• filter:

Finance or Pay in Full a new Car. Need Advice. Specifics Provided.

  • Page :
  • 1
  • Text Only
  • Search this Topic »
Voting History
rated:
Greetings I hope it is ok to post here,I need some guidance on financing.† I have been wanting to write this for a few months now, but was having problems putting my thoughts into a coherent thread.† Thank you in advance for taking the time to look at my situation.† It is appreciated.† Letís jump inÖ

  • I have great credit 795-834 credit score depending on who I ask but it is usually hovering around 815-828 for at least 3 years now.
  • I will be buying my first NEW car VERY SOON estimated at $40k including the tax and license.
  • I have the funds to purchase outright, but would hit my savings hard, but is doable with stocks.

Now the whole point of this dilemma is that I want to improve my credit and also keep it high.† The one negative whenever I look at my credit score is the following:ď1. LACK OF RECENT INSTALLMENT LOAN INFORMATION
There is either no recent activity or insufficient information about your installment loans. Having a loan along with other types of credit demonstrates that you are able to manage a variety of credit types.Ē
Now I have only had a loan once at Circuit City and that was only to up my credit score back in 2007, as I typically buy everything in cash up to a few years ago.
My method is always to pay off the credit card statement in full every month.† So if I have a balance due of $200, but my total balance shows as $1400, i always pay the largest amount.† I donít know if that is the right way, but it appears to have worked out for me.† However, I know that I am deficient in loans.
Now here comes the opportunity, the last 3 cars I have purchased were in cash (14k, 10k and the last a decade ago was 17k).† It might sound odd, but I grew up homeless and living on the streets eating out of trash cans, no shitÖ† So when I got out of that hole and made a life for myself, I always bought in cash.† If i didnít have the money to buy something, I just wouldnít, I refused to put myself in a position of owing anyone, end of story.† Thatís let me to be very good with managing my money as I know the value money has and how if you have no power without it.† Good story, but does that help my credit?† No.†So conventional wisdom would be to finance the car and use that to keep my credit high and maybe one day, if i try hard enough to make money, this will help me buy a house.† So I see the financing as an opportunity.† However, rates are friggin insane.† 4.x% of $40k?† Thatís insanity.† I have never gone in for a large loan before as I didnít need one and also donít want the pull on my credit.† So I am not sure what my rate would be.† According to more well off people than myself, I should be eligible for 0% based on my credit score. However, it appears that Toyota doesnít play that way with their 4Runners.† So I am probably looking at 2.9-4.9% from what the dealer told me, we havenít gone into the sweatbox yet, so not sure the official amount.
So thatís the question that keeps me up at night.† Do I finance and pay way more money than I should because of the interest in the hopes that it is REALLY good for my credit.† Or conversely, do i just throw $40k on the table and drive off like i always have.†I feel that if I pay in cash, I wouldnít be doing myself any favors and would be missing an opportunity.† or maybe I just donít understand this at all and have just been lucky to have a high credit score.† I donít know.† I really wasnít ready to jump in yet, but the purchase of the car has been sped up by the reliability of my last purchase.†So Maybe put $20k down and finance half for the shortest term possible?† Is that even worth it?† Is there more credit bang for the buck with a higher amount?† the more I research, the more I see conflicting info.†Now is there any difference in how it affects my lending status if I say take out a 3 year loan at the dealership and then pay it off in 3 months in full?† Does that hurt, help or make no difference?†What if I finance for 3 years and pay off at the end of a year?†Are there penalties for paying off early?† Do i save interest money if I pay off early, or am i locked into the price with interest no matter if i pay monthly or one lump sum.† See the TV at Circuit City was easy.† I had 0.0% for 18 months, so i paid every month and on the 19th† Month I paid off the remainder in cash.† if that is what made my credit so high, then imagine what a car loan would doÖ Or maybe nothingÖ Iím new, once why i am here.†Does anyone have any advice as I am feeling lost.† I have two dealers that are competing for my business, but will lose both soon if I donít snag the deal.† But I am not sure how to proceed.† i am not sure if a car loan would have any affect on my credit at all since it is high.† I donít know if it would hurt me to finance and pay off early.† is it insane to pay a ton more and finance if you have half in cash real and the rest you can grab out of stock.†Any advice is GREATLY appreciated.† I have had a rough life and financially have had to dig myself out of a horrible hole.† However i think i did pretty good and seem to be doing ok credit wise.† I just want to keep my momentum going and make it easier to one day buy a house or pay for medical bills if something happens to my family.† Thank you for reading my scatter brain thoughts.

