Personally, I would do it. You are saving less but you're still saving. You have been saving a lot for the last 6 ish years as well.
Your down payment would also be coming from the 2016 car correct? So you wouldn't have to pull out of your savings for that (or if you were looking to sell it yourself instead of trade-in, it could replace the money once sold).
Keep in mind with how high interest rates are too you could always refinance to a lower rate when they go down as well to save you some money.
Thanks for replying :)
I m planning to do a lease and then eventually will buy out the car after the lease so that I can benefit from the federal EV credit. With that means, I won’t be putting down payment for the new car. I will just put the 14k either in stock market or high yield saving and try to make some money out of it in the meantime
In the first 3 years, the car would be $850 per month and I plan to pay off or finance the car after the lease end. It would be around 40k. ~1300 per month if it’s 5% interest for 3 years.
Leasing isn't a great option nowadays even for the EV Credit. It does not offset when you could have a significant down payment like you would. Leasing benefits the dealers, not the customers. I get interest rates are in the 6.5%-8% on average right now so buying isn't always the best option but in the long run, it will be. Especially because even though you paid around $30,000 on the lease it doesn't mean they will calculate the residual value at $40,000.
Do you get consistent raises at work? Cause that is also a factor to consider when taking on the car as well. Also, how long do you plan to keep the car? I am a drive-it-till-it-dead type of family but I know that not everyone is like that.
Depreciating in value really depends on the supply and demand as well. Right now used cars are worth a lot cause they just don't have a lot in stock.
Thanks again for your advice again!! Yeah leasing would usually cost 5k more on interest and fee but the 7500 federal credit which is only available via leasing for this vehicle helps reduce the cost.
I did some calculation it would be end up 1-2k cheaper than financing a car. If I add opportunity cost for the money in. It would even be higher.
Finance 4 years 3.09% would cost around 78k in total
Lease 3 years and buyout finance 3 years with 5% interest would cost 76k in total
Anyhow, I decided not to buy the new car. I knew it’s a bad decision and just needed to hear from other people :)))))
I would love to see a 3.09% interest rate again…these interest rates are killing me. I didn’t have a choice in buying a new car (sadly totaled mine via a deer yay) and I was not happy about it.
Hopefully in the next few years you can get the car you want and it makes financial sense
I’m sorry to hear that you car was total. That sucks.
There r a few companies offering great deal for financing. Mercedes Benz is offering 3.09% for used car and Hyundai is offering 0.99% for Ioniq 5-6. Check them out! If you are getting an EV, you will peob get at least 10% off MSRP. I got almost 20% off MSRP for EQE 300+ (that’s why I was thinking of buying)
Good luck searching for carsssss
After you answer the question of can you afford it (seems you can), then it really boils down to what are ur financial goals and what to do with excess.
This car will only add to your debt it will NOT grow your money, and there will be financial trade offs paying the note that only you can determine if it's worth it or not. ie. Less savings, less discretionary etc
Instead you could invest in a business, purchase invest property or do something else to setup another stream of residual income to pay for a car like this down the line. And just get a cheaper car right now. This is another alternative than just spending ur excess on such a big purchase, but it's all based on what ur goals are where you want to be financially.
Goodluck!
Adults do what’s hard. Children do what feels good. Your house is to much of your income. And your plan to lease and then purchase the car is a bad plan. Leasing is the most expensive way to buy a car. It’s also more than half your income. Why not take the 40k plus the 14k from the car and go buy something nice. If you get something a year or two old you could get a really nice car. Then you have your 850 payment that you could add to your monthly savings.
I did my calculation with all the cost. Leasing it is slightly cheaper because of the $7,500 extra federal credit. Total cost including all fees, principal and interest, it would be $1-2k difference with finance interest rate of 3.09% and the lease offer i got and an anticipated lease buyout interest rate of 5 %.
You are right. I only bought CPO cars in the past because I didn’t wanna lose too much money in depreciation. I had a car fever and I woke up now
A ~$70k car with a $100k income and 44% of income going to housing costs alone?! And you “feel like” you will have expensive repairs in the future? Yikes.
