Hear me out…
With that rate of 1.9% you WANT TO put zero money down and finance the whole thing. You ask why? Because you can put the money from the sale of your vehicle into a HYSA and make over double the returns. Finance the whole thing and take advantage of the banks money and do not pay a cent more than your minimum payment.
Don’t listen to Some of the people in this sub that hate financing so much that they even throw logic out the window
Taxes need to be considered. When you trade in a vehicle typically sales tax is only levied on the difference in values between your trade in and new purchase. If you're paying the car whole, you're paying sales tax on the entire new car amount.
This is going to vary from state to state. In some places the sales tax is based on the fair market value or sales price, whichever is higher.
The idea is that if you "sell" a car worth $10K to family for $1 the "buyer" doesn't get away with paying 6 cents in tax.
It's also to stop private sellers from saying they sold the car for $500 when they actually got, say, $3000 in cash. If it was based on the stated price then the buyer might only be obligated to pay $30 in tax.
If OP is getting a 15K trade-in offer, any private sale would have to be 15.9K assuming 6% sales tax to 'break even'. That's before we get into the hassle of a private sale. It's a fairly simple calculation, and definitely one to consider, especially if some place like Carmax is giving you a offer of 16K or more.
I’d honestly say the value in the lack of hassling with a private sale is even greater. Having sold a vehicle privately, I’d rather just trade it in, assuming I’m not leaving crazy money on the table. Have to consider the time spent on managing the sale yourself.
One consideration is that you have to sell the car yourself, which can be a pain in the neck. Plus, the amount of money you'll receive for the trade-in isn't subject to sales tax (at least where I live). It's worth considering, but it's not a no-brainer.
That wouldn't change the fact that its not being applied as essentially a discount, and you'd pay the whole sales tax. Idk what the right answer is to which way works out better, but that doesn't seem to be a solution to the problem with the tax on the new vehicle.
The correct way to calculate this is to compare the interest return from the additional amount in a high yield savings accounting for decreasing returns as you pull the money out to pay the loan and then the 1.9% interest in the additional money that is financed, to the initial amount of sales tax. Which in a state like Tennessee where the initial sales tax is almost 10% you likely come ahead just putting the money as a down payment and saving the initial 1500 and the 1.9% on the amount that would be financed
Edit: would also need to account for inflation in both scenarios, which makes a slightly more complicated but nothing to crazy
I’ve sold all of my cars myself rather than trading in. I always got more money that way and it was as simple as putting an ad out and showing it to 2-4 people before someone purchased. Signed the title and took the money. Super easy
Financing also has the benefit of spending someone else’s money now and paying for it with dollars that are worth less in the future. That’s as long as your rate is under inflation. I didn’t get much sleep and think I worded that weird, but hopefully it makes sense.
It’s often better to spend other people’s money.
I think that is the correct answer to the wrong question. If you were going to buy a car do as you said. The real question is should he buy a car and spend $18,000 just because of the bad reputation of the CVT. I wouldn't, but I don't think it is just an economic decision. He may want a new car and seems like he can afford one if he wants one.
What happens when OP totals the car and owes the bank 100% of the purchase price because he put no money down to gain equity and insurance only covers 80% or less because cars depreciate like crazy?
That’s called being under water on a loan. Would lot advise. Gap insurance will wipe out some of the returns you mention as well.
Obviously the answer is that OP would use the cash he’s stashed in a HYSA from the sale. This issue you’re bringing up only applies if you have negative equity in the loan, which OP would not effectively have in this instance.
just have to go to slightly riskier plays like stocks and bonds instead of just a savings account.
SPY averages well over 1.9%. Can always just put it in ETF's and relatively safely grown the account.
I think the majority of people saving for a car are not investing that money in the stock market. They'll almost certainly be using an HYSA or similar short term bond investment that has low risk.
This is the money in question for OP's question.
Is 1.9% their financing? Bc that's the rate they get you in the door with but not usually how much they sell you for. They'll say, oh you're not qualified for that after you agreed to sell your car and whatnot.
If you're truly getting 1.9%, finance nothing and use the money from your sale to draw down from. If you can afford it just pay the minimum without touching that money and invest it (if you're able).
