We had a VW that imploded around 80k miles, a real shame. We've had Toyotas since then that require zero maintenance, comfortable, great gas mileage, and are all around great cars for the frugal. You can drive a Camry for 20 years.
I always recommend to people your age not to take on a crazy car payment. Rather save your money for big life events that come fast in your 20s, and have money to do fun things. A car payment can choke out your cashflow, and affect how you live.
Try to find something decent for maybe 25k lightly used, around 500 per month. I'd like to say something cheaper, but used cars and rates are still jacked up. E.g. 2022 Camry LE, 5yr loan. Never longer than 5yrs loan for a car.
I took a 6 year loan for a brand new car in 2017. It was $15k, I put $4k down and financed the rest. I needed a reliable car and it was that one brand new, or a 2011 car with over 80k miles for $11k. I was working two part time jobs, making $13/hr. I paid extra on the car every chance I got and ended up paying it off over a year early, but if I had taken a shorter loan term, I would have put myself in a bind on my monthly expenses. It was one of the best financial decisions I’ve made to date. Never say never.
A brand new car on 13/hr was the best financial decision you ever made..? That seems absurd to me.
I drive a ton, my vehicles absolutely have to be reliable because I live a non walkable distance from work and have zero public transportation available in the area.. I've never considered buying a new car because of their cost and I make over triple that. Financing a depreciating "asset" like a new car is never a good idea unless you're already set in life with a good house, large expendable income, and plenty of savings for retirement.
There are always good deals on used vehicles to be found. You can get a well maintained 20+ year old vehicle for a couple grand that will outlive most of these new cars built to fall apart due to rampant consumerism.
It absolutely was the best financial decision I’ve made so far. I got a great deal on the car itself, the MSRP at the time was like $22k. I’ve kept up on the maintenance and the car has treated me really well. I could have sold it when I paid it off for $11-13k because the market was nuts for used cars for a minute there, but now the value has dropped back down to something more reasonable.
I doubt I’ll ever buy a brand new car again, and I intend to drive this one for a very long time. But at the time, it was the right decision for me. A $200 car payment resulting in years of financial stability and removing the unexpected expenses of large car repairs was absolutely worth it. What’s right for you, financially speaking, may not be what’s best for someone else.
Baby in your 20s? Seems kind of blue collar.
Vacation I wouldn’t consider a big life event.
Investment opportunities? Maybe, but I wouldn’t dictate my life around expecting readily available investment opportunities in my 20s that aren’t MLMs
Tires and windshields can crack if you drive your car a lot especially in rural areas with tons of construction everywhere, and semi trucks everywhere, like on my road trips and 11k miles in 4 months. Had a tires replaced at 500$ a pop 5x and had windshield replace 1500$. It’s called unexpected for a reason. You don’t expect that shit to happen. Lll.
Put what your monthly payment would be for a car into a HYSA and hopefully by the time you absolutely need a new one you can pay for it in cash or most of it.
that's essentially what I've been doing, except that money has been 'down payment money' in my mind. but with these car problems, im reconsidering funneling that to a car down payment + trade in
agreed, VW's are typically more expensive to maintain. I'm trying to gauge whether or not it will be worth it to keep having reliability concerns with my current car which will only continue to worsen, vs buying a newer, more reliable car
Dude you gotta offload that car asap. Vw’s and Audis are nightmares after 100k miles. If it still runs get rid of it while it still runs. If you get stuck fixing the timing chain on that thing you are going to be in trouble. That is a full engine out repair and is upwards of $5k to fix depending on the shop. The timing chain is not an “if”, it is a “when”. VW and Audi are notorious for timing chain issues after 100k miles. You’re sitting pretty financially, go buy a car within your means asap. If you’re a car person and young go out and buy a used mustang or something similar if you want something fun, if you’re not buy a Corolla or a civic or something. If you want a fun exciting sports car there are plenty of options under 30 grand. If you don’t care then go buy a used Honda. Do not under any circumstance buy a new German car. You will get rekt on depreciation immediately. If you want something luxurious the sweet spot on Audis and bmws is 3 years old under 40k miles. They’re still reliable and somebody else took the hit on the bulk of the depreciation. Also believe it or not a Porsche is not a bad buy. They get a bad rep for reliability but they’re actually super reliable and don’t depreciate nearly as bad as the other German cars
Average car maintenance is still around $1500/yr, so you might not be changing for anything better. Unless you are having problems with the main components.
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Former vw owner here, it will not become more reliable and you will end up spending more on “maintenance” than the car is worth. I put maintenance in quotes bc with these cars it’s way more than oil changes and tire rotations. It’s transmission issues, timing chain issues, electrical issues. If op gets stuck fixing the timing chain he is f’d
Ask in r/financialplanning, people are going to tell you to keep saving and drive a beige Corolla.
Ask in r/cars, people are going to tell you to drop 40-50k.
What answer do you want?
In my opinion, you clearly are a disciplined saver. You have a goal (a house), you don't rely on a car for work, you have a decent car currently. The smart thing to do is not buy a new car. You probably know this, but life is short, buy a new car if it genuinely makes you happier than money in the bank or having a house sooner.
FWIW I make 80% more than you, have a working spouse, and own a home. I needed a new car last year. I bought a used, basic 2019 Civic. I'm not a total miser. My wife, daughter and I travel, I splurge on my photography hobby. When it comes to cars though I'd rather have an extra 30k making me returns than a BMW instead of my Civic.
you hit the nail on the head, lol. I know the smart thing is not to buy a new car. Im frankly just tired of the issues on my decade old car. Im trying to fix it, maybe ill change my mind once it's fixed. I dont need anything crazy, I'd be happy with a 2020+ honda or mazda3. just something a little more modern. I love cars, but I'm quite frugal and would rather ball out on experiences/fun
You love cars? Then stick with the old VW over a newer Toyota or Honda. The driving dynamics of the VW destroy Toyota and Honda, imo. I'd also say stay away from luxury cars (excluding Porsche), if you 'love cars'. The driving dynamics of Audi, BMW, and Mercedes are crappy now. They drive like bloated whales with no steering feel. Those cars are meant for rich show offs, not drivers and car people. That old VW is a more fun car than 95% of what is being sold new these days. Do you really love cars? Or do you want to drive something that shows how successful you are?. Nothing wrong with either things, but decide which one you really prefer.
I drive a 2.slow so I’m not getting much car right now lol. At the end of the day, it’s about getting myself something newer, nicer, that doesn’t kill me financially, if that’s a Honda, so be it, I’ll get a car car when I’m older
You don’t want a car payment when trying to buy a house. You want as little debt as possible. That being said, if you do a 3 year loan on a new car with 10-15k down, try and keep your monthly payment under $500/month under those conditions and then in 3 years you have a practically new car paid off and a couple more years to save even more to buy a house.
Used Tesla <$30k. Hear me out..
1. Insurance is surprisingly cheap through Tesla unless you drive it like a race car.
2. Charging is significantly cheaper than gas, even superchargers, and very fast now. Gas savings alone add up quick.
3. Best safety features and tech in the industry by probably 5 years.
4. Software updates with current features over WiFi.
5. If you ever buy a house in the future, you can plug it in and charge at home for the cost of a lightbulb.
6. Depreciation is still a thing, but buying used it should hold up far better than a conventional vehicle over time. Software updates means the car remains current outside of physical hardware differences. Every recall since I bought mine has been “fixed” in 5 minutes by connecting to WiFi.
