Advice on When to Sell

[Nikon]

Here is one for all you financial type folks out there.



Although I do financial analysis for a living I thought I'd ask any experts out there when it makes the best financial sense to sell my car and buy/lease a new one.



The following frames my situation:

1- The car in question is a 1995 Civic SI (canadian model, it is the coupe 1.6L VTEC model)

2 - Milage is currently 245,000KM (divide by 1.7 to get miles)

3 - I bought it new in '95 and it has been very reliable and I have maintained it diligently (anal might be a better word)

4 - Rust is developing on the rear wheel wells and is particularly bad at the bumper cover attachment points (will rust off shortly) Cost to repair is estimated at about $1,700CDN or more depending on what the body shop finds after stripping.

5 - the front rotors have hairline cracks and I'll want to replace those in the spring. I'm not sure on the costs yet.

6 - I recently replaced the intermediate exhaust pipe (between catalitic converter and muffler) and upon inspecting the catalitic converter I noticed it is about 20% plugged. I'll probably want to replace this in the summer (I told you I maintained this car diligently and am anal)

7 - I noticed some clicking in the right outer CV joint recently. It is mostly unnoticable but It will probably need replacing in the next year.



This tops my list of agging related concerns for this car. My question is at what point should I sell and move on to another car?



A couple of options I've considered:

1 - buy/lease a new car and keep the civic as a winter beater

2 - maintain car (above) and keep until the annual repairs exceed the market value of the car or an annual lease payment on a new one (not sure which measure is best here - suggestions?)

3 - repair bumper cover attachment point only, sell car and buy/lease a new one

4 - don't repair civic, sell and buy/lease new one



What is the most financially prudent move? For additional information I would be considering an Accura TSX or TL as a new car.



I appreciate any financial advice any of you experts are able to offer.

 

[Scott P]

I like option four. The little guy has served you well. Trade it in or sell it. It most likely will become more expensive to maintain as it gets older. You will need to fix the bumper soon for example.

 

[imported_BretFraz]

A few comments, if I may:



* This car is worth about $1500 as a trade, maybe less. You could retail it for closer to $3000 and probably get it if its as nice as you say it is. So, if you want to dump it, sell it yourself.



* There's always a ready market for used Hondas in good condition. As long as you price it right, I'm sure it will sell.



* The old rule of thumb re: cars needing repairs is: "It's always cheaper to fix the old car than to buy a new one".



* Brake rotors are cheap (about $35 each) and easy to replace. Slap on a set of new pads (about $40 a set), flush the old brake fluid, and you're good to go. A cheap fix.



* Unless the rust is structural and AB requires an annual safety inspection and the rust will cause your car to fail, I say skip it. If its not a safety issue then the rust is mostly cosmetic. Not worth the $$ to fix.



* A replacement cat is under $200 for your car. $50 or so to install. Another cheap repair.



* Reman'd axle assy's are about $60 per side. Two sides X labor = maybe $250-300 to fix the CV's.



* As cars age, owners need to budget montly for repairs. You're looking at $100-200/mo to be safe. I don't think you can lease a new TL for that.



In summary, you are better off financially to keep the Civic and fix it when it needs fixing. But a brand new car is always nice so if you can swing it, why not keep both? Use the Civic as your beater and the new car for commuting, etc.

 

[Nikon]

Great comments my responses follow:

A few comments, if I may:



* This car is worth about $1500 as a trade, maybe less. You could retail it for closer to $3000 and probably get it if its as nice as you say it is. So, if you want to dump it, sell it yourself.

I checked the Autotrader online to see what 95 Civic SI's of similar milage were being advertised for and the range was from $5,000-$6,500 (divide by 1.29 to get US dollars).

* There's always a ready market for used Hondas in good condition. As long as you price it right, I'm sure it will sell.

Agreed. An employee at the wand wash asks me every time I see him if I want to sell my car.

* The old rule of thumb re: cars needing repairs is: "It's always cheaper to fix the old car than to buy a new one".

Not always. If one spends $7,000 a year repairing a car then that is the equivalent of a $500 lease payment (note all of my figures are in Canadian so divide by 1.29 to get a rough idea of US equivalent)

* Brake rotors are cheap (about $35 each) and easy to replace. Slap on a set of new pads (about $40 a set), flush the old brake fluid, and you're good to go. A cheap fix.

Yes your right it is a very easy repair. These must be much cheaper in the US than here though because I priced rotors at about $150. Aftermarket might be cheeper.

