QuestionI have a 2006 Nissan Murano and heres my dilema. When I purchased it I gave $15K down and financed about $22K. All together i've paid almost $22K. I now only owe about $15K (approx. 24 months left). One day out of curiosity I was checking on the trade-in-value of my car. My car is to my standards in excellent condition. All recommended maintenance has been performed, it's never been in any accidents, the paint looks great (all but a few scratches from other car doors , but no dents) and its looks sharp on the interior. It has almost 18K miles. With that said the trade in value is about $19K-25K. Being that I've already paid roughly the trade in value of the vehicle it makes no sense to me to continue making payments on it. I'm know that if I wait to trade it in later on down the road (perhaps when i've paid it off) it will worth less. I understand that if I were to trade it my lender would be paid first and the rest would be applied against the cost of the new vehicle. Is there a calculation out there or any sort of formula that will estimate how much I would loose if I trade in now vs. wait another year or two? Do you have any advice for me? Just as background information my loan was set for 48 mo at 5%. My credit is good. I am 26 and single.
AnswerHi Melissa,
Thanks for your question. You really made a substantial down payment when you purchased your vehicle. The Nissan Murano's have really depreciated in the market place for some reason. One I believe is that they became very big in the rental fleet world. That means a lot of them are coming out of rental service and hitting the auctions at ridiculous prices.
Anyhow, it sounds like you've done your due diligence in your research. I would consider going to a Nissan store if that's what you're thinking of staying with and really try to negotiate your way into another vehicle. It doesn't sound like you're in a lease and I would recommend trading sooner than later. Only because as you're paying off your vehicle over the next 24 months, you're Murano will be decreasing in value. For a calculation, most of the time when you purchase a vehicle, it's really hard to predict the market in the future for market value. In some cases, in a lease; part of the leasing formula is to give you a residual amount (really, it's not as accurate as we like, but it does get you in a vehicle sooner). The residual amount varies and can sometimes be 50% or higher. Depends on market, miles expected to drive, etc. For example: MSRP is 20,000 and the residual will be 50% of that. So, you're paying for the 10,000 plus fees to drive the vehicle for a predetermined period of time. At the end of the contract, you can have the vehicle appraised and if it is higher than the 10,000 than you will use that for your downpayment, if not...you just drop off the vehicle and start over in a new one.
I said all that, to say this...I would recommend that you seriously consider leasing your next vehicle. I would not suggest that you dump another 15k on a depreciating automobile. The only real reason you probably did that was because, you either used equity from your trade or you just wanted a low, manageable payment. I would urge you to explore leasing, since your ownership cycle seems to be around 24-36 months. You can still use some money to buy down your payment, but the residual or the left over at the end of the term will still be whatever it is. Sometimes they refer to that number as your future value. Don't belive that for a second.
Hope this helps Melissa. Any further questions...just let me know!
Good luck,
Doug