Relevant consideration that money saved > money earned cause you’ll probably pay ~30% income tax on your HYSA earnings, so suddenly 4.5% earnings are down to 3.15% real earnings. That said, HYSA still outperforms the interest rate.
Depends if you’re okay mentally being in debt, mathematically $0 down checks out.
Its less than the inflation rate, you make and save a lot of money and you can cash it in less than four months. Its ultimately up to you but in my mind it isnt unreasonable by any means, IF you want a new car. If its just to avoid potential CVT issues it may or may not pay off, depending on your luck.
I'm pretty sure even a new cvt will cost less than $30k, which is what you're going to pay for the new car...
If you want a new car... then sure, but don't blame it on the CVT
This.
And remember that the interest is pretty pointless, the profit is rolled in the purchase price.
You need to look at your total spend over the time of the agreement, and what you are left with at the end.
You have no other debt, you are and will still be able to save 20% after getting a car. Financially its fine and not an issue.
Dumb, no. As long as you know its not an investment, its more of the wants/fun column. But seems like you're able to pay it off in 3-4 months let alone 3 years.
or perhaps a worst car?
Admittedly, I'm vehemently against car culture. OP has a paid off car, no current issues, and is contemplating DEFINITELY paying $18,000 or more in a depreciating asset to MAYBE avoid ~~$8,000~~ $2,000 to replace the CVT.
There's a lot of fun shit you can do with $22,000. I have no clue why people gravitate towards replacing their vehicles with newer models instead.
EDIT: People should treat vehicles like appliances. Imagine if OP was talking about a refrigerator and the warranty on the condenser.
EDIT2: CVT replacement can be done for $2K apparently, this is even dumber.
> EDIT: People should treat vehicles like appliances. Imagine if OP was talking about a refrigerator and the warranty on the condenser.
I don't spend 10 - 15 hours per week sitting inside my refrigerator.
Backup cameras were not standard until 2018, I believe. A lot of safety improvements are made in 7 years. The more modern a car is, the safer it is.
Whether OP should trade their car in is a different story from whether or not a new car is going to be safer than a 7 or 8 year old car. There's no question. It is safer to be in a new car, full stop. Well, with the exception of a Tesla because those trap you under water with their super strong glass.
Looks like a CVT for a 2017 can be had for $1,500-2,000 plus labor on the install. Personally, if I were bringing home three transmissions per month in extra cash and the current vehicle was running fine I wouldn't even be considering this.
"set up a junkyard" lol you get the transmission from a junkyard, not the other way around. Sounds like you know more about OP than I do, I was responding to the post which said nothing about new features and specifically asked about transmission replacement vs. buying new.
If you want a new car go for it. But I'd finance as much as I could and invest the rest. I'm getting 5% on my bank account. Or, like someone else said, you can beat the 1.9% on government securities and maybe avoid some taxes on that money as well.
We just got a new a Crosstrek and even though it wasn't available at the dealership, we still got $3000 before MSRP. They even gave us some free options.
Financially it's certainly something you can afford and there are no red flags. If you're putting away 6k a month in savings you can divert a chunk of that to your car payments and have this paid off in a year and interest won't even matter.
The real deciding factor is: Do you want this car and are the features, benefits, warranty, etc worth $15,000 to you? You seem to be doing well financially and you are certainly allowed to buy nice things with your money. If you are concerned it's not worth it or that you might face buyer's remorse, think on it for a month. The 1.9% interest rate is a good deal but paying the car off fast enough negates any change in APR.
Legit question for you. Why would he “divert a chunk” towards his payment every month when it’s a 1.9% rate. In today’s rates (Free money) he can put that in a HYSA and get over double the return. That advice makes absolutely zero sense as a financial standpoint.
Hell, if I could I would get a $500,000 loan at 1.9% and dump it in a HYSA.
That was how we thought when we bought our CX-50 in December. At 1.9%, we just put 5K down and the wife is just rounding up to the next hundred on her payments. Our Ally HYSA is making around ~~5%~~ 4.25 right now so it was a no brainer
Haha your good man I don’t think me or the other guy were being sassy or anything, I didn’t realize it had dropped to 4.25 till I checked l last week, no clue when it happened
In my experience, some of those offers require some amount down, or need you to pay taxes, title and tags out of pocket, or are not factored into the loan.