* Unless the rust is structural and AB requires an annual safety inspection and the rust will cause your car to fail, I say skip it. If its not a safety issue then the rust is mostly cosmetic. Not worth the $$ to fix.

The rear bumper cover attachment points will rust off soon causing the front of the bumper cover to fall. Your right about there being no legal reason to fix this in AB but who wants to drive a car with the bumper flapping about?

* A replacement cat is under $200 for your car. $50 or so to install. Another cheap repair.

Again, pricing must be much better in the US because this is priced in the $400 range up here. Once again aftermarket is probably better.

* Reman'd axle assy's are about $60 per side. Two sides X labor = maybe $250-300 to fix the CV's.

Back to that pricing issue. CV joints are no problem for me to replace but an outer joint costs $200 up here. Aftermarket?

[* As cars age, owners need to budget montly for repairs. You're looking at $100-200/mo to be safe. I don't think you can lease a new TL for that.

Agreed.

In summary, you are better off financially to keep the Civic and fix it when it needs fixing. But a brand new car is always nice so if you can swing it, why not keep both? Use the Civic as your beater and the new car for commuting, etc.

This is my preferred option but I'm hung up on spending on repairs for the civic and making a car payment as well. I was thinking of running an NPV analysis of each of my options and seeing which one had the best financial outcome. I'll probably end up doing this at some point.



One thing I did forget to mention is that the Civic still has its original clutch and this is one repair I'm not set up to do in my garage. Clutch replacement at an independant place I know is about $500 (dealer charges $800).



Thanks for your great comments. It has certainly got me thinking about figuring out how to obtain lower cost parts and prioritizing what to fix and what not to fix.

 

[BradE]

I think we need to be realistic about some things here. Bret is pretty much spot on with his price values. In it's current condition, there is no way your Civic will bring $5,000 to $6,000. By every vehicle evaluation guide available, your car would rate in rough condition at best as it stands today. With older cars, appearance is everything. The rust problem is going to dramatically decrease the value. Sorry, just the facts.



Also, the comment about $7,000 per year work as an example for the car being cheaper to trade than repair. I've NEVER heard of anyone putting $7,000 a year into a car like a Civic, Camry, or any other "normal" daily driver for that matter. I know guys with 1950's Rolls-Royces that don't spend $7K a year on repairs. That observation is a bit far fetched IMO.



If you plan on keeping the car, you need to address the mechanical concerns first. Cosmetics like the bumper cover can be addressed later, but the mechanics needs to be taken care of ASAP. I'd suggest you shop around for parts, the prices you were quoted are high, even by Canadian standards.

 

[ntoddalbert]

7 grand ( even Cannuck bucks) wow, I have maintained small airplanes that I maintain for less than that.



You know the car, you took care of the car, you have tough winters, keep it as a beater. If its a true beater you should only fix what is safety rellated or mandated by MV law. Thats what "Beater" means..........

 

[Nikon]

ShowroomLincoln



Thanks for your reply. Good to know about the vehicle evaluation guides. The figures I quoted were for actual Autotrader adds for Ontario for 1995 Civic Si with mileage in the 200,000KM range. I don't know what they actually sell for so your input here is very informative.



Just for interest, here is an auto trader add from Ontario that I just looked at.



Year: 1995

Make: HONDA

Model: CIVIC

Model Detail: SI

Price: $6,500

Mileage: 220,000 km

Date: 1/11/04

Ad Type: Private

Comment: As is. Manual, red ext., grey int., air, AM/FM cass., moon roof, timing belt & water pump replaced in Nov. '03. 220,000 km. $6500. (905)469-8136. (CJHVHR)





As for the prices on the parts I'm not sure what your experience in Canadian auto parts pricing for Honda's is but that is what the dealer has quoted me. I haven't checked on aftermarket components so that is where the difference could be.



My comment on the $7,000 per year for maintenance was a bit flippant of me. My point here is that if an engine or transmission failure were to occur then that could be more expensive than is worthwhile and buying another car might be the best option. I should have clarified myself sorry.



Thanks for the comments these are really helpful.[/I]

 

[Nikon]

7 grand ( even Cannuck bucks) wow, I have maintained small airplanes that I maintain for less than that.



You know the car, you took care of the car, you have tough winters, keep it as a beater. If its a true beater you should only fix what is safety rellated or mandated by MV law. Thats what "Beater" means..........

