New Vs. Used

[Anon]

Is it generally better to get a used vehicle or a new one in this economy?

I'm considering getting a used vehicle under $20k, but I question if it's even worth it since I have to make payments anyways, and I plan on living out of the vehicle. Might as well get something new and reliable right off the lot.

But I don't know a lot about vehicles, or budgeting. Who does?

 

[Camper]

I always buy the best vehicle that I can afford.

 

[user 423]

I remember from years ago reading a guide in a car magazine that said that your total car expenses shouldn't be more than 20% of your take home pay. Plus you need to be sure that your income will be stable thru the life of the loan. Here's an update:

https://www.nerdwallet.com/article/loans/auto-loans/much-spend-car
I get by with an older van because I'm able to do most of the maintenance and repairs myself. If you can't or don't want to work on vehicles, you're better off with a newer one. Not necessarily a new one because with a new vehicle you lose a lot in depreciation the first few years. Either way, you end up spending money.

 

[JDelete]

I agree with Camper, buy the best you can afford. For many years, practically most of my life in fact, I alway bought used since that was all I could afford. Now later in life when my income is better, I have bought new. There are advantages since you have warranty, you aren't getting someone else's problems, you know it hasn't had a life of chasing rabbits across the corn field, etc.

But there are some drawbacks as well. Insurance and license is always higher on a new vehicle—this does go down with age, however. You will freak out with the first scratch on it! lol

It is your decision to make. I highly suggest you do a lot of research and read reviews. Look at what current owners are saying. Look at what resale values are for the vehicle since this can tell you a lot. If the resale value for used models is higher, that usually means it is a highly desirable vehicle.

Spend some time being aware and notice things. For example, while you probably won't be driving much on salty roads as a nomad, one thing I have noticed up here in Minnesota—a place that salts the roads heavily in the winter—is that it seems like Dodge trucks become rust buckets in just a few years. I see Dodge Ram trucks that are only a few years old that already have holes rusted in the fenders. They seems to be reliable, but they sure don't look good.

 

[JDelete]

My thoughts on credit and loans.

Assuming your credit score is good.

I avoid getting loans through a car dealer unless it is one of their super low interest rate loans. I doubt they are having those offers now, though, since the market is so weird.

I like to go with a longer term on the loan provided the interest rate is low. The reason is, it makes the payments lower. Yes, if you pay it out for the full term, then you pay more in interest. But, I like the lower monthly payments and then double up or even triple up on monthly payments when possible. If I have a tight month, then I have the one lower payment to make and won't have any late payment issues.

If you do take out a loan, make sure to ask them if you can make multiple payments each month or pay it off early without any penalty.

 

[user 423]

^ Check out local credit unions. Usually the best way to go for financing.

 

[Anon]

Confusing. I'm late 20s, on a normal week I bring home $1,000 a week. No kids, no pets, but currently renting, but planning on moving out once I'm ready to make the jump into vehicle living.

Is it possible to get a new vehicle without a loan? Is a credit loan the same as a down payment? I've never owned a credit card but have student loan debt.

 

[JDelete]

Yes, Credit Unions are preferable to banks.

 

[user 423]

Is it possible to get a new vehicle without a loan? Is a credit loan the same as a down payment? I've never owned a credit card but have student loan debt.

Yes, if you have the full price in cash. If you do, you would save a lot in interest. Or actually I guess you could lease one but that has its own drawbacks.

Not sure what you mean by a 'credit loan'?

Banks or credit unions sometimes like to see you have a down payment,say for instance 10% of the purchase price. It depends I believe on your credit rating or other factors.

You might plan on talking with one of their loan officers who could give an idea on what you might be able to finance with your income and credit rating.

 

[Anon]

Yes, if you have the full price in cash. If you do, you would save a lot in interest. Or actually I guess you could lease one but that has its own drawbacks.

Not sure what you mean by a 'credit loan'?

You two got to talking about credit loans and such, I assumed that how most vehicle purchases work is that you have the option of making monthly payments, which I assumed is the lease or loan.

I think I got the lease/loan and the down payment mixed up, down payment is when you make a certain payment upfront, right?

Is it even possible to get a vehicle the same day if I don't have the cost of the vehicle in full? How can I get it before someone else does?

This all sounds very complicated and is making me lean more towards just getting a used vehicle that I can afford. Even if it needs serious repairs, I could probably do some small ones myself, and I'm willing to fork up parts of a few paychecks to getting the vehicle fixed up.

But is it possible to fix up over 200,000 miles worth of wear and tear? Replacing an engine is one thing, but an entire body? To what extent can a used vehicle get so old and worn that it can't be made like new again?

 

[JDelete]

An example,
Let's say you buy a $40,000 vehicle.
You pay $20,000 down on it—meaning that is what you pay when you get the car—this is your cash—your down payment.
You take out a loan for the remaining $20,000.
If it was a 5 year loan at 5% interest, your monthly payment would be $377.42
The amount of interest you would pay if you pay it off over the full 5 years is $2645.

With the example, if you took one of your weekly paychecks, $1000 dollars, and paid that every month as your monthly payment, you would have the loan paid off in 20 months. You would have paid $926 in interest.

 

[JDelete]

Please don't get a used fixer upper simply because all this money/loan stuff is confusing. Once you understand what is going on, it isn't that hard. If you really do want a used fixer upper, that is fine, but like I said, don't feel forced into that decision because of all the numbers and crap.

 

[user 423]

I think I got the lease/loan and the down payment mixed up, down payment is when you make a certain payment upfront, right?

Is it even possible to get a vehicle the same day if I don't have the cost of the vehicle in full? How can I get it before someone else does?

