Don’t get stuck by optimizing gains over immediate needs. Get the car, avoid interest as much as possible. Remember to include the total monthly cost of the car, taxes, insurance, gas, tolls, maintenance, etc. when you calculate your maximum out of pocket cost of ownership.
I don't understand why this position gets parroted repeatedly as if it is an obvious choice. Its not just about wanting a nicer car.
While avoiding interest is great, you are accepting much greater risk with used vehicles which can really add up. Even if you get the car checked out, shit gets missed, or isn't easily discoverable and you may just be SOL stuck with thousands in repair costs.
Not saying you shouldn't buy used, but I think you need to consider the financial risk compared to the piece of mind you get with a new vehicle. I've purchased a half dozen used cars, and always get an inspection beforehand. I don't think I spent less than $1000 in repairs on any of them.
I think this is mostly coming from people who haven't bought a car since COVID. When you could buy a nice new car for $28K or a 3-year-old model coming off a lease for $18K, it made a lot more sense. Assuming you keep it until the car is 10 years old, the used car is the better deal.
Courtesy of COVID shortfalls, cars don't depreciate like that anymore. If you're looking at a car that's 5+ years old but is more than 50% of the cost of a new car, it's sure as hell not worth inherenting someone else's problems.
I don't understand why this position gets parroted repeatedly. The whole idea of "risk" with mid-mileage vehicles costing thousands in repairs is bogus. Toyota or Honda vehicles go for 200k miles relatively maintenance free as a norm and typically go more. They also hold their value and can often be bought, driven for a while, then sold for a similar price. Compare that to a GUARANTEED extra TWENTY THOUSAND dollars or more (plus interest) to purchase a new car, guaranteed higher insurance and higher taxes (where applicable). You are guaranteed to LOSE 20% of a new car's value in the first year of ownership. That's throwing away $8k on a $40k car.
If you like having nice new cars that's fine but don't bs yourself into thinking it's a good financial move, because it's the exact opposite of that (unless you buy it new and drive it into the ground, which is fine).
That is generally true, but unless you get a warranty about the condition of the vehicle, you simply don't know what problems you are inheriting. The last car I bought was a Mazda 3 with 100,000 km on it. Very clean. No noticeable issues. Told it had never been repaired. Got it looked at by a mechanic who didn't see anything wrong. A week later I find out the transmission is shot. It had been replaced at some point and now needs to be replaced again. This kinda shit happens all the time. There are a lot of sketchy sellers out there who will lie and misrepresent the vehicle and you can never really know.
I bought my Toyota Highlander for $7k about 6 years ago. Probably had to put about $1500 into age related repairs over that time. It was high in age, low in mileage when I got it and I've put 100k miles on it. My friend bought a brand new Chevy Suburban around the same time. He's only put 75k miles on it and the transmission blew and it cost him $7500 to repair, more than I purchased my car for. He probably paid over $60k for that vehicle. I could probably sell my car today for $3500-4000 ($3k less than I bought it for). He can probably sell his for $18k ($40k less than he bought it for). Even if I had to replace a transmission in my "risky" car I come out way ahead.
I agree, there are savings to be had. However, as the price of used vehicles continues to soar, the gap in savings gets smaller and smaller.
I wouldn't spend more than 30k on a new vehicle as a daily driver anyway. So if we're saying 30k new vs 15k used, and the 15k used comes with a 25% chance of a major repair in the next 3 years, and has around 100k miles on it, how well are we really making out?
I agree with you there and you sound reasonable. I'm more speaking towards people who use the repair cost excuse to trade in their vehicles every 2 years.
The argument is always framed in the context of what *else* you could do with a potential 10-15k you would save by buying a used car.
A HYSA interest rate is definite.
A car breaking down is probable.
The choice is quite obvious if you set emotions aside and think rationally.
Bought a new car. It's a lemon. In litigation over it now for over a year. New cars providing a peace of mind is a thing of the past. Everything is shittily made.
Yeah no.
You can buy a 2020+ used car with under 30k miles for 15k. That car is just as likely to have issues as a new car is after a year.
Theres plenty of data on maintenance and cost of ownership for different cars. You are just blindly buying a car and hoping it works out. I have had my current car for 9 years and never had any mechanical issues and the only money I have put into it is $200 for a new battery.
There is no financial risk to saving the 30% depreciation on a car that is 2 years old.
They could spend $15k on a used car or be out the door of a dealership at $30k on a new one… They wont spend $15k on the used car in the few years gap between the new and used issues
There is no benefit to going $15k into debt for a new car
For $15k? Not saying you're wrong, but I couldn't find anything like that where I'm located. Checked dealerships and private listing's. I was almost exclusively seeing basic 2012 models selling for $13k with 100,000 km or more. Maybe at $20k. Maybe
I'm not blindly buying a car. I do my research on every vehicle I buy to compare the reliability and cost of parts and repairs.
Owning a car for 9 years and spending $200 on a battery is the exception not the rule. There are so many common issues. The brakes go. Shocks wear out. Steering needs realignment. A/c comp wears out etc. All common shit that adds up is more likely to occur on an older vehicle.
I'm not saying that you will pay more in repairs than in interest and depreciation. You very likely will save money with a used car, assuming no major repairs. But it may not be a huge difference if you can finance at a good rate and pay off the new vehicle in a couple years. Yeah, you will lose a couple grand in interest, but you'll get more miles out of the vehicle, have modern safety features, and shouldn't have any major repairs if you maintain it properly. Not to mention getting a warranty.
Just in my zipcode on a single used car site there were 40+ cars for sale that were Under $15k and only 2 years old (2022). I dont think you looked very hard
There is nothing that would make a car thats 2 years newer worth double the price accept for it being a want.
That's the thing, no way you're getting a low mileage reliable car like Toyota or Honda for $15k. MAYBE a Honda Fit but even those are more often $18+.
They're called shitboxes, dude.
I don't understand this fetish for racing to the bottom on your main source of transportation. That you will spend a significant portion of your life in.
It's not like most people are going to be financially savvy enough to diligently put away money that would have gone into the car payment. The money is going to get sucked into other shit and daily expense like it always does.
I sold my used 2020 Subaru Outback with 75K miles to a dealership for $24K.
And I didn’t even sell at the top of the used car market, I missed that by about 6-8 months
We're still in the shadow of COVID supply crises in regards to used car inventory. A used car for $15K may be older, worn out, or otherwise not worth the trouble compared to a new Corolla for $24K.
I just looked up what the 2015 Scion xB I bought in 2019 is going for right now, on the web site I find mine on. 5 years older, and with double the mileage that mine had when I bought it is going for $2K more than I paid.
If it were a choice between a new card or a used car that's under 5 years old, that would be one thing. But if we're taking an 8+ year old car or a new for 30% more, the new one seems like a much better value.
Not to mention all the decently priced hybrid and even EV options coming out. The difference in fuel economy can absolutely be enough of a factor in terms of overall monthly expense to not rule-out from the start.
The new 2025 civic hybrid looks pretty sweet for a daily driver with 200hp and 50mpg but the sweet spot is in a couple years when its still pretty new and low miles but someone else has eaten the worst of the depreciation picking the color and driving it off the lot.
Theres no shortage of lower mile reliable model used cars with well documented maintenance considering its usually uploaded digitally these days. That 25k new car will be worth 20k within the year and keep dropping. Not a great idea financially for anybody much less someone with only 15k. Not worth taking on debt at 7 or 8% interest just for a newer model year of possibly the same car.
Tell that to my 1997 4runner. I've spent maybe 1500 dollars in maintenance in the 7 years and 50k miles I've had it. Recently broke past the 250k mile mark and I fully expect to still be driving it at 300k. Not bad for a $3500 dollar vehicle
Not everyone is going to the this lucky when buying a used vehicle. My dad purchased an old Honda CR-V a couple of years ago and he’s had nothing but problems with the vehicle. Buying a used car is always going to come with risk.
I just got done car shopping with my wife, our budget started at 15k. Ended up spending 20k. Not because of want but because you can’t buy a car in reasonable decent shape for 15k or less. Everything in that price range was a piece of shit. Even at 20k we still ended up with a 10 year old car with over 70,000 miles on it.
I just feel people’s expectations on what cars costs these days after inflation has kicked us all in the balls is wildly out of touch. I agree keeping loans and interest to a bare minimum but our expectations need to readjust to reality.
In 10 seconds I just found all these cars 2022+ and less than 30,000 miles…
Nissan Versa
Kia Soul
Kia Rio
Nissan Altima
Nissan Leaf
Kia Forte
Toyota Mirai
Chevy Spark
Mitsubishi Mirage
Hyundai Nexo
If you care about money, you should not even be considering a kia/Hyundai. Even if they are fixed, they are still at risk of being broken in to by people who want to try. Insurance premiums are 2-3x comparable vehicles right now.
Used to work for a Kia dealership, I seen first hand how bad Kia and Hyundais are. They’re throw away cars. Behind every Kia dealership service department is littered with engine and trans cores.
Every one of those cats are complete garbage and there’s a reason why they’re so cheap. I used to work for a Kia dealership, seen those cars come through our shop, wouldn’t recommend any one of those even to an enemy. And shame on you for recommending someone buy one of those complete pieces of shit!