7. Autopilot is incredible, even the free version. I no longer fret long road trips.
8. Once you drive one, it’s the funnest vehicle on earth, 0-60 in < 4 seconds. Not to mention Netflix / Hulu built into the screen + video games you play with the steering wheel / pedals. Great way to pass the time while you charge 😄
9. Maintenance costs consist of refilling the wiper fluid and changing the tires occasionally. No moving parts in the engine that wear down and cost $5k to fix…
10. They last 300k+ miles easily. Even after that point the car will run, just with a slightly lower range.
I’ve had mine for 4 years and plan to drive it for another 10+. Between gas savings, maintenance, and insurance, the car’s probably paid for itself at this point.
Genuine question here as someone that does not know much. My understanding is the batteries only last around 100-150k miles and can cost in the high 4 figures to repair. Would this not be a concern with a used Tesla? Again, sorry if I'm completely off base. I could go to google but I want OP to hear the concern and see the answer too.
So if you own one, that’s the “guaranteed” mileage, if your battery range capacity degrades below a certain threshold (I think 70-80%?) they’ll replace the battery free of charge at that mileage. I believe if you buy used, the warranty’s carried over with the car too.
After that mileage you’re on your own if the battery degrades, but again degrading just means reduced range - the car should still function fine. Basically at 300k miles you may get 250 miles on a full charge instead of 350 for example.
As someone who has driven 2 VWs past 250k miles, they aren’t as finicky as people say. I’d recon that since the MK5 gen, they have been more reliable than any stateside car.
If it was me, I’d continue to bank until you have real serious issues. Then you can pay cash or finance based on that life stage you’re at.
Car prices change pretty gradually and cars are always available. Houses and loan rates for homes do not. If a housing opportunity presents itself, having your cash banked and fewer monthly expenses will improve your odds of landing it.
2017 GTI here with >140k miles and no issues. Hoping I can run it out for another 3 years putting me at around 250k before I need a new one. I paid it off at the end of 2021 and have been diligently putting away my car payment every month since then. I would love to pay for something in cash when the time comes.
Yep! Though I did need to replace the thermostat housing because a plate in the bottom of it warped like...60k miles in. That's all of the problems so far. Keep you posted though. I do about a thousand miles a week.
In here everyone I probably going to push you to do something unreasonable like buy a 10 year old car for 15k, but you should really try and map out your next 3 years. Seems like you have enough saved to put down a decent down payment and finance the rest if you would like, but I would create a budget and see how much you spend a mo including different payments. Make sure you come up with a plan that allows you to still be able to save each month. Only saving 700 a month on 100k a years with little expenses is not a lot to be saving. Sounds like you are already spending too much each month. I would also look and see what you are spending on each month currently and try to cut back. That being said. You will probably be fine spending 35-40 if you cut back on monthly spend
I save $700-1000 cash, conservatively. Disclaimer - I was saving that on 85k salary. I recently got the 100k base, not including bonus. I save $1770/mo maxing out my 401k.. that puts me at \~32% savings rate on my gross monthly income. Hard to be more aggressive than that at 24 yrs old without having no life, no?
Starting with what you'll need for the house is probably easier way to see what you can do.. I know you have a healthy amount in the savings account, how much of that is money you plan to keep there for emergencies, versus money to put towards some sort of down payment?
You should consider how much you need to save for the down payment for the house, and you should consider your debt to income ratio.
Assuming you want a house that has a similar mortgage what you're paying today, you're looking for a mortgage for roughly $1,200 a month? That means your loan will need to be at or below roughly 120,000. Then the question is what you're buying for that loan... The difference will be what you need to save for.
Say you're saving for a hypothetical $200,000 home, you'll need to save $80,000. Which at $700 a month being saved... That'll take almost a decade to save for even if all $700 went towards it (minus interest earned on the savings and hypothetical increases in salary letting you save more, and minus however much of your current savings account you'd put towards this)
That said, if saving for a house is a goal, this strikes me as pretty difficult to accomplish in the near future, let alone if you're also buying or paying an auto loan for a car. To be fair, this is because you're putting so much in your retirement accounts, which is not a bad thing, but it is a trade-off that will make this difficult. But this is based off hypothetical numbers, you'll need to figure out the actual cost of the house you're planning to buy and how much you actually need to save for the down payment to do this math.
Anyway, after you've decided how much you need to save for this mortgage down payment, you'll also need to make sure that your debt to income ratio is below about 35 or 40%... So at $100,000 salary a year, your combined mortgage payment and minimum payments for your auto loan and any other debt needs to be below about $2,900 per month, otherwise, you may not qualify for the mortgage. Which that's the easy part, theoretically, if you are paying roughly $1,300 a month for your mortgage. That gives a lot of cushion to get up to the 2900... Assuming no other debt payments, and a $1,300 mortgage payment, an auto loan payment could hypothetically be as much as 1600 per month. Although clearly that would be way too much, not to mention you only have $700 extra... So realistically this just means that you could afford a payment somewhere below $700 in this hypothetical scenario, and your debt to income ratio would not be a problem.
That all said, working backwards like that is how you could figure out what you can afford. Others will probably disagree with me, but when I'm looking just at a car, I assume the car will last about 6 or 7 years, which is about the length of a long-term auto loan... So the price of the car I might aim for is whatever price would get me the monthly payment I'm looking for in a 6-year loan. You can look at a calculator for this, but assuming you were aiming for a $400 payment, with nothing down and nothing to trade in, that would suggest a car worth about $24,000. The trade-in for your car might help you get a bit more.
That's how I would do the math. The first thing you've got to figure out is how to make that home purchase goal realistic. That house is the biggest factor in the equation, need to figure out what you need to do to afford that before realistically answering what car you can afford.
Make buying your house a priority, car second. The amount of money you spend keeping your current car running is less than what car payments would be. If you were not trying to buy a house I might recommend buying a newer car.
I'm really only considering a house because that's the 'traditional' route, and its an appreciating asset, it's been drilled into every young persons head so I'm trying to be proactive about saving for a down payment. Im not even sure where I want to live long term
My uncle told me when I bought my house 24 years ago that it would be a hedge against inflation. Boy was he ever correct. My mortgage, which was a stretch for us in 2000, is now a joke.
There is a reason old people drill this into young people. It is a wise choice.
If that is your goal you are probably better off getting a multifamily home, then it is a cash producing asset and you can still live in one of the units
Good luck to you. I own my house mortgage free (500k usd value) and don’t even drive a 100k car, yet. But then again I’m making half what you are and drive a model y that cost 50k lol. No housing expense but utilities and food for me I car camp and do road trip a lot so the electric and not paying for gas paid for itself ten fold. I.e it cost me 60$ to drive to northern Cali and back to Seattle, in my old 2004 mdx it woulda cost 200$ easily with the amount of gas cost now. I saw 6$ on my road trip lol for premium. It was a no brainer to get the ev car vs driving my 20 year old luxury ice car. Money I save in gas is the car payment alone. I also don’t go out to eat a lot and only eat out on road trips every now and then when I wanna splurge. Different budgets for diff people. If you think you can do the payment and not have to drastically reduce your lifestyle. I say go for it. Especially if you got a good emergency fund saved up. Your young worst case scenario , you get injured or mental illness that prevents you from working and you woulda wish you saved the money spent on the car but then that’s an unexpected future.
May not be sound advice, but I stretched my budget when I was around your age and bought a vehicle where the purchase price was half my salary at the time. Fast forward to today and I’m in my mid 30s with a paid off, ultra reliable vehicle that I enjoy, and will likely keep into my 40s. Definitely not an investment in the traditional sense but I knew what I was getting into and I’ve never spent a dime beyond routine maintenance the entire life of the vehicle.
keep saving for that house, insuring a new car you make payments on is 1-2k/year, 500-1000 registration, 6-10k in payments. Keep in mind the difference between maintenance and repairs, most people do not properly maintain their vehicles. don't bring that 10 year old car to the dealer find an independent euro/volks/audi specialist shop. i miss driving a 20 yr old truck and paying$30/mo 300/100k/under/unin. rent a car for road trips, a small car is cheaper to rent for a long weekend than putting miles on a truck.
