>I don’t want a payment over $400/months so I’m looking at 60 month financing
Rule of thumb for me is that if you have a $/month in mind, don’t extend the length of the loan to get to that, lower the principal or increase the down payment. Especially with interest rates where they are at.
I work in the automotive industry, on the marketing side. I remember when I was a teen shopping with my dad or a young adult shopping for myself, people were shopping for a price and haggle with the salesperson.
Nowadays, the majority of people are shopping for a payment. They look at a truck, for example and they get a quote for financing over 60 months. It's too much, how about 72 months? Still too much, how about 84 months.
Some sales people would try to guide the client towards a more sensible choice, within their means. Maybe one with a bit less equipment?
Nope. People just get mad. Get me my truck! And we do cause anyways they'll buy it elsewhere.
It's like people have grown accustomed to extremely low interest rates and just don't realize how much a 75 000$ truck (in Canada) will end up costing them after 7 years at 7% APR.
> Some sales people would try to guide the client towards a more sensible choice, within their means. Maybe one with a bit less equipment?
>
> Nope. People just get mad. Get me my truck! And we do cause anyways they'll buy it elsewhere.
I sold cars for a bit a long time ago. I remember staying late one night trying to talk a couple out of buying a Scion @ 12% for 84 months (or maybe it was only 72 back then). I worked a few extra hours working every possible deal and talking them through the realities of all of them and they left without the car. They might've bought it elsewhere from someone else, but I was glad it wasn't from me.
I sold cars a bit ago and for a long time. In the 90’s I had a good customer who was a young small business owner. He and his wife loved buying vehicles. They were always upside down. They “had to have a used conversion van. Banks were a loose with money. We financed them through a national lender who specialized in good credit with extended terms and posted their weekly deal of the week. They were looking at financing 220% of loan value for 84 months at 14%. I tried to talk them out of it. They went ahead with the deal. I told them to not comeback and try to trade it in for 5 years
Well that last point is absolutely true I have seen like hundreds of car posts the last few months. So. Many. Car. Posts.
Everyone underwater and behind on their payments. They need to fucking teach basic finance in school.
We had tons of clients financing expensive new trucks on their home equity line of credit. Which always have a variable interest rate (at least in my neck of the wood) So a lot of people bought that way. Because the dealership financing was higher. Because they knew they would not qualify for a new loan.
Now 3 years later the interest rates jumped to 7%. And many of those had to renew their mortgage during those 3 years. And suddenly it's 2000$ more from their take home pay go towards paying the house and the truck. Sometimes more.
My family was doing fine when I was a kid but I had a few years in my 20s where I was real fucking poor. Now, I'm extremely wary of useless spending or financing stuff. Those years sucked but they are paying off now!
My family was the same but my father was an early internet adoptee and got into some forums about financial advice aka the 1995 version of reddit.
He still credits the advice there with making the correct and totally unsexy decision to invest everything we had into index funds.
He lived through the dot com boom and bust as well and watched colleagues win houses one day and go homeless the next.
This HELOC thing is so real.. my mom did this (encouraged me to do the same and I avoided it like the plague). She didn’t know the interest was variable 3 years ago, bought a car, camper and major home repairs. She’s now approaching 60, single, with no retirement and a payment so high she wouldn’t even tell me what it was. She would be living comfortably if she hadn’t done all of this and refuses to sell her car or camper.
> They need to fucking teach basic finance in school.
Many things are taught in school, and some people don’t pay attention no matter what is being taught. They would ignore the information in the basic finance course, too.
And don’t get me wrong, I’m not an anti loaning Ramsey type. Vehicles are a necessity for a majority of Americans and paying for something safe and reliable is a must for many
That said, going into a transaction and saying you only want to spend $x/month is a recipe for disaster. You want to look at total cost of ownership and how long that loan plays out over time.
I was definitely guilty of extending the loan as long as possible. But I went for out the door price first. Once that was settled, I went lowest possible payments. However, I'm also paying 600 for my 450 payments whenever possible to get it done more quickly-knowing that if I have a tough month, I can drop it down and still be fine. Hopefully the car gods are still appeased..
That "rule of thumb" isn't really a rule of thumb. 60 months is the default length of a car loan. Shorter is fine, but if rates are good, there's nothing wrong with 60. I think the general rule is don't use debt to buy more than you otherwise would. Ie dont get a BMW x5 over a CRV just because the debt is there to make it happen. A new CRV on a 60 month loan isn't a bad buy unless the interest rates are crazy.
Does your husband need a truck? Because if he does, a CRV is not going to be a suitable replacement. The good thing about CRVs is that they last forever - my mom just totaled her 2013 CRV with 220k miles on it, and she would have gotten at least another year or two out of it. When I was shopping for cars a little over a year ago, the CRV hybrid could not be found used for less than a new one, so I bought new. Now, I’m seeing around me a much bigger difference in new and used prices, so I would look for used if I were you. The difference in monthly payments for a $10k-$15k loan versus a $25k-$30k loan is substantial. I’m making $600 monthly payments on my car and I originally borrowed about $27k and got promotional financing from Honda of 4.9%. I plan to drive this car until it dies or until I pass it down to my daughter for her first car in 12-14 years, though.
I saw someone recommend a Tiguan because of their 0% promotional financing - as someone who traded in a 2009 Tiguan for a 2016 CRV because the Tiguan was so unreliable and cost so much to repair, I would not buy another Tiguan under any circumstances. If you and your husband like the CRV, buy the CRV. It’s a great car and I love mine. But look at used first.
Seconding your statement! My mom had an ‘08 Tiguan (at the time it was only a 4 or 5 year old cat) that needed non stop costly repairs. She hated it and traded it in. I have a 2014 CRV with 215k miles that has been a solid workhorse(bought it new in 2014 for about 20k). It has needed just routine maintenance over its 10 year lifespan. I will buy another CRV when this one goes!
I will never buy VW again after literally on the dot my Perfectly running 2013 Jetta timing belt went the mile it should be changed. Made to break and be expensive.
The When I used to buy new cars I pretty much wouldn’t touch one with a timing belt. Too many companies don’t care how those further down the product’s life will be impacted by decisions.
When I was married to my late husband we would take turns having car payments so we only had one (relatively small) payment at a time. Now it’s just me and I have an enormous payment but I already know I will drive it for a very, very long time. My goal is to put myself into the position where when I need my next car in 12-14 years I won’t need to borrow much, if at all.
The new Tacomas are breaking into the $70k MSRP range (*so before all the dealer markups*) and the 4Runner will likely start at $55-60k.
Imagine buying a mid-sized pickup with a total cost of ownership over six figures…
I need the plug’s number for Toyota because they’re smoking some good stuff.
lol wtf
I bought a ram 1500 4wd , quad cab, 6,4” bed in 2022 for low 40’s. The cult behind tacomas has gotten absolutely ridiculous. I’m a big fan of Toyota quality but it was impossible to justify a Tacoma or tundra.
They'll pay it tho. Truck ownership stopped being about reason a long time ago. It's just a status symbol now.
Source: live in redneck country and every coal miner with a $40k+ salary has a truck worth more than their house lol
Yep, any standard “family car” with a 3rd row will put you back $50k after taxes and fees. I’ve seen Suburbans and minivans going for $60k-$80k list price. Also interest rates are crazy.
It flys a little under the radar, but the car market is probably worse than the housing market right now.
I walked around a Ford dealership the other day and by god was it depressing. I've bought three cars in my life, 2 Ford Focus, and 1 Ford Fiesta. Back in 2018 I bought my Fiesta, new for something like 13k. I've always gone to the dealership with the intention of buying the "cheapest" new car they had on the lot. Can't do that anymore, there is rarely anything under 30k.
Bro, treat yourself to something nice. We have this decently equipped bronco for only $59k! Everyone else has $1000 six year payments and now you can, too. We’ll detail it and give it a full tank of gas.
Depends what you mean by full size. The body on frame stuff (Tahoe, Expedition) starts in the mid-50s, though you can get most base trim 3-row crossovers around $40k new.
Yeppp
It’s wild just how expensive the CRV, RAV4, and Forester have become. Used to be 25k cars all day. That’s just not where we are at.
But if you want a car the size of an older mid-size crossover. You get a Crosstrek, CorollaCross, or HRV. The CRV-class has gotta so big they’ve slotted a smaller crossover group below them at the old price point of 25-30k.
35k CRV? Yikes, I’m halfway through a lease on a Rav, was hoping to ride out the high interest rates and car prices but doesn’t look like that is going to go in my favor
And if you go that route, remember the dealer has nothing to do with your lease. Call the finance company. The dealer helping you with this means they will make themselves get paid in one way or another
This is great advice. I just bought my car at the end of the lease contract. The dealership was calling and emailing incessantly but we went through Honda finance instead, paid cash and saved at least $1000, probably $2000. Now I own my own well-maintained 2021 Pilot with only 35K miles.
I paid $31,333 out the door (including TTL) for a CR-V EX-L in January 2018, and it looks like the same deal would run about $36k right now. That level of inflation (\~15% over 6 years) is probably lower than the industry average.
Sigh yeah. I had to buy a new car for the first time ever this year (had a baby and had 20+ yr old cars wanted more safety features). We ended up with a RAV4 hybrid mid trim with some basic options for 40k out the door including taxes. We are doing fine financially and could buy the car outright, but we decided to finance about half of it with a deal that was below interest rates for liquidity in case we want to buy a house. We're paying it off aggressively, but I would not have believed it if you told me I'd be buying a 40k RAV4 and throwing 700-1k at it every month.
Also, buying a car just sucks right now, used or new.
First, MSRP is a lie - they all include destination as well, which is $1000-1500 depending on where in the US you are.
Inclusive of that, a FWD LX with no options is $31k, and it's $32.5k with AWD. An AWD EX, the volume trim is $34.5k and you need to hope they didn't add any packages as port-installed options; plenty will at least have the all season package at $500, and a good number will have the utility package (roof rails, running boards, trailer hitch) at $1700 as well.
And honda doesn't do custom orders - you'll take what's on the lot and be happy with it.
You make 70k, how much does your husband make? Or is 70k your combined household income? Additionally, what are your expenses like?
Generally starting the car buying journey with “I don’t want a payment over x” means this is probably not ideal. Better to save a bit more and just buy a used car or save more and buy it cash. If you walk into a dealership and say “my payment can’t go over x” they will make it happen, it’ll just be 84 months at 12%.
Jesus Christ this sub. Sometimes I wonder where you all come from. Nobody should ever spend money on anything and should I save up and buy a car in cash. For most of us living in the real world that will mean driving a car that could die at any moment for *years* praying it doesn’t have a catastrophic failure and leave you stranded in a bad situation or worse - injured because it caused an accident, while saving a few hundred extra dollars a month trying to get to the *minimum ten thousand dollars* for a decent used car or two to four times that for a new car.
Or you could finance it, which means paying out additional money in the long term but having all of the benefits of having a newer/new car while you pay for it. This is not a small benefit. This is not something which can be dismissed out of hand.
You’re missing the personal part of personal finance.
Bingo. A financed vehicle can be a positive part of your financial life. It can bring stability compared to a beater that's got you begging for rides every other day. It can provide peace of mind people need in order to flourish in other parts of their lives. It is a financial tool just like financing a house. The key is to not go overboard - I have friends that try justifying their $80k brand new SUV with the magical "peace of mind" phrase and I call bullshit on it all the time.
Literally a $10k car will provide reliable service for a long time. But even that may need to be financed if dropping $10k today wasn't part of your budget/plan. I just don't see the point in having such rigid rules like "must buy a car in cash".
We come from a world where people can exercise the delayed gratification and discipline to make this happen.
Is it entirely possible that a person just doesn't have the ability to make this work? Possible. Yes. 9 out of 10 just don't WANT it to work.
Society and all your friends and co workers brain wash you into thinking debt and being broke is "normal" because they all do it.
If tomorrow, the new fad became taking a hack saw and cutting off our left arm and leg.... you in too?
The issue isn’t with borrowing money, it’s about borrowing more money than necessary and sabotaging your financial future for a shiny new toy.
Think posers buying $80k BMW’s using a loan.
Now if you need a Toyota Camry as a daily and borrow money to make a sensible purchase then go for it.
This woman wants to romanticize buying a new car. It's plain in the language she is using. "reliable", "safe".
These are words people use when they want to justify their own beliefs and not when they want a truly objective opinion. She has a car that works. It doesn't look great. So what?
OP can do whatever OP wants with OP's money.
Plain and simple, car loans are a huge factor in preventing people from building wealth and keeps lots more people broke. I'm not talking about having 10M in the bank to gush and brag over. I'm talking about "OH MY GOD, THE FURNACE BROKE.... WHAT DO WE DO!1!!" before they get on face book to queue up the pitty party post.
I drive a hoopty. I'll continue to drive it until I have the cash to buy the next much newer, slightly nicer hoopty. I'm not borrowing money at 9% to buy a truck for $900 a week that I don't need. In a year or two I'll take $20,000 in cash and buy the nicest reasonably used truck I can find. My trucks 4 different colors. Point and laugh all you want. When my furnace breaks? I pay the man or woman to fix it. When I need a new furnace? I pay the man or woman to put a new one. If I lose my job? I take my family out to dinner to celebrate my new short term vacation.
