The wife's 2006 MCS (Jan '06 prod date) has 49,000 on it and with the prices of used MINIs these days, we're thinking of upgrading her to a 2008. The question I have is:

How do I make the decision to sell?

Normally we drive cars until the wheels fall off. The last two cars we got rid of by donating to charity, and I've got a third sitting in the drive that would also qualify for that solution. So I've never done this kind of a calculation. What formula(s) should I use to determine if I should do this?

I know I'm not going to make money here. I'm just thinking I can minimize the damage and not go upside-down. The reason we are considering upgrading is that my wife, as part of her job, puts the miles on. In the last 15 months, she's put on 30K+. We bought this MINI as a dealer loaner car when her last MINI was totaled and I didn't want to get into a second gen that just started production. We put a lot down on it and currently only owe about $15K. It's a pretty loaded MCS, auto, leather, conv. pkg., some chrome, no mods. It can be detailed up to look pretty good.

 

Unless it has serious paint issues, it can be detailed up to look as good as new !

Tough decision. You're certainly not upside down on the car as it's value will be well over $15K.

Only you can make that decision... we don't know your financial condition or any other personal factors that come into play.

And I don't know there's any magical formula to help you decide if it's financially smart. You have to decide how much you'd put down, how much your payments would be, if you do finance any part of the cost, etc. From there, it should be a fairly simple decision for you.

 

It sounds like it's been a good car for you and remains in good condition. ... a keeper!

 

As you know there is a run on these things.
You could put it for sale for crazy money, like
what you paid for it, maybe somebody will bite.

 

As I wrote up the OP & had to look up the loan balance, it started me thinking. If I can get $20K, that'd leave me with $5K in my pocket (we originally put $10K down). I should be able to put her into a new 2008 that she just configed for ~$32,500 minus $10K equals new loan of $22,500. Payments from PenFed should be about what we pay now. To my (extremely inexperienced) way of thinking - she would have gotten this 30,000 miles for about $5000 of depreciation (plus expenses, less tax deduct, ect).

And that reminds me - while we end up eating the expenses, we do deduct her business mileage at tax time. That probably tosses another factor into the equation.

 

Only you can answer this question as you know your financial situation.

Like you, I drive my cars to the wheels fall off. I also always pay cash ...I don't do car payments. So, I can't help you figure this out, but wish you luck.

One thing I can say for sure ..there's nothing quite as much fun as a new MINI.

So there you have it ...I've been no help at all.

Dean.

 

tough one. .. there is also the option of selling yours private and buying a demo with some miles already but at a significant reduction in price ( if you find one you like ) and maybe not be that bad off.

Better still, let her keep it and order yourself a new one. not much help in the problem but i bet it would make you feel good!

 

I went through this about a year ago. In the mean time I got turned on to Dave Ramsey. My take is keep it if you like it. What would the new car offer that the old one doesn't. More warranty, less miles. If the car is well maintained it should have another 100,000 miles in it at least. Will the cost of future repairs likely be more or less than the hit (minimimal though it may be) on depreciation, taxes, fees, etc trading into the new car.

Last point, how nice would it be not to still have a car payment. Even if you end up paying the same monthly car payment - how much longer will you have to continue paying it than you could if you kept the car a few more years and had it paid off?

 

Ultimately if finance is not a problem, the question is do you like 2nd Gen MINI better. If the answer is yes then it sounds like your in a perfect position to go for it.

 

I will give you my opinion as an accountant with clients who often ask me the same question.

If by selling your current car you can keep the same car payments and add no more than 6 mo. to your current pay off period (new rates could be lower than your current one) then it is a wise "investment". Rarely a car can be considered an investment, however, MINI hold a pretty good reseale value - one of the best in the auto industry.

Of course, in addition to the car payment you need to see how much your insurance will increase.

One thing you mentioned is that your wife uses the car for work.. Can she wite it off on her taxes - even if only a % of the business use? - if so remember she is allowed to write off (in the same %) maintenance , insurance and loan interest costs.

For some people having a monthly payment for a car is part of the budget, so instead of trying to pay the loan off , they change cars on a regular basis and keep more or less the same payment.
This is not completely a bad idea as the car is always under warranty and free maintenance (in the case of teh MINI free road assistance) so the chances of a big repair bill are slim.

Also note that the IRS changed the rules on car donated to charity about two yrs ago (actual sell price instead of blue book value).

