MW As tariffs make car prices soar, dealers are clamoring for my used Honda Fit. Should I sell?

By Beth Pinsker

An ode to my very practical car and sensible financial planning

My 2018 Honda Fit is worth almost as much today as it was when I bought it used in the fall of 2019. If I wait a few days, I might even have a chance of breaking even or making a profit, given the way prices are going in the wake of "Liberation Day" with new tariffs on automobiles.

Six years into ownership, even with a few dings on the bumper from neighborhood kids running into my car with their bikes, I am beating depreciation. My use of the car effectively cost me about $42 a month. The reason for my investing prowess: I'm frugal and sensible.

I bought one of the cheapest, smallest cars on the market and held on to it. When the casing of the passenger-side rearview mirror got dinged and the dealer wanted $1,000 to fix it because it housed the "LaneWatch" camera, I just secured it with a piece of electrical tape. I ignored the paint scratches, sopped up water from rain leaks and went about my life - parking on my street behind other, much more expensive cars that had similar war wounds, but probably caused their owners much more heartbreak.

Bill Winterberg, a certified financial planner who is now primarily a tech consultant for other financial professionals, counsels people to look at cars like an appliance.

"It serves a purpose to get you where you need to go safely," he said. "You can't be too sad when your appliance gets dents and scratches. Buy what you can afford and keep it as long as you can."

I look even more askance at my cars, like they are spoons about to get shredded by the garbage disposal. In a high-density urban environment, it's no use having nice things. One of my previous cars got totaled when it was parked on a side street and a construction truck swerved and rammed it into a parking sign. No bumper protector could protect me from the wilds of Brooklyn - I'd need to encase my whole car in bubble wrap.

Is it time to sell your car?

Nevertheless, ever since I bought my Honda $(HMC)$ (JP:7267) Fit, people have been trying to buy it back from me. I get messages about once a quarter from the dealer where I originally bought the car and the place where I get it serviced. They know exactly which model I have and all the specs. In 2020, when used-car prices soared because of supply-chain issues, the dealers even offered me over the purchase price. I declined, because what would I replace it with? Then the deals slowed for a while.

They are back in earnest again, and it piqued my curiosity. Now that my car is a little older, I wondered if it was worth it to sell and buy something else sensible, arbitraging a newer-car deal for very little extra cash. I checked the Kelley Blue Book value of my Fit as tariffs were announced and was surprised to see it was only $3,000 less than my original purchase price.

The Blue Book value is just an estimate, and I assumed the real value of what I would be offered would be lower. To really know how much my car is worth, I'd have to take it in for a look-see at a dealership. One salesperson I spoke to - because a slew of them called after I used the online estimator - said that their company was aggressively loading up on inventory right now and regularly offering 25% above Blue Book value. But I had to act now, of course.

As tempting as an offer like this might be, you have to go back to core financial planning values to know if it's worth it. Yes, I could sell my car, but if I needed a new car, I'd also pay significantly more right now. When it's a good time to sell, it's usually a bad time to buy.

I had called Bill Winterberg because I knew he faced this scenario recently. He put his truck on the market in the fall because he no longer needed such a large vehicle, but he couldn't get the price he wanted for it. But right away, he saw a good deal on a used Volvo $(VLVLY)$ he wanted as a replacement for it. So he went ahead and bought it, and then waited and didn't sell the truck until this week when prices rebounded.

"I did it a little out of order," he said. "Sometimes you're under pressure because you want to lock the trade-in price and you have to be ready to commit that day so you can do both transactions at the same time. We had more flexibility."

Many people face the rush because they have a car that is faltering and they want to trade it in for a new car rather than spend the money on repairs. Or the car gets damaged in an accident and they use insurance money to get a replacement. Or the political winds change, and suddenly your statement car isn't the statement you want to make - talk to all those people trading in their Teslas $(TSLA)$.

That's another way that core financial readiness comes into play, because you want to have an appropriate amount of insurance. Winterberg suggested checking the value of your car every year and adjusting your replacement cost coverage accordingly.

How much car can you afford?

When you're thinking about that new car, it's easy to get sidetracked by the new models on display. A car is a status symbol. It's also a precarious and fickle piece of machinery that you could have to replace at any time, and not by your own doing but by somebody driving haphazardly on the road or a tree limb falling in a storm.

Winterberg and I share a love of used cars. "In my lifetime, I only bought a new car one time," Winterberg said. "I prefer to allow somebody else to take the hit of depreciation. You lose 10 to 15% of the sticker price in the first couple of months on a new car."

Another financial consideration: financing options. Typically, a loan on a new car is going to be a smaller finance charge on a larger amount, while financing a used car will cost you a few percentage points more for the loan while the price should be smaller. Leasing in a high-price, inflationary environment could cost you in interest-rate and pricing risk. You'll be back in an unfavorable market too soon.

The best-case scenario: Buy a dealer-certified previously leased car outright (if you can), and drive it until it dies. That might get you 10 years or 150,000 miles the way cars are built now, Winterberg said. And for the most part, you can check the maintenance records of leased cars because it's usually part of the deal that they come back to the original dealer for service. "Leased cars typically have a great history of being maintained and doing things like tire rotations," Winterberg said.

That all argues for me keeping my Honda Fit for now, because that's exactly how I came by my car purchase. It still only has 40,000 miles on it. That is, unless I have tempted fate by saying all of this and a big truck is about to head my way.

Got a question about investing, how it fits into your overall financial plan and what strategies can help you make the most out of your money? You can write to me at beth.pinsker@marketwatch.com. Please put "Fix My Portfolio" in the subject line.

You can also join the Retirement conversation in our Facebook community: Retire Better with MarketWatch.

By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

More Fix My Portfolio

-- Inside one overwhelmed Social Security office: 'It feels like we're being set up to fail,' says a veteran staffer

-- A Social Security office visit in the 'DOGE' era finds fearful, uneasy visitors wondering if the place is staying open

-- 7 lessons I learned as a volunteer tax preparer that can help you, too

-Beth Pinsker

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 02, 2025 17:56 ET (21:56 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.