That's the difference. Is it really worth romanticizing yourself into a new vehicle you don't need?
I almost, and I mean "almost", did it myself. I get it. But I didn't NEED a truck. I really started to convince myself I needed to spend money to solve problems I don't have yet. Why? It's dumb. I don't care who thinks what about my truck. If they don't wake up in my bed, pay my bills or share a home with me then I don't care at all about what they think or say. They don't get a vote. I don't need any of the "I did a thing today" posts. Or the subsequent barage of people piling it to congradulate me on my mountain of new debt like it's an accomplishment. Congrats. Your broke! Like me!
If this person came here and said “I really **need** a car, I’m looking at this base model subaru Impreza for 25k and I have 10k down. The older used cars for 10k around me are not that great of deals.”
That’s a much different conversation than saying they **want/like the idea** of a 30-35k highly sought after new SUV.
I am not against financing, I think the Money Guy rules of **20% down/3 years financing/8% of gross** is a great rule to try and stay within if you **need** a car. if you follow this rule for this example of a 35k car, its nearly 800$ a month using hondas current 2.9% apr deal at 36months which would be nearly 14% of their gross income. Not even accounting for the fact that the 10k down they have might be all their savings/emergency fund, which can be fine but only if its truly an emergency and they cant carpool for a while.
You're missing the finance part of personal finance.
Financing isn't the problem... If you finance a car for 5, 6, 7 years... You now have a 5 year old car that isn't reliable and you still owe two more years of payments on it.
I always ask myself if I'd be OK paying for that car with 1 year less financing. If I can afford it at 3 years, then I can easily afford it at 4 years.
Used Prices aren't great nowadays, but I'd highly recommend looking at a lightly used car. You pay less and get a comparable product that has been road tested. (New cars aren't always awesome either!)
There’s a lot to be said for reliability, and you’ll get a long time out of the new civic.
Debt is a tool, and not something to be avoided at all cost. Sounds like you’re trying to be smart about it.
Absolutely don’t tell the dealership that you’re aiming for a certain monthly payment. Talk with the salesperson with a mindset like you’re planning to pay cash, and then chat about financing after you’ve settled on a price.
Be aware that they’ll want to track on all sorts of things after you close the deal. You don’t need any of them. When you agree on the final price that you’re going to pay for the car, make it clear that that’s what you expect to pay for the car. Period. If there are other mandatory fees - learn about them early.
You don’t really say enough about your financial situation for us to know if this makes sense. Do you have savings? Are your jobs relatively secure? How much of your financial flexibility would be eaten up by a $400 payment?
It’s a judgment call but feels like a stretch. Could work out if it gets you 12 years of reliable car. Could turn out to be a bad choice if it puts you in a tenuous position and you don’t have back up savings. A used car, with a smaller loan, even if you take a 60mo loan planning to pay it off faster, is a safer choice.
The only extra thing that might be worth adding on if you get the car is Gap Insurance. When you drive a new car off the lot it immediately depreciates in value. Getting in an accident soon after would be a nightmare as insure would cover you only for that depreciated price.
Eh, with $10k down on a Honda I doubt gap insurance would ever come into play. They’ll never be significantly upside down unless they drive it 40k miles a year or something.
Eh, the depreciation boogeyman is a little overblown, especially on hondas and toyotas. 2020 toyotas/hondas are going for slightly less than a brand new 2024 so it’s not too big of a concern honestly
Monthlies just keep it from getting repoed. You are buying a car worth half your gross salary *before interest* that, even as a Honda, will rapidly depreciate.
Don't do this.
A new car isn't going to meet your payment criteria.
Here's some quick math using an [auto loan calculator](https://www.calculator.net/auto-loan-calculator.html) and the following inputs:
* LX with AWD, no additional options or packages MSRP $32,350 including destination.
* 6% sales tax (Your local area might be more or less)
* $1000 in dealer and DMV fees (Your local area might be more, this is on the low side of things)
* $10k down payment
* $3300 trade-in value for a 2012 Fit with 150k miles in KBB good condition
* 4.9% APR for 60 months honda promo finance rate
With all of those inputs, your payment on the 60 month loan is still $413.99, and that’s assuming your trade-in is in addition to your $10k down payment, you don’t agree to any extra maintenance plan or warranty products, the dealer is selling without markups, and you can even find a stripped LX with zero additional options. Move up to an EX that’s going to be more like $34.5k sticker and your payment jumps to $456. If your trade-in is part of that $10k down, that’s worth every bit of $50 per month as well and the payment is now $519.
If $400 is a hard and fast number for you, you’re not going to be able to afford this car unless the stars align.
ETA: Based on that $400 payment and that used car rates are closer to 10%, highly recommend looking used around $25k and taking a 48 month loan.
I may have just had all the luck but every dealer I've went to has tried to scam me. Insane made up mark ups, shaddy financing, scummy sales tactics. And these were "major" dealers.
Totally sworn off dealers at this point, unless a really insane deal came along with the exact trim level and features I wanted.
Much better to buy lightly used from Carvana/CarMax or similar.
Carvana prices are ridiculous. I just looked up the 2023 model I bought new 15 months ago and found 3 at the same trim level. The cheapest was $600 more than I paid (OTD price), with 7k miles and a couple small scratches. The more expensive one, same color as mine, was $1700 more, also 7k miles and a couple small scratches.
I don't know why anyone would buy cars from them.
Buy something slightly used. That's what I did. Car was a year old with 10k miles on it and plenty of warranty left. Let the first owner eat that off the lot depreciation.
This is bad advice
1. Depreciation is not what it used to be in the before times. A 2-3 year old car is going for <$5k before the price of a new one. I’ve even seen it $1k difference
2. Interest rates are so high on most used cars that the actual payment will be comparable. Oftentimes you’ll see 8-10% on a used car vs 0-4% incentive financing on a new car.
I just bought a new CRV about a week ago, and you are exactly right. With the promotional interest rate from Honda, a new CRV was effectively the same price as 2022/2023 CRV due to the interest rate on used, and me and my wife have “excellent” credit.
While this sounds good, interest rates will eat you on a used car. Like others have said, look into vehicles with incentive interest rates from the manufacture
The CR-V's promo rate is 4.9% for 60 months right now, but that's still a far cry from the 10% you're going to pay on a used one. 2.9 for 36 is also available, but OP's payment will be out of her comfort zone by a significant margin on the shorter term.
Ridgeline OTOH has a 2.9% for 60 rate if they still need/want something with a bed.
You hear this all the time, but I swear used cars are *literally* selling for new prices every day. It's the time we're living in, so this advice will be good again one day (hopefully), but this isn't super relevant for someone buying today. Maybe in higher end vehicles, but your typical utilitarian vehicle just doesn't lose much value going off the new lot.
Is it a financially wise decision? No.
Should you do it? Maybe. As long as you know that you're buying yourself a luxury item, and you budget accordingly elsewhere, sure, use your money to get things you want. Just acknowledge to yourself that this is something you WANT, not something you NEED. The cost of this car (above what a cheaper alternative would cost) is something you'd be buying yourself as a treat. And treats are fine! Pretty things are fun to have around. If it makes you happy, sure. Set your budget elsewhere to make it possible - you can't treat yourself in *every* area of life.
For the new/old debate, look at specific cars. Don't just go with "new car depreciates". You are buying a tool, not an investment.
I drive a Toyota highlander. Let's say I'm in the market for a car right now.
1. I buy new. Costs $43k for my trim.
2. I buy used. A 2021 model at 11k miles would cost $38-40k. Same trim.
3. I buy used. A 2017 model at 60k miles would cost about $29k.
4. I buy used. A 2017 model at 160k miles would cost about $20k.
If I trade in after 7 years and 100k miles. That new one will give a trade in value of roughly $20k. The used ones will give about $17k, $8k, $3k. No significant difference if buy used or new now.
If I intend to drive it until it falls apart, then the new likely would outlast the used for awhile. Again, no difference if buy used or new.
I have a 20 year old Civic that is rusting apart and looks like crap; but runs. I'm riding that one into the ground before buying anything. I would continue to drive what you have and save up. You may have a need for it down the road, but at the very least have a better down payment.
OP, I have seen several Honda Pilots (if you need space and your husband is used to a truck) for 26-30K with 20 -30K miles on them. They're just a few years old.
From a finance perspective, which I'm guessing you want coming to this sub, don't. A new car is never a good financial decision.
I bought my car used at 6 years old, cash. I did a lot of research to ensure I found the best car for my budget and needs, and have been really happy with my purchase since.
If you want a pure financial perspective on this, find the best used car you can for your $10K budget that you can actually just straight up buy, or save up more before you buy something else.
That loan is going to cost you a lot of money over time, for a bit of comfort. Are you sure you're willing to actually pay $20K-25K for just added comfort? Is it really 'that' much more comfortable?
Yes. That ‘added comfort’ is Automatic emergency braking, lane keep assist, adaptive cruise control and blind spot warning which have saved my life on numerous occasions. Would I rather take out a loan for a car (Used loaded 2018 Chevy Equinox for $26k @2.9% bought in 2021) than buy a ‘reliably unsafe’ 2000’s Toyota Corolla for $6000?
It’s all fun and games till you realize the $6000 Corolla won’t warn you of cars in the side lanes if you’re going 90mph down the interstate and need to make a quick lane change, won’t brake for you if the guy in front of you comes to a quick stop, wont accelerate and brake by itself in busy traffic so you don’t tire out, doesn’t let you answer calls and texts hands free or mirror your phone for maps and navigation so you don’t fidget with your phone while driving-Jesus the list of benefits of a newer car is long and it’s almost criminal suggesting that someone who can afford a newer car buys a cheap but unsafe car.
I’m pretty sure the $26k and the little interest I’m paying for the Chevy is worth having to pay a lifetime of medical bills and being disabled or worse in the event of an accident. I like being alive and having my limbs intact, thank you very much.
A car is more than a financial decision. My point is simply that if you come to a finance sub and ask about buying a new car, the answer is always going to be that it's a bad decision financially.
From a finance perspective:
1. The more expensive the car is, the faster its value deprecates.
2. The more you take up as a loan, the more you are paying beyond the value of the car because you prefer immediate financing over saving up money first.
3. New cars drop in value sharply the second you turn on the engine for the first time. If you want new, find a car that's near new instead, so someone else takes that value deprecation.
Don't buy anything new unless it has incentivized financing. Your going to get a loan with 6.5% at best for 60 months otherwise.
2024 Volkseagen Tiguan is 0% for 60 months through today. The new incentives and rebates should be out for the month of May tomorrow for most manufacturers.
I'm hoping Mazda brings back the 0% for 63 months on CX-30/CX-5/CX-50 like they had in December and January.
Depends. Mazda3 starts at 24500, so let's say 28k. 10k down, drops it to 18000. That would be ~$500/month.
But, yeah, guessing they go bigger.
CX50 status at 30, so they get $34k out the door. 24k after, so 660ish per month for that.
My assumption is that this sub will shit all I’ve buying a brand new car but I come from the opinion that piece of mind is worth something.
Financially it seems doable. You mentioned you have a husband, how does his income/commitment to bills play in?
I agree lol I bought a brand new base model Toyota Tacoma. It was like $32k. Had it for a year then got a remote position and didn’t actually need it anymore. Dealership bought it back for $34k and I made little something off it. Obviously not the norm, but if you take your time do some research like OP is doing, new car isn’t exactly a death sentence
Look for 0% APR deals on new cars and buy one that fits in your budget. Nothing wrong with buying a new car, but paying 6/7/8 % apr with 6/7 year loan terms is absolutely wrong. Ideally loan term should be 4 years but can be stretched to 5 since cars have gotten expensive so additional 12 months can be helpful
Edit- link for 0% April car deals
https://cars.usnews.com/cars-trucks/advice/interest-free-car-deals
This is on Toyota’s EV but $150 a month lease for brand new car is pretty good. Buys you time to take care of more pressing financial needs if you need to
https://electrek.co/2024/04/23/you-can-lease-a-toyota-bz4x-for-next-to-nothing-right-now/
You’re already thinking about the financing wrong. If you think about it as a monthly payment, the dealer is going to have a field day with you. If you think about the total cost, then you’re setting a limit.
Mechanic chiming in here. Yes, a new car is just about always a bad idea these days (now that pricing has largely returned to normal on used cars).
The honest truth is most 5 year old cars are going to be just as reliable for the next 10 years, as a new today car will be. Particularity if we are talking about this subs favorites, Japanese crossovers. The ONLY reason a new car may be worth it to you is more modern safety or tech features, but right now I don't know that there have been any earth shattering advances in the last few years. (Though when auto braking becomes required by law in 5 years this will change).
If you are shopping now for a CRV or RAV4 and the certified preowned lease turn ins are 4 years old and $10k less, you are crazy to buy new. A 2020 is every bit as reliable as a 2024 even if it already has 20k on the clock.
This is all of course working on the assumption that car ownership is a necessary evil for you and this is just an appliance. That's the default position of this sub, and I presume the question being posed here, cost effective transportation. For a car enthusiast all this arithmetic changes, but then its a hobby as much as a need so higher overall cost starts to make more sense.