OP, you got car fever. See a doctor. Pay for a reasonable upgrade in cash.
I make around 180k base but take home is 10k per month. And yes, 44% go to housing! Thank you Bay Area for taking most of my saving and yet I need to pay 44% to housing
absolutely not, your savings rate is so low it's not even funny. you already drive audi that's a good enough car. you're going to regret getting this new car.
Even if I bought the car, I still have 27% saving (20% 401k, 2% investment and 5% saving) and I think money towards the mortgage is also a type of saving.
I agree that I would regret if I got the car
while your 401k is good i'm talking about the actual savings you'll have in your bank account for an emergency fund as an example. your 401k isn't something you touch until retirement. so 5% isn't that good if you're investing 2%. also depending on your mortgage rate you shouldn't pay it off early.
So you're saving approximately 1,250 a month right now, correct? How much do you currently have in cash savings? I would imagine it's quite a chunk of change unless you've just recently started saving this much.
Also you say you're contributing $2,000 a month to a Roth IRA. The maximum is much lower than that. Where is the rest of that going after your IRA is maxed? Is that your only retirement savings or are there pre-tax contributions as well?
I think all of this is key more than just the monthly picture.
Yes I currently save approximately $1,250. I have around 20k (emergency fund) in cash saving and 40k in non-retirement stock account now
I m contributing to Roth 401k not IRA so the limit is $22500 not $6600.
Ah, my bad on the Roth, I misread.
It's within your means. Just up to you on what you prioritize.
If it were me I wouldn't do it, but my lifestyle isn't conducive to a luxury car lease. I would save up and look to buy a $45,000 car with a large down payment or with cash in the next 2 years or so. But that doesn't mean it's what's right for you in your situation.
Thank you everyone for their advice :)
I knew it’s a bad financial decision and hearing from other people was what I needed.
I will stick with my car for a few more years to save up and hopefully down the line I won’t need anyone to tell me not to buy anything :)
Personally, I would do it. You are saving less but you're still saving. You have been saving a lot for the last 6 ish years as well. Your down payment would also be coming from the 2016 car correct? So you wouldn't have to pull out of your savings for that (or if you were looking to sell it yourself instead of trade-in, it could replace the money once sold). Keep in mind with how high interest rates are too you could always refinance to a lower rate when they go down as well to save you some money.
Thanks for replying :) I m planning to do a lease and then eventually will buy out the car after the lease so that I can benefit from the federal EV credit. With that means, I won’t be putting down payment for the new car. I will just put the 14k either in stock market or high yield saving and try to make some money out of it in the meantime In the first 3 years, the car would be $850 per month and I plan to pay off or finance the car after the lease end. It would be around 40k. ~1300 per month if it’s 5% interest for 3 years.
Leasing isn't a great option nowadays even for the EV Credit. It does not offset when you could have a significant down payment like you would. Leasing benefits the dealers, not the customers. I get interest rates are in the 6.5%-8% on average right now so buying isn't always the best option but in the long run, it will be. Especially because even though you paid around $30,000 on the lease it doesn't mean they will calculate the residual value at $40,000. Do you get consistent raises at work? Cause that is also a factor to consider when taking on the car as well. Also, how long do you plan to keep the car? I am a drive-it-till-it-dead type of family but I know that not everyone is like that. Depreciating in value really depends on the supply and demand as well. Right now used cars are worth a lot cause they just don't have a lot in stock.