Member Summary
Most Recent Posts
I don't know your salary, but based on the other information you've given, you should be looking at a car that is under ... (more)

BostonOne (Jul. 23, 2017 @ 3:26p) |

I would say that if you are going to purchase a car NEW, then go for a new car of last years model, especially if body s... (more)

Dovetonsils (Jul. 23, 2017 @ 5:04p) |

I have plenty to say to this guy, but since his last post was 1 hour and 10 minutes after his first post and he hasn't l... (more)

meade18 (Jul. 24, 2017 @ 9:33a) |

Staff Summary
Thanks for visiting FatWallet.com. Join for free to remove this ad.

rated:
There is little to no value in getting an auto loan "just to help my credit score."

Your credit score is already in the top class and not near the edge anyways, so why would you want to increase it? around 750 is the top credit class for any lenders for mortgages or auto loans(in actual fico scores, you put up numbers in OP but it's unclear where you got those if they're real FICO or not).

rated:
For the fact that everytime I check my score i get a warning that says that I have no major loans and this is a negative. if something were to happen, hopefully a long term loan would help. plus I am always being told that i am a fool for buying my cars in cash. i am not trying to raise it, more give it sturdier legs. 2 of my health insurers have already informed me that my information was compromised, so maybe i am trying to bunker down for when this hits my credit report. Like i said, i wasn't expecting to be making this purchase like... tomorrow. So i thought i was going to have some decent time to research all things credit. Now out of nowhere it's go time and I am clearly not ready.

Originally i ONLY did it to make sure that I would own the car flat out and if worse came to worse, i could live in it and they couldn't take it from me. Now that I no longer live out of dumpsters and have the fear of losing everything again, people keep telling me I need to lease. Big mistake if I don't. But paying a couple thousand extra for a loan just to have a loan seems odd to me.

You are the first person to state that opinion to me, so already I am getting some input and data that is different from the original info. thank you.

oh and sometimes it drops to the high 700s for a few months and then comes back to the mid 800s. †Not sure if that's what you mean by on the edge. †I'd like to keep it from dropping below 815 if possible. †There seems to be no rhyme nor reason to the fluctuation. †It always gets righted. †I just don't like it dipping. †Maybe a car loan would give it more stability.

rated:
JamesTheCheap said:   †plus I am always being told that i am a fool for buying my cars in cash.
† Well that can be a separate topic. †Depends on overall net worth and how much a "car" value is, but you come here and many (like me) would always choose the artificially low 2% loan (Not from the dealer -- Look at credit unions or the big banks online) over paying cash if we can. †And then keep that extra money in investments. †On the other hand there's a lot of people who are ignorant who perpetuate the silly notions of getting the auto loan (or other nonsense behavior like intentionally "carrying a balance" on credit cards -- Which lowers and does not help and is throwing money in the trash) to improve credit scores. †The loan mix will raise the score slightly but is not worth expending $$ for.

Overall net worth matters because if someone has $Ms already then it's probably not worth the hassle/time investment†to them†to get a $40k loan and save a few $100/yr in interest over other avenues.

rated:
JamesTheCheap said:   For the fact that everytime I check my score i get a warning that says that I have no major loans and this is a negative. if something were to happen, hopefully a long term loan would help. plus I am always being told that i am a fool for buying my cars in cash. i am not trying to raise it, more give it sturdier legs. 2 of my health insurers have already informed me that my information was compromised, so maybe i am trying to bunker down for when this hits my credit report. Like i said, i wasn't expecting to be making this purchase like... tomorrow. So i thought i was going to have some decent time to research all things credit. Now out of nowhere it's go time and I am clearly not ready.

