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Downsizing to one car in a pandemic

Posted: Fri Oct 16, 2020 9:10 pm
by peseta
My wife and I each have a car. Since the pandemic started and we've been working from home, she has rarely used her car, and mine has been used sparingly as well. Even with small kids, I can probably count on one hand the number of times both of us have been using our cars at the same time since covid started.

We were planning on upgrading her car sometime in the first half of next year. I heard on Clark Howard's show that used car prices have spiked for weird supply-demand reasons related to the pandemic. Indeed they have -- her car's value per KBB and Edmunds is up 15% or so since the beginning of the year.

So, we're thinking of striking while the iron is hot. I got an offer from CarMax today that is actually in line with private party estimates. It seems to make sense to downside to one car now, and get her upgraded replacement next year (probably timed with a return to the office). Not only can we take advantage of the market, we can save on car insurance and other expenses related to her car for a little while.

Any downsides I'm missing here? Thanks!

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 16, 2020 9:13 pm
by Tingting1013
No downsides except to check Carvana, Vroom, and Shift for potentially even higher offer.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 16, 2020 9:17 pm
by LittleMaggieMae
is there some benefit on the sales taxes you would pay when you buy the new car if you have a 'trade in"? and is the amount substantial?

I've heard some states have a thing where say your new car is 40K and you are getting 10K for your trade in vehicle... the sales tax on your new car is calculated on 40K - 10K = 30K.

I didn't actually do any math - so I have no idea if this would even make a difference in the big picture.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 16, 2020 9:28 pm
by peseta
LittleMaggieMae wrote: Fri Oct 16, 2020 9:17 pm is there some benefit on the sales taxes you would pay when you buy the new car if you have a 'trade in"? and is the amount substantial?

I've heard some states have a thing where say your new car is 40K and you are getting 10K for your trade in vehicle... the sales tax on your new car is calculated on 40K - 10K = 30K.

I didn't actually do any math - so I have no idea if this would even make a difference in the big picture.
Thanks -- in my state there is no such benefit.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 16, 2020 9:52 pm
by delamer
I am not 100% clear which car you are selling. Is it your wife’s cuurent vehicle?

If so, is your car the better option for the family if you’ll only have one vehicle?

Also, if you get a multi-vehicle discount on your insurance, the cost for the vehicle that you keep may go up (although your savings will still be substantial).

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 16, 2020 10:20 pm
by Watty
peseta wrote: Fri Oct 16, 2020 9:10 pm Any downsides I'm missing here?
One potential problem is that when you get to the point where you need two cars again then you may need to buy a car in a hurry even if you can't find a good deal on the type of car you want.

For example at some point you may be notified by one of your employers that you need to start going back into the office next week. If both the person going into the office and the person working from home then needed a car then you would need to buy a car in a hurry in an equally bad car market.

I have had to buy a replacement car in a hurry and that is not a lot of fun.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 16, 2020 11:00 pm
by wander
I still keep my cars because all I pay is $200 (insurance) and $75 (DMV renewal) a year. When the pandemic is over and you are required to go back to work like before, you will have to buy car again. You may get better deal, but for me it's not worth time since I am driving an old car. But it may make sense to you.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 16, 2020 11:15 pm
by Tingting1013
wander wrote: Fri Oct 16, 2020 11:00 pm I still keep my cars because all I pay is $200 (insurance) and $75 (DMV renewal) a year. When the pandemic is over and you are required to go back to work like before, you will have to buy car again. You may get better deal, but for me it's not worth time since I am driving an old car. But it may make sense to you.
You also pay depreciation.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 16, 2020 11:21 pm
by wander
Tingting1013 wrote: Fri Oct 16, 2020 11:15 pm
wander wrote: Fri Oct 16, 2020 11:00 pm I still keep my cars because all I pay is $200 (insurance) and $75 (DMV renewal) a year. When the pandemic is over and you are required to go back to work like before, you will have to buy car again. You may get better deal, but for me it's not worth time since I am driving an old car. But it may make sense to you.
You also pay depreciation.
That's correct. That's why I mention my car is old so depreciation is nothing.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 16, 2020 11:50 pm
by whodidntante
Depreciation is the main expense here, but as a connoisseur of fine hoopties, I can tell you that a car sitting unused will have surprisingly high maintenance costs per mile driven. If you have expensive cars, you are probably better off financially to sell one. Preferably the one that is worth the most. Maybe you'll end up taking an Uber a few times if they aren't bankrupt yet.