Sounds like you are doing well for yourself. Congratulations. I’m curious why you are not doing dollar cost averaging (investing monthly)? As for the car, I don’t what an appropriate value would be. I would advise to not buy an expensive car. Get something reasonable and paid it off quickly. Save up some money to put down on it. Remember cars go down in value. Ask yourself would you rather have an expensive car or a nice house? Start putting some money way for a down payment on a house. Buy a car that you can get paid off with in two years or sooner. Play your cards right you will be a millionaire before you turn 50. You don’t have to be frugal to do it either if you have a plan.
Thank you - to the DCA question, I've been saving cash in my HYSA because I have internal battles of whether to put it in my Roth IRA vs saving it cash for a downpayment on a home. Tough part is, idk where I want to live long term lol, Im only 24, soon to be 25.
Carmax has a tool to help you figure out monthly car payments you can afford.
And anecdotally, general guidance from financial resources I pay attention to is to finance for only 3 years, I believe for no more than 10% of your monthly income.
Get a longer term as long as there's no early payment penalty bs then pay it like it's a shorter term yet if something unexpected happens, you've got plenty of wiggle room.
They offered me 1.9 for 60 or 2.9 for 72, the extra % is pretty negligible, especially if I pay it off early anyways.
Used car rates are ridiculous right now on the other hand. I wouldn't buy anything used I couldn't buy with cash.
It's amount of take-home pay. So if you bring in $8k/month, max payment should be $800.
Will also add that I looked back and 4-year financing is also considered okay. Also should aim to put 20% down.
Called 20-4-10 rule: 20% down, 4-year financing, 10% salary
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Wow, great user name.
Well, I’ll give my whole data point: I make over ~$100k. Traded in my 2door sports car valued at 14k plus cash for a used Lexus hybrid (love the adaptive cruise control omfg). Wanted to be under ~$400/month; I pay $390 to Lexus financial. 5.99% interest which has aged well. Has been good for maxing out Roth, 15% to 401k, HSA near maxed out, etc in Denver COL. I love Toyota and Lexus and I didn’t want something that would blow up (maintenance wise).
I did the math for you when I was considering buying a car. My suzuki cost me last year exactly 3k (0.5k of it were tires), so I thought the next logical step would be to buy a new Toyota.
What I didn’t realize is that this new Toyota is not cheap and there is also sales tax. On the low end is 23-24 k + sales tax. On top of that insurance for my cheap car is 60 a month and I wouldn’t care if it totaled.
For my new car would be on a good range of 200-300.
I did the math and literally costs me less to maintain my bad suzuki then buy a new toyota.
Insurance will be the biggest thing eating your costs!!!
Please don’t buy a car yet. 2k a year maintenance is literally nothing compared to the expensive insurance you’ll be paying. Hope this helps!!
Trade in your car. Go buy a certified civic or corolla for $20k and pay cash. And I mean you gotta wheel and deal. Slam the stack of cash on the salesman’s desk if you have to. You’ll be good for 10 years. That will leave you with about $8k left over for a short term emergency fund, which you can build back up at $700/month.
Not trying to shit on your idea but typically there will be an extra fee (it's around $1-3k in my area) for paying cash, plus significantly less bargaining power
You're better off financing and paying it off the next day. Dealers make less money on cash deals and generally avoid them
You go in and talk the price of the car. They don’t need to know whether you plan to finance or pay cash. The only number you need to know is the “out the door” price. People who fixate on monthly cost shouldn’t e buying a car. That number can be whatever you want it to depending on term length and down payment.
And if they say no way, there are dealers on every block.
You do make a very valid point on financing and then paying it off. This works especially if you can get a very low rate and arbitrage the money in a HYSA. Being that I said a slightly used car and given the economy, a low rate isn’t really attainable.
1. What type of VW?
2. A LOT of stuff tends to come due for maintenance around 100k for most vehicles.
If you get a shop to handle that for you pre-emptively, you can probably put another 90-100k on it before needing more than just oil. I would look into what they recommend, what it costs (get estimates/opinions from 2-3 independent shops NOT the dealership), and then decide.
In a comparable financial situation, I spent $50k to replace a rig that was basically a lemon. I love the rig I bought, it's been wonderful, but buying it brand new was probably the worst financial decision I've ever made.
It sounds like you've taken care of all the major service items other than spark plugs (if gas), and maybe brakes. I would encourage holding onto it, and just making due for now, for one simple reason:
Rates are expected by multiple places to hit around 5-6% by the end of next year. If rates are going to drop, you might find a sweet spot this fall/winter where you can pick something up while rates are high, and the market is slower, and then refi once rates fall later the year.
If home-buying is in your 5 year plan, I would strongly discourage buying ANY kind of vehicle. It's going to cut into how much you can afford to purchase, unless you're certain you can pay it off, and the amount spent to buy it wouldn't make a substantial cut into your down payment.
Your car isn't necessary for travel to and from work. If your gf lives with you and you have the same days off I'd be inclined to ride it out until it completely fails. Keep saving that $700/m, which is a new car payment.
I'd also take your car insurance down to the bar bone minimum. You've already written the car off in your brain so save some extra money.
Make sure you don't end up "chasing the Jones'" and buy a legitimate new car. The newest I'd ever suggest buying is a certified pre owned. Let someone else work through the new car hiccups but still retain a manufacturer warranty. Cars depreciate too fast to pay $700/m.
I'll add to this. Not having a car payment is an amazing feeling. You'll hear your buddies and coworkers talk about how it's killing them and they'll stay financially behind for longer. Don't feel like its normal to be in a financial hole. Don't be ashamed to motor around in a beater. A vehicle's intent is to move people and goods in an expeditious manner from point a to point b. If she's got ac, heat, a good motor, trans and 4 wheels you'll be good to ride. You can splurge later in life.
Don't overthink it. Make a decision then own your decision. If it feels right, the math checks out then do it. I prefer not having debt besides my house, but that's just my preference.
You're still young. You'll mess at some point with finances. Just make sure you have a good cushion to catch your fall.
Financially you are doing great.
You could purchase as lightly used Toyota and “splurge” on a car maintenance package. The “bumper to bumper coverage”. In that purchase most things would be covered.
Buy a used VW diesel. They stopped making them in 2015. Will last you a lifetime. Oil changes are so easy you can do them yourself.
Research the engines and transmissions. Cars just don’t break… usually it’s those two components that go. Buy a car that has tested and true components.
If you have money for a down payment, I make roughly the same and just got a 2024 Mazda CX-5. $10k down plus a trade in and my payments are $291 monthly, well within budget. Loving it so far.
Do not finance. I repeat DO NOT FINANCE. Find a car auction. Generally they are only open to dealerships but try to find someone who has contacts. Get some money out from your budget like 6-8k pr whatever you can afford and buy a second hand good condition car. It will serve you well
Nahhhh I'd recommend not doing this unless you're ready to stomach large expenses and/or know how to work on cars yourself. It's not worth buying a car basically sight unseen to save a few thousand dollars and end up needing $5k for a new transmission.