Originally i ONLY did it to make sure that I would own the car flat out and if worse came to worse, i could live in it and they couldn't take it from me. Now that I no longer live out of dumpsters and have the fear of losing everything again, people keep telling me I need to lease. Big mistake if I don't. But paying a couple thousand extra for a loan just to have a loan seems odd to me.

You are the first person to state that opinion to me, so already I am getting some input and data that is different from the original info. thank you.

oh and sometimes it drops to the high 700s for a few months and then comes back to the mid 800s. †Not sure if that's what you mean by on the edge. †I'd like to keep it from dropping below 815 if possible. †There seems to be no rhyme nor reason to the fluctuation. †It always gets righted. †I just don't like it dipping. †Maybe a car loan would give it more stability.

† What exactly do you plan to do with a high credit score? Does your boss give you a raise for that? Does uncle Sam cut you some slack on your taxes? As stated earlier, there is no practical difference once you are above say 750 or so in FICO. Dont over think this.

With that said, what is the 40k doing right now? If you were to finance this car purchase, what would you do with the 40k? If you have it invested and it will earn greater than the interest rate on the far loan, it makes sense to finance it. If the 40k is simply going to be under your mattress (or earning 0.1% in a bank), there is no point in financing the car (other than liquidity).

There is a difference between leasing a new vehicle and taking a loan to buy one. The former makes sense in very limited situations. The latter is not such a bad idea, as long as you are able to get a good rate (with your FICO score, you should be able to) on the loan.

Finally: Dont buy a new 40k car. Go with a used crown vic.

rated:
fwuser12 said:   † What exactly do you plan to do with a high credit score? Does your boss give you a raise for that? Does uncle Sam cut you some slack on your taxes? As stated earlier, there is no practical difference once you are above say 750 or so in FICO. Dont over think this.

With that said, what is the 40k doing right now? If you were to finance this car purchase, what would you do with the 40k? If you have it invested and it will earn greater than the interest rate on the far loan, it makes sense to finance it. If the 40k is simply going to be under your mattress (or earning 0.1% in a bank), there is no point in financing the car (other than liquidity).

There is a difference between leasing a new vehicle and taking a loan to buy one. The former makes sense in very limited situations. The latter is not such a bad idea, as long as you are able to get a good rate (with your FICO score, you should be able to) on the loan.

Finally: Dont buy a new 40k car. Go with a used crown vic.

† Generally agree. However if you're high net worth and/or FI, no problem in buying a 40K car. For most people, it's not a great idea.

rated:
JamesTheCheap said:   Do i save interest money if I pay off early, or am i locked into the price with interest no matter if i pay monthly or one lump sum.

What?
††

rated:
I do not have $Millions for sure. †I have enough money (hopefully) to keep paying rent and feeding my kid for 6 months if I lose my job.

Stocks on the other hand are all tied up in my company. †Which the stocks went super high and then declined. †I have all my assets in the company stock and company 401k, so i should probably get some of the stocks out for the car before I lose all my money (if it tanks).

Basically I'm 6 months or one earthquake away from the poorhouse. †i was able over time able to put $20k aside for a car down payment over the years anticipating that this truck wouldn't last forever. †Maybe 20k from my car account and $20k from stock. †That leaves my savings alone for emergencies. †So the extra money is either going to come from financing or my stocks.

What did you mean by overall net worth? †I'm a piece of shit, so not worth much. †Just what i've been able to scrounge up in life. †As for the value of the car? †it will tank as soon as i buy it as I will be heavily modifying it to suit my needs. †this seems to instantly drop the value of my cars, but they suit me perfectly. †Is that what you meant by "car" value?

rated:
Buy last year's car and let someone else eat the first year of depreciation.

rated:
BostonOne said:   
fwuser12 said:   † What exactly do you plan to do with a high credit score? Does your boss give you a raise for that? Does uncle Sam cut you some slack on your taxes? As stated earlier, there is no practical difference once you are above say 750 or so in FICO. Dont over think this.

With that said, what is the 40k doing right now? If you were to finance this car purchase, what would you do with the 40k? If you have it invested and it will earn greater than the interest rate on the far loan, it makes sense to finance it. If the 40k is simply going to be under your mattress (or earning 0.1% in a bank), there is no point in financing the car (other than liquidity).

