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But if the $3500 civic last 5 years then buy another $3500, why not just keep the nice car now and pay the rest of the $7000, interest rate should be no more than 3%, $210 in interest this year, even less in next. Insurance and registration suck for newer cars but will go down over time.
If he has 3 more years to pay on the $7000 that's just over $200 a month, in 3 year he can start putting that way and have a solid car payment free for a long time. Step up and pay $300 done in 2 years.
If cash today is a issue I'd consider refinancing it, $7000 for 48 months at 2.64% payment would be $154/month and $384 in total interest. The bank I use would even go to 66 months same rate. ($114/month $528 total interest) . Almost dumb to pay it off early as you can hopefully invest and make more than 2.64%.
How many more years will the 100,000 warranty last?
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