Re: Downsizing to one car in a pandemic

Posted: Sat Oct 17, 2020 8:46 am
by MikeG62
Watty wrote: Fri Oct 16, 2020 10:20 pm
peseta wrote: Fri Oct 16, 2020 9:10 pm Any downsides I'm missing here?
One potential problem is that when you get to the point where you need two cars again then you may need to buy a car in a hurry even if you can't find a good deal on the type of car you want.

For example at some point you may be notified by one of your employers that you need to start going back into the office next week. If both the person going into the office and the person working from home then needed a car then you would need to buy a car in a hurry in an equally bad car market.

I have had to buy a replacement car in a hurry and that is not a lot of fun.
Agree - this is the main risk in my mind.

Assuming you are comfortable with this risk, I think it makes sense in your circumstance.

FWIW, the lease on my Audi ended in late July. I turned in my SUV and ordered a new 2021 MY of the same vehicle. Estimated delivery is Nov of this year. DW and I have been using her SUV. We are retired so much less risk one of both of us will need the car to run to the office. Since I've not yet returned to the gym this remains workable. Once I go back, might be more of a challenge. By then I hope my new vehicle has arrived. Saving on lease payment and auto insurance in the meantime. Savings will go to offset one-time upfront costs of the new lease (bank fee, doc fee, MV fee, etc...).

Re: Downsizing to one car in a pandemic

Posted: Sat Oct 17, 2020 8:52 am
by chemocean
We downsized to one car during COVID: A high-mile range (50-70) electric hybrid. Since we have not taken road trip since COVID, we have not put gas in the car. The hybrid is nice for road trips, since we do not have to worry about charging anxiety.
Check with insurance company about your car insurance costs with one car. You will be surprised that going to one car will not save you that much in auto insurance because of the large multi-car discount on each car.

Re: Downsizing to one car in a pandemic

Posted: Sat Oct 17, 2020 1:04 pm
by gr7070
Meh.

What if values continue to rise; you'd lose selling it now. Unsure how you know where the car market is going.

Additionally, you're (potentially) only gaining 15% of what I presume is an older, lower value car.

I'm not inclined to go out of my way for this savings. It'd be different if this was an indefinite, lifestyle change; but for a year and modest savings. Meh.

Re: Downsizing to one car in a pandemic

Posted: Sat Oct 17, 2020 1:21 pm
by Mike Scott
Sounds like it should work for you. Just start casually watching the car market so you don't end up in a rushed or surprise purchase when you need the new car. You may even decide you don't need two cars at all. I was thinking about a new car this year but decided my old car can hold out a little longer until (perhaps) some of the economic uncertainty and job risk settles back to "normal". I was also watching for the great pandemic car sale which never really happened; maybe next time and I've got my three top choices picked already.

Re: Downsizing to one car in a pandemic

Posted: Sat Oct 17, 2020 3:08 pm
by peseta
Thanks all for their thoughts. To answer a few questions from above, we'd be keeping the larger family car. My wife was already working remote before covid, and I work for the feds, so I will have at least several weeks notice of a return to the office (i.e., little likelihood of needing to make a spur-of-he-moment purchase). I live near mass transit; I usually drive to our local station and ride the train in during normal times, but I can easily bike there for a bit if necessary.

I'll update this thread when we finalize our decision, appreciate all the input.

Re: Downsizing to one car in a pandemic

Posted: Sat Oct 17, 2020 6:55 pm
by mr_brightside
you'd save a bunch that's for sure

and don't forget -- if you ever 'need' and second car -- you can always rent one for the necessary time period...

we have started renting cars / minivans for our longer road trips ... less wear and tear on our daily drivers (1,000 mile + trips)

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 12:11 pm
by peseta
So, we are keeping the car after all. This is despite the fact it probably makes the most financial sense to sell it. I think my spouse was ultimately more uncomfortable about selling the car than it seemed the first time we talked. Since the car is 10 years old and largely depreciated, it's not costing us all that much to keep it. Money isn't everything.

That said, downsizing to one car might make sense for others -- I definitely see the logic of it.

Thanks, all!

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 12:22 pm
by 8foot7
We did exactly this. We sold wife's car to Carvana a couple of weeks back. We're having twins next week, so she'll be at home through at least February and then may not return to an office for several months after that. I've worked at home for two decades now as much as I want, and my SUV is older but in fine shape. We may need to make a car change due to the size of the family (4 boys, 3 in car seats + a dog + the two of us) but saw no reason to have a depreciating car sitting in the driveway for six months+ while it literally wasn't being used at all. (I had to drive it around to make sure the battery stayed charged.)