There is a difference between leasing a new vehicle and taking a loan to buy one. The former makes sense in very limited situations. The latter is not such a bad idea, as long as you are able to get a good rate (with your FICO score, you should be able to) on the loan.

Finally: Dont buy a new 40k car. Go with a used crown vic.

† Generally agree. However if you're high net worth and/or FI, no problem in buying a 40K car. For most people, it's not a great idea.

††
I'm sorry I don't follow? †I have no idea my net worth. †I rent and live in an overpriced area. †if I need something I can buy it, but I don't splurge on much. †As for the question of what does a good credit score get me? †I like that whenever i walk in somewhere like apple, the check my info and then hand over whatever I want. †I came from poor, I don't ever want to go back to where I walk into a business and get the look like I am a shoplifter or clearly in the wrong building. †if that makes sense. †A credit score higher than the average makes me feel like I did something right in this life. †If that doesn't make sense, apologies. †I don't want to be the guy paying off a rediculous Sears credit card because that's the best he's got. †Not sure if that makes sense either.

rated:
BostonOne said:   
fwuser12 said:   † What exactly do you plan to do with a high credit score? Does your boss give you a raise for that? Does uncle Sam cut you some slack on your taxes? As stated earlier, there is no practical difference once you are above say 750 or so in FICO. Dont over think this.

With that said, what is the 40k doing right now? If you were to finance this car purchase, what would you do with the 40k? If you have it invested and it will earn greater than the interest rate on the far loan, it makes sense to finance it. If the 40k is simply going to be under your mattress (or earning 0.1% in a bank), there is no point in financing the car (other than liquidity).

There is a difference between leasing a new vehicle and taking a loan to buy one. The former makes sense in very limited situations. The latter is not such a bad idea, as long as you are able to get a good rate (with your FICO score, you should be able to) on the loan.

Finally: Dont buy a new 40k car. Go with a used crown vic.

† Generally agree. However if you're high net worth and/or FI, no problem in buying a 40K car. For most people, it's not a great idea.

††
again, not sure what "high net worth and/or FI" means, especially the Fl. †Thanks

rated:
qcumber98 said:   
JamesTheCheap said:   Do i save interest money if I pay off early, or am i locked into the price with interest no matter if i pay monthly or one lump sum.

What?
††

† So if i finance for the length of say 3 years at a set rate. †If i pay it off early, am I expected to pay off the balance that would have accumulated over the full 3 years. †or am i only responsible for the interest accumulated till it was paid off.

i.e. I pay 3 months of interest if I pay 3 months and then paid off. OR I pay 3 months of interest for those three months. †then when I pay off the full amount, I am also paying off the interest that would have compiled over the remaining 33 months. †Am i on the hook for those 33 months. †Because the dealership or the bank would be expecting that money. †

rated:
qcumber98 said:   Buy last year's car and let someone else eat the first year of depreciation.
† Funny enough, 3 year old 4 runners are more expensive than new ones. †Resale on slightly used is insane. †I saw a car that was a 2015 with 40k miles on it for $500 more than the new one with 2 miles on the odometer. †i always buy used or certified. †this is my first new car. †I've just gotta suck it up. †As for the crown vic, I already have american steal that gets 4 miles to the gallon. †i'm good on the chevy front.

rated:
JamesTheCheap said:   
qcumber98 said:   
JamesTheCheap said:   Do i save interest money if I pay off early, or am i locked into the price with interest no matter if i pay monthly or one lump sum.

What?
††

† So if i finance for the length of say 3 years at a set rate. †If i pay it off early, am I expected to pay off the balance that would have accumulated over the full 3 years. †or am i only responsible for the interest accumulated till it was paid off.

i.e. I pay 3 months of interest if I pay 3 months and then paid off. OR I pay 3 months of interest for those three months. †then when I pay off the full amount, I am also paying off the interest that would have compiled over the remaining 33 months. †Am i on the hook for those 33 months. †Because the dealership or the bank would be expecting that money. †

† Every month, your account is charged interest for that statement, which your monthly payment covers. †Any extra reduces the principle owed; once there's no more principle owed, there's nothing to charge interest on, whether it's 3 months or 3 years after taking out the loan.

rated:
JamesTheCheap said:   Stocks on the other hand are all tied up in my company. †Which the stocks went super high and then declined. †I have all my assets in the company stock and company 401k, so i should probably get some of the stocks out for the car before I lose all my money (if it tanks).
† What part of your net worth/investment is "all tied up in my company"? Why is it tied up in your company and not in other companies or in an index. Is it because they are grants and you are restricted from selling it right now?