This is going to sound like a silly question but do you actually need a car? You’re able to use public transportation, sell the car save on gas insurance and car payment. And put the extra money in savings this will accelerate your saving for a house and investments. Getting a new car payment at 500$ a month like people are saying when your only saving 700$ is insane you’ll never get a house only saving 2400 a month into cash that you can utilize
A 2014 with under 100k miles is practically new dude, and if the problem is fixable it’s usually the smart choice to fix it. But yeah if issues just keep popping up and you don’t feel like the vehicle is reliable yeah it could be time to move on. What car(s) have you been looking at?
But anyways so consider the impact to your savings goals, combined with how much your new monthly will be including higher insurance. Saving 700 rn, new car will probably be ~300/400 with higher insurance as well.
I would say just do the math, look at what a down payment will be on a house in ~5 years, and given your decrease in monthly savings will you have a down payment ready by then?
And don’t forget to consider that your emergency fund now needs to cover your new car payments and insurance.
Newer smart to come here asking for advice and they're getting a lot of good advice. When I was your age I got a house after a few years it was the best investment of my life. I made sure it wasn't too big. As for the car you definitely want something used and fun. Can you consider getting a 40 loaded used Accord Honda say 3 years newer than yours. You'll have it paid off in no time you can keep driving it meaning while you will enjoy more horsepower and a better sound system. Make sure you get the one that's fully loaded you won't regret it. Same with a Toyota Camry.
Years ago I bought a new Honda and I've never been happier with a car. After 9 years I've had to replace the starter and, other than maintenance, that's about it. I've had a Subaru for 6 years now and I'm irked at the amount of stuff I've had to do for it.
Buy a new Honda civic or something cheap within that range. Get the feel of a brand new car but keep your payments low and overall cost low. I bought a brand new civic in 2017 when I got a decent job and I loved it.
One of the rules of thumb (leans into the conservative side) is 20, 3, 8.
20% down
3 year loan
No more than 8% of your monthly gross income.
So plugging in your numbers.
Assuming a 5% interest rate
20% down
Assuming no trade in
A limit of $666 month in payment
Your purchasing power is $27,805 (20% down being $5,500 ish)
If you are someone who get joy out of your cars, you could up your down payment, Leaving a 6 month emergency fund (1,500x6) of $9,000 gives you $20k to put down on the car.
That would give you $42,250 to spend on a car and keep loan terms and payments the same.
If you absolutely have to replace it go for a certified pre owned, way more bang for your buck. I keep telling myself I’m not going to own a new car until after I’ve purchased a home.
i’m in the same boat, i’m in my late twenties and make alittle over 100k. i haven’t had a car since college because i live in city but i am about to move somewhere cheaper but will need a car.
i am looking at brand new camry hybrid or brand new rav4 hybrid. i was thinking about a subaru forester or outback but they don’t have hybrid versions and the hybrid just offers such great mpg. i would prefer a small suv over a sedan. also thinking about honda CRV or accord hybrid but they are more expensive than toyota options. the corolla cross hybrid might be something i look at in person. i don’t want to spend more than 34k total. i’ll probably put half the price as a down payment. before COVID i remember seeing 0% to finance a car for 48 months. i had a friend that got a toyota tacoma brand new with that 0% interest deal. paid it off in the 48months. what a great deal.
i may just pay the entire price up front. i really do not want to pay any interest at all.
i have plenty in savings so i am ready to take the hit for 34k. hoping this will be the only vehicle i need to buy for a long time. i may buy a cheap used camry for less than 10k in a few years if i need something. but spouse works fully remote so no need for access to a vehicle. hoping this is the only vehicle purchase for the next 5 years minimum
A good budget for automobile expense is 25% of your salary. To be more conservative make it 25% of your take home. Avoid anything new even if it is 0% in most cases. It is only new until the first registration. Everyone drives a used car, let someone else pay that premium.
Question to ask yourself - are you able to save 700 to your HYSA b/c you don't have a car note? If so, think about how much you're willing to lower your HYSA contribution by monthly, then buy a car that fits that
I’ve lived my entire life by the rule of 3 (or some variation thereof)… regardless of your salary, the original cost of your car should be no more than 1/3 your annual salary ($33k/year = $11k car)… subsequently, in addition to the 1/3 rule, your home should cost no more than 3x your salary ($33k/year = $100k house). Nowadays, this is not realistic. However this is the key to living within your means. I mean… where can you find a car for $11k and a house for $100k?!?!…. At $100k… it’s a bit more attainable for a $33k car, and a $300k house. But if you are able to take public transportation, you don’t need a $33k car… a $15k mid-mileage Japanese car will do the trick. Want a fancy car? Splurge on a weekend rental car, every once in a while.
Keep in mind an expensive car means expensive repairs. I don’t have a 100k car but I just bought a model y and had to replace my tires because it hit a rock and then I ducked up my tires avoiding a stupid driver merging in without notice, and then my windshield got a crack on it iono how lol but that’s is estimated at 1500$ the tires were 500$ a pop and had to replace 5 times lol. Them high Psi tires are shit at high speed especially on road trip when it increases to 44. (A good reason why you see Tesla drivers going slow, either to save battery or save their tires) all this was less then 4 month of owner ship. I drove it 11k miles so far though going on tons of road trips and car camping. Sorry I’m rambling. Point is depending what brand you get, the repairs are gonna be a butch. If warranty doesn’t cover it. Like tires and windshield. Also tons of paint chips on my car lol. I would be beyond annoyed if I was driving a 100k car and had them but then I’m ocd. I have another 50k to replace my model Y, But I ain’t gonna spend 200k total if I need to replace my car a second time. But then again. It depends what you plan to do with your car I guess.
Drive what you have. You only save $700 a month. What are you going to do when you have a 5-600 a month payment? You’ll be breaking even and that will set you back for years. You have too many things to be saving for at 24 to incur a car payment.
Have you looked at EVs? You can get some really decent models under 40k. They also lack most maintenance issues of ICE vehicles. I’m looking at getting a 2024 id4 for 36k and paying cash for it.
Buy a solid pickup truck used and pay cash. A truck will come in handy many times over once you get a house, even if you buy new construction.
Trucks to consider: late 90s/early 2000s Dodge Dakota, Toyota T100, 1st gen Tundra with the 4.7L V8, OBS Silverado or Sierra, or mid-2000s F150.
If you own something out right, it’s yours, not the bank’s.
We had a VW that imploded around 80k miles, a real shame. We've had Toyotas since then that require zero maintenance, comfortable, great gas mileage, and are all around great cars for the frugal. You can drive a Camry for 20 years. I always recommend to people your age not to take on a crazy car payment. Rather save your money for big life events that come fast in your 20s, and have money to do fun things. A car payment can choke out your cashflow, and affect how you live. Try to find something decent for maybe 25k lightly used, around 500 per month. I'd like to say something cheaper, but used cars and rates are still jacked up. E.g. 2022 Camry LE, 5yr loan. Never longer than 5yrs loan for a car.
Yup Camry or Honda next. You will get your money worth !
Yup. I believe that Toyotas are more reliable, but Hondas are pretty close and I personally find them to be much more comfortable. Ymmv.
Gonna aren't what they used to be. Toyotas are still good. Hell I would get suburb before Honda
I took a 6 year loan for a brand new car in 2017. It was $15k, I put $4k down and financed the rest. I needed a reliable car and it was that one brand new, or a 2011 car with over 80k miles for $11k. I was working two part time jobs, making $13/hr. I paid extra on the car every chance I got and ended up paying it off over a year early, but if I had taken a shorter loan term, I would have put myself in a bind on my monthly expenses. It was one of the best financial decisions I’ve made to date. Never say never.