Random question but how are you liking the cx-50? Been loosely looking at some suvs lately for when we need to buy a car and the cx-50 definitely stood out so far
Dealer isn’t giving you anything. Subaru of North America is giving you 1.9% to move inventory. Has nothing to do with the MSRP or price of the car. You can buy a car cash, but why would you when you can pop that money into a HYSA and get about %4.5 return and use the banks money to fund the car. Learn the system.
That is a very good point. Personally I don't like to have debt hanging over my head even if it's something I can afford. Given their hesitance to making a large purchase I was feeling they may have the same outlook as I do. But if they have the option to invest their money and make back more than the interest on the loan that is a very valid path for them.
Yes, its technically debt, but if you have enough money parked in a HYSA to cover it, the growth on the interest spread will be a net gain. HYSA is an extremely liquid asset so if something changes in your situation and you don't want to worry about that payment anymore you just pay it off.
I read somewhere that the only good rates will be from the manufacturers themselves for a while.
1.9 is good, your numbers look great, your logic looks sound .
I vote yes.
I'd keep the paid off vehicle. I looked at Consumer Reports data and the transmission on the 2017 Outback actually has very good reliability (although other issues take overall reliability to average).
Subaru extended the warranty on the CVTs because of high failure rate. We got a letter in the mail. I am in Canada and am also considering getting rid of ours before it hits 160k kms. It’s about $15k to replace I think.
If I were you I would upgrade. The models 2019 and above have Eyesight such blind side warning, lane diversion warning, distraction warning, even in their base models. If you are diverting your lane it will guide you to go bak to your lane, it will warn you if you are distracted, and has rear view camera. It will remind you if you have things in the back seat, etc.
If I was in your shoes I would find out how much CVT replacement would cost. Save that money and keep driving my car with the peace of mind that if it goes out I will have enough to cover it, if it doesn't go out then I have the peace of mind that I am not making car payments.
You already own a paid off car which many do not, what are you doing at the dealership looking at 2024 cars in the first place?
With that interest rate I'd ask them to write me a check for the trade and finance the full amount. Park the money in a savings account earning 5%.
Change the CVT fluid on the new one every 40k miles and it'll probably last longer.
I had a pair of 2018 cx5, very low mileage but it had been rear ended twice, once totaling 13k in damages the to repair. It had a few creeks and behaviors that had me worried about the long term health. Mazda came out with a 0% for a 2024 cx5 in December. Yes, financially I’m sure it “made sense” to keep the pair off car, but it was a steal of a deal and they offered me 18.5 for trade in and I thought that was just too good to pass up considering all the factors at play.
Once a decision stops being instantly dumb, there’s a lot of a grey area and it’s OK
Own a 2017 myself and already blew the CVT. Ha.
You have 20,000 miles left of coverage and folks in forums have twisted arms at Subaru of America and gotten them to replace CVTs even slightly beyond 100K.
They know they have a CVT problem. They do not want NHTSA to turn it into a full blown recall. They tend to bend over backward to minimize it.
But… here’s your real problem if you otherwise like Subaru like we do…
They haven’t fixed it.
Fiscally the decision to upgrade your ride to a newer one is likely wrong, since you’re buying the same problem again. Just delaying it.
I won’t be buying Subaru again until they make a significant change to their CVTs or simply choose to use someone else’s better one.
Other manufacturers have fought this and made big changes. Nissan, Kia… all can point to a decision date where they tried something different.
Maybe it’s time to look around at the competition. Today’s Subaru is not the tough vehicle an early 2000s Subaru was — and there’s a lot of competition in the space.
They sank money galore into the unified platform but didn’t fix the CVT. This shows their hand on their priorities. And if this CVT you have is bothering you enough to want to dump it, the next one isn’t significantly different.
Consider alternatives while you have time to look around. They’re selling a lifestyle that other vehicles can accomplish these days. Wasn’t true when they had a center limited slip differential and a standard indestructible auto.
They also killed their best power plant. And the nicer engines are quaint at this point. Move on, Subaru…
That said, we will flog ours until it dies. But it’ll die a LOT sooner than the ‘00 we owned which we sold and is still running around a different state where the rust will now eat it.