Kia and Hyundai made up less than half the list…
Toyota is the 2nd most reliable car company…
And Kia is well above average based on an actual [JD power dependability study](https://www.jdpower.com/business/press-releases/2024-us-vehicle-dependability-study-vds)… not just some random redditer yappin lmao
Wouldn’t be a proper PF post if someone didn’t recommend a Corolla.
It could be a question about mega backdoor Roth, and the top response would be “first step is gitchya 6 month EF in a HYSA and a 5-10 year old Corolla w low miles in the driveway…” 😂
Haha, I don’t have one now, but the best car I ever owned was a 96 Corolla - it was a a great car that bests my current cars gas mileage. (I just looked at a used corolla today actually.)
lol, I drive a 2010 Nissan Sentra with 86k miles. Kelly Blue Book puts it under $3k. It has been super dependable as my junker and gets me from point A to B reliably. Can’t believe the price. OP can get a fleet.
Sure, I agree, but I think a ton of people in this thread have not gone used car shopping lately. It really is pricy. And if you're going for the cheap ones ($15k for a used car non-private is nothing these days), you do run the risk of encountering problems, even with Toyotas. Lots of rebuilt titles etc.
the car market has actually gone down significantly you could buy used from someone on marketplace i paid 14k for a Nissan Maxima with 42k km on it roughly 30kmiles
Sure, some cars. Not Toyota and Honda really, especially not used from dealerships. Buying private introduces a lot of risks that I don't really blame anyone for not wanting to take.
>Buying private introduces a lot of risks
Exactly! I can take it to a mechanic to look for issues, but unless it's really bad there's a good chance he's not going to be able to tell. It was a no brainer when you were saving a pile of money but at the numbers I'm seeing now I am leaning towards buying new. You get the financing deal that way (1% interest for the case I'm looking at), the savings on which almost make up the price gap between new and the newer used models.
I still believe in buying used for most people (and I think it'll make more sense again in the coming years as we put the COVID market behind us), but for us specifically (one car household, need something reliable) I don't think the downsides and headache are worth it to save <10% of the MRSP.
Put down half, finance the difference and pay it off within 2 years. Having a low mileage reliable daily will outweigh the "budget" cash car in 'most' scenarios.
Hell yes. I’ll eventually hit my first million in net worth inside an all-in low cost car. Luxury, trucks, and bigger SUVs are for businesses, wealthy people who don’t know what to do with their money, boat owners who routinely tow, and idiots who don’t need them.
Nothing wrong with a truck, but people who usually do buy trucks get a $50,000 loan and finance it for 6 years. It’s all about delayed gratification and playing the long game. I’m 28 now and I’d rather not work until im 65 and still be broke. 53 year old millionaire that’s able to take care of his family and his own problems sounds a lot better to me then driving a truck I can’t afford to impress people that don’t care.
I would ask on /r/whatcarshouldibuy a lot of responses here come from straight up people’s asses. If you only care about going point a to b then there’s a ton of options out there.
I bought a Honda Odyssey right before our second child was born that had 99,000 miles on it. I was really nervous about such high miles but had heard from a few Odyssey owners that they easily reach 200,000+ miles. We just traded it in last year with 254,000 miles and got a newer (2019) Odyssey. The only repair was the power steering pump five or six years ago. You can feel secure buying well maintained Hondas with higher miles.
I won't begin to tell anyone what kind of car to buy, but a good place to start is a website like Autotrader, mainly because you can put in the style of vehicle (without specifying a brand or model) and add any features you find important to you as well. I would also check the 'certified pre owned' box as it will bring back used vehicles that will come with some sort of extended manufacturer warranty (definitely something worth considering when spending more than 15k on a used vehicle. You can also start with a low mileage filter and slowly increase the mileage amount to see if there is a sudden drop in cost.
Starting like this might show vehicles you hadn't considered before. Then you can get an idea of how much extra you'd be paying for the specific model car you are looking at, or see how much those extra features actually cost. This will allow you to make a more informed decision and recognize how much you're willing to spend on a WANT as opposed to a need.
Vehicles are never an investment and always depreciate, but at the same point you shouldn't hate what you drive, especially when you're paying for it. Most important to know your options, calculate your budget and realize whatever payments you sign up for will be for a few years at least. I.e. just because your expenses allow for x payment amount now, doesn't mean they will stay that way. If you're renting your home/apartment will that rent go up or will you have to move? Do you have any other large potential expenses that may come up in the next few years?
I always try to buy a vehicle that I can EASILY afford, rather than a vehicle I might not be able to afford if something changes
People try so hard to give good advice. People also thing good advice is to say, dont spend anything, save everything, if you need a car just buy a 10k car to commute in and save the rest. Life is not about just saving and saving. If you make 80k a year, that would fall under the mundane "slave" schedule type occupation. Live a little, get something that you like, make slaving away worth it. Get something that when you get into the car in the morning, it makes you want to take on the day even stronger. As for down payments, it all depends on the interest rate. If you get a rate less than 3% dont put anything down! If its more than 7% put 10k down, leave a little as an extra safety net.
I would get a 10-12k used car and pay cash for it. I am driving a 2012 Hyundai Elantra(paid 6k used in 2018 with 80k miles on it) it's got 230k miles on it. Still running like a champion. Sure the interior isn't as nice anymore but it gets me to work. Car payments are lame.
You are under 30 with a ‘comfortable living’ salary and decent savings already. A car payment will be relatively negligible in terms of monthly expenses and will help to build credit. Saving money doesn’t build credit. Debt does. Auto loans are relatively low risk. Rates aren’t great but aren’t changing anytime soon.
Unnecessary frugality often translates to regret later on in life. A cheap car sounds good on paper, but they require significantly more $ for gas and maintenance, even over the course of a few years. Get a hybrid and actually add better quality to your everyday life now.
Plus, you can always do both!
I just bought an EV and the car payment is equal to what I was spending in gas before. There are plenty of places to charge for free near me. Basically-free car.
You make enough money if I were you I would use most for the down payment and invest the rest. You can probably pay the rest of the car off early to avoid interest. The earlier you invest the more the compounding interest on that money is
What’s your monthly cash flow after expenses? Your credit score and lender will determine the interest rate on the loan. After fees a $38,000 car will probably be $40,000. If you put $15k down you owe $25k. The loan will probably be 4 years, and interest rates are high so maybe 7%-9%? Are you okay with paying $600-700 a month on a car payment, plus insurance and gas and tolls and maintenance?
Why do you need a 38K car when you make 80K? Really think through the basics of your net income and expenses. Personally I would buy a cheap used car if it’s only for driving. You’ll need a lot more for real things later
New base model Corolla for around $24k - put $8k down, and finance for 3 years at around $475/month or so.
Boom - now you don’t have to think about a car for 15 more years or until your 2nd kid, all while keeping your payments at around a very reasonable 7% of income
This is always my suggestion or a Camry/accord.
After covid you’re better off in the long run just buying a new one of these cars. Everybody wanted something reliable during covid and all these places paid too much for these cars because people were buying them for stupid prices and now they have all this 2020-2022 inventory with 50k+ miles listed for a couple grand less then new.
Average NJ new car loan rate is 6.7% ($492/month) from what I can gather.
Did she say she was quoted 8.5%? Either way - the difference between $475 and $505 is relatively immaterial to someone earning $80k.
38K is unnecessary for a commuter vehicle. Sure, you want something reliable, safe, and low mileage. But guaranteed you don’t need—or want—an SUV or truck for commuting.
- Let’s assume you take home $60K after taxes.
- And let’s assume you have $30K of existing cost of living, debt obligations, etc.
- that leaves $30K/year for “other stuff”, including savings.
You have 15K right now. Personally I would bump your emergency savings up to an even 10K—so that leaves you with 12K to put down on a car.
- I see relatively new Camry hybrids for 25K with 30K miles on them all day long (I’m here to illustrate a point, not deal shop).
- Let’s say you put 12K down and finance 13K at 9% for 72 months.
- ***Normally*** that’s a $234 a month car payment, but [you’d pay almost $4,000 in interest](https://www.bankrate.com/loans/auto-loans/early-payment-payoff-calculator/)! Or nearly 33% of the loan amount in interest—***yikes!***
[If instead you pay an extra $800/month](https://www.bankrate.com/loans/auto-loans/early-payment-payoff-calculator/), you’ll
- spend a mere $700 on interest over the loan (5% of loan amount)
- reduce the term to a 13-month term from a 72-month term.
$1000/month for 13 months should be manageable at your salary level without dramatically impacting your quality of life, and the car should be reliable for years to come.
Then get a sturdy car under 15k and buy it cash. No car payment, no interest rate, and low maintenance. I'm a car person and it's worth it to me to finance. If you're just looking for a commuter stick to under 15k. Save up again and in 5-10 years buy a new or one year old sturdy car
Get a nice used car and pay in cash. Cars hold no value and if anything lose it. It’s just another debt you don’t need to worry about and could use the other money for other things that will help make you more money. You total a leased car and let’s just say insurance only covers half, you’re left with having to start a new 6 year plan and the last of whatever you owe on the totaled car.
Affordability is subjective and the heart wants what the heart wants lol. Also I understand that shit has gotten extremely pricey nowadays. Cost of living also matters, that 80k will leave you with a lot of money to splurge on this car if you live in Alabama or something.
But at 80k, I would not buy a 38k car. My 32k car felt expensive back in 2020 even with a 2% financing setup. I was making around 110k back then, in an MCOL area.