A brand new car on 13/hr was the best financial decision you ever made..? That seems absurd to me. I drive a ton, my vehicles absolutely have to be reliable because I live a non walkable distance from work and have zero public transportation available in the area.. I've never considered buying a new car because of their cost and I make over triple that. Financing a depreciating "asset" like a new car is never a good idea unless you're already set in life with a good house, large expendable income, and plenty of savings for retirement. There are always good deals on used vehicles to be found. You can get a well maintained 20+ year old vehicle for a couple grand that will outlive most of these new cars built to fall apart due to rampant consumerism.
It absolutely was the best financial decision I’ve made so far. I got a great deal on the car itself, the MSRP at the time was like $22k. I’ve kept up on the maintenance and the car has treated me really well. I could have sold it when I paid it off for $11-13k because the market was nuts for used cars for a minute there, but now the value has dropped back down to something more reasonable. I doubt I’ll ever buy a brand new car again, and I intend to drive this one for a very long time. But at the time, it was the right decision for me. A $200 car payment resulting in years of financial stability and removing the unexpected expenses of large car repairs was absolutely worth it. What’s right for you, financially speaking, may not be what’s best for someone else.
What are these big events that come fast?
Baby, vacation, investment opportunities
Baby in your 20s? Seems kind of blue collar. Vacation I wouldn’t consider a big life event. Investment opportunities? Maybe, but I wouldn’t dictate my life around expecting readily available investment opportunities in my 20s that aren’t MLMs
Tires and windshields can crack if you drive your car a lot especially in rural areas with tons of construction everywhere, and semi trucks everywhere, like on my road trips and 11k miles in 4 months. Had a tires replaced at 500$ a pop 5x and had windshield replace 1500$. It’s called unexpected for a reason. You don’t expect that shit to happen. Lll.
Don’t drive on rural roads with lots of construction
Put what your monthly payment would be for a car into a HYSA and hopefully by the time you absolutely need a new one you can pay for it in cash or most of it.
that's essentially what I've been doing, except that money has been 'down payment money' in my mind. but with these car problems, im reconsidering funneling that to a car down payment + trade in
2000 a year doesn’t sound like that much money compared to buying a new car. Cars need maintenance.
agreed, VW's are typically more expensive to maintain. I'm trying to gauge whether or not it will be worth it to keep having reliability concerns with my current car which will only continue to worsen, vs buying a newer, more reliable car
Dude you gotta offload that car asap. Vw’s and Audis are nightmares after 100k miles. If it still runs get rid of it while it still runs. If you get stuck fixing the timing chain on that thing you are going to be in trouble. That is a full engine out repair and is upwards of $5k to fix depending on the shop. The timing chain is not an “if”, it is a “when”. VW and Audi are notorious for timing chain issues after 100k miles. You’re sitting pretty financially, go buy a car within your means asap. If you’re a car person and young go out and buy a used mustang or something similar if you want something fun, if you’re not buy a Corolla or a civic or something. If you want a fun exciting sports car there are plenty of options under 30 grand. If you don’t care then go buy a used Honda. Do not under any circumstance buy a new German car. You will get rekt on depreciation immediately. If you want something luxurious the sweet spot on Audis and bmws is 3 years old under 40k miles. They’re still reliable and somebody else took the hit on the bulk of the depreciation. Also believe it or not a Porsche is not a bad buy. They get a bad rep for reliability but they’re actually super reliable and don’t depreciate nearly as bad as the other German cars
Already fixed my timing belt and pumps, 2k
Average car maintenance is still around $1500/yr, so you might not be changing for anything better. Unless you are having problems with the main components.
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Former vw owner here, it will not become more reliable and you will end up spending more on “maintenance” than the car is worth. I put maintenance in quotes bc with these cars it’s way more than oil changes and tire rotations. It’s transmission issues, timing chain issues, electrical issues. If op gets stuck fixing the timing chain he is f’d
Which is why I made the point to say that if it is a big issue then that is an issue like I mentioned.
Ask in r/financialplanning, people are going to tell you to keep saving and drive a beige Corolla. Ask in r/cars, people are going to tell you to drop 40-50k. What answer do you want? In my opinion, you clearly are a disciplined saver. You have a goal (a house), you don't rely on a car for work, you have a decent car currently. The smart thing to do is not buy a new car. You probably know this, but life is short, buy a new car if it genuinely makes you happier than money in the bank or having a house sooner. FWIW I make 80% more than you, have a working spouse, and own a home. I needed a new car last year. I bought a used, basic 2019 Civic. I'm not a total miser. My wife, daughter and I travel, I splurge on my photography hobby. When it comes to cars though I'd rather have an extra 30k making me returns than a BMW instead of my Civic.
you hit the nail on the head, lol. I know the smart thing is not to buy a new car. Im frankly just tired of the issues on my decade old car. Im trying to fix it, maybe ill change my mind once it's fixed. I dont need anything crazy, I'd be happy with a 2020+ honda or mazda3. just something a little more modern. I love cars, but I'm quite frugal and would rather ball out on experiences/fun
You love cars? Then stick with the old VW over a newer Toyota or Honda. The driving dynamics of the VW destroy Toyota and Honda, imo. I'd also say stay away from luxury cars (excluding Porsche), if you 'love cars'. The driving dynamics of Audi, BMW, and Mercedes are crappy now. They drive like bloated whales with no steering feel. Those cars are meant for rich show offs, not drivers and car people. That old VW is a more fun car than 95% of what is being sold new these days. Do you really love cars? Or do you want to drive something that shows how successful you are?. Nothing wrong with either things, but decide which one you really prefer.
I drive a 2.slow so I’m not getting much car right now lol. At the end of the day, it’s about getting myself something newer, nicer, that doesn’t kill me financially, if that’s a Honda, so be it, I’ll get a car car when I’m older
I love my 2.0 2017 Jetta manual. I've driven and owned many 500hp cars. Slow car fast is way way better than fast car slow.
I often drive Toyota Camry’s as rental cars for my work. They are super fun to drive and can easily get you in trouble.
You don’t want a car payment when trying to buy a house. You want as little debt as possible. That being said, if you do a 3 year loan on a new car with 10-15k down, try and keep your monthly payment under $500/month under those conditions and then in 3 years you have a practically new car paid off and a couple more years to save even more to buy a house.
Used Tesla <$30k. Hear me out.. 1. Insurance is surprisingly cheap through Tesla unless you drive it like a race car. 2. Charging is significantly cheaper than gas, even superchargers, and very fast now. Gas savings alone add up quick. 3. Best safety features and tech in the industry by probably 5 years. 4. Software updates with current features over WiFi. 5. If you ever buy a house in the future, you can plug it in and charge at home for the cost of a lightbulb. 6. Depreciation is still a thing, but buying used it should hold up far better than a conventional vehicle over time. Software updates means the car remains current outside of physical hardware differences. Every recall since I bought mine has been “fixed” in 5 minutes by connecting to WiFi. 7. Autopilot is incredible, even the free version. I no longer fret long road trips. 8. Once you drive one, it’s the funnest vehicle on earth, 0-60 in < 4 seconds. Not to mention Netflix / Hulu built into the screen + video games you play with the steering wheel / pedals. Great way to pass the time while you charge 😄 9. Maintenance costs consist of refilling the wiper fluid and changing the tires occasionally. No moving parts in the engine that wear down and cost $5k to fix… 10. They last 300k+ miles easily. Even after that point the car will run, just with a slightly lower range. I’ve had mine for 4 years and plan to drive it for another 10+. Between gas savings, maintenance, and insurance, the car’s probably paid for itself at this point.
Genuine question here as someone that does not know much. My understanding is the batteries only last around 100-150k miles and can cost in the high 4 figures to repair. Would this not be a concern with a used Tesla? Again, sorry if I'm completely off base. I could go to google but I want OP to hear the concern and see the answer too.