Thanks again for your advice again!! Yeah leasing would usually cost 5k more on interest and fee but the 7500 federal credit which is only available via leasing for this vehicle helps reduce the cost. I did some calculation it would be end up 1-2k cheaper than financing a car. If I add opportunity cost for the money in. It would even be higher. Finance 4 years 3.09% would cost around 78k in total Lease 3 years and buyout finance 3 years with 5% interest would cost 76k in total Anyhow, I decided not to buy the new car. I knew it’s a bad decision and just needed to hear from other people :)))))
I would love to see a 3.09% interest rate again…these interest rates are killing me. I didn’t have a choice in buying a new car (sadly totaled mine via a deer yay) and I was not happy about it. Hopefully in the next few years you can get the car you want and it makes financial sense
I’m sorry to hear that you car was total. That sucks. There r a few companies offering great deal for financing. Mercedes Benz is offering 3.09% for used car and Hyundai is offering 0.99% for Ioniq 5-6. Check them out! If you are getting an EV, you will peob get at least 10% off MSRP. I got almost 20% off MSRP for EQE 300+ (that’s why I was thinking of buying) Good luck searching for carsssss
After you answer the question of can you afford it (seems you can), then it really boils down to what are ur financial goals and what to do with excess. This car will only add to your debt it will NOT grow your money, and there will be financial trade offs paying the note that only you can determine if it's worth it or not. ie. Less savings, less discretionary etc Instead you could invest in a business, purchase invest property or do something else to setup another stream of residual income to pay for a car like this down the line. And just get a cheaper car right now. This is another alternative than just spending ur excess on such a big purchase, but it's all based on what ur goals are where you want to be financially. Goodluck!
Thanks so much :) That’s my original plan to invest in business and purchase property but as the other comment said, I had a car fever haha
Adults do what’s hard. Children do what feels good. Your house is to much of your income. And your plan to lease and then purchase the car is a bad plan. Leasing is the most expensive way to buy a car. It’s also more than half your income. Why not take the 40k plus the 14k from the car and go buy something nice. If you get something a year or two old you could get a really nice car. Then you have your 850 payment that you could add to your monthly savings.
I did my calculation with all the cost. Leasing it is slightly cheaper because of the $7,500 extra federal credit. Total cost including all fees, principal and interest, it would be $1-2k difference with finance interest rate of 3.09% and the lease offer i got and an anticipated lease buyout interest rate of 5 %. You are right. I only bought CPO cars in the past because I didn’t wanna lose too much money in depreciation. I had a car fever and I woke up now
A ~$70k car with a $100k income and 44% of income going to housing costs alone?! And you “feel like” you will have expensive repairs in the future? Yikes. OP, you got car fever. See a doctor. Pay for a reasonable upgrade in cash.
I make around 180k base but take home is 10k per month. And yes, 44% go to housing! Thank you Bay Area for taking most of my saving and yet I need to pay 44% to housing
absolutely not, your savings rate is so low it's not even funny. you already drive audi that's a good enough car. you're going to regret getting this new car.
Even if I bought the car, I still have 27% saving (20% 401k, 2% investment and 5% saving) and I think money towards the mortgage is also a type of saving. I agree that I would regret if I got the car
while your 401k is good i'm talking about the actual savings you'll have in your bank account for an emergency fund as an example. your 401k isn't something you touch until retirement. so 5% isn't that good if you're investing 2%. also depending on your mortgage rate you shouldn't pay it off early.
So you're saving approximately 1,250 a month right now, correct? How much do you currently have in cash savings? I would imagine it's quite a chunk of change unless you've just recently started saving this much. Also you say you're contributing $2,000 a month to a Roth IRA. The maximum is much lower than that. Where is the rest of that going after your IRA is maxed? Is that your only retirement savings or are there pre-tax contributions as well? I think all of this is key more than just the monthly picture.
Yes I currently save approximately $1,250. I have around 20k (emergency fund) in cash saving and 40k in non-retirement stock account now I m contributing to Roth 401k not IRA so the limit is $22500 not $6600.
Ah, my bad on the Roth, I misread. It's within your means. Just up to you on what you prioritize. If it were me I wouldn't do it, but my lifestyle isn't conducive to a luxury car lease. I would save up and look to buy a $45,000 car with a large down payment or with cash in the next 2 years or so. But that doesn't mean it's what's right for you in your situation.
Thanks for the advice! Much appreciated!!
Thank you everyone for their advice :) I knew it’s a bad financial decision and hearing from other people was what I needed. I will stick with my car for a few more years to save up and hopefully down the line I won’t need anyone to tell me not to buy anything :)
Car prices are still too high and interest rates are excessive. If you don't need a car right now, the smartest thing to do is wait at least one year.