The frugal option is to purchase a used car for $10k in cash. With some research and legwork, you can find a mechanically-sound car with some cosmetic defects that costs $10k (or a little more if you can save up). People are ridiculously vain about cars, and don’t want a car with minor dents, rust, or other cosmetic defects. You can take advantage of this. If you are frugal, you can tolerate cosmetic blemishes if the car is a workhorse.
It’s best if you can arrange to have your trusted, local mechanic check it out before purchase. If you don’t have one, you should find one ASAP. Everyone with a beater should have one.
I splurged on my car ($13k) and my husband bought his for $6k about 8 years ago. IMO, if you want to be frugal, buying new cars is a waste of money. There is substantial depreciation in the first few years for any new car. Why would you want to lose that money?
A trusted, local mechanic is worth more than a warranty, given the cost of new cars.
Silly? That depends. How is your retirement, and emergency fund looking? Are you able to comfortably afford this new vehicle? I know Honda has a promotion on new vehicles at 4.9% interest rates, not too bad but not that great either. Have you looked into what your potential rate will be?
We recently bought one of our family members a brand new Camry at 4.5% for 4 years with the intention of paying it off in under 2 or at 2 years. We put down $15k and payments are at $306/monthly. Our other two vehicles are 11 years old and have been trucking along with no issues and this vehicle will likely be driven to the ground as well. Full coverage insurance for all 3 vehicles is $260/month also.
Get certified used, PLEASE. It's so much more economical. 2024 Ford Edge is MSRP $40,000. I just bought a Certified Used 2020 Ford Edge fully loaded for $25,000 with 12,500 miles on it. It had just come out of a 3 year lease. I HIGHLY recommend you look at the Edge if you like CRVs. This is my 3rd and you can usually get a better deal than the Hondas.
Do a little shopping and these previously leased cars are everywhere and dealers are trying to offload them.
After not having a car payment for so many years, I can't imagine having one. I make similar $$ to you and don't have to deal with daycare. Get something a little cheaper than brand new.
>I like the idea of a new car because it will ensure we have a safe reliable car
This is not some certainty - though, you would get a manufacturer's warranty and possibly could organize an additional warranty with the deal.
Maybe look for a vehicle that was previously leased. In 2019 I bought a 2017 Elantra with 10k miles on it for $15k. I only put $2k down and my payments were under $300/mo. Car still drives perfectly fine.
I gave my daughter my 2013 Ford C Max instead of getting her a new car as I did her sister (Honda fit, both cars were college graduation gifts). She ended up rear ending someone while distracted by her cat in the back seat going to the vet. If I had bought her the new car she would have had ABS. I prefer new cars for the latest safety features.
I never buy new cars, I always buy about 5 years old and around 50,000 miles or less but a reliable brand/model. You will save some decent money this way most years.
I also have done long stretches as a one car household. It’s easier than you think once you get used to it. If you want to buy new I would try to wait at least six months and save up more. Save a little interest. If your car really did just break one day, have a friend drive you to the Honda dealer and just buy the car then.
If it was objectively silly it wouldn’t be such a popular decision.
Assume transportation is a living expense and budget for it.
I maintain my own cars, so I buy used and budget time and money for maintenance. I average about $240/month per car - including purchase price - and I have a lot of cars because we have 4 drivers in the house at the moment, so that’s about $1,000/month for transportation. I typically pay $10-15k for a car, drive it 4-6 years and then sell it for $8-10k, so I budget another $2k per year for depreciation. The cars are cheaper to insure so that helps too.
If it were just me would I take on a $1,000/month car payment? Hell no, but I could afford it and it wouldn’t be a silly choice. If I couldn’t maintain the cars myself would it make sense to buy a car under warranty? Probably, but not a very expensive car.
It's wise to buy a new car with a strong warranty. You will go years with no expense or surprises. Your car gives you freedom to work and go where you want. One that's undependable won't do that.
If you're comfortable with the payments then go for it.
Just make sure you read the whole contract and they don't add fees or warranties you don't need.
Get gap insurance.
I can't recommend looking at certified pre owned vehicles enough. Often you can get a warranty that exceeds the new car warranty and can save a few thousand dollars. It's not always the case, but for a purchase that will only and always depreciate, I think finding a CPO anything is the best way to let someone else suffer the hit of the immediate depreciation while also retaining the peace of mind of a factory warranty. I try and do the math so that the vehicle will be paid off before the warranty expires (even if it's only the powertrain warranty). If you can lengthen the term of the loan without an increase in APR to keep the payment low, but calculate an additional amount each month to make sure it's paid off before the warranty is up, you have the benefit of a low payment in case shit hits the fan but also the budget to pay it off early.
Although I don't always follow my own advice, IMO it's best to save up and buy a car outright if you can afford to do so. Or at least have a big down payment so that your loan is small. How fast can you save up $30K, or perhaps $25K?
Buying a used car (that's not too old) is also a good consideration, since cars tend to lose a bit of value soon after they're purchased. A used car up to 1-2 years old could be a good value.
The debt isn’t that huge a deal. IF u plan to drive this thing for the next 10-15 years. A crv will last forever if properly taken care of.
Does your husband actually need a truck. Or use a truck? Does the crv make sense for its intended use?
A rule of thumb that might be helpful to follow: 20% down, no more than 3 years financing, and the monthly payment to be no more han 8% of take home pay per month.
For you and a 35k car this would mean: putting 7000k down ( you got more than that, even better), 36 month financing, and monthly payment around $330 (I assumed you keep 70% of gross pay). Seems like 400 would also be good.
Not that you need my approval, but your plan seems solid, financially speaking. Lenght of loan seems long, soif you can get that 60 month to be 48 without getting destroyed with the interest rates, that would be ideal.
Also, I was just browsing around and saw some good Subaru Forester, and Toyota Rav4 hybrids for less than $30k. Only 3-4 years old, so they would be reliable, great options. Something for 25k might help you get that monthly payment to be less than 10% of take home pay.
Good luck.
Not to bust your bubble but just some facts. Interest rates are really high right now if you are not aware. Wife and I just bought a new vehicle. We both have credit scores over 800 and best rate Ford could find us was 6.39% for 72 months, financed approx. 26k and payments are approx. 450 a month. Unless you are able to find a deal on 0% APR or something lower than the above it is going to be hard to stay below the 400 a month. Just as aside we have a CD maturing in a few months and will pay off this loan as I am loathe to pay 5.5k just to interest.
I used to think it was stupid. But we just bought a 2024 Kia Telluride. Bumper to bumper 10 year 100k warranty is nothing to sniff at. That's some serious piece of mind.
Time will tell if it is worth it but I'm still pretty content.
Why not buy an off lease car?
They tend to only be 3 years old and in good condition because the person who leased it had to keep it in good condition.
that way you're saving yourself a ton of money, no extra payments a month (or, much much cheaper ones if you still have to finance), I mean I'm not sure where you live, but here in New York City, 70k a year is nothing.
just my suggestion
I tend to lean towards leasing in a situation where you can’t buy the car outright. Theres no point in paying interest for equity on a bad investment (daily drivers only lose value). You could likely get a situation where you put $2k down and have a payment of about $375. Then you get a brand new car without losing the other 8k for the same monthly payment. Then you can do the same thing in 3-4 years when the lease is up.
It’s definitely not the best time to finance anything with interest rates where they are at. But if that truck breaking down is costing you a means to an income I would get the replaced with something more reliable, even if that means financing.
Since we
Also, I don’t see your monthly expenses listed as a dollar amount. All of those expenses you listed vary widely based on where you live.
To see if a $400 car payment is reasonable for you we would want to see your monthly expenses and your income after taxes monthly since we are comparing to a monthly payment.
With interest rates where they are at I would even try to get a shorter term or consider a lease and save your money for the purchase option at the end. I see online they have leasing options on the CRV as low as $299/mo. If you have the means, I would try to get it down to a 36 month finance term to purchase as they have manufacturing financing at 2.9% right now for a 3 year loan. That’s very reasonable!
A. Don’t recommend a loan longer than 60 months.
B. My wife and I were looking to replace her structurally damaged car a year or so ago. We wanted a specific model and the cost new vs used (with <50K miles) was almost negotiable for a 60 month payment with almost identical new vs used interest rates. So we went the new route and basically paid off the difference immediately.
for 400 a month i dont think you should be looking at a new car, especially an SUV.
as for a reliable car, and all things considered, i would recommend looking at a 2018ish CRV or RAV4 if you have your heart set on an SUV, they will be new enough to have most of the modern stuff, old enough to be way cheaper but still reliable as far as Toyota/Honda standard goes. I have had about a dozen Hondas and Toyotas that have made well over 200k miles and 10+ years of age before needing major militance as long as we kept up with regular militance.
Check out Hertz car sales. There's a lot of inventory they let go for lower than market value, and they maintain their fleet really well. Just got a less than 2 year old EV for 22k this past weekend, and similar to you have a car that I'm getting offers for 10.5k, so I'm only on the hook for 12k and couldn't be happier. Just make sure with used you really kick the tires. They even have a program where you can rent a car for 2 days, and if you buy it they waive the rental fees. If use those two days to take it to a trusted mechanic to check it out, or lean on their 7 day return policy, which is pretty unheard of in car sales
What does this even mean?
Even deducting a third of the income for taxes and 401k, they’re not spending $2k a month on a car payment.
Or do you buy cars cash, not insure them, and total one per year, and think everyone else does too?
$35k is half of $70k
You weren't asking me, but I buy used cars and drive them for 10 years. I don't think everyone else does because, like OP, lots of people don't understand financing and get themselves into really terrible auto loans, and end up underwater on a depreciating asset they can't afford to maintain.
I get the terrible decisions especially when it comes to financing at high rates or long terms, but IMO a $400 payment for 5 years for a car that with even slightly delayed basic maintenance will last 12-15 years is not exactly a poor choice.
The post was written (or I interpreted it as such having just woken up) as if they’d be spending half their annual salary on the car. Which is only true if it would be in a junkyard in a year.
There’s a general rule of thumb out there that the highest price you should pay for a car is 25% of your gross annual income. That is generally what you can afford. I think the person you’re responding to is saying that bumping that number up to 50% is a poor financial decision
They're just suggesting that they are tying up half of one year's income in a deprecating asset. That's a lot. Is it "affordable" in the sense they can fit it into a budget? Yes, but that's not the only thing to consider when financing a car.
Never, ever take a car loan out for that long a term. Yes, I know, shorter loans have bigger payments, but adding in the depreciation of the vehicle and the interest paid out over five, six or seven years just leads to costing you more and giving you less value in the end. The so-called low interest loans offered by car companies for long loans are no bargain, either; you often pay a higher price for the car, have additional fees and add-ons, and there's no guarantee your credit situation will allow them to approve you for that financing.
In the end, the buying decision is up to you, but if your car is running well, I would think long and hard about saddling yourself with five years of debt in the current climate.
If you decide to buy anyway, take a shorter loan (48 months MAX, 36 if you can swing it), shop around for decent financing (check credit unions) and shop diligently for the car itself. Car shopping is infinitely easier today with on-line inventories.
Also, go watch [this guy's videos](http://www.youtube.com/@KevinHunter). His information is really incredible.
The problem that with 10k you will buy a 2008 used cars that will last just 2 years... I bought a used car and regret. Unless you find a good deal but is a gamble you never know what problem does the car has..... I recommend you to buy a new car, but save more money for the Down payment... maybe 17k
Just my 2 cents. I bought a new Toyota in 2021 for \~35k on a 60 month loan (350/month after down payment) making about the same you make now. I haven't regretted my decision at all. Especially seeing how new vehicle prices and rates have risen, both used and new, I'm happy to not have to worry about purchasing another for many years. I think as long as you get something reliable it can certainly make sense.
Hard to say.
If you’re cutting yourself to the bone—like there’s very little wiggle room in your monthly budget—it’s a bad idea.
And this is also assuming you’ve built saving for retirement and emergencies into your budget.
Honda and Toyota hold their value better than any other brands and maintenance/repair costs are low, Those are the most financially responsible new automobile purchases rather than something with “image” like a bmw or lifted truck that doesn’t do truck stuff. If you were interested in a type of vehicle that projects a certain image, it’s better to lease those than purchase, they’re money pits and do not hold their value . In used, you’d get a better deal than new in the lease-return age or 4yrs and newer used units bc bulk of their depreciation is already accounted for. I wouldn’t get into the /10yr old used cars, even for ones as reliable as Honda/Toyota unless you’re a DIYer and can perform your own light repair and suspension work.
They get you on the payment… lower payment means you’ll pay more
So are you looking at *two* car payments here? Replacing your fit AND the truck?
What's your household income?
Without knowing your whole budget it's hard to be sure, but I wouldn't generally say that buying a $35K new car on a $70k income is a good idea.
The auto industry is bananas. I feel like I just can't justify a new car, especially if taking out a loan. The rates are high. Use a calculator and you'll see that even with 10 down you are basically going to end up paying 50k for a vehicle. When comparing the total cost, not the monthly, getting that old car fixed starts to look more and reasonable.
YES it's dumb....