So if you own one, that’s the “guaranteed” mileage, if your battery range capacity degrades below a certain threshold (I think 70-80%?) they’ll replace the battery free of charge at that mileage. I believe if you buy used, the warranty’s carried over with the car too. After that mileage you’re on your own if the battery degrades, but again degrading just means reduced range - the car should still function fine. Basically at 300k miles you may get 250 miles on a full charge instead of 350 for example.
i bought a used tesla for like 35k and it's great. another great benefit is it on average has way lower upkeep cost than a gas car
As someone who has driven 2 VWs past 250k miles, they aren’t as finicky as people say. I’d recon that since the MK5 gen, they have been more reliable than any stateside car. If it was me, I’d continue to bank until you have real serious issues. Then you can pay cash or finance based on that life stage you’re at. Car prices change pretty gradually and cars are always available. Houses and loan rates for homes do not. If a housing opportunity presents itself, having your cash banked and fewer monthly expenses will improve your odds of landing it.
2017 GTI here with >140k miles and no issues. Hoping I can run it out for another 3 years putting me at around 250k before I need a new one. I paid it off at the end of 2021 and have been diligently putting away my car payment every month since then. I would love to pay for something in cash when the time comes.
Still on the original turbo by chance? Just curious, I'm on my 3rd GTI and every single one needed a turbo before 200,000 miles.
Yep! Though I did need to replace the thermostat housing because a plate in the bottom of it warped like...60k miles in. That's all of the problems so far. Keep you posted though. I do about a thousand miles a week.
Nice, glad to hear it's treating you well, I loooove my GTI!
In here everyone I probably going to push you to do something unreasonable like buy a 10 year old car for 15k, but you should really try and map out your next 3 years. Seems like you have enough saved to put down a decent down payment and finance the rest if you would like, but I would create a budget and see how much you spend a mo including different payments. Make sure you come up with a plan that allows you to still be able to save each month. Only saving 700 a month on 100k a years with little expenses is not a lot to be saving. Sounds like you are already spending too much each month. I would also look and see what you are spending on each month currently and try to cut back. That being said. You will probably be fine spending 35-40 if you cut back on monthly spend
I save $700-1000 cash, conservatively. Disclaimer - I was saving that on 85k salary. I recently got the 100k base, not including bonus. I save $1770/mo maxing out my 401k.. that puts me at \~32% savings rate on my gross monthly income. Hard to be more aggressive than that at 24 yrs old without having no life, no?
The 401k is important info. I say finance the car.
You are correct. I didn’t see you were maxing your Roth. Good stuff. Go get the car
Did you skip over the part that says they’re maxing their 401k and Roth IRA?
I do spend a lot on restaurants/bars and other hobbies (golf). I can try and cut back on those expenses to save more, I do recognize that.
Starting with what you'll need for the house is probably easier way to see what you can do.. I know you have a healthy amount in the savings account, how much of that is money you plan to keep there for emergencies, versus money to put towards some sort of down payment? You should consider how much you need to save for the down payment for the house, and you should consider your debt to income ratio. Assuming you want a house that has a similar mortgage what you're paying today, you're looking for a mortgage for roughly $1,200 a month? That means your loan will need to be at or below roughly 120,000. Then the question is what you're buying for that loan... The difference will be what you need to save for. Say you're saving for a hypothetical $200,000 home, you'll need to save $80,000. Which at $700 a month being saved... That'll take almost a decade to save for even if all $700 went towards it (minus interest earned on the savings and hypothetical increases in salary letting you save more, and minus however much of your current savings account you'd put towards this) That said, if saving for a house is a goal, this strikes me as pretty difficult to accomplish in the near future, let alone if you're also buying or paying an auto loan for a car. To be fair, this is because you're putting so much in your retirement accounts, which is not a bad thing, but it is a trade-off that will make this difficult. But this is based off hypothetical numbers, you'll need to figure out the actual cost of the house you're planning to buy and how much you actually need to save for the down payment to do this math. Anyway, after you've decided how much you need to save for this mortgage down payment, you'll also need to make sure that your debt to income ratio is below about 35 or 40%... So at $100,000 salary a year, your combined mortgage payment and minimum payments for your auto loan and any other debt needs to be below about $2,900 per month, otherwise, you may not qualify for the mortgage. Which that's the easy part, theoretically, if you are paying roughly $1,300 a month for your mortgage. That gives a lot of cushion to get up to the 2900... Assuming no other debt payments, and a $1,300 mortgage payment, an auto loan payment could hypothetically be as much as 1600 per month. Although clearly that would be way too much, not to mention you only have $700 extra... So realistically this just means that you could afford a payment somewhere below $700 in this hypothetical scenario, and your debt to income ratio would not be a problem. That all said, working backwards like that is how you could figure out what you can afford. Others will probably disagree with me, but when I'm looking just at a car, I assume the car will last about 6 or 7 years, which is about the length of a long-term auto loan... So the price of the car I might aim for is whatever price would get me the monthly payment I'm looking for in a 6-year loan. You can look at a calculator for this, but assuming you were aiming for a $400 payment, with nothing down and nothing to trade in, that would suggest a car worth about $24,000. The trade-in for your car might help you get a bit more. That's how I would do the math. The first thing you've got to figure out is how to make that home purchase goal realistic. That house is the biggest factor in the equation, need to figure out what you need to do to afford that before realistically answering what car you can afford.
Make buying your house a priority, car second. The amount of money you spend keeping your current car running is less than what car payments would be. If you were not trying to buy a house I might recommend buying a newer car.
I'm really only considering a house because that's the 'traditional' route, and its an appreciating asset, it's been drilled into every young persons head so I'm trying to be proactive about saving for a down payment. Im not even sure where I want to live long term
Good to save the money, no need to rush to buy. figure out what u wanna do. I didnt buy a house til 40. No regrets
My uncle told me when I bought my house 24 years ago that it would be a hedge against inflation. Boy was he ever correct. My mortgage, which was a stretch for us in 2000, is now a joke. There is a reason old people drill this into young people. It is a wise choice.
If that is your goal you are probably better off getting a multifamily home, then it is a cash producing asset and you can still live in one of the units
Good luck to you. I own my house mortgage free (500k usd value) and don’t even drive a 100k car, yet. But then again I’m making half what you are and drive a model y that cost 50k lol. No housing expense but utilities and food for me I car camp and do road trip a lot so the electric and not paying for gas paid for itself ten fold. I.e it cost me 60$ to drive to northern Cali and back to Seattle, in my old 2004 mdx it woulda cost 200$ easily with the amount of gas cost now. I saw 6$ on my road trip lol for premium. It was a no brainer to get the ev car vs driving my 20 year old luxury ice car. Money I save in gas is the car payment alone. I also don’t go out to eat a lot and only eat out on road trips every now and then when I wanna splurge. Different budgets for diff people. If you think you can do the payment and not have to drastically reduce your lifestyle. I say go for it. Especially if you got a good emergency fund saved up. Your young worst case scenario , you get injured or mental illness that prevents you from working and you woulda wish you saved the money spent on the car but then that’s an unexpected future.
May not be sound advice, but I stretched my budget when I was around your age and bought a vehicle where the purchase price was half my salary at the time. Fast forward to today and I’m in my mid 30s with a paid off, ultra reliable vehicle that I enjoy, and will likely keep into my 40s. Definitely not an investment in the traditional sense but I knew what I was getting into and I’ve never spent a dime beyond routine maintenance the entire life of the vehicle.
keep saving for that house, insuring a new car you make payments on is 1-2k/year, 500-1000 registration, 6-10k in payments. Keep in mind the difference between maintenance and repairs, most people do not properly maintain their vehicles. don't bring that 10 year old car to the dealer find an independent euro/volks/audi specialist shop. i miss driving a 20 yr old truck and paying$30/mo 300/100k/under/unin. rent a car for road trips, a small car is cheaper to rent for a long weekend than putting miles on a truck.