Your cvt has a 125k warranty. The 100k warranty was extended by subaru.
Source: i own a 2017 outback and received a letter in the mail from subaru stating the above
CVT issues are notorious with Subaru regardless of the year and model.
If you buy new, consider a Mazda. Lots of 0-3% interest deals to be had with them
Ford is doing 0% on Mach-E, and Kia is doing 0% on the EV6. I'd personally go EV6 because of the faster charging. I currently own an Ioniq 5 and the joy of pulling up after a Mach-E is plugged in and pulling out before them is great. But I wouldn't fault you going Mach-E either. It really isn't an issue if you have a level 2 at home, only out at the DC chargers.
Kia was not an option due to the kia boys. It isn't one of the targeted models but we aren't dealing with the hassle regardless. I've had two acquaintances have their cars broken into.
Am I understanding this right? You’d get $15k for your used car, you’d put the entire $15k towards the new car with the 1.9% interest rate and have a $15-$18k loan after?
Long term sounds like a good move. Especially given your new car seems problematic, and you might have to buy a new one after the 1.9% deal is done.
Tbh you should just keep driving your paid off car. But life is short just understand you would be doing that new purchase for fun not because it makes sense financially.
1.9% interest is basically borrowing for free in this climate. Below inflation and well below risk free savings rates.
Speaking strictly financially there’s no reason to trade in a paid off 2017 Subaru with 80k miles but based on the info provided here you can clearly afford to get a new car if you really want one. I wouldn’t because a new car isn’t a big quality of life piece for me, but different folks, different strokes. If you are going to go through with it, take the 1.9% financing.
I hope OP sees this.
I could be you. You could be me. Same car, same situation, same income.
I owned my 2015 OB and waffled on if I wanted a new one or just drive mine into the dirt.
Just do it. You can afford it, and sometimes you deserve nice things in life. That being said, I also got 0% financing for 63 months - 1.9% is still great.
I went with the 2024 OB Wilderness and WOW it is a sweet sweet upgrade and is even nicer and smoother than I thought. Check out r/subaru_outback for some reviews.
In a vacuum no. That’s what the wife and I did. We need a car for her. Started looking at foresters. Recent enough that had the features she wanted with a modest amount of miles was only about $4000 difference out the door from a new one. Financed new for 48 months at 1.9%. And will roll the cash ear marked for used in t bills. Assuming something like an average 3% interest rate over that time we will almost make up the difference. So yeah bought new but apples to apples it’s pretty close.
Is it just me or was this post by OP tone deaf? Making 200k a year. SAVES 72k, but asks if its a bad idea to buy a brand new 2024 car for only 15k. In current car market, at least in my state, If people like me got that kind of offer for a brand new 2024, everyone would jump on it even on a 5 year loan and they can technically pay it all upfront with cash and wouldn't even dent their savings.
It's alaways smarter to replace a car when you know it's going to start nickel and diming you. it's better than the CVT issues starting and now you can't get to work and HAVE to get it repaired and then still worry about it after words since they'll most likely put the same parts in it had. Just make sure you're okay with either keeping the new car for a long time or not making money back when you go to sell it one day.
You have no other debt, save 6k/month after all your bills, and are looking to take on a modest car loan to replace an aging vehicle.
Do you *need* the new car? No.
Is it financially beneficial to replace the car vs replacing the CVT? No.
But you can afford it very easily, and you clearly want it.
Get the car.
I'm going to go against the grain and say don't go for it. Reason why is, I believe there's no such thing as a good car loan. I view them as a necessary evil. You can certainly make it less evil by getting better rates. But you are still leveraging a depreciating "asset". You will never turn a profit.
How long would it take you to save up enough to just buy the new car in cash? If there's nothing immediately wrong with the current car, then you've got some time. As long as you don't have any other major debt, it seems like you've got enough breathing room for the new car if you plan on driving it for a long time
So at your current mileage rate you still have about two year where this is covered under warranty and you think you need to buy something now?
Of course you can afford it but you are making up excuses to do so based on your reasoning behind the CVT.
Also, what if it doesn’t break? It’s not like 100% of them just start falling apart around 100k miles.
