Car Corner
Trade Down Results - 2004 Mini Cooper S

May 1, 2010
By Scott Lewis

It happened! I traded down from my BMW 335i. A major event occurred to force this issue, which looked like it had no chance of happening. We'll start with why it almost didn't happen and then get into why and how it did happen. Oh yea, and we need to tell you about the car itself.

2004 Mini Cooper S

I won't tease you, so I will tell you now that I bought a 2004 Mini Cooper S. It is charcoal gray with a black leather interior. It had jut a tick under 36,000 miles when I bought it. Yes, a low mileage Mini Cooper, with about 6K miles per year on it. I bought it for $14,799. Obvious with the S designation this is the supercharged edition with 163 horsepower. This car is also equipped with the 6 speed manual transmission. The bonus was that it comes with the very nice sounding Harmon/Kardon stereo. Other options seem few, and those fog lights with the covers do not work.

if you will recall from my February column I was looking for a Mini Cooper, Honda Accord Coupe or a VW GTI. I test drove a very nice Certified 2005 Accord Coupe with 49K miles for $14,650. It came with a 1 year - 12,000 mile bumper to bumper warrantee with the power train covered up to 100,000 miles. Unfortunately the dealer was a jerk. They offered me $13,000 for my BMW. That was a major insult to my intelligence and I immediately walk out. If i did not have a trade I would have bought that Honda. It was in perfect condition and I could not find a paint blemish on it anywhere. Easy come, easy go.

Why Did This Almost Fail?

Money got very tight as I was planning to trade down the BMW 335i for another car. In fact, money got so tight there was no way to cover the missing equity in the BMW. According to NADA the average trade-in value of the car was $8,600 less than I owed on the car. OUCH!

We recently refinanced our house, and I hoped there would be enough money left to get out from under the 335i and its $705 monthly payment. Coming up with $8,600 was impossible. I also tracked the value of the car over the last few months and it was going down at the same pace we were paying it off. So there was no hope in sight... at least in the short run. It would take years of payments to get close to even on the car.

The Event

An event happened in my life that forced me to take a far more drastic approach to trying to trade down to a more affordable car. My wife and I separated. Now I was going to be moving out and getting an apartment. With paying child support and incurring all my own bills there was no way I could afford $705 for a car payment. I worked up a budget that called for a car payment of no more than $300. That budget left me with about $200 for savings. Had I still had a $700 car payment I would be going in the negative $200 every month. Something desperate had to be done.

The Trade Down Plan... That Worked!

I approached my credit union with a plan. I wanted to take out a personal (called signature) loan. I would use part of that loan to pay off two credit cards I was taking with me when I moved out. I also wanted to use the remainder of the personal loan to pay down the loan on the BMW, so I could trade it in on another car.

I don't want to make this a really long story, so let's just say it all worked. My credit union would only do the two loans as a single package. I also had to use all of my company bonus to help pay down the BMW because the credit union was strict on how much it would let me pay down the car with the personal loan.

Now I have a $25,000 personal loan with a payment of $522, and an auto loan for $15,000 with a payment of $271. That's a total of $793 per month. This compares to $975 per month if I paid only the minimum on those two credit cards and kept the BMW... with no end in sight for when I would be out of debt.

Now have two debts.. the personal loan and the car. That is it. Plus, in 5 years I will be debt free. Dave Ramsey would be proud.

Buying Another Car

Just to make sure I was not in a bad situation I did an experiment. What if I traded in the Mini Cooper S today... on another car. If I went to by another car for $15,000 I would have to put down $2,200 to keep the payment the same. I could get away with a smaller down payment and easily keep a car payment below $300/month. No bad at all.


So, I am now driving a car I love. I can also trade it in pretty much anytime I want with a normal down payment. And I have a clear vision of when I will be out of debt.

Next month I am going to show you the cars I was looking at last year when I was thinking about moving out.

Stay tuned.