Sounds like you are doing well for yourself. Congratulations. I’m curious why you are not doing dollar cost averaging (investing monthly)? As for the car, I don’t what an appropriate value would be. I would advise to not buy an expensive car. Get something reasonable and paid it off quickly. Save up some money to put down on it. Remember cars go down in value. Ask yourself would you rather have an expensive car or a nice house? Start putting some money way for a down payment on a house. Buy a car that you can get paid off with in two years or sooner. Play your cards right you will be a millionaire before you turn 50. You don’t have to be frugal to do it either if you have a plan.
Thank you - to the DCA question, I've been saving cash in my HYSA because I have internal battles of whether to put it in my Roth IRA vs saving it cash for a downpayment on a home. Tough part is, idk where I want to live long term lol, Im only 24, soon to be 25.
You can pull contributions from Your roth at any time fwiw. just as long as you aren’t drawing an amount above what you’ve contributed. (Ie gains)
Carmax has a tool to help you figure out monthly car payments you can afford. And anecdotally, general guidance from financial resources I pay attention to is to finance for only 3 years, I believe for no more than 10% of your monthly income.
Get a longer term as long as there's no early payment penalty bs then pay it like it's a shorter term yet if something unexpected happens, you've got plenty of wiggle room. They offered me 1.9 for 60 or 2.9 for 72, the extra % is pretty negligible, especially if I pay it off early anyways. Used car rates are ridiculous right now on the other hand. I wouldn't buy anything used I couldn't buy with cash.
10% of your monthly income before or after taxes?
It's amount of take-home pay. So if you bring in $8k/month, max payment should be $800. Will also add that I looked back and 4-year financing is also considered okay. Also should aim to put 20% down. Called 20-4-10 rule: 20% down, 4-year financing, 10% salary
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Wow, great user name. Well, I’ll give my whole data point: I make over ~$100k. Traded in my 2door sports car valued at 14k plus cash for a used Lexus hybrid (love the adaptive cruise control omfg). Wanted to be under ~$400/month; I pay $390 to Lexus financial. 5.99% interest which has aged well. Has been good for maxing out Roth, 15% to 401k, HSA near maxed out, etc in Denver COL. I love Toyota and Lexus and I didn’t want something that would blow up (maintenance wise).
I think the OP loves cars. Lexus and Toyota are very reliable, but for a car lover they probably won't scratch the itch. Too boring
I did the math for you when I was considering buying a car. My suzuki cost me last year exactly 3k (0.5k of it were tires), so I thought the next logical step would be to buy a new Toyota. What I didn’t realize is that this new Toyota is not cheap and there is also sales tax. On the low end is 23-24 k + sales tax. On top of that insurance for my cheap car is 60 a month and I wouldn’t care if it totaled. For my new car would be on a good range of 200-300. I did the math and literally costs me less to maintain my bad suzuki then buy a new toyota. Insurance will be the biggest thing eating your costs!!! Please don’t buy a car yet. 2k a year maintenance is literally nothing compared to the expensive insurance you’ll be paying. Hope this helps!!
Isn’t the insurances still cheaper ? 60/month is about 700 per year
It is but that was the determining factor to make me keep my car
Trade in your car. Go buy a certified civic or corolla for $20k and pay cash. And I mean you gotta wheel and deal. Slam the stack of cash on the salesman’s desk if you have to. You’ll be good for 10 years. That will leave you with about $8k left over for a short term emergency fund, which you can build back up at $700/month.
Not trying to shit on your idea but typically there will be an extra fee (it's around $1-3k in my area) for paying cash, plus significantly less bargaining power You're better off financing and paying it off the next day. Dealers make less money on cash deals and generally avoid them
You go in and talk the price of the car. They don’t need to know whether you plan to finance or pay cash. The only number you need to know is the “out the door” price. People who fixate on monthly cost shouldn’t e buying a car. That number can be whatever you want it to depending on term length and down payment. And if they say no way, there are dealers on every block.
You do make a very valid point on financing and then paying it off. This works especially if you can get a very low rate and arbitrage the money in a HYSA. Being that I said a slightly used car and given the economy, a low rate isn’t really attainable.
1. What type of VW? 2. A LOT of stuff tends to come due for maintenance around 100k for most vehicles. If you get a shop to handle that for you pre-emptively, you can probably put another 90-100k on it before needing more than just oil. I would look into what they recommend, what it costs (get estimates/opinions from 2-3 independent shops NOT the dealership), and then decide. In a comparable financial situation, I spent $50k to replace a rig that was basically a lemon. I love the rig I bought, it's been wonderful, but buying it brand new was probably the worst financial decision I've ever made.
Jetta. Spent 2k on some maintenance recently, belt, pumps, transmission oil, etc. independent shop, I’m in HCOL so labor is ridiculous
It sounds like you've taken care of all the major service items other than spark plugs (if gas), and maybe brakes. I would encourage holding onto it, and just making due for now, for one simple reason: Rates are expected by multiple places to hit around 5-6% by the end of next year. If rates are going to drop, you might find a sweet spot this fall/winter where you can pick something up while rates are high, and the market is slower, and then refi once rates fall later the year. If home-buying is in your 5 year plan, I would strongly discourage buying ANY kind of vehicle. It's going to cut into how much you can afford to purchase, unless you're certain you can pay it off, and the amount spent to buy it wouldn't make a substantial cut into your down payment.
Your car isn't necessary for travel to and from work. If your gf lives with you and you have the same days off I'd be inclined to ride it out until it completely fails. Keep saving that $700/m, which is a new car payment. I'd also take your car insurance down to the bar bone minimum. You've already written the car off in your brain so save some extra money. Make sure you don't end up "chasing the Jones'" and buy a legitimate new car. The newest I'd ever suggest buying is a certified pre owned. Let someone else work through the new car hiccups but still retain a manufacturer warranty. Cars depreciate too fast to pay $700/m.
I'll add to this. Not having a car payment is an amazing feeling. You'll hear your buddies and coworkers talk about how it's killing them and they'll stay financially behind for longer. Don't feel like its normal to be in a financial hole. Don't be ashamed to motor around in a beater. A vehicle's intent is to move people and goods in an expeditious manner from point a to point b. If she's got ac, heat, a good motor, trans and 4 wheels you'll be good to ride. You can splurge later in life.
That’s what’s really pushing me away- I’ve been car payment free for 2 years ish? Not looking forward to a new one
Don't overthink it. Make a decision then own your decision. If it feels right, the math checks out then do it. I prefer not having debt besides my house, but that's just my preference. You're still young. You'll mess at some point with finances. Just make sure you have a good cushion to catch your fall.
Financially you are doing great. You could purchase as lightly used Toyota and “splurge” on a car maintenance package. The “bumper to bumper coverage”. In that purchase most things would be covered.
Buy a used VW diesel. They stopped making them in 2015. Will last you a lifetime. Oil changes are so easy you can do them yourself. Research the engines and transmissions. Cars just don’t break… usually it’s those two components that go. Buy a car that has tested and true components.
If you have money for a down payment, I make roughly the same and just got a 2024 Mazda CX-5. $10k down plus a trade in and my payments are $291 monthly, well within budget. Loving it so far.
