With the economy in a state of uncertainty and the unemployment rate reaching a whopping 20%, Americans are increasingly looking for ways to cut their spending while the COVID-19 coronavirus pandemic takes its toll. A car can be the biggest expense beyond the cost of living for the average person, so it should come as no surprise that many people will be contemplating putting their cars on the chopping block in the coming weeks and months. Here’s what you need to consider when deciding whether you should sell your car:
Determine Whether a Car is Vital to Your Livelihood
The most important question you need to ask yourself is “do I need my car?” If you live in a walkable neighborhood or metro area with easily accessible public transportation, then a car might be more of a luxury than a necessity. However, if important destinations, such as your job and the grocery store, are miles away from your home with no other available method of transportation, then a car is probably necessary for your day-to-day life.
Calculate the Total Cost of Owning Your Car
After you’ve concluded that you don’t necessarily need a car for your daily livelihood, then you’ll want to calculate how much you spend on your car to see how much you’ll save by selling it. This includes both your monthly payments and secondary expenses, such as insurance, gas, maintenance, parking and registration.
If you still have several months or years of payments left or find yourself out of work, then the potential savings might make selling the car worth your while. On the other hand, if your car is paid off (or close to being paid off) and your employment is secure, then you should consider keeping it until it’s absolutely necessary to sell it.
Can You Downgrade to a Cheaper Model?
For those of you with some financial flexibility, one option you should consider is trading your car in for a cheaper model so that you can save some money while still maintaining the convenience of having a car. You can also sell your car in favor of a lease, which yields reduced payments over the course of three years and an option to purchase it at the end of the lease period if COVID-19’s economic effects have been mitigated by then.
If you’re backed into a corner financially and have minimal other options available to you, then selling your car can provide necessary relief to keep you sustained during this difficult time. Otherwise, it might make sense to keep your car (for now, at least) if you still have a steady source of income and/or it’s not costing you a significant amount of money each month.