In general, you dont want more than ~5% of your total investment tied to a single company. That goes twice if it is the company where you work for.

rated:
JamesTheCheap said:   
I'm sorry I don't follow? †I have no idea my net worth.

Net Worth = Assets - debts. Easiest to calculate when you have less of them.

Liquid net worth (often what people are referring to when they say "net worth") = Liquid Assets (cash, stock market investments, retirement accounts - anything that can be immediately exchanged for cash) - Debt( excluding secured debt covering illiquid assets like mortgage debt or auto loans)

FI = "Financially Independent". I think this actually doesn't have one set definition. Generally it either means you have enough investments/assets (from saving through years of living below your means or from other means like inheritance) that you don't "need" to work to put food on the table or keep the lights on at your house. It can also refer to having enough investments that you still need to work but not full time or not at a "real" career job, like an Engineer quitting and moving to part-time consulting or part-time minimum wage work to finance more travel or prevent boredom.

rated:
JamesTheCheap said:   For the fact that everytime I check my score i get a warning that says that I have no major loans and this is a negative.
They list that reason because they're required to list reasons your score isnt even higher than it is. You won't see any meaningful difference.

You are the first person to state that opinion to me, so already I am getting some input and data that is different from the original info. thank you.
I'm guessing you also frequently hear "credit cards are bad" and "credit card rewards are bait that just end up costing you more money"? You get a completely different perspective on finances here at FatWallet, that routinely goes against so-called "conventional wisdom".

rated:
JamesTheCheap said:   My method is always to pay off the credit card statement in full every month.† So if I have a balance due of $200, but my total balance shows as $1400, i always pay the largest amount.† I donít know if that is the right way, but it appears to have worked out for me.† However, I know that I am deficient in loans.
No need to explain here what paying a CC bill IN FULL means -- it's common practice here (except for those carrying 0% Balance Transfer [BT] balances on their cards).

If you're charging $1,000+/mo on a regular basis and paying of your balance(s) IN FULL, where that's been going on for a several years, that should be sufficient for earning (and maintaining) a high credit score (barring temporary adverse items, like opening a bunch of new CC accounts for sign-up bonuses). Having installment loans *may* help if your credit is questionable, but yours is already very high, so an installment loan (such as an auto loan) is unlikely to (significantly) improve your credit score.

I haven't had an auto loan for 15+ years, but the last time I did, it was @ 1.9% (where even though I had the funds to†buy the car in cash,†back then banks paid around 3%+ on savings accounts, so it was more cost effective to finance). Due to moving from one state to another, I paid the loan off†1 month early (i.e. sent in a double payment as my last monthly payment). My monthly payment included interest, so when I paid the loan off early, I pre-paid interest (that was no longer due) for the last month (due to paying the principle off 1 month early). A few weeks later the finance company sent me a refund†check for†the last month's overpaid interest.

P.S. Your OP (Opening Post) is a giant wall of text. You should break it up into paragraphs (and maybe simplify it).

rated:
TheDiggler said:   
If you're charging $1,000+/mo on a regular basis and paying of your balance(s) IN FULL, where that's been going on for a several years, that should be sufficient for earning (and maintaining) a high credit score (barring temporary adverse items, like opening a bunch of new CC accounts for sign-up bonuses).