Surprisingly my wife was on board nearly from the start. I reminded her if this didn't work out, we can literally go out and buy another car the same day if we really had to. That convinced her.

I don't doubt we'll spend some money on a car but it is nice to have that car gone and be a little more efficient with our capital right now.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 12:46 pm
by hightower
LittleMaggieMae wrote: Fri Oct 16, 2020 9:17 pm is there some benefit on the sales taxes you would pay when you buy the new car if you have a 'trade in"? and is the amount substantial?

I've heard some states have a thing where say your new car is 40K and you are getting 10K for your trade in vehicle... the sales tax on your new car is calculated on 40K - 10K = 30K.

I didn't actually do any math - so I have no idea if this would even make a difference in the big picture.
Yes, this does happen in my state (Ohio). You don't have to pay tax on the value of the trade in as you describe above. If you sell it privately, you need to make sure you're selling it for more than your trade-in offers otherwise you're better off trading it in and saving on taxes. The savings can be substantial. For instance, I'm trading in my Honda Ridgeline valued at 33500 for a Model Y soon. Since our sales tax is 7%, that's $2,345 in taxes I don't have to pay on the new car. If I were to sell the car privately, I'd need to make sure I was getting at least $33,500 + $2,345 or I'd be better off trading in.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 12:46 pm
by BigMoneyGrip
We did this as well. Hoping to hold out until June/July 2021, but won't be an issue if things open up before then and we have to go buy something else.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 12:53 pm
by surveyor
My wife didn't like her car and we sold it to Carmax in May. Sports came into play this Fall and we ended up double booked on two nights. We managed but it was a lot of driving. We are searching for a "fun" late 60's convertible that is in good shape.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 2:14 pm
by LadyGeek
This thread is now in the Personal Consumer Issues forum (car).

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 2:26 pm
by Soon2BXProgrammer
peseta wrote: Fri Oct 16, 2020 9:10 pm My wife and I each have a car. Since the pandemic started and we've been working from home, she has rarely used her car, and mine has been used sparingly as well. Even with small kids, I can probably count on one hand the number of times both of us have been using our cars at the same time since covid started.

We were planning on upgrading her car sometime in the first half of next year. I heard on Clark Howard's show that used car prices have spiked for weird supply-demand reasons related to the pandemic. Indeed they have -- her car's value per KBB and Edmunds is up 15% or so since the beginning of the year.

So, we're thinking of striking while the iron is hot. I got an offer from CarMax today that is actually in line with private party estimates. It seems to make sense to downside to one car now, and get her upgraded replacement next year (probably timed with a return to the office). Not only can we take advantage of the market, we can save on car insurance and other expenses related to her car for a little while.

Any downsides I'm missing here? Thanks!
We went from 3 cars (for 2 people) to 2 cars.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 2:35 pm
by slow n steady
My wife and I have three young children and we downsized to one car in March (not covid related). I have a work vehicle that I can take home but I can't use it for anything outside of work.

We were concerned that we would both have to be in different places at the same time. I reasoned with the money we are saving we could easily pay for uber whenever this happens. In the last Seven months this has happened zero times.

I actually really enjoy the extra space and mental space from not having the extra car.

I say go for it! If it ends up being a terrible experience (low percentage chance of that happening), you can always get her new vehicle earlier than planned.

Good luck!

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 3:12 pm
by atikovi
Unless this is a hot sports or elegant luxury car, I'd be bored to death having to drive the same car day in and day out. Now if you view cars as just an appliance, that's a different story. Even then, there are some homes with two ovens or refrigerators.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 3:53 pm
by harrychan
Tingting1013 wrote: Fri Oct 16, 2020 9:13 pm No downsides except to check Carvana, Vroom, and Shift for potentially even higher offer.
Beware. I experienced bait and switch with one of these companies where they initially gave a slightly higher estimate than Carmax but lowered it by $2000 claiming scratches and the car having stain in the rear seats (the car interior was black..). I demanded they return the car and they relented and matched Carmax's offer.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 4:01 pm
by 123
atikovi wrote: Fri Oct 23, 2020 3:12 pm Unless this is a hot sports or elegant luxury car, I'd be bored to death having to drive the same car day in and day out. Now if you view cars as just an appliance, that's a different story. Even then, there are some homes with two ovens or refrigerators.
We have multiple bathrooms in our home, who wants to use the same toilet all the time?