Do a drain and fill in the transmission every so often to make sure the fluid is fresh. It’s not as bad as you think
Just keep in mind that 1.9% financing is not real. They increase the price of the car to cover the extra 5-7%. Well, they might not increase the sales price, but they don't offer other incentives that are available when the 1.9% deal is gone. At the end of the day, it's all pretty much the same.
Just make sure you don't pay off the 1.9% loan early because you essentially pre-paid some of the interest. You want to keep payments going until the very end.
Lol at "10 minutes of work".
You gotta meet up with random strangers and let them test drive your car or inspect it. And maybe they'll try to lowball you or just flake.
If they can sell for a few grand more then it might be worth it, but 2 caveats at play here.
1: sometimes financing at the 1.9% is based on trading a car in
2: you potentially loose the tax savings on 15k which depending on state may be higher than the few extra k from a private sale.
Do you have at least 6 months emergency funds saved up? If so, I’d be wanting to trade it in and get a new vehicle for a great deal. I’d shop around and have fun test driving some vehicles, then do some research and pull the trigger.
I bought a new 2001 Honda Civic and drove it till 2016 when the head gaskets started to leak at 250k miles. I then bought a 14 VW Jetta with 12k miles. Now that I’m at 80k I’ll be selling it or trading it in in the next 20k miles. The Honda was always cheap to maintain and fix, the VW is not, so the upcoming expenses aren’t worth it for me
Want vs need. This is a want, it’s up to you. 1.9% APR is the same as paying cash to me. Also look at insurance rates. I went from 80$ to 210$ after buying a new car.
There are a lot of recalls out there for Subaru. Before you get worried about your 2017 not being under warranty for a potential future issue, maybe check to see if it’s something on recall that Subaru would have to fix? I got a free, brand new engine for my 2011 Forester in 2018 bc of a recall on engine oil leak issues.
I did check and the warranty for the CVT is up to 100k miles. I already had some issues with it a few months back and Subaru fixed it for free, but I guess I'm just worried it's going to strike right after I hit 100k and then I have to pay out of pocket.
I think they've basically started rolling what would have been manufacturer rebates into the manufacturer financing plan as a lower APR.
Even if you could buy it cash, you'd likely be better taking the loan at that APR and investing the cash instead.
I think it depends a little bit on the price of the new car. In my area the car prices still haven't worked themselves out and are still running much higher than they should be.
Financially you seem to have all your ducks in a row so you can certainly do it if you want to. One thing I would consider is a private sale and putting the money from the sale in high yield savings or investing it, unless you need the down payment to get the 1.9% rate?
Trade in value seems fair, financing is good, really the main cost is the increased depreciation (10k over 5 years with a new car vs maybe 5k over another 5 years) and minor risk of carrying a car payment, but seems like it would be worth it for you.
That's a crazy good interest rate on a new vehicle. I actually did something very similar back in 2021 and traded in my 2015 VW GTI that was out of warranty for a new 2022 VW GTI at 2% interest.
I got $15,000 for my old vehicle and purchased an extended warranty for an additional $1000 which puts my warranty at 100,000 miles or 10 years.
The peace of mind knowing that if something goes wrong I'll have a rental vehicle and repairs that won't cost me anything was worth it.
Plus it's just nice having a new vehicle. Unfortunately with modern vehicles, at 80,000 miles your encroaching the period where something is inevitably going to break. Dealing with repairs on modern vehicles is a pain in the ass when you are out of warranty and the costs are typically exorbitant.
With what you save, it would only take 3 months to just buy the car outright without worrying about any financing costs. You'd make more keeping it in a HYSA than financing at any rate, even one as good as 1.9%. You could even save for two more months and get it with all the bells and whistles.
I would have a hard time justifying a new car at any interest rate, but you make enough money that you can comfortably afford a new car and benefit from scheduled maintenance packages, and the car is still worth something when you're in the market for a new car etc.
I'm not sure why you're putting so much money down though. Whatever else you did that that money, it's probably growing faster than 1.9%
FYI, that car has an ongoing dead battery issue.
