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I bought a RED 2009 BMW from an auto mall in 2011 Jan for $30,000 when it was around 32K mileage. It is now around 81K mileage and I still have a loan of $15,000 on it for 2.5 yr more. I see its current KBB value is around $11,000 to $13,000. The car is running perfectly fine and has some minor paint scratches on the bumpers. Can anyone suggest if it is a good idea to sell off the car before its too late or use it for more time till the loan is cleared.

  • Great question. Talk this out loud and it might help you make a good decision. – Pete B. Aug 4 '14 at 18:08
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    Too late for what? – JohnFx Aug 4 '14 at 22:39
  • Thanks for your responses. Here are my concerns: I'm not sure how the BMW cars perform after crossing 80-100K mileage as some vehicles run smooth and some breakdown after they cross certain mileage. And the repair work on this vehicle is must expensive. If I sell I will have to pay ~$2000 towards the remaining loan and if I keep I eventually spend ~$1000 to $2000 for the loan and maintenance which comes down to the same value. So, is it good to keep it and use it for longer time or sell it off now to save from future major repairs. – user19445 Aug 5 '14 at 17:09
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As cars age, the amount of deprecation tends to decrease. You have already lost between 19 and 17K on the car in the past 3.5 years. You can't lose that much on that car ever again! First because it is not worth that much. Second, because even if the engine blows up, or it is totaled you can always get about $300-$400 for it.

If you trade this car for a newer model the same exact scenario is likely to happen again. In three years (or so) the car will lose half its value. If you happen to stick the same price point, and are comfortable with $5000/year going "out the window", then it might be time to trade up.

You can get a decent idea of what your car will be worth in the 2.5 years by seeing what a 2006 with 116K miles on it. One option is to keep driving it after it is paid off. With putting a little money into it, and having it detailed every once in a while it can feel like a pretty sweet ride for many years and miles to come. Even if you have maintenance costs, you won't have a car payment. How sweet would that be?

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Buying and selling cars a lot is something that makes money if you are a dealer but usually doesn't if you are not. The question to ask yourself is why you want to sell it.

If it is because you are feeling poor and need money, it might make sense to sell it, particularly if you don't need it. But $12k or whatever is not a ton of money. If you do need a car and will have to replace it if you sell it then selling it is likely not a good idea.

If it is because you want a nicer car and can afford to upgrade, then selling it is likely a good idea. The fact that you have had it for years and not paid off the loan tells me this situation is unlikely.

You should think of the value of your car to you (and the potential cost of replacing it) and the amount of money you owe on it as two different things. The debt you have is a debt that you will need to pay no matter what you do with the car or how its value changes. The value of the car to you is pretty much a separate issue from how much you have outstanding in debt.

If you want to sell the car to pay off the debt that is fine if you don't need the car or if you can get a suitable replacement car for MUCH less (which I find unlikely).

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Do you need the car? It depends on what your goals are. You're going to keep losing money on the car via means of the debt (which I assume you can't pay off without selling the car) and depreciation.

If it was me, I would sell the car. But if you like it and you can afford it, then keep it.

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