To clarify,†charging to†the credit card account each month has NO effect on Fico score whatsoever, other than in pulling down the score if it results in high utilization. †Having the account open is what creates credit history and raises the score. †Paying $0 is still paying on time. †Opening a bunch of credit cards for bonuses†over time†will quickly generate a high credit score. †Unused cards just need one charge a year or so so that the issuer doesn't close them for inactivity.
††

rated:
JamesTheCheap said:   However, rates are friggin insane.† 4.x% of $40k?† Thatís insanity.† I have never gone in for a large loan before as I didnít need one and also donít want the pull on my credit.† So I am not sure what my rate would be.† According to more well off people than myself, I should be eligible for 0% based on my credit score. However, it appears that Toyota doesnít play that way with their 4Runners.† So I am probably looking at 2.9-4.9% from what the dealer told me, we havenít gone into the sweatbox yet, so not sure the official amount.
††
Your credit is good enough you don't need a loan, but if you want one you can walk into the dealer with your own outside financing for 1.5% from Penfed or Western.

If you can manage to invest that $40k and get a return of 4-8%, you would be wise to finance your purchase.

Edit to add: If you get a 3 year loan, and decide you want to pay it off after some time, you don't pay any fees (if you have a good company) or interest for the remaining time the loan is scheduled for.

rated:
JamesTheCheap said:   
qcumber98 said:   
JamesTheCheap said:   Do i save interest money if I pay off early, or am i locked into the price with interest no matter if i pay monthly or one lump sum.

What?
††

† So if i finance for the length of say 3 years at a set rate. †If i pay it off early, am I expected to pay off the balance that would have accumulated over the full 3 years. †or am i only responsible for the interest accumulated till it was paid off.

i.e. I pay 3 months of interest if I pay 3 months and then paid off. OR I pay 3 months of interest for those three months. †then when I pay off the full amount, I am also paying off the interest that would have compiled over the remaining 33 months. †Am i on the hook for those 33 months. †Because the dealership or the bank would be expecting that money. †

If paying off a loan early requires paying the interest on the amount of time remaining on the loan, then no one would ever pay off a loan early. †Speaking of which, make sure your loan does not have any prepayment penalties.

rated:
Maybe I read this wrong. OP state if the SHTF he's only got 6mos before his family is destitute. Unless NEEDED don't buy a 40k auto. If demanded by job situ lease one a couple years old. You've got mouths to feed.

rated:
fwuser12 said:   JamesTheCheap said:   Stocks on the other hand are all tied up in my company. †Which the stocks went super high and then declined. †I have all my assets in the company stock and company 401k, so i should probably get some of the stocks out for the car before I lose all my money (if it tanks).
† What part of your net worth/investment is "all tied up in my company"? Why is it tied up in your company and not in other companies or in an index. Is it because they are grants and you are restricted from selling it right now?

In general, you dont want more than ~5% of your total investment tied to a single company. That goes twice if it is the company where you work for.
. I think the op means that money isn't vested yet? In my case, I have a crap load of money I am waiting to vest so that I can pull it out.

rated:
qcumber98 said:   JamesTheCheap said:   
qcumber98 said:   
JamesTheCheap said:   Do i save interest money if I pay off early, or am i locked into the price with interest no matter if i pay monthly or one lump sum.

What?
††

† So if i finance for the length of say 3 years at a set rate. †If i pay it off early, am I expected to pay off the balance that would have accumulated over the full 3 years. †or am i only responsible for the interest accumulated till it was paid off.

i.e. I pay 3 months of interest if I pay 3 months and then paid off. OR I pay 3 months of interest for those three months. †then when I pay off the full amount, I am also paying off the interest that would have compiled over the remaining 33 months. †Am i on the hook for those 33 months. †Because the dealership or the bank would be expecting that money. †

If paying off a loan early requires paying the interest on the amount of time remaining on the loan, then no one would ever pay off a loan early. †Speaking of which, make sure your loan does not have any prepayment penalties.


This is wise advice. Since you are new to loans, think of it like an ETF but for your bank.

rated:
why do you care about your credit score? If you have the money to live without credit, then do so.

The only credit we have is credit cards. We payed off our house 4 years ago. We payed off my car a month after buying it -- the only reason I got the minimal loan was $500 in factory incentives for a loan.

We get those same messages when I check my credit score through our Discover card. Whatever.

rated:
No you should not finance a 40k new car.

No you should not buy a 40k new car.

No you should not buy a new car.