My explanation (and repentance) for the $7K remark apears above.

I guess I let my over obsesiveness with perfection get the better of me at times so I guess the beater comment isn't quite right either. I guess I would still want my beater to look relatively good and be nice to drive. I'll try to post some photos this comming week so you have a better Idea of what I'm talking about.



In away I suppose I'm trying to alternately talk myself into and out of making a new purchase. Always a tough psychological dilema.



Again great feedback. Thanks!

 

[JustinR32]

Nikon,



That car is listed for $6500... and is still for sale.



If you like the car, fix it and keep it. If you are tired of the car, sell it and get another one.



It's not always about the money. In fact, it almost NEVER is. Buying a new car isn't a financial decision, it's an emotional one.



Tom

car business for 20 years

 

[Nikon]

what this highlights for me is that the car isn't worth much now and if I keep the car for much longer it won't be worth anything, at which point the annual maintenance spend will be higher than the sale price.



I have always repaired and maintained this car flawlessly. Any little thing that was not right I'd fix or replace it. It still runs great, has no squeeks or rattles, suspension is tight , interior is not worn, and I still like the way it drives. So there is a part of me that wants to continue this flawless maintenance practice with the items I've mentioned above and maybe even indulge in some suspension modifications and new paint.



Then I come back to earth, realize I'm not in my 20's anymore and that spending money like this may not be the best idea I'd be better off getting something new. I really like the new Acura's and BMW's and I would like having something with no rock chips, more power, better handling, and more luxury.



Good point about this being an emotional decision because what I'm experiencing is very much based on the enjoyment of car ownership. For instance my dilema with what to do with my current car is based on how much I like it, but because of the rust (this is my primary concern) It doesn't look as great to me and I want to repair it so that I can continue the pride of ownership I've had for these past 9 years.



Your reply has been very illuminating, as have all the other comments. These types of discussions are good for helping to filter my thoughts.

 

[Nikon]

Thanks everyone for your excellent commentary. I have done some looking and I've found better prices on parts in line with what Bretfraz and Showroomlincoln had quoted.



I've also decided, with the aid of your comments, that I'm not going to fix the rust and I'll look for a new ride come spring. I've already driven the Accura TSX and TL and I think I'll be choosing one of them.



Again, thanks for all the great input!!

 

[imported_garyo]

Deciding to keep, sell or both is only a decision you can make. However, if the $$$ factor is a driving part of your decision and you do decide to replace and/or get another vehicle, why buy new? The used car market is flooded with good quality low mileage cars that come off leases or people trade them in to get the latest and greatest. There are some fantastic buys on 2 year old cars with the balance of the manufacturer warranty remaining. Additionally the now common place existence of “Certified Pre-Owned� programs with extended manufacturer warranties really make used cars a wise financial decision. Personally I am done with buying new cars (unless the supply of good used cars is greatly diminished which seems unlikely with currently buying and selling trends).



Lets face it Cars are a horrible financial investment (except for some rare collector cars). If you are going to consider the value (or lack thereof) of your Honda in a couple of years you should also factor in the HUGE depreciation hit you take when you drive a new car off the lot. Your civic has most likely hit the bottom of its depreciation curve. It is not going to go down much further in value. Look at civics 5-6 years older than yours and you will find the ones in good conditions are not that much less expensive than yours. Just more food for thought.

 

[imported_chpsk8]

Here's the US value taken from www.nadaguides.com This is if you sold it, trade in is less...



1995 Honda Civic-4 Cyl.

Hatchback 3D Si

145,000 miles



Low Retail Average Retail High Retail

Base Price $4,075 $5,125 $5,850



Mileage Adjustment

145,000 miles subtract: ($1,000) ($1,000) ($1,000)



Certification and Extended Warranties

Total Price $3,075 $4,125 $4,850

Average Retail Price represents a clean vehicle in good condition and is assumed to have a Clean Title History. Looking to purchase a new car? Get a free quote from a dealer near you. Obtain used car financing rates as low as 4.85% APR for 12-36 months. Selling your vehicle? Print a checklist and the required DMV Title & Registration forms to complete your sale. Sell your car through AutoTrader.com, and get the most money for your vehicle.