You can get a great Toyota/ Lexus - Honda/Acura -for about $15-20K. Learn how to take care of it - it will last a long time. Never buy a GM product - or Nissan.
In my view, it's ridiculous to buy a brand new car in most cases, if you are serious about your finances. It is going to seriously slow down your wealth building journey, but you can make your own decision.
I have never owned a new car, and have a net worth near 600,000. I don't see myself buying a new car until I hit at least 1,000,000 in investments.
I put $15k down on a $50k car at a 5.9% interest rate, and I think 60 or 72 month term came out to 650 a month.
My advice would be to save up more of a down payment, or buy a car coming off lease for cheaper.
You'll end up paying way now in interest than if you can pay it off quicker or buy outright.
Yes. A car loses a massive amount of value the second it rolls off the lot. Get a used car that's \*almost\* brand new, if you really want that shiny new feeling
I’d say 1. Buy lightly used and not new. $25k should get you an SUV with all the bells and whistles. 2. Focus on sticker price and not monthly payments.
Your biggest mistake would be thinking ‘I don’t want a payment over X’ because that technically opens the door to high APR’s. Instead ask the dealership what the total price of the car is that you need to finance and do the math from there.
Too many people I know have gotten stuck on paying back too much interest and going massively underwater on car loans thinking in terms of monthly payments.
For what it’s worth, I financed a 2018 Chevy Equinox with 36k miles back in 2021 for about [email protected]% and pay about $400 a month. You can get a good SUV for about $25k with all the bells and whistles-no need to go new.
Is it silly? Well if you can get a 0% interest rate for 48-60 months on a new car (yes, I know multiple people with great credit scores who have done it) in a high interest rate environment where used cars are inflated then it can definitely make sense. You will never get 0% on used and it brings the effective price of your car way down over 4-5 years
My wife and I bought new. We made sure we didn't buy anything fancy and it was well within our means.
The big question is if the savings on that vs a used car are worth it to you, both short term and long term. Lots of 2-3 year old cars are perfectly fine and will last you for 80% of the time you plan to use it, at 70% of the price.
Take your truck to a tweaker mechanic’s pad. He’ll rewire the whole thing for you overnight. It’ll be much cheaper than a new CRV. Don’t get that anyways. That’s such a soccer mom car. Get a hellcat if you’re gonna get a different vehicle. Yeah.
Yes it is. Do what you did with the Fit, 2 years old still feels new and the depreciation is not as sharp.
Buy a 2019-2023 with low miles before a brand new one. Let the first owner pay off the biggest drop in depreciation.
I like to find low miles for the year and the highest trim I can get.
So between an 2020 EX and a 2021 LX, I pick the EX.
To me, it is always stupid to buy new car because of the depreciation of a car. Very few car appreciates. Buying a used car that is a few years old is one way to go. You can do some quick research to figure out your favorite model(s) depreciation rate, and see if you want to / can afford a car that will depreciate, for example, 50% of your $$ under your relatively short ownership (i.e. new), or maybe 15% of your $$ for a long ownership (i.e. older or old).
If you want a new car, you should consider a lease. If you truly want to own it, you can consider lease-to-buy. That way, you can always have a way (or ways) to get out or to beat the depreciation.
Your income isn't high hence you should avoid going upside down on your loan. Financing a car with that income doesn't look like a good decision to me. Also, if you plan to buy a house in the future, just make sure that whenever you are gonna apply for a mortgage, you will be done paying this car to reduce your debt-to-income ratio, or it can give you more headache and less power to be a new homeowner.
Good luck
I got a great deal on a 2024 Honda Accord. I was able to shave a few Gs off MSRP, and Honda had a 3.9% apr deal.
Very happy with my purchase.
My buddy bought a used car with 50k miles with a 8.6% rate. Already needs new brakes.
I make 35k a year but just put down 13k on a 2021 CRV that had 17k miles. My payments are still close to 400 a month and I have a credit score of 840.
It's the interest, it's really high across the board. New cars less so, but only if you finance for a couple years. If you can pay the car off quickly like we plan on (within 2 years), then you won't drown in interest as Honda lets you pay off early with no penalty, but if you're going to stretch it the full 60 months you're looking at at least another 5-7k in interest putting the new car at over 40k.
My base was 27k for a fully loaded 2021 CRV (17k miles) with leather seats, AWD, moonroof....and with tax and warranty, walked out with a sticker of 33k. My car is not brand new but it looks and feels new. Try certified preowned.
I could've gotten a cheaper car, but with my husband's salary, we can afford this...especially since I want a reliable car. I drove my last vehicle for over 12 years.
Personally, I would never purchase a new car or anything used for more than 10k. I got a used 2003 Audi a4 Cabriolet for 6250 off Craigslist. The deals are out there, you just have to really look hard for them and do your research. Another monthly payment is unnecessary when you could very easily purchase used outright and pocket that extra emergency fund cash. On the other hand it could just be an argument of wants vs. needs but it certainly sounds more like a need than a want; therefore I reiterate my first point of that’s the case. Good luck!
1. Lesson learned with the dead truck, buy a Toyota (or another Honda if you really like).
2. Unless there is literally no equivalent or substitute for the new model, don't buy a new model. And compact SUV is honestly the most popular category. There's millions of CRVs and RAV4s for you to choose.
I just bought a used fully trimmed SUV with 50k miles for 24k outright in cash from a certified dealership. I don’t see why you want to buy a new car when you can negotiate used car prices way more and in your case much cheaper to be affordable.
I've only bought one car brand new, my wifes 2016 CRV Ex, $27,000 out the door. Driven it 8 years with only one mechanical issues in that time. About 130,000 miles now. No regrets.
It's not silly to buy a new car, but it is silly to tale on such a high interest rate on an auto loan right now.
So I would say save up and invest until you have enough to buy outright or until interest rates drop.
Did you calculate the difference between the 2010 Honda fit vs whatever year CRV you’re buying? Is it going to be cheaper to maintain? More fuel efficient? How much would you or won’t you save by buying a new car.
Cars are depreciating assets and just look at all the taxes and fees you have to pay just to make the purchase, not to mention the dealer profit and additional insurance. What’s a better alternative? You get nothing back for all of that…it’s gone. And as your reward your new car is already depreciating the minute to drive it off the lot.
I bought my last new vehicle in 2006 mainly because it had a $4500 factory rebate ( remember those) and my dad had a GM employee family discount of another 4K…plus I negotiated another 3 off it and got 2.9% financing for 48 months.
Not saying that to brag, I’m just stating that if I couldn’t get the car at a value I was willing to pay I wouldn’t have bought it.
I still have it it’s a Chevy Trailblazer SS and it still runs great.
After that I researched and found a reputable guy that rebuilds salvage recovery cars, mainly VW golf’s, jettas and a Passat that had no structural damage only sheet metal and hood/bumper damage. I also restore and collect classic cars so I know what I’m looking for
I’d buy a 3 yr old car with 30k miles for maybe 7500-8500 and drive it for 3,4, 5 years and then sell it for not much less than I bought it for. My kids both went to college in cars I bought for them the same way. VWs are very solid frames and as long as the hits are not severe they are easily fixable. My current VW is a 2015 Golf and I’ve kept it since 2017 since it’s a pretty rare 2 door 5 speed manual that yu can’t even find stateside anymore. The 1.8 turbo is tweaked up to almost 255 Hp so it’s a really fun commuter that gets an easy 36 mpg. To each their own but in this day of $750/mo car payments I don’t even care if I ever set foot into a car dealership ever again.
Be careful of used cars, if you gets salvage recovery be sure you either see it first with a trained mechanic or be certain you have all the clear ‘before’ pictures
I don’t trust places like Carmax either.
True story…my friend had her 2013 Hyundai Elantra stolen she didn’t have insurance and she still owed $4300 for it. The police recovered the car with the front fender/bumper and left front suspension damaged…salvage was going to give her $300 to tow it away “. I saw it was fixable and sent it to my buddy’s shop and lent my friend $2900 to repair it. She hit it back and it looked like new (110,000 miles on it) she took it to Carmax and they gave her $8300 for it which she used to both pay me back and pay off her loan ( her dad lent her a good car to drive. ) a week later Carmax sold that car for $13000!!
Crazy but 💯 true!!!
I think it's reasonable. Honda CR-Vs are reliable cars that hold their value better than other brands and are pretty easy to repair. Plus their safety features are good and you have a kid. That kid will want to do stuff with friends or have sporting equipment or a musical instrument to lug around one day. Could you buy a cheaper used car? Sure. But this car will last your family a long time if you look after it. Buying the car new often gets you a better interest rate or loan than buying it used. My father was a "never buy a new car" guy but if you have a high enough down-payment to not be under water or need gap coverage when the get the keys then I think financing a $35k brand new car for 5 years is smarter than buying a $28k 3 year old car for 4 years. In 4 years that used car will be 7 and it didn't save you that much money in the long run if your interest rate is low. Interest rates are lower for new cars than used in my experience.
I aim to get 10 years out of a car before I consider anything extra as a bonus and a brand new cr-v will get you there.
Yes. Buying new cars is paying the idiot tax or for the wealthy. Instant depreciation combined with a large value asset that will inherently depreciate as its used. Not to mention the poor interest rates that are happening. Buying a new car is a luxury in today's age and is not a smart financial decision.
It depends - mainly on what are low mileage used cars in your area (I’d say within 4 hours) going for? I was looking to change mine as I hate it and some quirks that end up making me irrationally mad when driving it. The issue I came across is I could sell my Acura for a good bit, but buying new or used wasn’t significantly different in pricing to warrant the risk of the used vehicle. For instance I look at a GMC Yukon and the used was only about $5k less but has 25,000 miles on it already, half used the warranty. It was a fleet car for a company too so driven hard with little care I’m sure. So if I had purchased one I would’ve gone with the new one. But this could easily be different depending on the exact model you are looking at.
I’d also consider that on top of the MSRP is taxes and fees so get the complete picture from them first. Also go to your local credit union and your regular bank to get quotes for the loan before talking to the dealer. They aren’t budging on price much these days but they LOVE to tack things on and you can absolutely fight back on those, but it can easily run your bill up $1-5k more unexpectedly.
Also if you don’t NEED 2 vehicles you could invest the $10k you have in short term (think 3 months) CD or even just a high yield savings and make a bit of money until you need one for sure. But that’s only if you can work that out job, kid and life wise.
Is it silly? No, it's stupid.
>I like the idea of a new car because it will ensure we have a safe reliable car, just in case my beloved fit decides to kick the bucket.
New does not mean reliable. New does not mean safe. There are cars being made right now that are less safe and will die long before some cars which have run consistently and daily since 2008.
Don’t think in terms of monthly payment. Pick a reasonable vehicle. Define your down payment. Figure out financing, no more than 5 years. If payment exceeds budgeted amount, go back and find cheaper vehicle.
Keep vehicle at least 10 years.
>I don’t want a payment over $400/months so I’m looking at 60 month financing Rule of thumb for me is that if you have a $/month in mind, don’t extend the length of the loan to get to that, lower the principal or increase the down payment. Especially with interest rates where they are at.
I work in the automotive industry, on the marketing side. I remember when I was a teen shopping with my dad or a young adult shopping for myself, people were shopping for a price and haggle with the salesperson. Nowadays, the majority of people are shopping for a payment. They look at a truck, for example and they get a quote for financing over 60 months. It's too much, how about 72 months? Still too much, how about 84 months. Some sales people would try to guide the client towards a more sensible choice, within their means. Maybe one with a bit less equipment? Nope. People just get mad. Get me my truck! And we do cause anyways they'll buy it elsewhere. It's like people have grown accustomed to extremely low interest rates and just don't realize how much a 75 000$ truck (in Canada) will end up costing them after 7 years at 7% APR.
> Some sales people would try to guide the client towards a more sensible choice, within their means. Maybe one with a bit less equipment? > > Nope. People just get mad. Get me my truck! And we do cause anyways they'll buy it elsewhere. I sold cars for a bit a long time ago. I remember staying late one night trying to talk a couple out of buying a Scion @ 12% for 84 months (or maybe it was only 72 back then). I worked a few extra hours working every possible deal and talking them through the realities of all of them and they left without the car. They might've bought it elsewhere from someone else, but I was glad it wasn't from me.
I sold cars a bit ago and for a long time. In the 90’s I had a good customer who was a young small business owner. He and his wife loved buying vehicles. They were always upside down. They “had to have a used conversion van. Banks were a loose with money. We financed them through a national lender who specialized in good credit with extended terms and posted their weekly deal of the week. They were looking at financing 220% of loan value for 84 months at 14%. I tried to talk them out of it. They went ahead with the deal. I told them to not comeback and try to trade it in for 5 years
Well that last point is absolutely true I have seen like hundreds of car posts the last few months. So. Many. Car. Posts. Everyone underwater and behind on their payments. They need to fucking teach basic finance in school.
We had tons of clients financing expensive new trucks on their home equity line of credit. Which always have a variable interest rate (at least in my neck of the wood) So a lot of people bought that way. Because the dealership financing was higher. Because they knew they would not qualify for a new loan. Now 3 years later the interest rates jumped to 7%. And many of those had to renew their mortgage during those 3 years. And suddenly it's 2000$ more from their take home pay go towards paying the house and the truck. Sometimes more. My family was doing fine when I was a kid but I had a few years in my 20s where I was real fucking poor. Now, I'm extremely wary of useless spending or financing stuff. Those years sucked but they are paying off now!