It won't make any difference to future lenders, and it is a waste of money, full stop.

rated:
Exactly jd2010. Finances have to be more squared away than 6mos savings before taking a 40k dump. Retirement stuffed & having college funds for the yungun's if they prove responsible. Etc.

rated:
First off, congrats on righting your life. That's a big accomplishment and it sounds like you're doing well.

Before we talk about the car, I want to echo the advice that having a large amount of money tied up in your company stock is a bad idea. Lets say your company goes through tough times and they need to layoff people to cut costs. You could be out of a job and see your stock price take a hit. Diversify. Use an index fund like a total stock market fund, S&P 500, etc.

As to the car, I can understand wanting something nice and new when you grow up not having much. But think about how long you had to save that money, how much you had to sacrifice. You know better than anyone that money makes things easier. And the more money you have, the more it works for you. Don't fall into the mentality that every time you save up a certain amount you need to buy something. That's a bad way of thinking and you've gotten too far to just fall back to square one.

Why not half that budget to 20k and get a nice used car? You can still get something really nice and not hit your savings as hard. I'm not rich, but I know wealthy people and a lot of them drive old cars. That's why they're rich! While everyone else is worrying about status and spending their cash on things that decline in value, they save and pass those people by. Keep on the same track you're going, I know it's tempting to get sidetracked but you're so much better in the long run if you keep saving and living below your means.

rated:
JamesTheCheap said:   
qcumber98 said:   Buy last year's car and let someone else eat the first year of depreciation.
† Funny enough, 3 year old 4 runners are more expensive than new ones. †Resale on slightly used is insane. †I saw a car that was a 2015 with 40k miles on it for $500 more than the new one with 2 miles on the odometer. †i always buy used or certified. †this is my first new car. †I've just gotta suck it up. †As for the crown vic, I already have american steal that gets 4 miles to the gallon. †i'm good on the chevy front.

† Re: buying new vs. used and lease vs. buy, always do the math.† The "buy a 3yr old vehicle" mantra has reached the masses over the last decade and many models are in the situation you describe above where the used vehicle cost is similar to the new one (and you no longer have a warranty).† Always do the math.

Given your only having 6 months reserves, I would second the posters who say not to spend $40K on a vehicle.† Do you need a 4runner or do you just need a vehicle to get you from point A to B.† There are some very good lease deals now on sedans (not on SUVs/Trucks as those are selling well) which may be worth investigating.†††

rated:
cheapdad00 said:   
JamesTheCheap said:   
qcumber98 said:   Buy last year's car and let someone else eat the first year of depreciation.
† Funny enough, 3 year old 4 runners are more expensive than new ones. †Resale on slightly used is insane. †I saw a car that was a 2015 with 40k miles on it for $500 more than the new one with 2 miles on the odometer. †i always buy used or certified. †this is my first new car. †I've just gotta suck it up. †As for the crown vic, I already have american steal that gets 4 miles to the gallon. †i'm good on the chevy front.

† Re: buying new vs. used and lease vs. buy, always do the math.† The "buy a 3yr old vehicle" mantra has reached the masses over the last decade and many models are in the situation you describe above where the used vehicle cost is similar to the new one (and you no longer have a warranty).† Always do the math.

Given your only having 6 months reserves, I would second the posters who say not to spend $40K on a vehicle.† Do you need a 4runner or do you just need a vehicle to get you from point A to B.† There are some very good lease deals now on sedans (not on SUVs/Trucks as those are selling well) which may be worth investigating.†††

† He said he's "heavily modifying it to suit my needs". †So the 4 runner will be a monster truck when he's done.

rated:
datapusher said:   
fwuser12 said:   
JamesTheCheap said:   Stocks on the other hand are all tied up in my company. †Which the stocks went super high and then declined. †I have all my assets in the company stock and company 401k, so i should probably get some of the stocks out for the car before I lose all my money (if it tanks).
† What part of your net worth/investment is "all tied up in my company"? Why is it tied up in your company and not in other companies or in an index. Is it because they are grants and you are restricted from selling it right now?

In general, you dont want more than ~5% of your total investment tied to a single company. That goes twice if it is the company where you work for.