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 4:04 pm
by Tingting1013
harrychan wrote: Fri Oct 23, 2020 3:53 pm
Tingting1013 wrote: Fri Oct 16, 2020 9:13 pm No downsides except to check Carvana, Vroom, and Shift for potentially even higher offer.
Beware. I experienced bait and switch with one of these companies where they initially gave a slightly higher estimate than Carmax but lowered it by $2000 claiming scratches and the car having stain in the rear seats (the car interior was black..). I demanded they return the car and they relented and matched Carmax's offer.
Shift will come to your house and make you a final offer on the spot for you to decide. Vroom is a bit of a gamble as you have to mail in your title and send off your car first before the final offer arrives. Don’t know about Carvana.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 4:10 pm
by atikovi
123 wrote: Fri Oct 23, 2020 4:01 pm
atikovi wrote: Fri Oct 23, 2020 3:12 pm Unless this is a hot sports or elegant luxury car, I'd be bored to death having to drive the same car day in and day out. Now if you view cars as just an appliance, that's a different story. Even then, there are some homes with two ovens or refrigerators.
We have multiple bathrooms in our home, who wants to use the same toilet all the time?
Can't have too many thrones in your castle.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 4:11 pm
by harrychan
Tingting1013 wrote: Fri Oct 23, 2020 4:04 pm
harrychan wrote: Fri Oct 23, 2020 3:53 pm
Tingting1013 wrote: Fri Oct 16, 2020 9:13 pm No downsides except to check Carvana, Vroom, and Shift for potentially even higher offer.
Beware. I experienced bait and switch with one of these companies where they initially gave a slightly higher estimate than Carmax but lowered it by $2000 claiming scratches and the car having stain in the rear seats (the car interior was black..). I demanded they return the car and they relented and matched Carmax's offer.
Shift will come to your house and make you a final offer on the spot for you to decide. Vroom is a bit of a gamble as you have to mail in your title and send off your car first before the final offer arrives. Don’t know about Carvana.
SHIFT came to my home and gave an initial estimate through email. Then they drove the car to their shop for an extensive review is where they dropped the value and final offer.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 4:30 pm
by Tingting1013
harrychan wrote: Fri Oct 23, 2020 4:11 pm
Tingting1013 wrote: Fri Oct 23, 2020 4:04 pm
harrychan wrote: Fri Oct 23, 2020 3:53 pm
Tingting1013 wrote: Fri Oct 16, 2020 9:13 pm No downsides except to check Carvana, Vroom, and Shift for potentially even higher offer.
Beware. I experienced bait and switch with one of these companies where they initially gave a slightly higher estimate than Carmax but lowered it by $2000 claiming scratches and the car having stain in the rear seats (the car interior was black..). I demanded they return the car and they relented and matched Carmax's offer.
Shift will come to your house and make you a final offer on the spot for you to decide. Vroom is a bit of a gamble as you have to mail in your title and send off your car first before the final offer arrives. Don’t know about Carvana.
SHIFT came to my home and gave an initial estimate through email. Then they drove the car to their shop for an extensive review is where they dropped the value and final offer.
Huh maybe they have different procedures in different markets.

Downsizing to one car is good

Posted: Fri Oct 23, 2020 5:48 pm
by Bogle7
We downsized to one car in 2008.
We were ages 59/50 at that time.
We live in the city.
I worked from home and she worked outside the house part time.
During the last 11 years we have used Car2Go and/or Uber about 10 times to compensate for a single car.
Pre-Covid we were averaging 4500 miles/year. Now, it is about 2000.
We have never regretted our decision.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 6:07 pm
by michaelingp
In my area, if you don't drive your car much, the critters get up under the hood and tear apart the insulation. Fortunately, they didn't gnaw on any wires that I know of. So we sold the 2004 CR-V with 187,000 miles, the check engine light on and a dent in the door to CarMax for much more than I expected. With the virus, I was rarely driving it.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 8:46 pm
by H-Dog
We upsized to two cars when the pandemic was in full force end of April. It has been useful even though I have been working from home.

I enjoy doing the repairs and maintenance on our vehicles. This is why we now own two vehicles 10+ years old.

Like another poster said. Cheap insurance, registration, low/no depreciation and they work as backups for one another if something happens. I rather drive to work than commute using public transit once that time comes back around with COVID still being around.

Re: Downsizing to one car in a pandemic

Posted: Fri Oct 23, 2020 11:33 pm
by phxjcc
The transaction cost is the difference between the bid and ask prices on each side of the transaction.

You can plan on 20% between bid and ask.

Carvana, et al, are trying to buy into the market and want to get more VC funding. This is raising the bid prices over the dealerships.

Understanding that, you may be able to sell now and only pay a 10% premium over your disposition receipts.