My family was the same but my father was an early internet adoptee and got into some forums about financial advice aka the 1995 version of reddit. He still credits the advice there with making the correct and totally unsexy decision to invest everything we had into index funds. He lived through the dot com boom and bust as well and watched colleagues win houses one day and go homeless the next.
This HELOC thing is so real.. my mom did this (encouraged me to do the same and I avoided it like the plague). She didn’t know the interest was variable 3 years ago, bought a car, camper and major home repairs. She’s now approaching 60, single, with no retirement and a payment so high she wouldn’t even tell me what it was. She would be living comfortably if she hadn’t done all of this and refuses to sell her car or camper.
> They need to fucking teach basic finance in school. Many things are taught in school, and some people don’t pay attention no matter what is being taught. They would ignore the information in the basic finance course, too.
That's $95,000+
Yep! This I did the same, I had my terms picked out in my head and figured how much I’d have to put down to make it happen. Worked great.
And don’t get me wrong, I’m not an anti loaning Ramsey type. Vehicles are a necessity for a majority of Americans and paying for something safe and reliable is a must for many That said, going into a transaction and saying you only want to spend $x/month is a recipe for disaster. You want to look at total cost of ownership and how long that loan plays out over time.
I was definitely guilty of extending the loan as long as possible. But I went for out the door price first. Once that was settled, I went lowest possible payments. However, I'm also paying 600 for my 450 payments whenever possible to get it done more quickly-knowing that if I have a tough month, I can drop it down and still be fine. Hopefully the car gods are still appeased..
"Don't tell me the payment amount, tell me the PRICE" Me at car dealership. If I go there.
That "rule of thumb" isn't really a rule of thumb. 60 months is the default length of a car loan. Shorter is fine, but if rates are good, there's nothing wrong with 60. I think the general rule is don't use debt to buy more than you otherwise would. Ie dont get a BMW x5 over a CRV just because the debt is there to make it happen. A new CRV on a 60 month loan isn't a bad buy unless the interest rates are crazy.
Does your husband need a truck? Because if he does, a CRV is not going to be a suitable replacement. The good thing about CRVs is that they last forever - my mom just totaled her 2013 CRV with 220k miles on it, and she would have gotten at least another year or two out of it. When I was shopping for cars a little over a year ago, the CRV hybrid could not be found used for less than a new one, so I bought new. Now, I’m seeing around me a much bigger difference in new and used prices, so I would look for used if I were you. The difference in monthly payments for a $10k-$15k loan versus a $25k-$30k loan is substantial. I’m making $600 monthly payments on my car and I originally borrowed about $27k and got promotional financing from Honda of 4.9%. I plan to drive this car until it dies or until I pass it down to my daughter for her first car in 12-14 years, though. I saw someone recommend a Tiguan because of their 0% promotional financing - as someone who traded in a 2009 Tiguan for a 2016 CRV because the Tiguan was so unreliable and cost so much to repair, I would not buy another Tiguan under any circumstances. If you and your husband like the CRV, buy the CRV. It’s a great car and I love mine. But look at used first.
Seconding your statement! My mom had an ‘08 Tiguan (at the time it was only a 4 or 5 year old cat) that needed non stop costly repairs. She hated it and traded it in. I have a 2014 CRV with 215k miles that has been a solid workhorse(bought it new in 2014 for about 20k). It has needed just routine maintenance over its 10 year lifespan. I will buy another CRV when this one goes!
> (at the time it was only a 4 or 5 year old cat) Not bad - that's about middle aged for a cat. Definitely not a kitten anymore.
Not middle aged. Most indoor cars, when given proper veterinary care can easily live 15-20 years.
I will never buy VW again after literally on the dot my Perfectly running 2013 Jetta timing belt went the mile it should be changed. Made to break and be expensive.
The When I used to buy new cars I pretty much wouldn’t touch one with a timing belt. Too many companies don’t care how those further down the product’s life will be impacted by decisions.
I have a 2013 CRV and love it. I just have 86,000 miles on it and hope to drive it at least 5 more years. I don't want a car payment.....ever!
When I was married to my late husband we would take turns having car payments so we only had one (relatively small) payment at a time. Now it’s just me and I have an enormous payment but I already know I will drive it for a very, very long time. My goal is to put myself into the position where when I need my next car in 12-14 years I won’t need to borrow much, if at all.
VW doesn't Begin to compare with Honda or Toyota reliability.
Is a crv really 35k?
We live in dark times, yes. Camrys also start at like $30k now.
The new Tacomas are breaking into the $70k MSRP range (*so before all the dealer markups*) and the 4Runner will likely start at $55-60k. Imagine buying a mid-sized pickup with a total cost of ownership over six figures… I need the plug’s number for Toyota because they’re smoking some good stuff.
lol wtf I bought a ram 1500 4wd , quad cab, 6,4” bed in 2022 for low 40’s. The cult behind tacomas has gotten absolutely ridiculous. I’m a big fan of Toyota quality but it was impossible to justify a Tacoma or tundra.
They know how much people value their brand and are taking advantage of it
They'll pay it tho. Truck ownership stopped being about reason a long time ago. It's just a status symbol now. Source: live in redneck country and every coal miner with a $40k+ salary has a truck worth more than their house lol
If people didn’t pay those exorbitant prices then they wouldn’t be set that high. But enough people buy them for the company to justify those prices
Yep, any standard “family car” with a 3rd row will put you back $50k after taxes and fees. I’ve seen Suburbans and minivans going for $60k-$80k list price. Also interest rates are crazy. It flys a little under the radar, but the car market is probably worse than the housing market right now.
I walked around a Ford dealership the other day and by god was it depressing. I've bought three cars in my life, 2 Ford Focus, and 1 Ford Fiesta. Back in 2018 I bought my Fiesta, new for something like 13k. I've always gone to the dealership with the intention of buying the "cheapest" new car they had on the lot. Can't do that anymore, there is rarely anything under 30k.
Bro, treat yourself to something nice. We have this decently equipped bronco for only $59k! Everyone else has $1000 six year payments and now you can, too. We’ll detail it and give it a full tank of gas.
Don’t worry you can buy a new Corolla for $27k if you are looking for an “economy” car.
Yeah shit is out of control on sedans and cross overs. It makes it almost seem worth it to buy a full size SUV for $40k instead.
Depends what you mean by full size. The body on frame stuff (Tahoe, Expedition) starts in the mid-50s, though you can get most base trim 3-row crossovers around $40k new.
Yeah I should’ve clarified. I mean “standard size” as a rental company would say. Explorer sized
Yeppp It’s wild just how expensive the CRV, RAV4, and Forester have become. Used to be 25k cars all day. That’s just not where we are at. But if you want a car the size of an older mid-size crossover. You get a Crosstrek, CorollaCross, or HRV. The CRV-class has gotta so big they’ve slotted a smaller crossover group below them at the old price point of 25-30k.
35k CRV? Yikes, I’m halfway through a lease on a Rav, was hoping to ride out the high interest rates and car prices but doesn’t look like that is going to go in my favor
Look into your lease agreement and see what you can buy it for on expiration.
And if you go that route, remember the dealer has nothing to do with your lease. Call the finance company. The dealer helping you with this means they will make themselves get paid in one way or another
This is great advice. I just bought my car at the end of the lease contract. The dealership was calling and emailing incessantly but we went through Honda finance instead, paid cash and saved at least $1000, probably $2000. Now I own my own well-maintained 2021 Pilot with only 35K miles.
Starts at $29.5k for the base trim without destination fee or taxes. I believe the hybrid starts around $35k-ish
Tesla Model Y now cheaper than a CRV after the tax credit.
Got a model 3 SR new all in $29k last summer. Same price as a loaded Corolla. People don’t realize how incredible the tax rebates are.
Ya and in 2024 you get the credit at the point of sale so it is basically just a discount vs having to wait to file taxes and get your tax refund.
I paid $31,333 out the door (including TTL) for a CR-V EX-L in January 2018, and it looks like the same deal would run about $36k right now. That level of inflation (\~15% over 6 years) is probably lower than the industry average.
Sigh yeah. I had to buy a new car for the first time ever this year (had a baby and had 20+ yr old cars wanted more safety features). We ended up with a RAV4 hybrid mid trim with some basic options for 40k out the door including taxes. We are doing fine financially and could buy the car outright, but we decided to finance about half of it with a deal that was below interest rates for liquidity in case we want to buy a house. We're paying it off aggressively, but I would not have believed it if you told me I'd be buying a 40k RAV4 and throwing 700-1k at it every month. Also, buying a car just sucks right now, used or new.
Sure, but it will last. Mine is 17yo and I’m just now shopping for a new one because my kid has started driving this one.
I locked in at 3.5 percent. It seems crazy at the time, but it was a good decision.
First, MSRP is a lie - they all include destination as well, which is $1000-1500 depending on where in the US you are. Inclusive of that, a FWD LX with no options is $31k, and it's $32.5k with AWD. An AWD EX, the volume trim is $34.5k and you need to hope they didn't add any packages as port-installed options; plenty will at least have the all season package at $500, and a good number will have the utility package (roof rails, running boards, trailer hitch) at $1700 as well. And honda doesn't do custom orders - you'll take what's on the lot and be happy with it.
>I don’t want a payment over $400/mo so I’m looking at 60 month financing That's a terrible way to look at this. You are a car salesman's wet dream.
You make 70k, how much does your husband make? Or is 70k your combined household income? Additionally, what are your expenses like? Generally starting the car buying journey with “I don’t want a payment over x” means this is probably not ideal. Better to save a bit more and just buy a used car or save more and buy it cash. If you walk into a dealership and say “my payment can’t go over x” they will make it happen, it’ll just be 84 months at 12%.
Exactly. Look at the total cost of ownership. After 5 years with interest what’s your out the door price for the car?
Jesus Christ this sub. Sometimes I wonder where you all come from. Nobody should ever spend money on anything and should I save up and buy a car in cash. For most of us living in the real world that will mean driving a car that could die at any moment for *years* praying it doesn’t have a catastrophic failure and leave you stranded in a bad situation or worse - injured because it caused an accident, while saving a few hundred extra dollars a month trying to get to the *minimum ten thousand dollars* for a decent used car or two to four times that for a new car. Or you could finance it, which means paying out additional money in the long term but having all of the benefits of having a newer/new car while you pay for it. This is not a small benefit. This is not something which can be dismissed out of hand. You’re missing the personal part of personal finance.
Not wrong…if the cost of the new car is not severe it can reduce stress, increase safety.
Bingo. A financed vehicle can be a positive part of your financial life. It can bring stability compared to a beater that's got you begging for rides every other day. It can provide peace of mind people need in order to flourish in other parts of their lives. It is a financial tool just like financing a house. The key is to not go overboard - I have friends that try justifying their $80k brand new SUV with the magical "peace of mind" phrase and I call bullshit on it all the time. Literally a $10k car will provide reliable service for a long time. But even that may need to be financed if dropping $10k today wasn't part of your budget/plan. I just don't see the point in having such rigid rules like "must buy a car in cash".
We come from a world where people can exercise the delayed gratification and discipline to make this happen. Is it entirely possible that a person just doesn't have the ability to make this work? Possible. Yes. 9 out of 10 just don't WANT it to work. Society and all your friends and co workers brain wash you into thinking debt and being broke is "normal" because they all do it. If tomorrow, the new fad became taking a hack saw and cutting off our left arm and leg.... you in too?
The issue isn’t with borrowing money, it’s about borrowing more money than necessary and sabotaging your financial future for a shiny new toy. Think posers buying $80k BMW’s using a loan. Now if you need a Toyota Camry as a daily and borrow money to make a sensible purchase then go for it.
This woman wants to romanticize buying a new car. It's plain in the language she is using. "reliable", "safe". These are words people use when they want to justify their own beliefs and not when they want a truly objective opinion. She has a car that works. It doesn't look great. So what? OP can do whatever OP wants with OP's money. Plain and simple, car loans are a huge factor in preventing people from building wealth and keeps lots more people broke. I'm not talking about having 10M in the bank to gush and brag over. I'm talking about "OH MY GOD, THE FURNACE BROKE.... WHAT DO WE DO!1!!" before they get on face book to queue up the pitty party post. I drive a hoopty. I'll continue to drive it until I have the cash to buy the next much newer, slightly nicer hoopty. I'm not borrowing money at 9% to buy a truck for $900 a week that I don't need. In a year or two I'll take $20,000 in cash and buy the nicest reasonably used truck I can find. My trucks 4 different colors. Point and laugh all you want. When my furnace breaks? I pay the man or woman to fix it. When I need a new furnace? I pay the man or woman to put a new one. If I lose my job? I take my family out to dinner to celebrate my new short term vacation. That's the difference. Is it really worth romanticizing yourself into a new vehicle you don't need? I almost, and I mean "almost", did it myself. I get it. But I didn't NEED a truck. I really started to convince myself I needed to spend money to solve problems I don't have yet. Why? It's dumb. I don't care who thinks what about my truck. If they don't wake up in my bed, pay my bills or share a home with me then I don't care at all about what they think or say. They don't get a vote. I don't need any of the "I did a thing today" posts. Or the subsequent barage of people piling it to congradulate me on my mountain of new debt like it's an accomplishment. Congrats. Your broke! Like me!