. I think the op means that money isn't vested yet? In my case, I have a crap load of money I am waiting to vest so that I can pull it out.

† But the OP also mentioned this (in relation to being able to pay for the 40k car): "I have the funds to purchase outright, but would hit my savings hard, but is doable with stocks." Presumably, OP can get money by selling those. It could be more clearly worded; I hope OP comes back and clarifies.

rated:
cheapdad00 said:   
JamesTheCheap said:   
qcumber98 said:   Buy last year's car and let someone else eat the first year of depreciation.
† Funny enough, 3 year old 4 runners are more expensive than new ones. †Resale on slightly used is insane. †I saw a car that was a 2015 with 40k miles on it for $500 more than the new one with 2 miles on the odometer. †i always buy used or certified. †this is my first new car. †I've just gotta suck it up. †As for the crown vic, I already have american steal that gets 4 miles to the gallon. †i'm good on the chevy front.

† Re: buying new vs. used and lease vs. buy, always do the math.† The "buy a 3yr old vehicle" mantra has reached the masses over the last decade and many models are in the situation you describe above where the used vehicle cost is similar to the new one (and you no longer have a warranty).† Always do the math.

Given your only having 6 months reserves, I would second the posters who say not to spend $40K on a vehicle.† Do you need a 4runner or do you just need a vehicle to get you from point A to B.† There are some very good lease deals now on sedans (not on SUVs/Trucks as those are selling well) which may be worth investigating.†††

† Completely agree on doing the math on new vs. used.
For OP, the most important criterion is to buy something that is within budget/affordability, taking into account the full financial picture and vehicle needs. Based on what OP has said, a new 40k vehicle doesnt seem to be the right choice.

rated:
OP, in your 2nd post, you said - "... i am not trying to raise it, more give it sturdier legs. 2 of my health insurers have already informed me that my information was compromised, so maybe i am trying to bunker down for when this hits my credit report. ...". †If by this you mean that you suffered a data breach or identity theft of some kind, then if I were you, I'd deal with this problem before worrying about increasing an already-great credit score.†

Then, in a later post you said, "Basically I'm 6 months or one earthquake away from the poorhouse."† Yet you really want to buy a new, fairly expensive vehicle?† A quick web search tells me the 4-runner is in the top 10 for holding its value, so at least that part is in your favor. †BUT you also said that you want to heavily customize it, and that - "it will tank as soon as i buy it as I will be heavily modifying it to suit my needs."† †So by your own analysis, it will likely be worth less AND you will have† spent additional money on customization?

You're going to end up with a vehicle-loan combination that owns you, rather than the other way around.† Instead, work on shoring up your finances and put off the "dream vehicle" thing for later.† Buy a used-but-functional †"workhorse" vehicle.

rated:
I don't know your salary, but based on the other information you've given, you should be looking at a car that is under $20K, preferably closer to $10K.

rated:
I would say that if you are going to purchase a car NEW, then go for a new car of last years model, especially if body style has not changed. IF body style has changed from previous year model, then stealerships will be even more willing to deal. The car will still be NEW and have the same warranty. If you have a trade, sell it outright to get the best value out of it.

Now blowing 40 big ones on a vehicle is just crazy in my opinion. There are decent cars (or SUV's) that can be had at much less than that. Who are you trying to impress spending 40K. Forget all the bells and whistles that will only give you issues as the vehicle gets older and expensive to fix out of warranty. Cars are to DRIVE, not tinker with all the toys in it.

Figure on keeping the vehicle for at least 7+ years if you are able. Paying CASH rather than financing is how I would go (since you state that you are able and should net you a better price (as your money is good at ANY car model and at Any Stealership).
Any Stealership that lets a cash deal walk out the door is just plain stupid.

I have been buying my NEW personal vehicles this way since 1973 and I have done alright by this method.

Good luck!

rated:
I have plenty to say to this guy, but since his last post was 1 hour and 10 minutes after his first post and he hasn't logged in since, I'm going to see if he comes back before I bother.

  • Quick Reply:  Have something quick to contribute? Just reply below and you're done! hide Quick Reply
     
    Click here for full-featured reply.


Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2017