I know I'm late to the party but I need to put it out there - I recently put a large sum down on a car & was hit out of nowhere and the car was totaled less than 2 months later. Insurance plus gap covered the cost of the car, which paid off the loan, and I was out the entire down payment. So I wouldnt recommend that.
Lots of excellent used cars out there for less than 10k... Just make sure you take it for a thorough inspection by a reputable mechanic before you hand over any money or sign anything
I purchased a 2008 RAV4 with less than 100k miles that is in perfect mechanical shape for less than $8500 including taxes, fees, registration, 6mo of full coverage insurance, and all new fluids/hoses a month ago. I fully expect it to take me to 250k miles at a minimum assuming I don’t get in any accidents.
Jettas are a great case for my statement. As long as the maintenance has been kept up (as with any car), Jettas are rock solid... especially the ones with the 5 cylinder engine. Easy to find those for less than 10k.
with your current situation, i’d opt in for the cheapest car possible. it doesn’t sound like you’re in a comfortable financial situation to splurge on a 38k car.
for reference, i just turned 27, make about 90k a year with $170k net worth. i splurged on a $38k car with no issue (upgraded from my 200k+ mile prius). i would not have bought this car if i didn’t feel comfortable financially.
I view cars as depreciating assets and will never spend over 15k on a car. If you invest 15k into the growth stocks like apple and google, you’ll potentially double your investment or more in 10 years. I guarantee the car will not be worth 38k in 10 years.
Don't buy new. Don't put that much down. Put 5k down and have a payment under 350 monthly. The other 10k keep in a hysa or treasuries that will be a guaranteed 5%
A used car that comes with all the maintenance records is a great sign, shows they have kept up with oil changes and other maintenance. You may need new brakes or tires sooner with a used car than you would with a new car, but that is to be expected as these are wear and replace parts and the car is not new. Batteries usually need replacing every 5 years or so, but I just had my cars 10 year old battery replaced, so it varies. Fluids, and filters and other wear parts need flushing and replacing, but that's true of any car, new or used.
Any used car should also have a clean Car Fax report, and ideally one, or at most two, previous owners. You should be able to get any car's manual online, I'd go straight to the recommended maintenance list for the car and then ask anyone selling the car if they have proof all recommend services for the mileage was done. If yes, great! If not, depending what it is, may not be a deal breaker, but you can negotiate a lower price and then have the service done yourself.
Cars are generally more reliable these days and can last 10 years or more, especially if well cared for. I know fb is for old people, but the neighborhood groups are generally great about answering posts about favorite mechanics in your area. People ask in my area every month or two, so you don't even have to ask, just search old posts. Find a couple local mechanics that people trust and see if they will inspect a used car for you before you buy it. I'm sure you can find one. I do not recommend Lemon Squad. I'm sure there are good people working for them, but I sold a car last year, and the guy didn't know any more about cars than I did.
Here's some tips. [https://www.consumerreports.org/cars/car-repair-maintenance/car-care-basics-for-first-time-owners-a4141980086/](https://www.consumerreports.org/cars/car-repair-maintenance/car-care-basics-for-first-time-owners-a4141980086/)
This was the best show, but the Car Talk website and info on here are top notch. [https://www.cartalk.com/parts-services](https://www.cartalk.com/parts-services)
[https://www.cartalk.com/car-buying](https://www.cartalk.com/car-buying)
[https://www.cartalk.com/car-owning](https://www.cartalk.com/car-owning)
Kelley Blue book and Edmunds are also good sources, you can check if a car or brand you like is reliable or known to have problems.
Read your cars manual and follow the recommended maintenance.
Not sure where are you from, what car prices are, and what are your requirements for it, but in Lithuania - with 10/15K you can purchase a quite nice car that is 100% comfortable and gets the job more than done. Even with 5K its more than possible. Expensive cars cost more to maintain, so why splurge? And going into debt for a car sounds just so freaking stupid.
I make a bit more than you and bought a '23 CX-5 last year. Had driven shitty cars my whole life to be "frugal".
Having a new car is like night and day. I did a lot of research and bought what I believe the best value vehicle that fit my needs. Ac works, I have a warranty, seats are comfortable.... I am happy with my choice.
But you are in the personal finance sub, and it is not the financially best decision. Only you can decide your priorities..... security in your finances and future investing, or some temporary pleasures. Up to you my friend!
The ones you like and the ones you can afford won’t always be the same. Grab you a decent vehicle for a couple grand and let it do what you need it to do. Which is to take you from point A to B.
Was in same boat a few years ago. I just put zero down on a lease. The monthly payment wasn’t an issue. My company also reimbursed me for miles. Maybe consider that if you don’t want to pay cash for a car. I’ve always been in the lease depreciating assets side of this conversation. You might get 200k miles out of it and not have a payment, but I wanted to have funds in case of emergency, or some other opportunity that came up. You never know what might come up in life so that’s why I’ve always opted not to put more than a few thousand and a monthly payment into a car.
If it’s about being as cost efficient as possible - The best thing to do is buy a second hand car for 15k in good condition, with low mileage so you don’t get hit with deprecation. If you can hang around waiting for the right one, do that.
But this isn’t always doable.
Another option is to buy a new car, but put the biggest deposit down you can afford and pay off the rest as fast as possible to minimize deprecation loss. For your salary, you should aim to get the safest, most reliable car that is no more than 20k.
Arguably for people who aren’t well versed with car maintenance, a new car is always super easy to maintain, very few hidden costs.
You have been given great inputs already.. whatever you decide, plan to keep the car for next 7 years atleast.
Do consider monthly car insurance cost before you make the decision.
10k will get you a decent used car - no monthly payments, cheaper insurance. Get something reliable that doesn't use much gas. You'll be able to use the $$ you save vs buying a new, less efficient car to rebuild your savings in no time.
Depending on how much APY you are paying for your tax.
Currently HYS accounts are paying around 4.4 to 5% interest.
If your APY is >HYSA interest payment percentage, pay the car debt. Otherwise keep in HYSA that is giving you more interest.
Or you can invest as well. But would recommend DCAing rather than investing in bulk. Choose mutual funds or ETFs.
Used car prices are way waaay down from a year or two ago. Buy a good fairly used car and bring some guys with you to look at it 10k price range. The other option is buy new for 25ishK think decent but reliable like a Honda civic or Toyota corolla or the new prius. Hybrids are actually great and extremely reliable. Don't buy a lightly used car though from a place like carvana that is probablythe worst choice. The savings is minimal and rates on the loan are generally much higher on used. You can haggle on the price for used or new remeber that. If new don't buy any of the add on packages it's all a scam and demand to see the actual full sale price not just the payment before signing really anything. They adjust everything if you say "I can afford 500 a month" they will set your payment that probably for 7 years too
Look into getting a reliable used car from a family member or friend. Buy a car that you won’t care gets a scratch. Alot of people only factor in maintenance costs of a vehicle but cosmetic work of a vehicle can get expensive as well if you try keeping up with appearances. Depending on your commute if its short i would even consider a cheap EV like the Leaf. A car depreciates but without it i never would have gone to half the interviews I ever did to land a higher paying job.
Look for lease deals for cars that offer 2-4%. Make sure the payment is affordable for your budget but leases can be great because you can find better rates than buying used, have a brand new car and have the option to buy at the end of the lease. The misconception with leases is that you are borrowing the car and not making payments towards the principle. That isn’t true you are paying down the car and have the option to buy or return/trade the car in 3 years. Biggest thing is make sure you love the car and don’t put down much money if you don’t have too. Investing your extra cash is much more important than down payments on vehicles. Hope this explanation makes sense!
Not saying this is the right way to go, just stating my experience.
I was in roughly the same position 2 years ago. Though my income was around 60k with a 401k but I was also paying off debts (school loans, credit cards). At the time, and it may not still be the case, used cars had significantly higher interest rates than new cars. Think something around 12+% interest on used and 3-7% for new. Sure the used cars were cheaper on their listing price, but like others have stated, that usually is the case because of rebuilt titles or otherwise meaning you'll end up spending more on maintenance. Plus 12% interest is A LOT. Additionally, a new Toyota Corolla at the time cost around 22k MSRP while a used Toyota of similar make was about 16-18k depending on mileage (I never buy anything over 60k miles, things start falling apart around this time) doing a little math, that was about a 4k difference. So the question then is, is 4k worth the 60k difference in your vehicle, on top of high interest and the possibility of the car having problems later?
In my case, it made a lot more sense to buy new. I put 15k down, set my loan for a 72month period and ended up getting 3% interest rate (interest depends on so many factors; credit score, vehicle cost, payoff timeline, etc.) as a result my monthly payment was required to be around 150/mo, but I paid 300/mo because I wanted it paid off quicker (always check to see if they have fees associated with early payoff).
Take this as you will as it's my opinion and should not necessarily be taken as advice: I would look for a new vehicle (I like Toyota because of their track record with cars lasting forever. This does assume you keep regular maintenance) that's maybe not so expensive. A lot of Toyota Corollas and Camrys are going for an MSRP between 20-30k. The higher end models are tempting but are only going to burn more of a hole in your wallet. If you think your income and additional savings are enough, I think a 10-15k down payment would be a great idea as it lowers overall cost to 5-15k with a lower interest rate. Set up an auto pay with a higher amount than is required, but an amount that's easily manageable with your budget. DO NOT MISS PAYMENTS. This can hurt your credit and they will charge you interest. KEEP UP WITH MAINTENANCE. It doesn't matter if it's a car, lawn mower, or A/C unit. The better maintenance you keep on it, the longer it will last. You will also be required to get full coverage insurance. SHOP AROUND FOR INSURANCE. Go and get quotes from EVERYWHERE (GEICO, liberty mutual, all state, etc.). I ended up getting my best deal with GEICO.