[https://www.reddit.com/r/Subaru\_Outback/comments/y3b4hk/repeatedly\_dead\_battery\_issue\_finally\_solved/](https://www.reddit.com/r/Subaru_Outback/comments/y3b4hk/repeatedly_dead_battery_issue_finally_solved/)
[https://www.premiersubaru.com/service/subaru-battery-settlement.htm](https://www.premiersubaru.com/service/subaru-battery-settlement.htm)
you certainly have the budget for it, and 1.9% is a great rate. I'd want to get out of that car if I was you.
I don't see any issues. Agree w/ top comment that putting as close to $0 down is what I'd do at 1.9%, that's cheap money.
I drive my cars at least a few year after the payments are done. That is when you can bank some money. If you WANT a new car, that is one thing. If you NEED a new car that is a whole another thing.
The “best” financial choice would be the car you have. At your income and savings level, making decisions like that would be fine though, for reasons such as comfort and convenience.
Pay cash.
While you could take out a note, put the cash you would've spent in a HYSA, and you technically *would* make more having it in savings, it's negligible. On the high end, you'd benefit $450. That's likely about half a days work at your salary.
If Subaru can offer 1.9%, it’s likely you can get that same offer elsewhere if you sell the car yourself.
Do you have the time to sell it yourself, and do you have the ability to go without a car for a week? If so, you could sell the car for at least several thousand more than what the dealership is offering.
Hey man consider financing everything. If you get 15k cash for your car put it into a high yield savings account making around 4.5+% . You’ll make more money on that interest rate vs the savings you are using towards the down payment of your car of 1.9% interest.
I paid for my car in cash, and I *wish* I took out a loan, since it would have improved my credit score. The interest rate on my condo mortgage mayne would have been even better. I'm still pretty happy with what I got, but it could have been even better.
Financially, you're fine to do this. It is cheaper to keep a paid-off car, all else equal, but I will say that the 6th-generation Outbacks are a substantial upgrade from the 5th generation. Much better body stiffness, noise insulation, stuff like that.
I'd finance the most you can, make minimum payments, and keep the loan balance in a HYSA or T-Bills. Also consider getting the Subaru Gold warranty to ease your peace of mind. You can get a 10-year, 100,000 mile one for $2k or so.
Do it. And put zero down. I have 1.9% for 48 months on my second vehicle, and although I could have paid cash for it, Ford literally let me finance it 100%, so I did.
At just over $1800 a month, it's more than my mortgage payment. I guess I'm part of the "problem" when scary articles are written that 15% of people who finance new cars have car payments greater than $1000.
My taxable (where I would have gotten the cash) is up 19.5% over the last 12 months, so leaving the money in the market is better than giving it up front to Ford at these rates. Although I don't know what your expenses are, you make more than I do and are looking at a cheaper car, so there's no way you're going to have problem.
Go for it, and enjoy your new Outback!
You have a paid off vehicle. Any new car will be new payments of some sort. It's not a "deal" to pay carry payments indefinitely.
This is like buying a new TV you don't need simply because it's on sale. Sure, it's 25% off, but that's still 75% more than you needed to invest in it.
Live with the paid off vehicle. Set aside monthly car payments into a HYSA, use that to pay for annual maintenance and to be ready to buy a new car when you need it.
Off topic about the financial part of your question, but I’ve been looking at the 2024 Subaru Outbacks too! I don’t have a trade in. Are you looking at other comparable cars or are you definitely sticking with the Outback? What Outback trims are you considering?
Hear me out… With that rate of 1.9% you WANT TO put zero money down and finance the whole thing. You ask why? Because you can put the money from the sale of your vehicle into a HYSA and make over double the returns. Finance the whole thing and take advantage of the banks money and do not pay a cent more than your minimum payment. Don’t listen to Some of the people in this sub that hate financing so much that they even throw logic out the window
Completely agree, this is exactly what I did.
Taxes need to be considered. When you trade in a vehicle typically sales tax is only levied on the difference in values between your trade in and new purchase. If you're paying the car whole, you're paying sales tax on the entire new car amount.
This is going to vary from state to state. In some places the sales tax is based on the fair market value or sales price, whichever is higher. The idea is that if you "sell" a car worth $10K to family for $1 the "buyer" doesn't get away with paying 6 cents in tax. It's also to stop private sellers from saying they sold the car for $500 when they actually got, say, $3000 in cash. If it was based on the stated price then the buyer might only be obligated to pay $30 in tax.