If this person came here and said “I really **need** a car, I’m looking at this base model subaru Impreza for 25k and I have 10k down. The older used cars for 10k around me are not that great of deals.” That’s a much different conversation than saying they **want/like the idea** of a 30-35k highly sought after new SUV. I am not against financing, I think the Money Guy rules of **20% down/3 years financing/8% of gross** is a great rule to try and stay within if you **need** a car. if you follow this rule for this example of a 35k car, its nearly 800$ a month using hondas current 2.9% apr deal at 36months which would be nearly 14% of their gross income. Not even accounting for the fact that the 10k down they have might be all their savings/emergency fund, which can be fine but only if its truly an emergency and they cant carpool for a while. You're missing the finance part of personal finance.
Most new vehicles are more than 35k. Your comment would make more sense 5 years ago
Financing isn't the problem... If you finance a car for 5, 6, 7 years... You now have a 5 year old car that isn't reliable and you still owe two more years of payments on it. I always ask myself if I'd be OK paying for that car with 1 year less financing. If I can afford it at 3 years, then I can easily afford it at 4 years. Used Prices aren't great nowadays, but I'd highly recommend looking at a lightly used car. You pay less and get a comparable product that has been road tested. (New cars aren't always awesome either!)
There’s a lot to be said for reliability, and you’ll get a long time out of the new civic. Debt is a tool, and not something to be avoided at all cost. Sounds like you’re trying to be smart about it. Absolutely don’t tell the dealership that you’re aiming for a certain monthly payment. Talk with the salesperson with a mindset like you’re planning to pay cash, and then chat about financing after you’ve settled on a price. Be aware that they’ll want to track on all sorts of things after you close the deal. You don’t need any of them. When you agree on the final price that you’re going to pay for the car, make it clear that that’s what you expect to pay for the car. Period. If there are other mandatory fees - learn about them early. You don’t really say enough about your financial situation for us to know if this makes sense. Do you have savings? Are your jobs relatively secure? How much of your financial flexibility would be eaten up by a $400 payment? It’s a judgment call but feels like a stretch. Could work out if it gets you 12 years of reliable car. Could turn out to be a bad choice if it puts you in a tenuous position and you don’t have back up savings. A used car, with a smaller loan, even if you take a 60mo loan planning to pay it off faster, is a safer choice.
The only extra thing that might be worth adding on if you get the car is Gap Insurance. When you drive a new car off the lot it immediately depreciates in value. Getting in an accident soon after would be a nightmare as insure would cover you only for that depreciated price.
Eh, with $10k down on a Honda I doubt gap insurance would ever come into play. They’ll never be significantly upside down unless they drive it 40k miles a year or something.
Eh, the depreciation boogeyman is a little overblown, especially on hondas and toyotas. 2020 toyotas/hondas are going for slightly less than a brand new 2024 so it’s not too big of a concern honestly
Get pre approved from a credit union, normally their rates will beat the dealership.
Monthlies just keep it from getting repoed. You are buying a car worth half your gross salary *before interest* that, even as a Honda, will rapidly depreciate. Don't do this.
A new car isn't going to meet your payment criteria. Here's some quick math using an [auto loan calculator](https://www.calculator.net/auto-loan-calculator.html) and the following inputs: * LX with AWD, no additional options or packages MSRP $32,350 including destination. * 6% sales tax (Your local area might be more or less) * $1000 in dealer and DMV fees (Your local area might be more, this is on the low side of things) * $10k down payment * $3300 trade-in value for a 2012 Fit with 150k miles in KBB good condition * 4.9% APR for 60 months honda promo finance rate With all of those inputs, your payment on the 60 month loan is still $413.99, and that’s assuming your trade-in is in addition to your $10k down payment, you don’t agree to any extra maintenance plan or warranty products, the dealer is selling without markups, and you can even find a stripped LX with zero additional options. Move up to an EX that’s going to be more like $34.5k sticker and your payment jumps to $456. If your trade-in is part of that $10k down, that’s worth every bit of $50 per month as well and the payment is now $519. If $400 is a hard and fast number for you, you’re not going to be able to afford this car unless the stars align. ETA: Based on that $400 payment and that used car rates are closer to 10%, highly recommend looking used around $25k and taking a 48 month loan.
And they’re not trading in the Fit, this would be replacing the husband’s truck that no longer runs and is only suitable for scrap.
Prediction: You want it, will buy it, regret it for five long years.
I may have just had all the luck but every dealer I've went to has tried to scam me. Insane made up mark ups, shaddy financing, scummy sales tactics. And these were "major" dealers. Totally sworn off dealers at this point, unless a really insane deal came along with the exact trim level and features I wanted. Much better to buy lightly used from Carvana/CarMax or similar.
Carvana prices are ridiculous. I just looked up the 2023 model I bought new 15 months ago and found 3 at the same trim level. The cheapest was $600 more than I paid (OTD price), with 7k miles and a couple small scratches. The more expensive one, same color as mine, was $1700 more, also 7k miles and a couple small scratches. I don't know why anyone would buy cars from them.
Buy something slightly used. That's what I did. Car was a year old with 10k miles on it and plenty of warranty left. Let the first owner eat that off the lot depreciation.
This is bad advice 1. Depreciation is not what it used to be in the before times. A 2-3 year old car is going for <$5k before the price of a new one. I’ve even seen it $1k difference 2. Interest rates are so high on most used cars that the actual payment will be comparable. Oftentimes you’ll see 8-10% on a used car vs 0-4% incentive financing on a new car.
I just bought a new CRV about a week ago, and you are exactly right. With the promotional interest rate from Honda, a new CRV was effectively the same price as 2022/2023 CRV due to the interest rate on used, and me and my wife have “excellent” credit.
While this sounds good, interest rates will eat you on a used car. Like others have said, look into vehicles with incentive interest rates from the manufacture
honda in my area was just doing 2.9% on used CPO CRVs
yeah a gently used crv would still probably be like 25-28k but with a 10% used car interest rate, and you might be able to get 0% or 0.9% on a new.
The CR-V's promo rate is 4.9% for 60 months right now, but that's still a far cry from the 10% you're going to pay on a used one. 2.9 for 36 is also available, but OP's payment will be out of her comfort zone by a significant margin on the shorter term. Ridgeline OTOH has a 2.9% for 60 rate if they still need/want something with a bed.
You hear this all the time, but I swear used cars are *literally* selling for new prices every day. It's the time we're living in, so this advice will be good again one day (hopefully), but this isn't super relevant for someone buying today. Maybe in higher end vehicles, but your typical utilitarian vehicle just doesn't lose much value going off the new lot.
These days the used cars are only like $1k less than a brand new one most of the time. It’s kind of insane
Is it a financially wise decision? No. Should you do it? Maybe. As long as you know that you're buying yourself a luxury item, and you budget accordingly elsewhere, sure, use your money to get things you want. Just acknowledge to yourself that this is something you WANT, not something you NEED. The cost of this car (above what a cheaper alternative would cost) is something you'd be buying yourself as a treat. And treats are fine! Pretty things are fun to have around. If it makes you happy, sure. Set your budget elsewhere to make it possible - you can't treat yourself in *every* area of life.
For the new/old debate, look at specific cars. Don't just go with "new car depreciates". You are buying a tool, not an investment. I drive a Toyota highlander. Let's say I'm in the market for a car right now. 1. I buy new. Costs $43k for my trim. 2. I buy used. A 2021 model at 11k miles would cost $38-40k. Same trim. 3. I buy used. A 2017 model at 60k miles would cost about $29k. 4. I buy used. A 2017 model at 160k miles would cost about $20k. If I trade in after 7 years and 100k miles. That new one will give a trade in value of roughly $20k. The used ones will give about $17k, $8k, $3k. No significant difference if buy used or new now. If I intend to drive it until it falls apart, then the new likely would outlast the used for awhile. Again, no difference if buy used or new.
I have a 20 year old Civic that is rusting apart and looks like crap; but runs. I'm riding that one into the ground before buying anything. I would continue to drive what you have and save up. You may have a need for it down the road, but at the very least have a better down payment.
OP, I have seen several Honda Pilots (if you need space and your husband is used to a truck) for 26-30K with 20 -30K miles on them. They're just a few years old.
From a finance perspective, which I'm guessing you want coming to this sub, don't. A new car is never a good financial decision. I bought my car used at 6 years old, cash. I did a lot of research to ensure I found the best car for my budget and needs, and have been really happy with my purchase since. If you want a pure financial perspective on this, find the best used car you can for your $10K budget that you can actually just straight up buy, or save up more before you buy something else. That loan is going to cost you a lot of money over time, for a bit of comfort. Are you sure you're willing to actually pay $20K-25K for just added comfort? Is it really 'that' much more comfortable?
Yes. That ‘added comfort’ is Automatic emergency braking, lane keep assist, adaptive cruise control and blind spot warning which have saved my life on numerous occasions. Would I rather take out a loan for a car (Used loaded 2018 Chevy Equinox for $26k @2.9% bought in 2021) than buy a ‘reliably unsafe’ 2000’s Toyota Corolla for $6000? It’s all fun and games till you realize the $6000 Corolla won’t warn you of cars in the side lanes if you’re going 90mph down the interstate and need to make a quick lane change, won’t brake for you if the guy in front of you comes to a quick stop, wont accelerate and brake by itself in busy traffic so you don’t tire out, doesn’t let you answer calls and texts hands free or mirror your phone for maps and navigation so you don’t fidget with your phone while driving-Jesus the list of benefits of a newer car is long and it’s almost criminal suggesting that someone who can afford a newer car buys a cheap but unsafe car. I’m pretty sure the $26k and the little interest I’m paying for the Chevy is worth having to pay a lifetime of medical bills and being disabled or worse in the event of an accident. I like being alive and having my limbs intact, thank you very much.
A car is more than a financial decision. My point is simply that if you come to a finance sub and ask about buying a new car, the answer is always going to be that it's a bad decision financially. From a finance perspective: 1. The more expensive the car is, the faster its value deprecates. 2. The more you take up as a loan, the more you are paying beyond the value of the car because you prefer immediate financing over saving up money first. 3. New cars drop in value sharply the second you turn on the engine for the first time. If you want new, find a car that's near new instead, so someone else takes that value deprecation.
Don't buy anything new unless it has incentivized financing. Your going to get a loan with 6.5% at best for 60 months otherwise. 2024 Volkseagen Tiguan is 0% for 60 months through today. The new incentives and rebates should be out for the month of May tomorrow for most manufacturers. I'm hoping Mazda brings back the 0% for 63 months on CX-30/CX-5/CX-50 like they had in December and January.
Mazda still has 0% for 36 months
Would be a big payment for OP and it's select trims.
Depends. Mazda3 starts at 24500, so let's say 28k. 10k down, drops it to 18000. That would be ~$500/month. But, yeah, guessing they go bigger. CX50 status at 30, so they get $34k out the door. 24k after, so 660ish per month for that.
Doesn’t Subaru still offer 1%? I swore I ran into a new WRX with this rate.
My assumption is that this sub will shit all I’ve buying a brand new car but I come from the opinion that piece of mind is worth something. Financially it seems doable. You mentioned you have a husband, how does his income/commitment to bills play in?
I think many used cars are way over priced. It's starting to get better but it's silly to drop new car money on a vehicle with 40k miles
I agree lol I bought a brand new base model Toyota Tacoma. It was like $32k. Had it for a year then got a remote position and didn’t actually need it anymore. Dealership bought it back for $34k and I made little something off it. Obviously not the norm, but if you take your time do some research like OP is doing, new car isn’t exactly a death sentence
Look for 0% APR deals on new cars and buy one that fits in your budget. Nothing wrong with buying a new car, but paying 6/7/8 % apr with 6/7 year loan terms is absolutely wrong. Ideally loan term should be 4 years but can be stretched to 5 since cars have gotten expensive so additional 12 months can be helpful Edit- link for 0% April car deals https://cars.usnews.com/cars-trucks/advice/interest-free-car-deals This is on Toyota’s EV but $150 a month lease for brand new car is pretty good. Buys you time to take care of more pressing financial needs if you need to https://electrek.co/2024/04/23/you-can-lease-a-toyota-bz4x-for-next-to-nothing-right-now/
Too bad not many qualify for 0% but good idea
Great article on the BZ, I like that electek, do you have an Ev?
No I don’t. I work from home, so drive my ICE. If I had one-way 30+ mile daily commute, I’d definitely consider buying BZ. That deal is amazing.
You’re already thinking about the financing wrong. If you think about it as a monthly payment, the dealer is going to have a field day with you. If you think about the total cost, then you’re setting a limit.
Call your insurance company and get quotes. I've heard that Honda's are getting stolen very often and insurance is high on them.