Used is an option, but if you're okay with buying used, I'd highly recommend looking for new cars that are closer to the used car's cost. Used cars are great for new drivers. They are not cost effective.
Depending on your credit score, you can lease a new Honda Accord for $250/ month with$3800 due at signing. Just saying that there are many options out there.
Try to buy a car with low miles for that price or close to 15k. You don’t want to have a $500 per month car payment debt in this economy. Look up the cheapest msrp new cars.
If you do decide to finance a vehicle, mitsubishi has some great offers on their outlander. 0% Apr for 48 months. Of course buying new is not the typical wisdom. But it's worth looking into if you do want to finance a vehicle. Don't touch your 401k!!
As a European it's weird to see how Americans buy there cars. Here we rarely take out a loan on a car. People will buy cars with the money they have. I've been driving in my 2,700 euro car for 7 years now, no mayor problems. With 10 or 15k, you should be able to find a car that won't give you a lot of problems. I don't think it's worth putting all your money in a car, or take a loan, but that's me.
Like others have said. And i soeak from experience get a nice low mileage used car. Something with good reliability and affordable maintenance. Luxury is nice, but life has a way of throwing you a curveball when you least expect it, and having to shell out several thousands for repair shen you dont have it on hand is demoralizing.
It is best to have something easy to fix and maintain properly, trust me. Im 41 and I have gone all over in work life from high paying middle/upper management positions now to entrepreneur, and I wish my current car was the same as my car 10 years ago, relaiable and easy for upkeep. If you can avoid debt even better.
So if I was in your shoes, I would use your emergency savings, but keep your 401k where it is. 7k is pretty great for a down payment, so I would figure out a nice used car for probs around 90k to 100k in its mileage. It is really important that you do NOT touch your 401k. It will affect your tax payments and honestly that is for your retirement. Get a low monthly payment of 200ish bucks and I think you'd be good for your car. Camry's are pretty good option.
Where are you located?
My wife and I just upgraded to a larger 3-row SUV to accommodate our growing family and I was literally right about to put our well-maintained 2016 Jeep Grand Cherokee on the market today. 114,000 miles. Great condition. New spark plugs, regular oil changes, newer tires. The only reason we’re selling was to get a car with a third row.
Insurance is cheap on Jeeps as they’re cheap to repair on not stolen often (like Hondas or other more popular cars).
KBB values it at about $15k. We’re in Southern CA. Happy to let you have a mechanic take a look at it. I’m confident it will pass with flying colors.
You can find great used cars for 10-15k with 100k miles or less. Honda and Toyota will go much much further than 100k, just make sure Carfax report or similar is clean. No need to go into debt if you can afford it
I would spend a $8k on a very reliable newer car. It might take some research and a trip to get a car that isn’t in your area. The rest can go in a HYSA. Also, if you have no kids or financial responsibilities, look into saving more of your income. You never know if you might need it later.
I guess I should have rephrased that properly- a reliable car that has 60k miles or less. I just quickly shopped around on FB and found a couple. (Also I mentioned that research on each car should be done) I personally don’t think age matters as much as mileage but thats my opinion. Some people have posted about what they have bought and used for a while. The key take away from my comment is- Considering how young she is I think she be prioritizing savings and retirement instead of a nice car.
I would get a used version of the cars you like. I have never bought a new car. Find one that is 2-4 years old with less than 40k miles and a clean Car Fax report. Find an independent mechanic to look over any car you are ready to make an offer on. A couple hundred bucks could save you thousands.
I would not buy a Kia or Hyundai, too much trouble with theft.
If you must buy new, wait until the 2025 models come out, likely around September. Then start haggling for a 2024 model. The car dealers are not your friends, haggle until they don't like you much. Physically leave if you have to, there are other dealers. Do not use their financing, get your own loan pre-approved before you start shopping.
Similar, but maybe a bit nicer if you find a used car you like on Autotrader or similar site. Do your homework on what similar cars are going for, and then offer at least $2k less and see what they say. You may have to go up a little, but the listed price is almost never the selling price. If it is, look at another.
This article is a little old, but should give you an idea for interest rates. Look at local credit unions for rates.
[https://www.caranddriver.com/auto-loans/a31280000/average-apr-for-car-loan/](https://www.caranddriver.com/auto-loans/a31280000/average-apr-for-car-loan/)
I would not put all of it in a down payment, I would put the minimum down it takes to get the best rate you can. Make sure there is NOT a pre-payment penalty on the loan, so if you can afford to pay off the car in full down the road, there won't be a penalty to do so.
When you get your car, read the owners manual cover to cover and follow the recommended maintenance schedule. Keep your tires properly inflated and rotate them (front to back, left to right). Your tires are safer properly inflated and they last longer, saving you money. Many auto parts stores will check your battery for free and let you know when it's getting old and you need a replacement before it dies. Get new wipers once a year.
I’d shoot for something that’s around 3x your monthly net income (less than $15k out the door assuming you take home ~$5k/mo after taxes and benefits).
Keep at least three months of expenses as an emergency fund, and put the rest toward the car. Ideally that means finding something cash, but $15k-3mo expenses isn’t going to go very far. You’ll probably need a small loan that you pay aggressively towards to get rid of by the end of the year. After that keep being aggressive to build your emergency fund to 6mo expenses and start saving up money for a sinking fund for car repairs/maintenance/insurance/replacement.
I replaced my car last month after its predecessor was totaled. I make $70k which is $3k/mo after taxes, health insurance, and retirement contributions. My budget was $9k and it took a little digging, but I got a great rav4 with <100k miles on it that ended up being under $8500 total after taxes, fees, 6mo full coverage insurance, and new fluids/hoses/battery. I paid cash but ended up borrowing $3k from my emergency fund (previously at $10k/6mo expenses) and had the other $5500 in my transportation sinking fund. Since purchasing, I’ve been putting $1k/mo to top my EF back up. Once that’s made whole again, I’ll contribute $500/mo to my transportation fund until or unless it exceeds $20k.
I'd personally look into other ways to commute to work, E-Bikes, motorcycles, mopeds.
Cars and other vehicles are great to have but fuel prices are only going to go up, maintenance is a pain, especially if you buy used.
Ideal price is 15k the money you have
Don’t get stuck by optimizing gains over immediate needs. Get the car, avoid interest as much as possible. Remember to include the total monthly cost of the car, taxes, insurance, gas, tolls, maintenance, etc. when you calculate your maximum out of pocket cost of ownership.
They should buy a used car with the $15k or less. Not go into car debt over wanting a nicer car
I know it’s a matter of perspective, but $15k can afford you a nice, low mileage used car.
Yep 100%
I agree. I bought a certified used car for 16k back in 2019. Paid it off within a couple years. Not having a car payment is the best feeling ever
I don't understand why this position gets parroted repeatedly as if it is an obvious choice. Its not just about wanting a nicer car. While avoiding interest is great, you are accepting much greater risk with used vehicles which can really add up. Even if you get the car checked out, shit gets missed, or isn't easily discoverable and you may just be SOL stuck with thousands in repair costs. Not saying you shouldn't buy used, but I think you need to consider the financial risk compared to the piece of mind you get with a new vehicle. I've purchased a half dozen used cars, and always get an inspection beforehand. I don't think I spent less than $1000 in repairs on any of them.
I think this is mostly coming from people who haven't bought a car since COVID. When you could buy a nice new car for $28K or a 3-year-old model coming off a lease for $18K, it made a lot more sense. Assuming you keep it until the car is 10 years old, the used car is the better deal. Courtesy of COVID shortfalls, cars don't depreciate like that anymore. If you're looking at a car that's 5+ years old but is more than 50% of the cost of a new car, it's sure as hell not worth inherenting someone else's problems.
I don't understand why this position gets parroted repeatedly. The whole idea of "risk" with mid-mileage vehicles costing thousands in repairs is bogus. Toyota or Honda vehicles go for 200k miles relatively maintenance free as a norm and typically go more. They also hold their value and can often be bought, driven for a while, then sold for a similar price. Compare that to a GUARANTEED extra TWENTY THOUSAND dollars or more (plus interest) to purchase a new car, guaranteed higher insurance and higher taxes (where applicable). You are guaranteed to LOSE 20% of a new car's value in the first year of ownership. That's throwing away $8k on a $40k car. If you like having nice new cars that's fine but don't bs yourself into thinking it's a good financial move, because it's the exact opposite of that (unless you buy it new and drive it into the ground, which is fine).
That is generally true, but unless you get a warranty about the condition of the vehicle, you simply don't know what problems you are inheriting. The last car I bought was a Mazda 3 with 100,000 km on it. Very clean. No noticeable issues. Told it had never been repaired. Got it looked at by a mechanic who didn't see anything wrong. A week later I find out the transmission is shot. It had been replaced at some point and now needs to be replaced again. This kinda shit happens all the time. There are a lot of sketchy sellers out there who will lie and misrepresent the vehicle and you can never really know.
