I have a 2002 Kia Sedona van, that I really love. It has everything I
need, and more. It's been reliable and I am very happy with it. I have
20,000 miles on it, and it has been well maintained. About 3 months
ago, I foolishly caused some damage to the tailight and bumper on one
side. The repair estimate is over $2,000. My insurance deductible is
$500, and the damage, while bothersome, is acceptable to me, as I
don't want to pay the deductible. More than that, I don't want my
insurance to rise, as I am the one who caused the damage to happen
(made a hasty backup, into a fence.) So, I have learned to live with
the damage. The taillight works, the car runs, and really the damage
is not all that bad. Cosmetically it looks ugly, and for resale, I
would expect to repair the damage.

We took the van for routine maintenance at the dealer and they offered
to sell me a 2004 van, keeping my monthly payments to no more than $20
above the current payment. I can afford the new payment, and the idea
of a new van, sans damage, is very tempting. Normally, I keep my cars
for a very long time. Cars are not a status symbol to me, they are
merely a means of transport. The Kia handles all my needs, and I'd
like to keep it (or a newer one)

So, my question is, is it worth it to trade in my 2002 Kia Sedona van
for a newer model, for $20 a month extra? I'm aware that my
registration and insurance will go up a bit, and that's OK. I'm
wondering, financially if this trade-up is a sound financial decision.
It seems to me the cost of repairs, if I paid out of pocket, is worth
the extra money, plus I have the benefit of a new car.
What do the experts think? Thank you!

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Request for Question Clarification by mvguy-ga on 24 Mar 2004 13:28 PST

How much longer would you have to make monthly payments with the new
car than with the current car? I'm assuming that you're not just
paying $20 a month extra, but $20 a month extra plus monthly payments
for a longer time.

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Clarification of Question by armyvet-ga on 24 Mar 2004 13:45 PST

Thank you for the comments.

The loan would be a new loan, for the duration....4 or 5 years, but at
a cost of $20 more a month than I am currently paying. But I'd also
have a new car. I really don't care a whole lot about the dent, though
I would prefer NOT to have one, and a brokwn tail light. I'm leaning
towards the new car. The 2002 has depreciated, and I can start with a
new car, new loan. No dents. It's so tempting!

Besides the intangible benefits of having a new vehicle, etc, this
really seems to be a purely financial decision. On the one hand, you
have a vehicle that's about two-three years old, that you've been
paying for every month over that two-three year period. It has
depreciated in market value as all automobiles do, with the heaviest
depreciation in the first couple of years. You probably still have a
substantial part of the original loan to pay off, which may or may not
be offset by the current resale value of the van. So, I suggest you
ask the dealer to write out for you the complete financial transaction
that they are proposing, including:

- trade-in value of your current 2002 Sedona
- remaining value of loan/lease over and above trade-in value of your
current vehicle
- repair cost to restore the 2002 Sedona to that trade-in value (ie.
should you repair it first, or will it be the same value to you if
they repaired it after you sell it back to them)
- number of months of loan/lease payments for the 2004 Sedona
- monthly payment for the 2004 Sedona

Many people are now treating the ownership of a car as simply a
monthly expense, meaning that they are leasing them for three years,
then returning them and starting a new lease on a new vehicle. For
them, this matches their lifestyle. These folks want to enjoy their
time with a car or truck, but don't want to form a life-long
commitment. Others prefer to actually "own their vehicle" - even if
this means taking out a loan so that it's really the financing company
that owns the vehicle for the first few years. You'll have to decide
which sort of person you are, the numbers from the dealer will help
you greatly in deciding this.

Good luck,

aht-ga
Google Answers Researcher

Keep your existing car.

So who cares if it's got a dent?

Keep the 2002.
Enjoy the lack of a car payment 2 years earlier than if you got the 2004.
Forget the dent.
Fix the tail light as that's a safety item, as well as cheap/easy.
Worry about things other than cars!