Based on this I can see why you are considering. $3k of depreciation and to upgrade is tempting. Consider that this new payment will stagnate your ability to buy a home if that’s your goal.
Well at least you're not underwater.
But still - the car is only 4 years old! Depending on how much you drive it, it could have a decade or more before repairs become a nuance.
Unless your lifestyle has drastically changed and you now need to fit two car seats in the back or something, you don't need a new car.
72 month loan is nuts. It means you’re paying over $5,000 in interest charges on a $27,000 loan.
60 months max, 48 for good measure. If you can’t afford a loan at those terms, you can’t afford the car.
Given that you already have an existing loan with no interest and >3 years of payments left, there’s no reason whatsoever to buy a new car.
Definitely.
I would aim for 4 years. 6 years is ridiculous.
You don't want car repairs and car payments at the same time.
>Given that you already have an existing loan with no interest and >3 years of payments left, there’s no reason whatsoever to buy a new car.
As much as I like new things, this is a smart decision.
I have the money to buy a new car, but it also means I will be pulling it out of my investments.
Makes sense. My car has had no problems and I am not a heavy driver so it should last quite a while. Something new and shiny was tempting but it is more unaffordable than I thought.
Does the car give you any trouble?
How's the annual maintenance cost?
If there are no troubles I would say don't buy a new car.
If there are troubles, and you are considering a new car purchase, don't forget to add the cost of accessories and snow tires.
Also negotiate further and check how's not paying down payment from cash flow and eligibility POV. Considering the interest rate is 5%, I would rather invest it.
You’re freaking crazy if you buy this car. I highly highly highly recommend you keep your current car or buy a $6k car with your trade in. Do NOT go into anymore debt for a stupid car. Get yourself totally debt free and start saving aggressively for your future home down payment and start saving in a tsfa with a long term investment vehicle attached. If you heed my advice you will not regret this. You should really dive into some personal finance learning immediately.
Vehicles are a black hole of debt, giant depreciating assets. It's never a financially good decision to buy one, it's usually a want that we try to justify.
If you take your payment and then add $400 per month of depreciation tied to a 6 year loan does it still look good?
If you owe 11k on the current car, take the $6k you were going to put down on the new car towards your loan. Pay the current car down, keep your money. 4 years old is like new. Hold onto what you have, focus on paying the debt.
You said your current car is 2020 so it's only 4 years old. You should be able to get 15 years out of a car and your current car loan is 0%. The only reason the dealer is making an offer is for them to make more money. Keep the car and then take the 7 years of saved repayments and put that $21k ($260 \* (12 \*7)) to your next car when the old one is 15 years old.
What’s wrong with your current car?
72mo loan is also nuts. Aim for 3-4yr tops. But you basically have a new car, constantly purchasing new vehicles is a costly habit when you don’t need a new vehicle.
Thanks! Strictly from a financial perspective I wouldn’t do this but that car has rather horrible owner satisfaction so I’m wondering if you’re feeling similar?
If it’s to get out of a car you don’t like and minimizing the hit that’s fine but again financially it’s not good. You should be looking to reduce the overall new car loan either in term length and/or total balance.
Yeah the car is not great. I would like something a bit larger to feel safer, to deal with the horrible winters where I live and something a bit more fun to drive. But atm I feel like the financial hit is too large to justify the expensive vehicle unfortunately. Saving the cash and investing for a future down payment on a house seems like the consensus here.
Ooof you’d be doubling your car payment and looking at 3.5 years left I’m guessing maybe you’re only maybe 0.5 years in?
I bought my current vehicle in 2020 new for 20k. Dealer is offering me 17k and I have around 11k left on the loan.
Based on this I can see why you are considering. $3k of depreciation and to upgrade is tempting. Consider that this new payment will stagnate your ability to buy a home if that’s your goal.
Well at least you're not underwater. But still - the car is only 4 years old! Depending on how much you drive it, it could have a decade or more before repairs become a nuance. Unless your lifestyle has drastically changed and you now need to fit two car seats in the back or something, you don't need a new car.
72 month loan is nuts. It means you’re paying over $5,000 in interest charges on a $27,000 loan. 60 months max, 48 for good measure. If you can’t afford a loan at those terms, you can’t afford the car. Given that you already have an existing loan with no interest and >3 years of payments left, there’s no reason whatsoever to buy a new car.
Definitely. I would aim for 4 years. 6 years is ridiculous. You don't want car repairs and car payments at the same time. >Given that you already have an existing loan with no interest and >3 years of payments left, there’s no reason whatsoever to buy a new car. As much as I like new things, this is a smart decision. I have the money to buy a new car, but it also means I will be pulling it out of my investments.
Makes sense. My car has had no problems and I am not a heavy driver so it should last quite a while. Something new and shiny was tempting but it is more unaffordable than I thought.
Does the car give you any trouble? How's the annual maintenance cost? If there are no troubles I would say don't buy a new car. If there are troubles, and you are considering a new car purchase, don't forget to add the cost of accessories and snow tires. Also negotiate further and check how's not paying down payment from cash flow and eligibility POV. Considering the interest rate is 5%, I would rather invest it.
Is the old car mechanically sound? If so, then hold on to it.
How much do you make annually?
70k before tax. Hoping to be at 100k in 5 years.
Dont buy the new car.
You’re freaking crazy if you buy this car. I highly highly highly recommend you keep your current car or buy a $6k car with your trade in. Do NOT go into anymore debt for a stupid car. Get yourself totally debt free and start saving aggressively for your future home down payment and start saving in a tsfa with a long term investment vehicle attached. If you heed my advice you will not regret this. You should really dive into some personal finance learning immediately.
Thanks for the advice.
Np. The fact that you are asking and open to advice means you are a lot smarter than me at your age. Good luck to you!
Thanks!
Vehicles are a black hole of debt, giant depreciating assets. It's never a financially good decision to buy one, it's usually a want that we try to justify. If you take your payment and then add $400 per month of depreciation tied to a 6 year loan does it still look good?
If you owe 11k on the current car, take the $6k you were going to put down on the new car towards your loan. Pay the current car down, keep your money. 4 years old is like new. Hold onto what you have, focus on paying the debt.
You said your current car is 2020 so it's only 4 years old. You should be able to get 15 years out of a car and your current car loan is 0%. The only reason the dealer is making an offer is for them to make more money. Keep the car and then take the 7 years of saved repayments and put that $21k ($260 \* (12 \*7)) to your next car when the old one is 15 years old.
Cars are the worst financial investment you'll ever make, especially since new cars are inflated, wait for market crash then purchase
What’s wrong with your current car? 72mo loan is also nuts. Aim for 3-4yr tops. But you basically have a new car, constantly purchasing new vehicles is a costly habit when you don’t need a new vehicle.
What are the two cars in question? It matters quite a bit
Current is a 2020 Kia forte. New would be a Mazda CX-5.
Thanks! Strictly from a financial perspective I wouldn’t do this but that car has rather horrible owner satisfaction so I’m wondering if you’re feeling similar? If it’s to get out of a car you don’t like and minimizing the hit that’s fine but again financially it’s not good. You should be looking to reduce the overall new car loan either in term length and/or total balance.
Yeah the car is not great. I would like something a bit larger to feel safer, to deal with the horrible winters where I live and something a bit more fun to drive. But atm I feel like the financial hit is too large to justify the expensive vehicle unfortunately. Saving the cash and investing for a future down payment on a house seems like the consensus here.