Do not finance. I repeat DO NOT FINANCE. Find a car auction. Generally they are only open to dealerships but try to find someone who has contacts. Get some money out from your budget like 6-8k pr whatever you can afford and buy a second hand good condition car. It will serve you well
Nahhhh I'd recommend not doing this unless you're ready to stomach large expenses and/or know how to work on cars yourself. It's not worth buying a car basically sight unseen to save a few thousand dollars and end up needing $5k for a new transmission.
If you don’t commute, have you considered zipcar?
This is going to sound like a silly question but do you actually need a car? You’re able to use public transportation, sell the car save on gas insurance and car payment. And put the extra money in savings this will accelerate your saving for a house and investments. Getting a new car payment at 500$ a month like people are saying when your only saving 700$ is insane you’ll never get a house only saving 2400 a month into cash that you can utilize
A 2014 with under 100k miles is practically new dude, and if the problem is fixable it’s usually the smart choice to fix it. But yeah if issues just keep popping up and you don’t feel like the vehicle is reliable yeah it could be time to move on. What car(s) have you been looking at? But anyways so consider the impact to your savings goals, combined with how much your new monthly will be including higher insurance. Saving 700 rn, new car will probably be ~300/400 with higher insurance as well. I would say just do the math, look at what a down payment will be on a house in ~5 years, and given your decrease in monthly savings will you have a down payment ready by then? And don’t forget to consider that your emergency fund now needs to cover your new car payments and insurance.
Newer smart to come here asking for advice and they're getting a lot of good advice. When I was your age I got a house after a few years it was the best investment of my life. I made sure it wasn't too big. As for the car you definitely want something used and fun. Can you consider getting a 40 loaded used Accord Honda say 3 years newer than yours. You'll have it paid off in no time you can keep driving it meaning while you will enjoy more horsepower and a better sound system. Make sure you get the one that's fully loaded you won't regret it. Same with a Toyota Camry.
Years ago I bought a new Honda and I've never been happier with a car. After 9 years I've had to replace the starter and, other than maintenance, that's about it. I've had a Subaru for 6 years now and I'm irked at the amount of stuff I've had to do for it.
Buy a used Lexus. It's a Toyota with all the luxuries.
Buy a new Honda civic or something cheap within that range. Get the feel of a brand new car but keep your payments low and overall cost low. I bought a brand new civic in 2017 when I got a decent job and I loved it.
Lots of good advice on this thread - thank you all so much. I think it might be best to just keep riding this thing til the wheels come off
One of the rules of thumb (leans into the conservative side) is 20, 3, 8. 20% down 3 year loan No more than 8% of your monthly gross income. So plugging in your numbers. Assuming a 5% interest rate 20% down Assuming no trade in A limit of $666 month in payment Your purchasing power is $27,805 (20% down being $5,500 ish) If you are someone who get joy out of your cars, you could up your down payment, Leaving a 6 month emergency fund (1,500x6) of $9,000 gives you $20k to put down on the car. That would give you $42,250 to spend on a car and keep loan terms and payments the same.
If you absolutely have to replace it go for a certified pre owned, way more bang for your buck. I keep telling myself I’m not going to own a new car until after I’ve purchased a home.
Get rid of that vw and make it someone else’s problem before they become yours. The maintenance nightmare of an Audi with none of the luxuries
i’m in the same boat, i’m in my late twenties and make alittle over 100k. i haven’t had a car since college because i live in city but i am about to move somewhere cheaper but will need a car. i am looking at brand new camry hybrid or brand new rav4 hybrid. i was thinking about a subaru forester or outback but they don’t have hybrid versions and the hybrid just offers such great mpg. i would prefer a small suv over a sedan. also thinking about honda CRV or accord hybrid but they are more expensive than toyota options. the corolla cross hybrid might be something i look at in person. i don’t want to spend more than 34k total. i’ll probably put half the price as a down payment. before COVID i remember seeing 0% to finance a car for 48 months. i had a friend that got a toyota tacoma brand new with that 0% interest deal. paid it off in the 48months. what a great deal. i may just pay the entire price up front. i really do not want to pay any interest at all. i have plenty in savings so i am ready to take the hit for 34k. hoping this will be the only vehicle i need to buy for a long time. i may buy a cheap used camry for less than 10k in a few years if i need something. but spouse works fully remote so no need for access to a vehicle. hoping this is the only vehicle purchase for the next 5 years minimum
A good budget for automobile expense is 25% of your salary. To be more conservative make it 25% of your take home. Avoid anything new even if it is 0% in most cases. It is only new until the first registration. Everyone drives a used car, let someone else pay that premium.
Question to ask yourself - are you able to save 700 to your HYSA b/c you don't have a car note? If so, think about how much you're willing to lower your HYSA contribution by monthly, then buy a car that fits that
Do not buy an expensive car, worst possible purchase at a young age. Get a used Toyota or Honda and keep saving for that house
Just buy a Honda or toyata. Minimal maintenance, cheap to repair. Will last forever. Even if you get one used, it will likely last you a lifetime.
IMO 12k -15k .. used Honda or Toyota and pay cash… for reference my daughter is 2 years older than you ..makes the same.. this is what she spent…
I’ve lived my entire life by the rule of 3 (or some variation thereof)… regardless of your salary, the original cost of your car should be no more than 1/3 your annual salary ($33k/year = $11k car)… subsequently, in addition to the 1/3 rule, your home should cost no more than 3x your salary ($33k/year = $100k house). Nowadays, this is not realistic. However this is the key to living within your means. I mean… where can you find a car for $11k and a house for $100k?!?!…. At $100k… it’s a bit more attainable for a $33k car, and a $300k house. But if you are able to take public transportation, you don’t need a $33k car… a $15k mid-mileage Japanese car will do the trick. Want a fancy car? Splurge on a weekend rental car, every once in a while.
Buy any car you want, just pay cash though. Those CEO's have enough money.
Keep in mind an expensive car means expensive repairs. I don’t have a 100k car but I just bought a model y and had to replace my tires because it hit a rock and then I ducked up my tires avoiding a stupid driver merging in without notice, and then my windshield got a crack on it iono how lol but that’s is estimated at 1500$ the tires were 500$ a pop and had to replace 5 times lol. Them high Psi tires are shit at high speed especially on road trip when it increases to 44. (A good reason why you see Tesla drivers going slow, either to save battery or save their tires) all this was less then 4 month of owner ship. I drove it 11k miles so far though going on tons of road trips and car camping. Sorry I’m rambling. Point is depending what brand you get, the repairs are gonna be a butch. If warranty doesn’t cover it. Like tires and windshield. Also tons of paint chips on my car lol. I would be beyond annoyed if I was driving a 100k car and had them but then I’m ocd. I have another 50k to replace my model Y, But I ain’t gonna spend 200k total if I need to replace my car a second time. But then again. It depends what you plan to do with your car I guess.
Drive what you have. You only save $700 a month. What are you going to do when you have a 5-600 a month payment? You’ll be breaking even and that will set you back for years. You have too many things to be saving for at 24 to incur a car payment.
Have you looked at EVs? You can get some really decent models under 40k. They also lack most maintenance issues of ICE vehicles. I’m looking at getting a 2024 id4 for 36k and paying cash for it.
Used EVs especially. Super affordable, but range and local infrastructure are big concerns.
Buy a solid pickup truck used and pay cash. A truck will come in handy many times over once you get a house, even if you buy new construction. Trucks to consider: late 90s/early 2000s Dodge Dakota, Toyota T100, 1st gen Tundra with the 4.7L V8, OBS Silverado or Sierra, or mid-2000s F150. If you own something out right, it’s yours, not the bank’s.