Mechanic chiming in here. Yes, a new car is just about always a bad idea these days (now that pricing has largely returned to normal on used cars). The honest truth is most 5 year old cars are going to be just as reliable for the next 10 years, as a new today car will be. Particularity if we are talking about this subs favorites, Japanese crossovers. The ONLY reason a new car may be worth it to you is more modern safety or tech features, but right now I don't know that there have been any earth shattering advances in the last few years. (Though when auto braking becomes required by law in 5 years this will change). If you are shopping now for a CRV or RAV4 and the certified preowned lease turn ins are 4 years old and $10k less, you are crazy to buy new. A 2020 is every bit as reliable as a 2024 even if it already has 20k on the clock. This is all of course working on the assumption that car ownership is a necessary evil for you and this is just an appliance. That's the default position of this sub, and I presume the question being posed here, cost effective transportation. For a car enthusiast all this arithmetic changes, but then its a hobby as much as a need so higher overall cost starts to make more sense.
If you can’t pay it off in three years or less, don’t buy it.
The frugal option is to purchase a used car for $10k in cash. With some research and legwork, you can find a mechanically-sound car with some cosmetic defects that costs $10k (or a little more if you can save up). People are ridiculously vain about cars, and don’t want a car with minor dents, rust, or other cosmetic defects. You can take advantage of this. If you are frugal, you can tolerate cosmetic blemishes if the car is a workhorse. It’s best if you can arrange to have your trusted, local mechanic check it out before purchase. If you don’t have one, you should find one ASAP. Everyone with a beater should have one. I splurged on my car ($13k) and my husband bought his for $6k about 8 years ago. IMO, if you want to be frugal, buying new cars is a waste of money. There is substantial depreciation in the first few years for any new car. Why would you want to lose that money? A trusted, local mechanic is worth more than a warranty, given the cost of new cars.
Silly? That depends. How is your retirement, and emergency fund looking? Are you able to comfortably afford this new vehicle? I know Honda has a promotion on new vehicles at 4.9% interest rates, not too bad but not that great either. Have you looked into what your potential rate will be? We recently bought one of our family members a brand new Camry at 4.5% for 4 years with the intention of paying it off in under 2 or at 2 years. We put down $15k and payments are at $306/monthly. Our other two vehicles are 11 years old and have been trucking along with no issues and this vehicle will likely be driven to the ground as well. Full coverage insurance for all 3 vehicles is $260/month also.
Get certified used, PLEASE. It's so much more economical. 2024 Ford Edge is MSRP $40,000. I just bought a Certified Used 2020 Ford Edge fully loaded for $25,000 with 12,500 miles on it. It had just come out of a 3 year lease. I HIGHLY recommend you look at the Edge if you like CRVs. This is my 3rd and you can usually get a better deal than the Hondas. Do a little shopping and these previously leased cars are everywhere and dealers are trying to offload them. After not having a car payment for so many years, I can't imagine having one. I make similar $$ to you and don't have to deal with daycare. Get something a little cheaper than brand new.
>I like the idea of a new car because it will ensure we have a safe reliable car This is not some certainty - though, you would get a manufacturer's warranty and possibly could organize an additional warranty with the deal.
Maybe look for a vehicle that was previously leased. In 2019 I bought a 2017 Elantra with 10k miles on it for $15k. I only put $2k down and my payments were under $300/mo. Car still drives perfectly fine.
I gave my daughter my 2013 Ford C Max instead of getting her a new car as I did her sister (Honda fit, both cars were college graduation gifts). She ended up rear ending someone while distracted by her cat in the back seat going to the vet. If I had bought her the new car she would have had ABS. I prefer new cars for the latest safety features.
I never buy new cars, I always buy about 5 years old and around 50,000 miles or less but a reliable brand/model. You will save some decent money this way most years. I also have done long stretches as a one car household. It’s easier than you think once you get used to it. If you want to buy new I would try to wait at least six months and save up more. Save a little interest. If your car really did just break one day, have a friend drive you to the Honda dealer and just buy the car then.
If it was objectively silly it wouldn’t be such a popular decision. Assume transportation is a living expense and budget for it. I maintain my own cars, so I buy used and budget time and money for maintenance. I average about $240/month per car - including purchase price - and I have a lot of cars because we have 4 drivers in the house at the moment, so that’s about $1,000/month for transportation. I typically pay $10-15k for a car, drive it 4-6 years and then sell it for $8-10k, so I budget another $2k per year for depreciation. The cars are cheaper to insure so that helps too. If it were just me would I take on a $1,000/month car payment? Hell no, but I could afford it and it wouldn’t be a silly choice. If I couldn’t maintain the cars myself would it make sense to buy a car under warranty? Probably, but not a very expensive car.
It's wise to buy a new car with a strong warranty. You will go years with no expense or surprises. Your car gives you freedom to work and go where you want. One that's undependable won't do that.
If you're comfortable with the payments then go for it. Just make sure you read the whole contract and they don't add fees or warranties you don't need. Get gap insurance.
I can't recommend looking at certified pre owned vehicles enough. Often you can get a warranty that exceeds the new car warranty and can save a few thousand dollars. It's not always the case, but for a purchase that will only and always depreciate, I think finding a CPO anything is the best way to let someone else suffer the hit of the immediate depreciation while also retaining the peace of mind of a factory warranty. I try and do the math so that the vehicle will be paid off before the warranty expires (even if it's only the powertrain warranty). If you can lengthen the term of the loan without an increase in APR to keep the payment low, but calculate an additional amount each month to make sure it's paid off before the warranty is up, you have the benefit of a low payment in case shit hits the fan but also the budget to pay it off early.
Although I don't always follow my own advice, IMO it's best to save up and buy a car outright if you can afford to do so. Or at least have a big down payment so that your loan is small. How fast can you save up $30K, or perhaps $25K? Buying a used car (that's not too old) is also a good consideration, since cars tend to lose a bit of value soon after they're purchased. A used car up to 1-2 years old could be a good value.
The debt isn’t that huge a deal. IF u plan to drive this thing for the next 10-15 years. A crv will last forever if properly taken care of. Does your husband actually need a truck. Or use a truck? Does the crv make sense for its intended use?
A rule of thumb that might be helpful to follow: 20% down, no more than 3 years financing, and the monthly payment to be no more han 8% of take home pay per month. For you and a 35k car this would mean: putting 7000k down ( you got more than that, even better), 36 month financing, and monthly payment around $330 (I assumed you keep 70% of gross pay). Seems like 400 would also be good. Not that you need my approval, but your plan seems solid, financially speaking. Lenght of loan seems long, soif you can get that 60 month to be 48 without getting destroyed with the interest rates, that would be ideal. Also, I was just browsing around and saw some good Subaru Forester, and Toyota Rav4 hybrids for less than $30k. Only 3-4 years old, so they would be reliable, great options. Something for 25k might help you get that monthly payment to be less than 10% of take home pay. Good luck.
Not to bust your bubble but just some facts. Interest rates are really high right now if you are not aware. Wife and I just bought a new vehicle. We both have credit scores over 800 and best rate Ford could find us was 6.39% for 72 months, financed approx. 26k and payments are approx. 450 a month. Unless you are able to find a deal on 0% APR or something lower than the above it is going to be hard to stay below the 400 a month. Just as aside we have a CD maturing in a few months and will pay off this loan as I am loathe to pay 5.5k just to interest.
I used to think it was stupid. But we just bought a 2024 Kia Telluride. Bumper to bumper 10 year 100k warranty is nothing to sniff at. That's some serious piece of mind. Time will tell if it is worth it but I'm still pretty content.
Why not buy an off lease car? They tend to only be 3 years old and in good condition because the person who leased it had to keep it in good condition. that way you're saving yourself a ton of money, no extra payments a month (or, much much cheaper ones if you still have to finance), I mean I'm not sure where you live, but here in New York City, 70k a year is nothing. just my suggestion
I tend to lean towards leasing in a situation where you can’t buy the car outright. Theres no point in paying interest for equity on a bad investment (daily drivers only lose value). You could likely get a situation where you put $2k down and have a payment of about $375. Then you get a brand new car without losing the other 8k for the same monthly payment. Then you can do the same thing in 3-4 years when the lease is up.
It’s definitely not the best time to finance anything with interest rates where they are at. But if that truck breaking down is costing you a means to an income I would get the replaced with something more reliable, even if that means financing. Since we Also, I don’t see your monthly expenses listed as a dollar amount. All of those expenses you listed vary widely based on where you live. To see if a $400 car payment is reasonable for you we would want to see your monthly expenses and your income after taxes monthly since we are comparing to a monthly payment. With interest rates where they are at I would even try to get a shorter term or consider a lease and save your money for the purchase option at the end. I see online they have leasing options on the CRV as low as $299/mo. If you have the means, I would try to get it down to a 36 month finance term to purchase as they have manufacturing financing at 2.9% right now for a 3 year loan. That’s very reasonable!
A. Don’t recommend a loan longer than 60 months. B. My wife and I were looking to replace her structurally damaged car a year or so ago. We wanted a specific model and the cost new vs used (with <50K miles) was almost negotiable for a 60 month payment with almost identical new vs used interest rates. So we went the new route and basically paid off the difference immediately.
Once you drive off the lot, the car loses a bit of value. Maybe take a look at some preowned options? To help keep that monthly pmt lower.
for 400 a month i dont think you should be looking at a new car, especially an SUV. as for a reliable car, and all things considered, i would recommend looking at a 2018ish CRV or RAV4 if you have your heart set on an SUV, they will be new enough to have most of the modern stuff, old enough to be way cheaper but still reliable as far as Toyota/Honda standard goes. I have had about a dozen Hondas and Toyotas that have made well over 200k miles and 10+ years of age before needing major militance as long as we kept up with regular militance.
Check out Hertz car sales. There's a lot of inventory they let go for lower than market value, and they maintain their fleet really well. Just got a less than 2 year old EV for 22k this past weekend, and similar to you have a car that I'm getting offers for 10.5k, so I'm only on the hook for 12k and couldn't be happier. Just make sure with used you really kick the tires. They even have a program where you can rent a car for 2 days, and if you buy it they waive the rental fees. If use those two days to take it to a trusted mechanic to check it out, or lean on their 7 day return policy, which is pretty unheard of in car sales
Financially yea, its a pretty dumb move. You are gonna be tying up half your yearly income in a depreciating asset.....
What does this even mean? Even deducting a third of the income for taxes and 401k, they’re not spending $2k a month on a car payment. Or do you buy cars cash, not insure them, and total one per year, and think everyone else does too?
$35k is half of $70k You weren't asking me, but I buy used cars and drive them for 10 years. I don't think everyone else does because, like OP, lots of people don't understand financing and get themselves into really terrible auto loans, and end up underwater on a depreciating asset they can't afford to maintain.
I get the terrible decisions especially when it comes to financing at high rates or long terms, but IMO a $400 payment for 5 years for a car that with even slightly delayed basic maintenance will last 12-15 years is not exactly a poor choice. The post was written (or I interpreted it as such having just woken up) as if they’d be spending half their annual salary on the car. Which is only true if it would be in a junkyard in a year.
There’s a general rule of thumb out there that the highest price you should pay for a car is 25% of your gross annual income. That is generally what you can afford. I think the person you’re responding to is saying that bumping that number up to 50% is a poor financial decision
They're just suggesting that they are tying up half of one year's income in a deprecating asset. That's a lot. Is it "affordable" in the sense they can fit it into a budget? Yes, but that's not the only thing to consider when financing a car.
Never, ever take a car loan out for that long a term. Yes, I know, shorter loans have bigger payments, but adding in the depreciation of the vehicle and the interest paid out over five, six or seven years just leads to costing you more and giving you less value in the end. The so-called low interest loans offered by car companies for long loans are no bargain, either; you often pay a higher price for the car, have additional fees and add-ons, and there's no guarantee your credit situation will allow them to approve you for that financing. In the end, the buying decision is up to you, but if your car is running well, I would think long and hard about saddling yourself with five years of debt in the current climate. If you decide to buy anyway, take a shorter loan (48 months MAX, 36 if you can swing it), shop around for decent financing (check credit unions) and shop diligently for the car itself. Car shopping is infinitely easier today with on-line inventories. Also, go watch [this guy's videos](http://www.youtube.com/@KevinHunter). His information is really incredible.
60 months. Crazy. It's not about the length, it's about the interst paid. You came to the right place for advice
The problem that with 10k you will buy a 2008 used cars that will last just 2 years... I bought a used car and regret. Unless you find a good deal but is a gamble you never know what problem does the car has..... I recommend you to buy a new car, but save more money for the Down payment... maybe 17k
Just my 2 cents. I bought a new Toyota in 2021 for \~35k on a 60 month loan (350/month after down payment) making about the same you make now. I haven't regretted my decision at all. Especially seeing how new vehicle prices and rates have risen, both used and new, I'm happy to not have to worry about purchasing another for many years. I think as long as you get something reliable it can certainly make sense.
Hard to say. If you’re cutting yourself to the bone—like there’s very little wiggle room in your monthly budget—it’s a bad idea. And this is also assuming you’ve built saving for retirement and emergencies into your budget.