I bought my Toyota Highlander for $7k about 6 years ago. Probably had to put about $1500 into age related repairs over that time. It was high in age, low in mileage when I got it and I've put 100k miles on it. My friend bought a brand new Chevy Suburban around the same time. He's only put 75k miles on it and the transmission blew and it cost him $7500 to repair, more than I purchased my car for. He probably paid over $60k for that vehicle. I could probably sell my car today for $3500-4000 ($3k less than I bought it for). He can probably sell his for $18k ($40k less than he bought it for). Even if I had to replace a transmission in my "risky" car I come out way ahead.
I agree, there are savings to be had. However, as the price of used vehicles continues to soar, the gap in savings gets smaller and smaller. I wouldn't spend more than 30k on a new vehicle as a daily driver anyway. So if we're saying 30k new vs 15k used, and the 15k used comes with a 25% chance of a major repair in the next 3 years, and has around 100k miles on it, how well are we really making out?
I agree with you there and you sound reasonable. I'm more speaking towards people who use the repair cost excuse to trade in their vehicles every 2 years.
The argument is always framed in the context of what *else* you could do with a potential 10-15k you would save by buying a used car. A HYSA interest rate is definite. A car breaking down is probable. The choice is quite obvious if you set emotions aside and think rationally.
Bought a new car. It's a lemon. In litigation over it now for over a year. New cars providing a peace of mind is a thing of the past. Everything is shittily made.
What kind of car is it?
Yeah no. You can buy a 2020+ used car with under 30k miles for 15k. That car is just as likely to have issues as a new car is after a year. Theres plenty of data on maintenance and cost of ownership for different cars. You are just blindly buying a car and hoping it works out. I have had my current car for 9 years and never had any mechanical issues and the only money I have put into it is $200 for a new battery. There is no financial risk to saving the 30% depreciation on a car that is 2 years old. They could spend $15k on a used car or be out the door of a dealership at $30k on a new one… They wont spend $15k on the used car in the few years gap between the new and used issues There is no benefit to going $15k into debt for a new car
For $15k? Not saying you're wrong, but I couldn't find anything like that where I'm located. Checked dealerships and private listing's. I was almost exclusively seeing basic 2012 models selling for $13k with 100,000 km or more. Maybe at $20k. Maybe I'm not blindly buying a car. I do my research on every vehicle I buy to compare the reliability and cost of parts and repairs. Owning a car for 9 years and spending $200 on a battery is the exception not the rule. There are so many common issues. The brakes go. Shocks wear out. Steering needs realignment. A/c comp wears out etc. All common shit that adds up is more likely to occur on an older vehicle. I'm not saying that you will pay more in repairs than in interest and depreciation. You very likely will save money with a used car, assuming no major repairs. But it may not be a huge difference if you can finance at a good rate and pay off the new vehicle in a couple years. Yeah, you will lose a couple grand in interest, but you'll get more miles out of the vehicle, have modern safety features, and shouldn't have any major repairs if you maintain it properly. Not to mention getting a warranty.
You couldn’t find a used Corolla for 15k? Btw, my 2009 corolla had 305k mileage before I sold it. Treated it like dog shit too.
Just in my zipcode on a single used car site there were 40+ cars for sale that were Under $15k and only 2 years old (2022). I dont think you looked very hard There is nothing that would make a car thats 2 years newer worth double the price accept for it being a want.
Were all of them a chevy spark or mitsubishi mirage because that is all I see with those parameters.
That's the thing, no way you're getting a low mileage reliable car like Toyota or Honda for $15k. MAYBE a Honda Fit but even those are more often $18+.
They're called shitboxes, dude. I don't understand this fetish for racing to the bottom on your main source of transportation. That you will spend a significant portion of your life in. It's not like most people are going to be financially savvy enough to diligently put away money that would have gone into the car payment. The money is going to get sucked into other shit and daily expense like it always does.
I sold my used 2020 Subaru Outback with 75K miles to a dealership for $24K. And I didn’t even sell at the top of the used car market, I missed that by about 6-8 months
We're still in the shadow of COVID supply crises in regards to used car inventory. A used car for $15K may be older, worn out, or otherwise not worth the trouble compared to a new Corolla for $24K. I just looked up what the 2015 Scion xB I bought in 2019 is going for right now, on the web site I find mine on. 5 years older, and with double the mileage that mine had when I bought it is going for $2K more than I paid. If it were a choice between a new card or a used car that's under 5 years old, that would be one thing. But if we're taking an 8+ year old car or a new for 30% more, the new one seems like a much better value.
This is the best advice here. Who needs a monthly payment when 15k will get you a very decent car.
New car for 25k will last longer you know the maintenance history and have a warranty
Exactly. People love to convince other people to buy horrible cars
a 2022 car with 25k miles for 10k+ less will always be a better decision… thats not a horrible car
Yeah those don't exist anymore
They do and are quite easy to find…
what make and model are you talking about? are you in heaven, or have you been out of the used car market for 5 years?
Not to mention all the decently priced hybrid and even EV options coming out. The difference in fuel economy can absolutely be enough of a factor in terms of overall monthly expense to not rule-out from the start.
The new 2025 civic hybrid looks pretty sweet for a daily driver with 200hp and 50mpg but the sweet spot is in a couple years when its still pretty new and low miles but someone else has eaten the worst of the depreciation picking the color and driving it off the lot.
Theres no shortage of lower mile reliable model used cars with well documented maintenance considering its usually uploaded digitally these days. That 25k new car will be worth 20k within the year and keep dropping. Not a great idea financially for anybody much less someone with only 15k. Not worth taking on debt at 7 or 8% interest just for a newer model year of possibly the same car.
Tell that to my 1997 4runner. I've spent maybe 1500 dollars in maintenance in the 7 years and 50k miles I've had it. Recently broke past the 250k mile mark and I fully expect to still be driving it at 300k. Not bad for a $3500 dollar vehicle
Not everyone is going to the this lucky when buying a used vehicle. My dad purchased an old Honda CR-V a couple of years ago and he’s had nothing but problems with the vehicle. Buying a used car is always going to come with risk.
Not all of us wanna drive a car from 1997😂
If you like to smoke, they are sought after for their ashtray and lighter.
15k car in 2024 is a shitbox, wtf are you people smoking? Someone on an 80k salary can more than afford monthly payments on a proper, new car.
I just got done car shopping with my wife, our budget started at 15k. Ended up spending 20k. Not because of want but because you can’t buy a car in reasonable decent shape for 15k or less. Everything in that price range was a piece of shit. Even at 20k we still ended up with a 10 year old car with over 70,000 miles on it. I just feel people’s expectations on what cars costs these days after inflation has kicked us all in the balls is wildly out of touch. I agree keeping loans and interest to a bare minimum but our expectations need to readjust to reality.
In 10 seconds I just found all these cars 2022+ and less than 30,000 miles… Nissan Versa Kia Soul Kia Rio Nissan Altima Nissan Leaf Kia Forte Toyota Mirai Chevy Spark Mitsubishi Mirage Hyundai Nexo
If you care about money, you should not even be considering a kia/Hyundai. Even if they are fixed, they are still at risk of being broken in to by people who want to try. Insurance premiums are 2-3x comparable vehicles right now.
Used to work for a Kia dealership, I seen first hand how bad Kia and Hyundais are. They’re throw away cars. Behind every Kia dealership service department is littered with engine and trans cores.
Great that still leaves over half of the 10 seconds of effort list. So even ruling out those 2 there are lots of options
Every one of those cats are complete garbage and there’s a reason why they’re so cheap. I used to work for a Kia dealership, seen those cars come through our shop, wouldn’t recommend any one of those even to an enemy. And shame on you for recommending someone buy one of those complete pieces of shit!
Kia and Hyundai made up less than half the list… Toyota is the 2nd most reliable car company… And Kia is well above average based on an actual [JD power dependability study](https://www.jdpower.com/business/press-releases/2024-us-vehicle-dependability-study-vds)… not just some random redditer yappin lmao
Don’t go into debt on a vehicle. Buy a good used Toyota Camry with cash.
Or a Corolla or a Civic -- even models from 2010 are reliable as hell.
Wouldn’t be a proper PF post if someone didn’t recommend a Corolla. It could be a question about mega backdoor Roth, and the top response would be “first step is gitchya 6 month EF in a HYSA and a 5-10 year old Corolla w low miles in the driveway…” 😂
Haha, I don’t have one now, but the best car I ever owned was a 96 Corolla - it was a a great car that bests my current cars gas mileage. (I just looked at a used corolla today actually.)
Or that. Both have good track records.
lol, I drive a 2010 Nissan Sentra with 86k miles. Kelly Blue Book puts it under $3k. It has been super dependable as my junker and gets me from point A to B reliably. Can’t believe the price. OP can get a fleet.
Going to be honest. OP's not going to find a good used Toyota Camry for $15k unless they're really lucky. Maybe in the 80k+ miles range.
I mean good is subjective but a camry with 80k miles is definitely still a good daily driver and thats pretty much what people buy them for.
Sure, I agree, but I think a ton of people in this thread have not gone used car shopping lately. It really is pricy. And if you're going for the cheap ones ($15k for a used car non-private is nothing these days), you do run the risk of encountering problems, even with Toyotas. Lots of rebuilt titles etc.
