i'll have to do some more homework and then figure out if its worth giving the Lancer back.

This is what the guy at the dealership told me- A brand new (2009, I guess) Lancer ES with the Rockford Fosgate package/DVD etc will cost about $16,000-17,000 as of today. 1.5 years ago, I paid almost $20K for the same package, that being the 2008 model. So for all practical purposes, if I get $14k-15K for my car now, its probably a good deal.
What I've paid for will be gone, and I recover nothing. But then,the balance $15K on the loan will be over & done with.

[Ym-enjn]

See if you get $15000 for old lancer and $4000 from your bike, will you get the SUV of your shoice in that amount. If not do you have extra amount to pay the difference?

[Nitin]

Originally Posted by Ym-enjn

See if you get $15000 for old lancer and $4000 from your bike, will you get the SUV of your shoice in that amount. If not do you have extra amount to pay the difference?

When I say that I'll get $15,000 , I mean that the dealership will buy back the car for that amount, and hence nullify the remaining balance on the car (which is close to $15,000). My total loan amount was $26,000 and I've paid up close to $10K. So basically the remaining balance is taken care of by the dealership as they will pay the $15,000 to Mitsubishi.

I don't get the $15K in hand. I will have to start a new loan on another vehicle when I find a suitable one. Does this make sense?