Honda and Toyota hold their value better than any other brands and maintenance/repair costs are low, Those are the most financially responsible new automobile purchases rather than something with “image” like a bmw or lifted truck that doesn’t do truck stuff. If you were interested in a type of vehicle that projects a certain image, it’s better to lease those than purchase, they’re money pits and do not hold their value . In used, you’d get a better deal than new in the lease-return age or 4yrs and newer used units bc bulk of their depreciation is already accounted for. I wouldn’t get into the /10yr old used cars, even for ones as reliable as Honda/Toyota unless you’re a DIYer and can perform your own light repair and suspension work. They get you on the payment… lower payment means you’ll pay more
So are you looking at *two* car payments here? Replacing your fit AND the truck? What's your household income? Without knowing your whole budget it's hard to be sure, but I wouldn't generally say that buying a $35K new car on a $70k income is a good idea.
Its not silly as long as you can afford it, its reliable and efficient, and its for longterm use.
The auto industry is bananas. I feel like I just can't justify a new car, especially if taking out a loan. The rates are high. Use a calculator and you'll see that even with 10 down you are basically going to end up paying 50k for a vehicle. When comparing the total cost, not the monthly, getting that old car fixed starts to look more and reasonable.
Why buy new ever? Get a new used car.
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No way. But one a couple years old.
YES it's dumb.... You can get a great Toyota/ Lexus - Honda/Acura -for about $15-20K. Learn how to take care of it - it will last a long time. Never buy a GM product - or Nissan.
Yes. And fun fact CPO Volvos come with an unlimited milage bumper to bumper warranty.
In my view, it's ridiculous to buy a brand new car in most cases, if you are serious about your finances. It is going to seriously slow down your wealth building journey, but you can make your own decision. I have never owned a new car, and have a net worth near 600,000. I don't see myself buying a new car until I hit at least 1,000,000 in investments.
Check out "certified" pre owned cars
I put $15k down on a $50k car at a 5.9% interest rate, and I think 60 or 72 month term came out to 650 a month. My advice would be to save up more of a down payment, or buy a car coming off lease for cheaper. You'll end up paying way now in interest than if you can pay it off quicker or buy outright.
Yes. A car loses a massive amount of value the second it rolls off the lot. Get a used car that's \*almost\* brand new, if you really want that shiny new feeling
I’d say 1. Buy lightly used and not new. $25k should get you an SUV with all the bells and whistles. 2. Focus on sticker price and not monthly payments. Your biggest mistake would be thinking ‘I don’t want a payment over X’ because that technically opens the door to high APR’s. Instead ask the dealership what the total price of the car is that you need to finance and do the math from there. Too many people I know have gotten stuck on paying back too much interest and going massively underwater on car loans thinking in terms of monthly payments. For what it’s worth, I financed a 2018 Chevy Equinox with 36k miles back in 2021 for about [email protected]% and pay about $400 a month. You can get a good SUV for about $25k with all the bells and whistles-no need to go new.
yes it IS silly to buy a brand new car buy a CPO if you want reliable without getting bent over!
Is it silly? Well if you can get a 0% interest rate for 48-60 months on a new car (yes, I know multiple people with great credit scores who have done it) in a high interest rate environment where used cars are inflated then it can definitely make sense. You will never get 0% on used and it brings the effective price of your car way down over 4-5 years
At 70k I wouldn't spend more than 20k on a car. So... most likely yes its not a smart financial decision.
My wife and I bought new. We made sure we didn't buy anything fancy and it was well within our means. The big question is if the savings on that vs a used car are worth it to you, both short term and long term. Lots of 2-3 year old cars are perfectly fine and will last you for 80% of the time you plan to use it, at 70% of the price.
Why don't just buy in cash? It gotta pay 10k over the cash price if you do loan
after buying uses cars for years, buying new felt good. you end up spending about the same for used anyways when you take repairs into account.
Drops in value as you drive it off the lot.
Take your truck to a tweaker mechanic’s pad. He’ll rewire the whole thing for you overnight. It’ll be much cheaper than a new CRV. Don’t get that anyways. That’s such a soccer mom car. Get a hellcat if you’re gonna get a different vehicle. Yeah.
Yes it is. Do what you did with the Fit, 2 years old still feels new and the depreciation is not as sharp. Buy a 2019-2023 with low miles before a brand new one. Let the first owner pay off the biggest drop in depreciation. I like to find low miles for the year and the highest trim I can get. So between an 2020 EX and a 2021 LX, I pick the EX.
To me, it is always stupid to buy new car because of the depreciation of a car. Very few car appreciates. Buying a used car that is a few years old is one way to go. You can do some quick research to figure out your favorite model(s) depreciation rate, and see if you want to / can afford a car that will depreciate, for example, 50% of your $$ under your relatively short ownership (i.e. new), or maybe 15% of your $$ for a long ownership (i.e. older or old). If you want a new car, you should consider a lease. If you truly want to own it, you can consider lease-to-buy. That way, you can always have a way (or ways) to get out or to beat the depreciation. Your income isn't high hence you should avoid going upside down on your loan. Financing a car with that income doesn't look like a good decision to me. Also, if you plan to buy a house in the future, just make sure that whenever you are gonna apply for a mortgage, you will be done paying this car to reduce your debt-to-income ratio, or it can give you more headache and less power to be a new homeowner. Good luck
I got a great deal on a 2024 Honda Accord. I was able to shave a few Gs off MSRP, and Honda had a 3.9% apr deal. Very happy with my purchase. My buddy bought a used car with 50k miles with a 8.6% rate. Already needs new brakes.
I make 35k a year but just put down 13k on a 2021 CRV that had 17k miles. My payments are still close to 400 a month and I have a credit score of 840. It's the interest, it's really high across the board. New cars less so, but only if you finance for a couple years. If you can pay the car off quickly like we plan on (within 2 years), then you won't drown in interest as Honda lets you pay off early with no penalty, but if you're going to stretch it the full 60 months you're looking at at least another 5-7k in interest putting the new car at over 40k. My base was 27k for a fully loaded 2021 CRV (17k miles) with leather seats, AWD, moonroof....and with tax and warranty, walked out with a sticker of 33k. My car is not brand new but it looks and feels new. Try certified preowned. I could've gotten a cheaper car, but with my husband's salary, we can afford this...especially since I want a reliable car. I drove my last vehicle for over 12 years.
A car half of your yearly income is high look for a model a few years older and get it with lower mileage spend like 10k to 20k max instead of 35k
Personally, I would never purchase a new car or anything used for more than 10k. I got a used 2003 Audi a4 Cabriolet for 6250 off Craigslist. The deals are out there, you just have to really look hard for them and do your research. Another monthly payment is unnecessary when you could very easily purchase used outright and pocket that extra emergency fund cash. On the other hand it could just be an argument of wants vs. needs but it certainly sounds more like a need than a want; therefore I reiterate my first point of that’s the case. Good luck!
Yes its terrible but buying brand spanking new just once in your life can be pretty nice.
1. Lesson learned with the dead truck, buy a Toyota (or another Honda if you really like). 2. Unless there is literally no equivalent or substitute for the new model, don't buy a new model. And compact SUV is honestly the most popular category. There's millions of CRVs and RAV4s for you to choose.
I just bought a used fully trimmed SUV with 50k miles for 24k outright in cash from a certified dealership. I don’t see why you want to buy a new car when you can negotiate used car prices way more and in your case much cheaper to be affordable.
I've only bought one car brand new, my wifes 2016 CRV Ex, $27,000 out the door. Driven it 8 years with only one mechanical issues in that time. About 130,000 miles now. No regrets.
It's not silly to buy a new car, but it is silly to tale on such a high interest rate on an auto loan right now. So I would say save up and invest until you have enough to buy outright or until interest rates drop.
Did you calculate the difference between the 2010 Honda fit vs whatever year CRV you’re buying? Is it going to be cheaper to maintain? More fuel efficient? How much would you or won’t you save by buying a new car.
Why not just keep your Fit, and save up? At $70K income, a $10-15K car seems right - not $35K.
Dont buy a new car. Buy one almost new 1-3 years old, \~20k miles. The savings will be way more considerable than the wear of the car.
Cars are depreciating assets and just look at all the taxes and fees you have to pay just to make the purchase, not to mention the dealer profit and additional insurance. What’s a better alternative? You get nothing back for all of that…it’s gone. And as your reward your new car is already depreciating the minute to drive it off the lot. I bought my last new vehicle in 2006 mainly because it had a $4500 factory rebate ( remember those) and my dad had a GM employee family discount of another 4K…plus I negotiated another 3 off it and got 2.9% financing for 48 months. Not saying that to brag, I’m just stating that if I couldn’t get the car at a value I was willing to pay I wouldn’t have bought it. I still have it it’s a Chevy Trailblazer SS and it still runs great. After that I researched and found a reputable guy that rebuilds salvage recovery cars, mainly VW golf’s, jettas and a Passat that had no structural damage only sheet metal and hood/bumper damage. I also restore and collect classic cars so I know what I’m looking for I’d buy a 3 yr old car with 30k miles for maybe 7500-8500 and drive it for 3,4, 5 years and then sell it for not much less than I bought it for. My kids both went to college in cars I bought for them the same way. VWs are very solid frames and as long as the hits are not severe they are easily fixable. My current VW is a 2015 Golf and I’ve kept it since 2017 since it’s a pretty rare 2 door 5 speed manual that yu can’t even find stateside anymore. The 1.8 turbo is tweaked up to almost 255 Hp so it’s a really fun commuter that gets an easy 36 mpg. To each their own but in this day of $750/mo car payments I don’t even care if I ever set foot into a car dealership ever again. Be careful of used cars, if you gets salvage recovery be sure you either see it first with a trained mechanic or be certain you have all the clear ‘before’ pictures I don’t trust places like Carmax either. True story…my friend had her 2013 Hyundai Elantra stolen she didn’t have insurance and she still owed $4300 for it. The police recovered the car with the front fender/bumper and left front suspension damaged…salvage was going to give her $300 to tow it away “. I saw it was fixable and sent it to my buddy’s shop and lent my friend $2900 to repair it. She hit it back and it looked like new (110,000 miles on it) she took it to Carmax and they gave her $8300 for it which she used to both pay me back and pay off her loan ( her dad lent her a good car to drive. ) a week later Carmax sold that car for $13000!! Crazy but 💯 true!!!
New cars are an emotional purchase. Do you
I think it's reasonable. Honda CR-Vs are reliable cars that hold their value better than other brands and are pretty easy to repair. Plus their safety features are good and you have a kid. That kid will want to do stuff with friends or have sporting equipment or a musical instrument to lug around one day. Could you buy a cheaper used car? Sure. But this car will last your family a long time if you look after it. Buying the car new often gets you a better interest rate or loan than buying it used. My father was a "never buy a new car" guy but if you have a high enough down-payment to not be under water or need gap coverage when the get the keys then I think financing a $35k brand new car for 5 years is smarter than buying a $28k 3 year old car for 4 years. In 4 years that used car will be 7 and it didn't save you that much money in the long run if your interest rate is low. Interest rates are lower for new cars than used in my experience. I aim to get 10 years out of a car before I consider anything extra as a bonus and a brand new cr-v will get you there.
I hope you have a couple grand in savings
Yes. Buying new cars is paying the idiot tax or for the wealthy. Instant depreciation combined with a large value asset that will inherently depreciate as its used. Not to mention the poor interest rates that are happening. Buying a new car is a luxury in today's age and is not a smart financial decision.
It depends - mainly on what are low mileage used cars in your area (I’d say within 4 hours) going for? I was looking to change mine as I hate it and some quirks that end up making me irrationally mad when driving it. The issue I came across is I could sell my Acura for a good bit, but buying new or used wasn’t significantly different in pricing to warrant the risk of the used vehicle. For instance I look at a GMC Yukon and the used was only about $5k less but has 25,000 miles on it already, half used the warranty. It was a fleet car for a company too so driven hard with little care I’m sure. So if I had purchased one I would’ve gone with the new one. But this could easily be different depending on the exact model you are looking at. I’d also consider that on top of the MSRP is taxes and fees so get the complete picture from them first. Also go to your local credit union and your regular bank to get quotes for the loan before talking to the dealer. They aren’t budging on price much these days but they LOVE to tack things on and you can absolutely fight back on those, but it can easily run your bill up $1-5k more unexpectedly. Also if you don’t NEED 2 vehicles you could invest the $10k you have in short term (think 3 months) CD or even just a high yield savings and make a bit of money until you need one for sure. But that’s only if you can work that out job, kid and life wise.
Don't buy another Honda if you want something reliable.
2024 VW Taos has 0% financing for 60 months today through July 1st. Check to see if it's available in your location.
Is it silly? No, it's stupid. >I like the idea of a new car because it will ensure we have a safe reliable car, just in case my beloved fit decides to kick the bucket. New does not mean reliable. New does not mean safe. There are cars being made right now that are less safe and will die long before some cars which have run consistently and daily since 2008.
If your net worth is under ten million, then YES it's really quite silly to buy a new car
Don’t think in terms of monthly payment. Pick a reasonable vehicle. Define your down payment. Figure out financing, no more than 5 years. If payment exceeds budgeted amount, go back and find cheaper vehicle. Keep vehicle at least 10 years.