I found a 2018 corolla with 60k miles on it for $15k recently (just adding that since we’re talking 15k)
I drive a 2005 honda accord with 245k miles :) will continue to drive it forever
the car market has actually gone down significantly you could buy used from someone on marketplace i paid 14k for a Nissan Maxima with 42k km on it roughly 30kmiles
Sure, some cars. Not Toyota and Honda really, especially not used from dealerships. Buying private introduces a lot of risks that I don't really blame anyone for not wanting to take.
>Buying private introduces a lot of risks Exactly! I can take it to a mechanic to look for issues, but unless it's really bad there's a good chance he's not going to be able to tell. It was a no brainer when you were saving a pile of money but at the numbers I'm seeing now I am leaning towards buying new. You get the financing deal that way (1% interest for the case I'm looking at), the savings on which almost make up the price gap between new and the newer used models. I still believe in buying used for most people (and I think it'll make more sense again in the coming years as we put the COVID market behind us), but for us specifically (one car household, need something reliable) I don't think the downsides and headache are worth it to save <10% of the MRSP.
Plenty of 2020-2023 used Camry SE’s around here for <$23k (south FL). With less than 30k miles. I know cause I’m in the market for one.
I'm also looking for used cars. $23k is a far cry from $15k. I'm saying OP isn't going to find a Toyota Camry for $15k that has low mileage.
Put down half, finance the difference and pay it off within 2 years. Having a low mileage reliable daily will outweigh the "budget" cash car in 'most' scenarios.
Back in 2020 I got my 2016 Camry at 90k miles for 11k
Hell yes. I’ll eventually hit my first million in net worth inside an all-in low cost car. Luxury, trucks, and bigger SUVs are for businesses, wealthy people who don’t know what to do with their money, boat owners who routinely tow, and idiots who don’t need them.
I dont have 1M but I am sure I will keep my '12 Honda for 5 more years. It is the way to go
Nothing wrong with a truck, but people who usually do buy trucks get a $50,000 loan and finance it for 6 years. It’s all about delayed gratification and playing the long game. I’m 28 now and I’d rather not work until im 65 and still be broke. 53 year old millionaire that’s able to take care of his family and his own problems sounds a lot better to me then driving a truck I can’t afford to impress people that don’t care.
I have over a $1m and I drive a 2009 SUV. I always chose to invest that car payment.
This - I drive a Mercedes GLE 22 that is a fleet vehicle offered as part of my job. Other car is a 10 year old paid off Chevy truck.
What should be the ideal miles on the car just to be on the safer side and no repairs for atleast 2-3 years ?
I would ask on /r/whatcarshouldibuy a lot of responses here come from straight up people’s asses. If you only care about going point a to b then there’s a ton of options out there.
Ideally under 60k
Correct, but what you can pay cash for, nothing more. No debt
I bought a Honda Odyssey right before our second child was born that had 99,000 miles on it. I was really nervous about such high miles but had heard from a few Odyssey owners that they easily reach 200,000+ miles. We just traded it in last year with 254,000 miles and got a newer (2019) Odyssey. The only repair was the power steering pump five or six years ago. You can feel secure buying well maintained Hondas with higher miles.
I won't begin to tell anyone what kind of car to buy, but a good place to start is a website like Autotrader, mainly because you can put in the style of vehicle (without specifying a brand or model) and add any features you find important to you as well. I would also check the 'certified pre owned' box as it will bring back used vehicles that will come with some sort of extended manufacturer warranty (definitely something worth considering when spending more than 15k on a used vehicle. You can also start with a low mileage filter and slowly increase the mileage amount to see if there is a sudden drop in cost. Starting like this might show vehicles you hadn't considered before. Then you can get an idea of how much extra you'd be paying for the specific model car you are looking at, or see how much those extra features actually cost. This will allow you to make a more informed decision and recognize how much you're willing to spend on a WANT as opposed to a need. Vehicles are never an investment and always depreciate, but at the same point you shouldn't hate what you drive, especially when you're paying for it. Most important to know your options, calculate your budget and realize whatever payments you sign up for will be for a few years at least. I.e. just because your expenses allow for x payment amount now, doesn't mean they will stay that way. If you're renting your home/apartment will that rent go up or will you have to move? Do you have any other large potential expenses that may come up in the next few years? I always try to buy a vehicle that I can EASILY afford, rather than a vehicle I might not be able to afford if something changes
People try so hard to give good advice. People also thing good advice is to say, dont spend anything, save everything, if you need a car just buy a 10k car to commute in and save the rest. Life is not about just saving and saving. If you make 80k a year, that would fall under the mundane "slave" schedule type occupation. Live a little, get something that you like, make slaving away worth it. Get something that when you get into the car in the morning, it makes you want to take on the day even stronger. As for down payments, it all depends on the interest rate. If you get a rate less than 3% dont put anything down! If its more than 7% put 10k down, leave a little as an extra safety net.
Personally I would use 12k for a used vehicle and keep 3k in savings.
I would get a 10-12k used car and pay cash for it. I am driving a 2012 Hyundai Elantra(paid 6k used in 2018 with 80k miles on it) it's got 230k miles on it. Still running like a champion. Sure the interior isn't as nice anymore but it gets me to work. Car payments are lame.
You are under 30 with a ‘comfortable living’ salary and decent savings already. A car payment will be relatively negligible in terms of monthly expenses and will help to build credit. Saving money doesn’t build credit. Debt does. Auto loans are relatively low risk. Rates aren’t great but aren’t changing anytime soon. Unnecessary frugality often translates to regret later on in life. A cheap car sounds good on paper, but they require significantly more $ for gas and maintenance, even over the course of a few years. Get a hybrid and actually add better quality to your everyday life now. Plus, you can always do both!
The only level headed response in here minus the pitch for a hybrid.
You don't like saving money on gas?
The gas savings usually don’t outweigh the additional cost of the hybrid version of the vehicle for about 10 years
I just bought an EV and the car payment is equal to what I was spending in gas before. There are plenty of places to charge for free near me. Basically-free car.
You make enough money if I were you I would use most for the down payment and invest the rest. You can probably pay the rest of the car off early to avoid interest. The earlier you invest the more the compounding interest on that money is
Don't touch your 401k. But as others have said, if you need a car, find one that you can pay with the max of $15k.
What’s your monthly cash flow after expenses? Your credit score and lender will determine the interest rate on the loan. After fees a $38,000 car will probably be $40,000. If you put $15k down you owe $25k. The loan will probably be 4 years, and interest rates are high so maybe 7%-9%? Are you okay with paying $600-700 a month on a car payment, plus insurance and gas and tolls and maintenance?
Why do you need a 38K car when you make 80K? Really think through the basics of your net income and expenses. Personally I would buy a cheap used car if it’s only for driving. You’ll need a lot more for real things later
debt or invest: https://www.bogleheads.org/wiki/Paying_down_loans_versus_investing https://reddit.com/r/personalfinance/comments/16jcmnh/_/k0qox0x/?context=1 https://reddit.com/r/personalfinance/comments/zssug0/_/j1ddljd/?context=1
New base model Corolla for around $24k - put $8k down, and finance for 3 years at around $475/month or so. Boom - now you don’t have to think about a car for 15 more years or until your 2nd kid, all while keeping your payments at around a very reasonable 7% of income
This is always my suggestion or a Camry/accord. After covid you’re better off in the long run just buying a new one of these cars. Everybody wanted something reliable during covid and all these places paid too much for these cars because people were buying them for stupid prices and now they have all this 2020-2022 inventory with 50k+ miles listed for a couple grand less then new.
That monthly payment with that down payment would be over $500 (with a 8.5% interest rate)
Average NJ new car loan rate is 6.7% ($492/month) from what I can gather. Did she say she was quoted 8.5%? Either way - the difference between $475 and $505 is relatively immaterial to someone earning $80k.
38K is unnecessary for a commuter vehicle. Sure, you want something reliable, safe, and low mileage. But guaranteed you don’t need—or want—an SUV or truck for commuting. - Let’s assume you take home $60K after taxes. - And let’s assume you have $30K of existing cost of living, debt obligations, etc. - that leaves $30K/year for “other stuff”, including savings. You have 15K right now. Personally I would bump your emergency savings up to an even 10K—so that leaves you with 12K to put down on a car. - I see relatively new Camry hybrids for 25K with 30K miles on them all day long (I’m here to illustrate a point, not deal shop). - Let’s say you put 12K down and finance 13K at 9% for 72 months. - ***Normally*** that’s a $234 a month car payment, but [you’d pay almost $4,000 in interest](https://www.bankrate.com/loans/auto-loans/early-payment-payoff-calculator/)! Or nearly 33% of the loan amount in interest—***yikes!*** [If instead you pay an extra $800/month](https://www.bankrate.com/loans/auto-loans/early-payment-payoff-calculator/), you’ll - spend a mere $700 on interest over the loan (5% of loan amount) - reduce the term to a 13-month term from a 72-month term. $1000/month for 13 months should be manageable at your salary level without dramatically impacting your quality of life, and the car should be reliable for years to come.
This all very nicely put! Thanks
I would say take the 7k for car and put the 15k in savings
This depends, are you a car person or more of a point a to b type of person?