This all sounds very complicated and is making me lean more towards just getting a used vehicle that I can afford. Even if it needs serious repairs, I could probably do some small ones myself, and I'm willing to fork up parts of a few paychecks to getting the vehicle fixed up.

But is it possible to fix up over 200,000 miles worth of wear and tear? Replacing an engine is one thing, but an entire body? To what extent can a used vehicle get so old and worn that it can't be made like new again?

You can get pre-approved for a certain amount by the bank. Then you go shopping and if you find something that's suitable, then they would just contact the bank to arrange for a check for X amount.

Buying a used anything with 200k on it is just a crap shoot. Toyotas in general are reliable but any used vehicle can be trouble. If you don't know much about vehicles, I wouldn't advise doing that. Sure, any vehicle can be fixed but it can be VERY expensive. And if you're travelling in it and depending on it for work, hassling with it can be a real bummer.

I wouldn't get too antsy about beating someone else to a deal. Unless you really have to move quickly because of circumstances, you should take your time, save your money, learn more about the financing angle,etc. A deal made in haste can be bad news.

 

[JDelete]

But is it possible to fix up over 200,000 miles worth of wear and tear? Replacing an engine is one thing, but an entire body? To what extent can a used vehicle get so old and worn that it can't be made like new again?

It's always possible to fix up anything. But it might be a lot of expense. A lot of things besides the engine get worn.

 

[JDelete]

I wouldn't get too antsy about beating someone else to a deal. Unless you really have to move quickly because of circumstances, you should take your time, save your money, learn more about the financing angle,etc. A deal made in haste can be bad news.

Absolutely! Words of wisdom!

 

[user 423]

I've never owned a credit card but have student loan debt.

BTW: In general banks like to see your total debt not much more than 30% of your pay. That means what you pay in rent, your student loan payment + anything else you pay on. So if you have a couple of hundred going to student loans and your rent and utilities are high, then the amount they will let you borrow will be less. Then you might need to have a bigger down payment in order to afford what you want to buy.

 

[Anon]

BTW: In general banks like to see your total debt not much more than 30% of your pay. That means what you pay in rent, your student loan payment + anything else you pay on. So if you have a couple of hundred going to student loans and your rent and utilities are high, then the amount they will let you borrow will be less. Then you might need to have a bigger down payment in order to afford what you want to buy.

I don't have to make payments on it now thanks to the political situation. Is that going to affect anything?

An example,
Let's say you buy a $40,000 vehicle.
You pay $20,000 down on it—meaning that is what you pay when you get the car—this is your cash—your down payment.
You take out a loan for the remaining $20,000.
If it was a 5 year loan at 5% interest, your monthly payment would be $377.42
The amount of interest you would pay if you pay it off over the full 5 years is $2645.

With the example, if you took one of your weekly paychecks, $1000 dollars, and paid that every month as your monthly payment, you would have the loan paid off in 20 months. You would have paid $926 in interest.

Please don't get a used fixer upper simply because all this money/loan stuff is confusing. Once you understand what is going on, it isn't that hard. If you really do want a used fixer upper, that is fine, but like I said, don't feel forced into that decision because of all the numbers and crap.

You have no idea how bad I can be at math, especially those percents.

But hey! $377.42 a month doesn't sound nearly as scary as I was expecting! I should be able to handle that, especially working as a welder and living on the road.

 

[rruff]

But is it possible to fix up over 200,000 miles worth of wear and tear? Replacing an engine is one thing, but an entire body? To what extent can a used vehicle get so old and worn that it can't be made like new again?

I'd never buy anything with those miles. Something with 100k, that is a reliable model to begin with, and is in good shape, that would be fine.

When I was shopping for a Tundra 6 years ago, any with 100k miles and in good shape was 2/3 the price of a new one. I figured that wasn't enough of a discount, so bought new. I could sell it now for a lot more than I paid. Makes/models that are cheap used are not necessarily a good deal, though.

I would not take off vagabonding with a car payment, unless you have guaranteed income. Better just to save up, and when you are free, be really free. I saved up as much as I could for 8 years out of school, and then basically lived off the interest for 11 years, and had more $ at the end than the beginning. You may not think $377/mo is am lot, but when I was doing this full time, my total expenses in the 90s were ~$250/mo... for gas, depreciation, repairs, food, entertainment, insurance, even health insurance. In todays money that would be ~$450/mo.

You mentioned wanting an SUV. In the used market I'd suggest looking at Sequoias, as they don't seem to hold their value as much as 4runners, and are a solid vehicle.

Buying new or used, it's a tough time for vehicles right now. Prices are high.

 

[Calaverasgrande]

Used to be that you could save 50% over the new price by getting a van that was a few years old. If you are lucky you could track down a church group or similar with a low mileage van that had been well maintained.
These days vans are in high demand due to both the van-life fad, and the covid driven delivery on demand services.
I scoured the NY area for months and could only find rust heaps in my price range. Had to go up to way over my budget to get a pretty well used 4 year old van. In the end I only saved about 8k off the new price.
And not even the brand or model I wanted really.
I should have just gone all in on a brand new van.

 

[user 423]

I don't have to make payments on it now thanks to the political situation. Is that going to affect anything?

But hey! $377.42 a month doesn't sound nearly as scary as I was expecting! I should be able to handle that, especially working as a welder and living on the road.

The amount you owe on student loans will figure into your total debt and they will look at that. Payments are scheduled to resume May 1 but that may be changed...who knows? I wouldn't count on it going away altogether. You will be on the hook for it sooner or later.

$377 is only the payment on $20k. On top of that you'll pay for insurance, tags, maintenance and fuel. Depending on your state you may need to pay ~$2000 up front just for tax and tags. So that leaves only $18k for the vehicle. Much more $ for tax/tags on a more expensive vehicle.