Trying to figure out if I should swap vehicles due to disuse.
Vehicle in question: 2018 Audi A4 Quattro Prestige, 19k mi. KBB private party is 40k, 36k trade in. I owe 26k on it.
22 years old: Finishing BAS and then MS (both paid for by employer)
Income: 60k post tax, could raise up to ~82k if I wanted to work full time, which I do not right now due to school.
Debt: 60k – Auto loan @ 3.99%, the rest in student loans at 5.5% mixed between sub and unsub federal loans. Credit cards paid off monthly.
Liquid Assets: 5k
Fixed Assets: 53k
Receivables: 20k; 10k of which is payable in 2 weeks.
Monthly expenses, including the car are about 2600.
I can easily pay for the car, I’m just not sure if I should be. It has appreciated by about 10k since I bought it last year. I made a pros and cons list
Pros to keeping:
-Reliable, low mileage, honestly a blast to drive (I love my little car lol), decent mileage, major depreciation schedule has passed. Only drive about 300 mi, which keeps depreciation due to mileage very low.
Cons to keeping:
17% of monthly income, which I could drop to about 5-10% if I swapped into something cheaper. I had thought about a mid 2010s A3 or A6 TDI. That would run 15-25k. Low use in relation to expense level.
For the love of god, please do not tell me to buy a 99 civic.
One question, for me and yourself. Why do you need an expensive Audi to drive when you’re working part time and in college? Because you literally don’t need it.
But to answer your question, yes you absolutely are over spending. You don’t need a 99 civic but come on, you don’t need luxury/sport car in your situation. Your 1 emergency away from financial disaster. But a safe reliable car for around 10k. Finish school, save some money and then you can drive a car you can actually afford.
Owning a car that is worth 2/3 of your annual salary is a great way to never be able to build wealth. I know you are expecting to increase your salary as you get these degrees, but you will also find a whole bunch more stuff that you “need” as that happens, especially if you’re establishing a baseline of getting used to expensive stuff.
If it were me, I would definitely sell it. At a minimum, I’d do a detailed budget that includes funding retirement, aggressive loan payments, and saving toward other goals like a home down payment and any other irregular expenses like auto repairs. If you are actually doing that and the car payments are coming out of your discretionary funds, then it’s up to you and maybe you just really prioritize cars over other activities. But if you can’t fund all that other stuff, then you can’t afford the car.
For perspective I make 140k before taxes and drove a used Volvo into the ground before committing to a new 30k EV after tax incentives. I love cars and could never imagine dropping 60k on a car until I earn upwards 200k a year.
Sell the car for the reasons already stated by the other commenters. You don’t need an Audi worth 2/3 your salary right now.
Might want to check what maintenance is coming up and how much it will cost. I sold my A4 when it was coming close to doing the timing belt. $2k job.
If the car makes you happy then keep it. You can’t buy smiles, I work in finance and I know I’m overspending on my 18 S5 but when you in your 20s with low expenses and still saving properly then why not. As long as your not having cash flow issues and are still systematically saving just keep the car.
A brand new GTI starts at 30k and it’s not super different mechanically from what you drive now. A brand new N-line Elantra starts at $32k and they’re shockingly good cars. Spending $25k on a used Audi as the lower cost option doesn’t seem to be worth the hassle for a car that could have major maintenance/repair costs. They’re not cheap cars to own. You can find something used that’s still fun to drive for a *lot* less money
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