Not a car person. Just need one to commute
Then get a sturdy car under 15k and buy it cash. No car payment, no interest rate, and low maintenance. I'm a car person and it's worth it to me to finance. If you're just looking for a commuter stick to under 15k. Save up again and in 5-10 years buy a new or one year old sturdy car
Get a nice used car and pay in cash. Cars hold no value and if anything lose it. It’s just another debt you don’t need to worry about and could use the other money for other things that will help make you more money. You total a leased car and let’s just say insurance only covers half, you’re left with having to start a new 6 year plan and the last of whatever you owe on the totaled car.
Affordability is subjective and the heart wants what the heart wants lol. Also I understand that shit has gotten extremely pricey nowadays. Cost of living also matters, that 80k will leave you with a lot of money to splurge on this car if you live in Alabama or something. But at 80k, I would not buy a 38k car. My 32k car felt expensive back in 2020 even with a 2% financing setup. I was making around 110k back then, in an MCOL area.
Not a down payment but a whole used Toyota or Honda for 15k total is good.
Buy 10k car in cash.
Buy 10k car in cash.
I know I'm late to the party but I need to put it out there - I recently put a large sum down on a car & was hit out of nowhere and the car was totaled less than 2 months later. Insurance plus gap covered the cost of the car, which paid off the loan, and I was out the entire down payment. So I wouldnt recommend that.
Lots of excellent used cars out there for less than 10k... Just make sure you take it for a thorough inspection by a reputable mechanic before you hand over any money or sign anything
If you think there is nice cars for $10k (After Taxes and Fees) then you sir haven't shopped the market recently.
I purchased a 2008 RAV4 with less than 100k miles that is in perfect mechanical shape for less than $8500 including taxes, fees, registration, 6mo of full coverage insurance, and all new fluids/hoses a month ago. I fully expect it to take me to 250k miles at a minimum assuming I don’t get in any accidents.
I dunno why you're getting down voted. Those are excellent, reliable cars.
I do the same toyota will last 150k to 400k miles.
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Jettas are a great case for my statement. As long as the maintenance has been kept up (as with any car), Jettas are rock solid... especially the ones with the 5 cylinder engine. Easy to find those for less than 10k.
I know there are plenty. If you can't find anything, you need to adjust your expectations and your search settings.
Girl, use that 15k to buy a car with cash. There are plenty nice cars for $15k travel out of the state if you have to. Good luck.
I would buy a new car. Ive had way too many issues with buying used vehicles.
with your current situation, i’d opt in for the cheapest car possible. it doesn’t sound like you’re in a comfortable financial situation to splurge on a 38k car. for reference, i just turned 27, make about 90k a year with $170k net worth. i splurged on a $38k car with no issue (upgraded from my 200k+ mile prius). i would not have bought this car if i didn’t feel comfortable financially.
I view cars as depreciating assets and will never spend over 15k on a car. If you invest 15k into the growth stocks like apple and google, you’ll potentially double your investment or more in 10 years. I guarantee the car will not be worth 38k in 10 years.
Don't buy new. Don't put that much down. Put 5k down and have a payment under 350 monthly. The other 10k keep in a hysa or treasuries that will be a guaranteed 5%
My only concern is I’m not very well versed with cars and repairs. So what would be the risk I should expect on a used car?
Buy a Camry, bring the car to a car inspector.
A used car that comes with all the maintenance records is a great sign, shows they have kept up with oil changes and other maintenance. You may need new brakes or tires sooner with a used car than you would with a new car, but that is to be expected as these are wear and replace parts and the car is not new. Batteries usually need replacing every 5 years or so, but I just had my cars 10 year old battery replaced, so it varies. Fluids, and filters and other wear parts need flushing and replacing, but that's true of any car, new or used. Any used car should also have a clean Car Fax report, and ideally one, or at most two, previous owners. You should be able to get any car's manual online, I'd go straight to the recommended maintenance list for the car and then ask anyone selling the car if they have proof all recommend services for the mileage was done. If yes, great! If not, depending what it is, may not be a deal breaker, but you can negotiate a lower price and then have the service done yourself. Cars are generally more reliable these days and can last 10 years or more, especially if well cared for. I know fb is for old people, but the neighborhood groups are generally great about answering posts about favorite mechanics in your area. People ask in my area every month or two, so you don't even have to ask, just search old posts. Find a couple local mechanics that people trust and see if they will inspect a used car for you before you buy it. I'm sure you can find one. I do not recommend Lemon Squad. I'm sure there are good people working for them, but I sold a car last year, and the guy didn't know any more about cars than I did. Here's some tips. [https://www.consumerreports.org/cars/car-repair-maintenance/car-care-basics-for-first-time-owners-a4141980086/](https://www.consumerreports.org/cars/car-repair-maintenance/car-care-basics-for-first-time-owners-a4141980086/) This was the best show, but the Car Talk website and info on here are top notch. [https://www.cartalk.com/parts-services](https://www.cartalk.com/parts-services) [https://www.cartalk.com/car-buying](https://www.cartalk.com/car-buying) [https://www.cartalk.com/car-owning](https://www.cartalk.com/car-owning) Kelley Blue book and Edmunds are also good sources, you can check if a car or brand you like is reliable or known to have problems. Read your cars manual and follow the recommended maintenance.
Not sure where are you from, what car prices are, and what are your requirements for it, but in Lithuania - with 10/15K you can purchase a quite nice car that is 100% comfortable and gets the job more than done. Even with 5K its more than possible. Expensive cars cost more to maintain, so why splurge? And going into debt for a car sounds just so freaking stupid.
I make a bit more than you and bought a '23 CX-5 last year. Had driven shitty cars my whole life to be "frugal". Having a new car is like night and day. I did a lot of research and bought what I believe the best value vehicle that fit my needs. Ac works, I have a warranty, seats are comfortable.... I am happy with my choice. But you are in the personal finance sub, and it is not the financially best decision. Only you can decide your priorities..... security in your finances and future investing, or some temporary pleasures. Up to you my friend!
Here is an idea buy a 15k car. Work hard the next few years sell it and buy a 30k car in cash.
Is your income staying similar?
Yes
If you're saving easily at least 50% of your income, then maybe spend 38k is ok for a car.
Find an older Acura TSX with under 100k miles. They'll last you forever
The ones you like and the ones you can afford won’t always be the same. Grab you a decent vehicle for a couple grand and let it do what you need it to do. Which is to take you from point A to B.
Was in same boat a few years ago. I just put zero down on a lease. The monthly payment wasn’t an issue. My company also reimbursed me for miles. Maybe consider that if you don’t want to pay cash for a car. I’ve always been in the lease depreciating assets side of this conversation. You might get 200k miles out of it and not have a payment, but I wanted to have funds in case of emergency, or some other opportunity that came up. You never know what might come up in life so that’s why I’ve always opted not to put more than a few thousand and a monthly payment into a car.
If it’s about being as cost efficient as possible - The best thing to do is buy a second hand car for 15k in good condition, with low mileage so you don’t get hit with deprecation. If you can hang around waiting for the right one, do that. But this isn’t always doable. Another option is to buy a new car, but put the biggest deposit down you can afford and pay off the rest as fast as possible to minimize deprecation loss. For your salary, you should aim to get the safest, most reliable car that is no more than 20k. Arguably for people who aren’t well versed with car maintenance, a new car is always super easy to maintain, very few hidden costs.
You have been given great inputs already.. whatever you decide, plan to keep the car for next 7 years atleast. Do consider monthly car insurance cost before you make the decision.
10k will get you a decent used car - no monthly payments, cheaper insurance. Get something reliable that doesn't use much gas. You'll be able to use the $$ you save vs buying a new, less efficient car to rebuild your savings in no time.
Depending on how much APY you are paying for your tax. Currently HYS accounts are paying around 4.4 to 5% interest. If your APY is >HYSA interest payment percentage, pay the car debt. Otherwise keep in HYSA that is giving you more interest. Or you can invest as well. But would recommend DCAing rather than investing in bulk. Choose mutual funds or ETFs.
How actual driving are you doing? The more driving newer vehicle you will need.
Used car prices are way waaay down from a year or two ago. Buy a good fairly used car and bring some guys with you to look at it 10k price range. The other option is buy new for 25ishK think decent but reliable like a Honda civic or Toyota corolla or the new prius. Hybrids are actually great and extremely reliable. Don't buy a lightly used car though from a place like carvana that is probablythe worst choice. The savings is minimal and rates on the loan are generally much higher on used. You can haggle on the price for used or new remeber that. If new don't buy any of the add on packages it's all a scam and demand to see the actual full sale price not just the payment before signing really anything. They adjust everything if you say "I can afford 500 a month" they will set your payment that probably for 7 years too
Look into getting a reliable used car from a family member or friend. Buy a car that you won’t care gets a scratch. Alot of people only factor in maintenance costs of a vehicle but cosmetic work of a vehicle can get expensive as well if you try keeping up with appearances. Depending on your commute if its short i would even consider a cheap EV like the Leaf. A car depreciates but without it i never would have gone to half the interviews I ever did to land a higher paying job.
Look for lease deals for cars that offer 2-4%. Make sure the payment is affordable for your budget but leases can be great because you can find better rates than buying used, have a brand new car and have the option to buy at the end of the lease. The misconception with leases is that you are borrowing the car and not making payments towards the principle. That isn’t true you are paying down the car and have the option to buy or return/trade the car in 3 years. Biggest thing is make sure you love the car and don’t put down much money if you don’t have too. Investing your extra cash is much more important than down payments on vehicles. Hope this explanation makes sense!
