hello! i'm a 24 year old with a 60k salary, and have been paying my 2024 toyota corolla cross off since may of 2024. the car was a graduation gift from my parents, who insisted that i get a new, not used car. i feel silly for not taking more control of the situation. i now pay $615 a month for it and will be for the next four years. i can afford it now, sure, but I dont have the most stable job, and forsee myself facing job hunting in the next year. i do travel a lot, given that i'm in a distance relationship and also travel to visit my parents pretty frequently. my car currently has about 23k miles on it. I realize I would certainly not profit from the sale and likely be out a few thousand, but at least i wouldn't have the looming balance. I'd likely buy something cheaper.
Do I Sell My New 2024 Toyota Corolla Cross ?
byu/OldFruitt inpersonalfinance
Posted by OldFruitt
23 Comments
I’m sorry but how is new car you are paying for a gift from your parents?
> the car was a graduation gift
> i now pay $615 a month for it
How is it a gift if you’re paying for it?
If you sold the car, what will you drive? Do you need a car?
>the car was a graduation gift from my parents, who insisted that i get a new, not used car. i feel silly for not taking more control of the situation. i now pay $615 a month for it
It was a gift? But you are paying $615 a month for it? The gift of debt?
>I realize I would certainly not profit from the sale and likely be out a few thousand, but at least i wouldn’t have the looming balance. I’d likely buy something cheaper.
Makes sense to me.
How was the car a gift if you’re paying for it?
Lol what? How is this it a gift from your parents if you’re paying for it?
With that said, you’re an adult if you know you’ll be job hunting you should budget and save. This includes less traveling or no traveling. You need to decide if traveling is a necessary expense or a want. And by necessary I mean you’ll be homeless or dead not single or alone.
Welcome to adulthood where our decisions determine life 😀.
My mom said she was gonna buy me suits for my graduation gift, but she was never financially able to. Still better than thousands in debt as a gift though.
Don’t take anymore gifts from them
You already took the depreciation hit. What’s your interest rate? If it’s high, try to refinance it to a lower rate. If it’s less than 6%, keep the car and enjoy it. Even if you sell it, you gonna get a much crappier car and save like 100 a month….if you driving long distance, keep your reliable Toyota
I am a car broker and see situations like this all the time
My advise: keep the corolla
Used cars have hidden costs:
– likely out of warranty so any repairs are your financial burden (and a mental burden too as it feels so shitty whenever something breaks even if it’s small)
– a used car will be that much closer to needing to be replaced. A 2024 Corolla will likely be good for 8+ years.
On top of that, I don’t think you’re going to save as much as expected on a used car. A four year loan on a $15k car is still going to come out to about $450/mo with tax/license/interest.
My suggestion is that instead of paying thousands to get out of your current loan, just keep some healthy savings for whenever you find yourself between jobs.
I can discuss further with you, but people in your situation make terrible long term mistakes all the time when they switch to a “cheaper” car. I’ve seen it happen.
……….. Wait…. Do I owe Santa money?
I would keep the car. On a total cost of ownership basis over the lifetime of the car, a new Toyota is no financial mistake. Do the regular maintenance and try to keep it 15-20 years. You’ll be all right. No need to overreact. Just learn the lesson about making decisions for yourself and don’t repeat buying out of your price range due to family pressure on a house/condo.
I mean it’s a new, reliable, fuel efficient vehicle so I don’t think it’s that bad to hold onto it. Trading down would mean older car that may need repairs that could evaporate any payment savings. Just pay it off and plan to keep it for a long time.
How was this a gift if they aren’t paying for it? Did they put any money down for it?
Your payment is suspiciously high for a ~$26k vehicle. What are the terms of the loan? Interest rate, amount owed, months left? When you (parents?) purchased the car did you get any extended warranty, tire and wheel protection, service package, etc? Those can add many thousands to the price and can usually be cancelled for a prorated refund.
It’s possible you can reduce the amount owed and/or your monthly payment without selling the vehicle. Give us more details on the purchase and loan and we can give better advice.
From the info provided I’m going to assume you got into a roughly $35k loan with a 6 year term with an 8% rate. That would indicate you purchased a 2024 Corolla Cross Hybrid XSE, the top model, which runs for $33k, allowing for about $2k in dealer options, sound about right? With that I’m going to estimate you have made 14 monthly payments that accounted for about $5800 in principal payments leaving you with a balance of about $29k left on your loan. The KBB trade in value for that vehicle is $28k. This leaves you only $1k under water, which you may be able to negotiate away. Which means if you are a strong negotiator you could trade into a different vehicle and not be under water. Lets say you wanted to save 25% on your car payment, bring it down to $465/mo. That would get you a budget of roughly $25k for a replacement vehicle. Plenty of good used options out there for that much, I recently picked up a 2022 Ford Bronco Sport Badlands for about that much and its great.
I personally would not. The cheapest car is the one you hold on to for as long as the maintenance allows.
New cars immediately depreciate so you’d lose money if you sold it or traded it in, which you’re aware of. You’re spending the money in one way or another so I’d strongly suggest keeping it since you can afford it.
The payment sucks but once it’s paid off you’ll have a very reliable car for at least another 10 years.
Plus, any other cheaper car would come with a shorter lifespan if it’s new(or newer) or unexpected maintenance troubles if you get an older car cash.
If your parents insist on a new car, you should insist on them making the payments.
As others have said, I’m not sure how this car is a gift.
It is a good idea to sell. But for traveling you would be driving a car you would be going in a car that you do not know much about. Why is your payment so high? You financed for 3 years?
Selling a car when you’re underwater on the loan is messy. You’d have to pay the difference out of pocket, which might not be a quick fix. An alternative could be to look into refinancing. You might be able to get a lower interest rate or extend the loan term to bring that monthly payment down to something more manageable, especially with a solid payment history so far. It’s worth a shot.
You need to compare how much you still owe on the car vs what you can sell it for. If the value of the sale won’t clear what’s left on the loan then you will need to come up with the rest to pay the deficency and in most cases will not be able to sell the car.
If it is close you could *maybe* roll the remaing amount after a trade-in into a new cheaper vehicle’s loan but honestly that can be a dicey situation that leads to permanent vehicle debt for a lot of people.
How much do you owe vs how much is it worth if you sell it?
I think you’re on the right path. Sell it at like carmax, (easier than a private sale for a newer car) you’ll take a few thousand loss, but you’ll get all the down and what not back. Then you can cash buy a used car for 8-10k. Your insurance will go down too.
Then if you move to a city with public transport in 2 years, sell it, the depreciation would hit the new car harder so sooner is better than later.
Do the math and see what it would do if you bumped the payment amount up. It’s a Toyota… it will last 10 years plus. You’ve already taken the depreciation hit.
Used, lower/mid mileage Toyotas depreciate slower than almost any car on the road right now. There are also unseen costs with a “beater car” to keep it on the road and there is also the cost to the quality of life you have when driving and peace of mind. It’s not all about the dollars. My advice is if you’re really motivated to sell – list the car $500 above your bank payoff and take the first offer that pays off your loan in full. But if that car can stay below 50000 miles and no accidents you’ll have positive equity in less than 24 months. Good luck