All you finance experts

[Welshwatchman]

Originally Posted by Carolina

Please - someone help me explain why the below analysis is not correct.


"I think we're all getting paralysis from analysis. What you need to do is think of it in more immediate terms:

1. You get rid of a gas guzzler and some "down the road potential repair problems," not likely for some time on a new car, especially a Japanese one noted for quality.

Servicing costs, tyres, insurance and repairs difference between the two cars could be substantial, perhaps $1000 p.a cheaper with the Civic.

2. You reduce your car pymnt. by $40.mo
19,300 you owe on the truck divided by 42 mo's. = $460/mo

If you refinance the agreement there will be extra interest applied so the $460 will rise.
vs.
21,900 for the Honda + 3300 you will owe after CarMax = 25200 divided by 60 months
= 420/mo.
Savings: $40/mo. from car pymnt. + $100/mo. on gas = $140 in your pocket for 42 mo's + the gas savings keep on coming.

The $3300 will be subject to compound interest, increasing the $25200 mentioned to $26500 approx. This comes to $442 pm.

3. Yes, you will still have to keep paying on the Honda and that is what it finally comes down to. Is it worth putting $140/mo. in your pocket for the next 42 mos. or are you better off without the extra money now in exchange for a shorter payment period at the end of which you are still looking at a far more expensive vehicle to run.

Still looks like a good deal to me"

5 year running cost:

F50

Purchase cost remaining $19300.
5 years insurance (est) $3000 (You can amend this to suit actual figures known to you)
5 years gasoline $13000
5 years maintenance/repairs/tyres etc $3000

Total - $39,300.00

Civic

Purchase cost remaining (inc the 3300, compound interest) $26500
5 years insurance (est) $2000 (You can amend this also if you have a proper quotation)
5 years gasoline $6500
5 years maintenance/repairs/tyres etc $1200

Total - $36,200.00

Precious little difference (unless the F50 has a major repair bill out of warranty).
Gas prices may get a little bit silly though in due course.

Why not sell the F50 and try to get the $19,000 to settle the finance and get a $15,000 Civic (or similar)?

This will run you a total of $29,000 over five years. A saving of over $2,000 per year.

I personally wouldn't do it. I sold my gas guzzler Merc ML and bought a compact executve diesel Merc, hated it, flipped it after just 3 months and bought a big BMW. I may has well had a bonfire of cash, idiot me.

If he hated the Civic as much as I hated the C Class Merc then you may regret the whole exercise.