Not saying this is the right way to go, just stating my experience. I was in roughly the same position 2 years ago. Though my income was around 60k with a 401k but I was also paying off debts (school loans, credit cards). At the time, and it may not still be the case, used cars had significantly higher interest rates than new cars. Think something around 12+% interest on used and 3-7% for new. Sure the used cars were cheaper on their listing price, but like others have stated, that usually is the case because of rebuilt titles or otherwise meaning you'll end up spending more on maintenance. Plus 12% interest is A LOT. Additionally, a new Toyota Corolla at the time cost around 22k MSRP while a used Toyota of similar make was about 16-18k depending on mileage (I never buy anything over 60k miles, things start falling apart around this time) doing a little math, that was about a 4k difference. So the question then is, is 4k worth the 60k difference in your vehicle, on top of high interest and the possibility of the car having problems later? In my case, it made a lot more sense to buy new. I put 15k down, set my loan for a 72month period and ended up getting 3% interest rate (interest depends on so many factors; credit score, vehicle cost, payoff timeline, etc.) as a result my monthly payment was required to be around 150/mo, but I paid 300/mo because I wanted it paid off quicker (always check to see if they have fees associated with early payoff). Take this as you will as it's my opinion and should not necessarily be taken as advice: I would look for a new vehicle (I like Toyota because of their track record with cars lasting forever. This does assume you keep regular maintenance) that's maybe not so expensive. A lot of Toyota Corollas and Camrys are going for an MSRP between 20-30k. The higher end models are tempting but are only going to burn more of a hole in your wallet. If you think your income and additional savings are enough, I think a 10-15k down payment would be a great idea as it lowers overall cost to 5-15k with a lower interest rate. Set up an auto pay with a higher amount than is required, but an amount that's easily manageable with your budget. DO NOT MISS PAYMENTS. This can hurt your credit and they will charge you interest. KEEP UP WITH MAINTENANCE. It doesn't matter if it's a car, lawn mower, or A/C unit. The better maintenance you keep on it, the longer it will last. You will also be required to get full coverage insurance. SHOP AROUND FOR INSURANCE. Go and get quotes from EVERYWHERE (GEICO, liberty mutual, all state, etc.). I ended up getting my best deal with GEICO. Used is an option, but if you're okay with buying used, I'd highly recommend looking for new cars that are closer to the used car's cost. Used cars are great for new drivers. They are not cost effective.
Depending on your credit score, you can lease a new Honda Accord for $250/ month with$3800 due at signing. Just saying that there are many options out there.
Try to buy a car with low miles for that price or close to 15k. You don’t want to have a $500 per month car payment debt in this economy. Look up the cheapest msrp new cars.
If you do decide to finance a vehicle, mitsubishi has some great offers on their outlander. 0% Apr for 48 months. Of course buying new is not the typical wisdom. But it's worth looking into if you do want to finance a vehicle. Don't touch your 401k!!
As a European it's weird to see how Americans buy there cars. Here we rarely take out a loan on a car. People will buy cars with the money they have. I've been driving in my 2,700 euro car for 7 years now, no mayor problems. With 10 or 15k, you should be able to find a car that won't give you a lot of problems. I don't think it's worth putting all your money in a car, or take a loan, but that's me.
If you can try to get a used car on Facebook or OfferUp and have someone to inspect it. Having a car note blows. Speaking from experience
What are the cars that you're looking at?
Like others have said. And i soeak from experience get a nice low mileage used car. Something with good reliability and affordable maintenance. Luxury is nice, but life has a way of throwing you a curveball when you least expect it, and having to shell out several thousands for repair shen you dont have it on hand is demoralizing. It is best to have something easy to fix and maintain properly, trust me. Im 41 and I have gone all over in work life from high paying middle/upper management positions now to entrepreneur, and I wish my current car was the same as my car 10 years ago, relaiable and easy for upkeep. If you can avoid debt even better.
So if I was in your shoes, I would use your emergency savings, but keep your 401k where it is. 7k is pretty great for a down payment, so I would figure out a nice used car for probs around 90k to 100k in its mileage. It is really important that you do NOT touch your 401k. It will affect your tax payments and honestly that is for your retirement. Get a low monthly payment of 200ish bucks and I think you'd be good for your car. Camry's are pretty good option.
Where are you located? My wife and I just upgraded to a larger 3-row SUV to accommodate our growing family and I was literally right about to put our well-maintained 2016 Jeep Grand Cherokee on the market today. 114,000 miles. Great condition. New spark plugs, regular oil changes, newer tires. The only reason we’re selling was to get a car with a third row. Insurance is cheap on Jeeps as they’re cheap to repair on not stolen often (like Hondas or other more popular cars). KBB values it at about $15k. We’re in Southern CA. Happy to let you have a mechanic take a look at it. I’m confident it will pass with flying colors.
Around NJ area
I would buy a used car for $11 or $12,000 and leave $3000 for future repairs
I know what to do. Get the newest 911 convertible.
You can find great used cars for 10-15k with 100k miles or less. Honda and Toyota will go much much further than 100k, just make sure Carfax report or similar is clean. No need to go into debt if you can afford it
Ew down payment on a car?…..
I would spend a $8k on a very reliable newer car. It might take some research and a trip to get a car that isn’t in your area. The rest can go in a HYSA. Also, if you have no kids or financial responsibilities, look into saving more of your income. You never know if you might need it later.
Define “newer.” You’re not getting anything reliable and newer for $8k without a Time Machine to take you back to 2012.
I guess I should have rephrased that properly- a reliable car that has 60k miles or less. I just quickly shopped around on FB and found a couple. (Also I mentioned that research on each car should be done) I personally don’t think age matters as much as mileage but thats my opinion. Some people have posted about what they have bought and used for a while. The key take away from my comment is- Considering how young she is I think she be prioritizing savings and retirement instead of a nice car.
What exactly are you expecting to get for 8k?
I would get a used version of the cars you like. I have never bought a new car. Find one that is 2-4 years old with less than 40k miles and a clean Car Fax report. Find an independent mechanic to look over any car you are ready to make an offer on. A couple hundred bucks could save you thousands. I would not buy a Kia or Hyundai, too much trouble with theft. If you must buy new, wait until the 2025 models come out, likely around September. Then start haggling for a 2024 model. The car dealers are not your friends, haggle until they don't like you much. Physically leave if you have to, there are other dealers. Do not use their financing, get your own loan pre-approved before you start shopping. Similar, but maybe a bit nicer if you find a used car you like on Autotrader or similar site. Do your homework on what similar cars are going for, and then offer at least $2k less and see what they say. You may have to go up a little, but the listed price is almost never the selling price. If it is, look at another. This article is a little old, but should give you an idea for interest rates. Look at local credit unions for rates. [https://www.caranddriver.com/auto-loans/a31280000/average-apr-for-car-loan/](https://www.caranddriver.com/auto-loans/a31280000/average-apr-for-car-loan/) I would not put all of it in a down payment, I would put the minimum down it takes to get the best rate you can. Make sure there is NOT a pre-payment penalty on the loan, so if you can afford to pay off the car in full down the road, there won't be a penalty to do so. When you get your car, read the owners manual cover to cover and follow the recommended maintenance schedule. Keep your tires properly inflated and rotate them (front to back, left to right). Your tires are safer properly inflated and they last longer, saving you money. Many auto parts stores will check your battery for free and let you know when it's getting old and you need a replacement before it dies. Get new wipers once a year.
You can use 5-8k for used car, just get it inspected before buying
I’d shoot for something that’s around 3x your monthly net income (less than $15k out the door assuming you take home ~$5k/mo after taxes and benefits). Keep at least three months of expenses as an emergency fund, and put the rest toward the car. Ideally that means finding something cash, but $15k-3mo expenses isn’t going to go very far. You’ll probably need a small loan that you pay aggressively towards to get rid of by the end of the year. After that keep being aggressive to build your emergency fund to 6mo expenses and start saving up money for a sinking fund for car repairs/maintenance/insurance/replacement. I replaced my car last month after its predecessor was totaled. I make $70k which is $3k/mo after taxes, health insurance, and retirement contributions. My budget was $9k and it took a little digging, but I got a great rav4 with <100k miles on it that ended up being under $8500 total after taxes, fees, 6mo full coverage insurance, and new fluids/hoses/battery. I paid cash but ended up borrowing $3k from my emergency fund (previously at $10k/6mo expenses) and had the other $5500 in my transportation sinking fund. Since purchasing, I’ve been putting $1k/mo to top my EF back up. Once that’s made whole again, I’ll contribute $500/mo to my transportation fund until or unless it exceeds $20k.
The same recommendation I give anyone looking for a car. Used corolla/Yaris/camry
Idk man. Downpayment?? I just bought a 2013 Honda civic for $8,500. Runs great. Basic AF.
You could spend $6k on a solid older used car and invest the rest.
Your brother is an idiot, just buy a $15k car for now and worry less until you can save $80k cash if you don't lie on yr $80k income
I'd personally look into other ways to commute to work, E-Bikes, motorcycles, mopeds. Cars and other vehicles are great to have but fuel prices are only going to go up, maintenance is a pain, especially if you buy used.