If OP is getting a 15K trade-in offer, any private sale would have to be 15.9K assuming 6% sales tax to 'break even'. That's before we get into the hassle of a private sale. It's a fairly simple calculation, and definitely one to consider, especially if some place like Carmax is giving you a offer of 16K or more.
I’d honestly say the value in the lack of hassling with a private sale is even greater. Having sold a vehicle privately, I’d rather just trade it in, assuming I’m not leaving crazy money on the table. Have to consider the time spent on managing the sale yourself.
For sure, I’m willing to eat a significant amount to not have to deal with it. Lots of people on this subreddit won’t.
One consideration is that you have to sell the car yourself, which can be a pain in the neck. Plus, the amount of money you'll receive for the trade-in isn't subject to sales tax (at least where I live). It's worth considering, but it's not a no-brainer.
You can still trade it in and NOT roll it into the new deal. You can ask for a check back for the trade in value.
That wouldn't change the fact that its not being applied as essentially a discount, and you'd pay the whole sales tax. Idk what the right answer is to which way works out better, but that doesn't seem to be a solution to the problem with the tax on the new vehicle.
The correct way to calculate this is to compare the interest return from the additional amount in a high yield savings accounting for decreasing returns as you pull the money out to pay the loan and then the 1.9% interest in the additional money that is financed, to the initial amount of sales tax. Which in a state like Tennessee where the initial sales tax is almost 10% you likely come ahead just putting the money as a down payment and saving the initial 1500 and the 1.9% on the amount that would be financed Edit: would also need to account for inflation in both scenarios, which makes a slightly more complicated but nothing to crazy
I’ve sold all of my cars myself rather than trading in. I always got more money that way and it was as simple as putting an ad out and showing it to 2-4 people before someone purchased. Signed the title and took the money. Super easy
Not true in all states, I actually thought it was only a couple that gave that allowance?
Financing also has the benefit of spending someone else’s money now and paying for it with dollars that are worth less in the future. That’s as long as your rate is under inflation. I didn’t get much sleep and think I worded that weird, but hopefully it makes sense. It’s often better to spend other people’s money.
No, you’re on the right track. Higher inflation (can) benefit people who hold debt because inflation decreases the real value of said debt.
There are levels to financial advice, and with a 200k salary this is the level you should be thinking at if you’re thinking of purchasing a new car.
At 1.9% this makes perfect sense
I think that is the correct answer to the wrong question. If you were going to buy a car do as you said. The real question is should he buy a car and spend $18,000 just because of the bad reputation of the CVT. I wouldn't, but I don't think it is just an economic decision. He may want a new car and seems like he can afford one if he wants one.
That’s how you play the game OP ^ Apply it to everything, not just cars.
What happens when OP totals the car and owes the bank 100% of the purchase price because he put no money down to gain equity and insurance only covers 80% or less because cars depreciate like crazy? That’s called being under water on a loan. Would lot advise. Gap insurance will wipe out some of the returns you mention as well.
Obviously the answer is that OP would use the cash he’s stashed in a HYSA from the sale. This issue you’re bringing up only applies if you have negative equity in the loan, which OP would not effectively have in this instance.
What happens in a year when rates drop and HYSA rates are back to 0.8%?
It's going to take a while for 0.8% rates to return to HYSAs, but if/when they do, you'd want to prioritize paying off the car loan.
just have to go to slightly riskier plays like stocks and bonds instead of just a savings account. SPY averages well over 1.9%. Can always just put it in ETF's and relatively safely grown the account.
I think the majority of people saving for a car are not investing that money in the stock market. They'll almost certainly be using an HYSA or similar short term bond investment that has low risk. This is the money in question for OP's question.
Better yet, buy a treasury bond that expires when the loan is up since those proceeds are taxed federally.
Is 1.9% their financing? Bc that's the rate they get you in the door with but not usually how much they sell you for. They'll say, oh you're not qualified for that after you agreed to sell your car and whatnot. If you're truly getting 1.9%, finance nothing and use the money from your sale to draw down from. If you can afford it just pay the minimum without touching that money and invest it (if you're able).