Other Vehicle Information

Model Number: EH338

Weight: 2390

Value Explanations

The free consumer values on NADAguides.com are based on the Consumer edition of the N.A.D.A. Official Used Car Guide ®, and should not be utilized for industry purposes. The consumer values may vary from the N.A.D.A. Official Used Car Guide values presented to you by insurance companies, banks, credit unions, government agencies and car dealers due to vehicle condition, regional market differences and frequency of updates



Low Retail Value

A low retail vehicle may have extensively visible wear and tear. The body may have dents and other blemishes. The buyer can expect to invest in bodywork and/or mechanical work. It is likely that the seats and carpets will have visible wear. The vehicle should be able to pass local inspection standards and be in safe running condition. Low retail vehicles usually are not found on dealer lots.

Average Retail Value

An average retail vehicle should be clean and without glaring defects. Tires and glass should be in good condition. The paint should match and have a good finish. The interior should have wear in relation to the age of the vehicle. Carpet and seat upholstery should be clean, and all power options should work. The mileage should be within the acceptable range for the model year.



An Average Retail vehicle on a dealer lot may include a limited warranty or guarantee, and possibly a current safety and/or emission inspection (where applicable).

High Retail Value

A high retail vehicle should be in flawless condition. All power equipment should be functional. The paint should match and have a high gloss finish. The carpet and seat upholstery should be clean and have minimal wear. The engine should start quickly and run smoothly. The tires should be like new with a spare and jack. The mileage should be significantly below the acceptable mileage range for the model year.



A high retail vehicle on a dealer lot should be fully reconditioned and is likely to include a warranty, guarantee or manufacturer certification and current safety and/or emission inspection (where applicable).

 

[txz28]

The best economic move is to probably keep the car and fix it.



When it is time to sell is ideally the day before it leaves you stranded on the side of the road. Seriously, you should dump it when it becomes a hastle. When you cannot stand taking it to the shop, sell. Rarely is it the money. It is emotional decision. Base it on when you do not want to face the car one more day or when you are too afraid to drive the car because it might break.

 

[LightngSVT]

Do what will make you the happiest in the long run. For me that would be to buy the new car. If this helps any, I bought a 1991 Civic Si back in October for $1400 US. I had to add "cat back" exhaust and a tune up (about $250). The car needs brakes (possible master cylinder) , possible mid pipe and is starting to use some oil. But the car runs great and is very reliable and is still in good shape. It does have the very typical Honda rust around the quaters. So this may give you an idea of what your car will be worth in a few years.

 

[Nikon]

LightngSVT



Thanks for the perspective and the info on your new civic. I guess when a car is driven daily for 9 years, like mine has, I need to expect that these repairs are inevitable.

 

[SoTex]

DON'T LEASE!!!

 

[Nikon]

DON'T LEASE!!!

There's a rule around leasing isn't there? I think I remember something like "if your going to keep something for 3-5 years lease otherwise buy" I think this was in reference to industial equipment but does it translate to autos as well? I know that by the time one has full ownership of a product leasing is almost always more costly than purchase finance. Any other advice?

 

[SoTex]

www.daveramsey.com



www.totalmoneymakeover.com

 

[reevis]

There's a rule around leasing isn't there? I think I remember something like "if your going to keep something for 3-5 years lease otherwise buy" I think this was in reference to industial equipment but does it translate to autos as well? I know that by the time one has full ownership of a product leasing is almost always more costly than purchase finance. Any other advice?

I've been researching this recently and everything I find pretty much says no to leasing (or buying a new car every 3-4 years for that matter). It appears the best way to purchase a car and get the most bang for your buck is to either:



Buy new and keep the car for at least 7 years (preferably longer).



or



Buy a used car 3~4 yrs old and keep it for at least 4 years (preferably longer).



In either situation it appears that it's most beneficial to the customer to have a vehicle until it's roughly 8-10 years old, but the longer you keep it...the better.



The one thing to keep in mind is that a car's value depreciates at faster rates in the earlier years. In some cases, just after 4 years of ownership the car's value can be close to 50% of what it was when purchased.



eg. car purchased at 50K in 2000 has a book value of 28K in 2004. That's a 44% drop from the initial value. However, from years 2004~2010 the car may drop only another 20% over six years. So the first 4 years averaged an 11% decline per year while the last 6 average a 3.3%. (These numbers are just ballparks.) But if you look at the average decline over the ten year period...it's 6.4%.



I guess the long and the short of it is...keep a car as long as you can...whether you buy new or used.



It however, appears from a financial standpoint...buying used is the *best* option...since the previous owner(s) took the biggest hit in depreciation.



http://www.fool.com has some good articles about this stuff.