Good luck and Happy Motoring

 

I already did! Both of them! Her current car was a demo/loaner car so we got it for probably 3-4000 off. And I took delivery of a new 08 in May. And yes it makes me feel good.

 

mine is 2005 MCSC is all paid for... does it mean it will be easier to change to 2009 MINI?

 

This is a long post, but lastrega has a lot of good stuff to consider. Thanks lastrega.
The new rate would most probably be lower than our old loan on that car (thank you PenFed! and whomever started that thread!). The added length of the loan would be a bit over a year.

Good point. Need to check on that one.

She tracks business vs personal and our CPA deducts cents/mile.

You are stating my thoughts on this issue. In the current time frames, I'm paying actual cash of $425/mo plus depreciation which, while not actual cash out of pocket, is still real. As long as she's in this job, both of those factors will be in play. Furthermore, she needs reliability (hell I need her to have reliablilty - I can't go all over creation saving her when it breaks down).

The last one we deducted was about 10 years ago so it was only starting to be 'watched' by the IRS. I bought the blue book and kept several ads of cars of similar value/condition. Averaged all of them to get a number. The last one we donated, I didn't even try to get a receipt. It was that bad.

* * * * *
Here's a summary of how I'm hearing the advice so far:
1) No car payment is nice. Yep it is, but given the miles she puts on a car, ain't gonna happen. Wheels will fall off about the time the payments end, with somewhere upwards of 175K+, maybe 200K+.
2) Buy a demo if you can. In today's market? I picked her car up from the dealer (O2 sensor) yesterday. There were only 12 MINIs on the lot and all were sold. NO Inventory Available. I have to admit, part of why I'm here is because this car was a dealer loaner and we got a great deal on it. I kinda doubt I can do it again.
3) The tax deduction for 2007 worked out to put about $1100 back into my pocket.
4) Figure out what insurance is going to do on a new car.
5) Given #1 & 2 above, we're gonna deal with a payment while she has this job.
6) Current finances should be a factor. For us right now, as long as she has this job, it may need to be watched, but it's not a problem. She gets paid quite well to compensate her for all the driving.

 

I also realized that part of the calculation should relate to the depreciation curve. So I started looking for that kind of info. Check this out:

http://www.whatcar.com/depreciation-index.aspx

It's british, but it has interesting info. Depreciation on a MINI is surprisingly linear as opposed to the usual steep slope of the first year for most cars.

 

Unless your car is a total lemon, there is no possibility that a new car can be more economical than your current one until it gets to be about 15 years old or you are spending an average of more than $2-3k per year in repairs. To guarantee that will not occur, you can buy an extended warranty prior to exceeding the factory warranty. Of course, you need to determine whether you have maintained the car in a condition that you would be willing to be seen in. My '02 is on track for reaching the average age of the vehicles I have owned (17 years).

 

The problem with that thought process, is that I'll be well into the 200,000+ range before the note is paid off. I don't think the normal concept of problems starting to appear when the note is paid off applies in our current situation. Normally, I'm usually trading car payments for repair payments and the repairs are usually less so I save money overall. With a MINI I expect the repairs to be expensive and they would be in addition to the payments. If I consider selling out in the 130,000 mile range before the repairs are massively expensive, the car is upside-down, so getting out is hard.

And if I go to your 15 years mark, my wife is dead . Working this hard for that long will kill her. And I'd be stuck with a MINI with 440,000 miles on it. 17 years ends up at 500,000 miles.
(I think 15 years is a little too long on the projection scale).

 

Good logic. It did not occur to me that you would continue to put 30,000 miles per year on the car. But consider, with than much driving, most of it may be highway mileage which is far less wear and tear than a typical car that is used for mostly local and intermediate distances.

Even though my GMC Pickup has made it to 18 years and 300k, I'm guessing the MINI isn't going to come close. It'll only be to 200k in that amount of time.

 

Yes, MINis have excellent resale values. However, asking for 100% of the original MSRP in a three year old car with nearly 50k miles is quite a stretch, even for the best kept used MINI. I would check Edmunds, KBB, Cars.com, etc... to get some realistic market values. A private sale is usually the best way to get top dollar, but the dealer may make a good offer on a relatively new '06.

 

Depending on the point of view, you're considering a downgrade (which would be my point of view).

Good gawd, keep the Mini!

 

From what point of view would changing be a downgrade? The old one would be a 2006 R53 with 50K. The new would be a R56 (looks like 2009 production has started) with 0 miles. Options would be fairly similar.

 

if it aint broke dont fix it!