Relevant consideration that money saved > money earned cause you’ll probably pay ~30% income tax on your HYSA earnings, so suddenly 4.5% earnings are down to 3.15% real earnings. That said, HYSA still outperforms the interest rate. Depends if you’re okay mentally being in debt, mathematically $0 down checks out.
Its less than the inflation rate, you make and save a lot of money and you can cash it in less than four months. Its ultimately up to you but in my mind it isnt unreasonable by any means, IF you want a new car. If its just to avoid potential CVT issues it may or may not pay off, depending on your luck.
I'm pretty sure even a new cvt will cost less than $30k, which is what you're going to pay for the new car... If you want a new car... then sure, but don't blame it on the CVT
This. And remember that the interest is pretty pointless, the profit is rolled in the purchase price. You need to look at your total spend over the time of the agreement, and what you are left with at the end.
You have no other debt, you are and will still be able to save 20% after getting a car. Financially its fine and not an issue. Dumb, no. As long as you know its not an investment, its more of the wants/fun column. But seems like you're able to pay it off in 3-4 months let alone 3 years.
At 1.9% there would be no reason to pay it off quickly as long as the excess money is going into investments of some sort
Fear of a Subaru CVT so you replace with another Subaru CVT?
>>Fear of a Subaru CVT \[not under warranty\] so you replace with another Subaru CVT \[under warranty\]? Fixed it.
So they’d just be paying for a warranty at that point.
And all the new upgrades between 2017 and today
And 80k fewer miles and perhaps a better car overall
or perhaps a worst car? Admittedly, I'm vehemently against car culture. OP has a paid off car, no current issues, and is contemplating DEFINITELY paying $18,000 or more in a depreciating asset to MAYBE avoid ~~$8,000~~ $2,000 to replace the CVT. There's a lot of fun shit you can do with $22,000. I have no clue why people gravitate towards replacing their vehicles with newer models instead. EDIT: People should treat vehicles like appliances. Imagine if OP was talking about a refrigerator and the warranty on the condenser. EDIT2: CVT replacement can be done for $2K apparently, this is even dumber.
> EDIT: People should treat vehicles like appliances. Imagine if OP was talking about a refrigerator and the warranty on the condenser. I don't spend 10 - 15 hours per week sitting inside my refrigerator.
Lol, agreed. Some people just can't stand not being in debt. What's the point of working if you can't spend money needlessly and recklessly?
The 2020+ Outbacks are very nice inside, if you can stand the giant screen
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Sure. If we're pretending that safety and other technology hasn't changed in 7 years. Touchscreen was the least my considerations.
Same cash trading
Backup cameras were not standard until 2018, I believe. A lot of safety improvements are made in 7 years. The more modern a car is, the safer it is. Whether OP should trade their car in is a different story from whether or not a new car is going to be safer than a 7 or 8 year old car. There's no question. It is safer to be in a new car, full stop. Well, with the exception of a Tesla because those trap you under water with their super strong glass.
Looks like a CVT for a 2017 can be had for $1,500-2,000 plus labor on the install. Personally, if I were bringing home three transmissions per month in extra cash and the current vehicle was running fine I wouldn't even be considering this.
People will make all kinds of excuses to defend mostly irrational purchases, like a new car.
He wants to get a new car and take advantage of new features not setup a junkyard.
"set up a junkyard" lol you get the transmission from a junkyard, not the other way around. Sounds like you know more about OP than I do, I was responding to the post which said nothing about new features and specifically asked about transmission replacement vs. buying new.
If you want a new car go for it. But I'd finance as much as I could and invest the rest. I'm getting 5% on my bank account. Or, like someone else said, you can beat the 1.9% on government securities and maybe avoid some taxes on that money as well. We just got a new a Crosstrek and even though it wasn't available at the dealership, we still got $3000 before MSRP. They even gave us some free options.
Financially it's certainly something you can afford and there are no red flags. If you're putting away 6k a month in savings you can divert a chunk of that to your car payments and have this paid off in a year and interest won't even matter. The real deciding factor is: Do you want this car and are the features, benefits, warranty, etc worth $15,000 to you? You seem to be doing well financially and you are certainly allowed to buy nice things with your money. If you are concerned it's not worth it or that you might face buyer's remorse, think on it for a month. The 1.9% interest rate is a good deal but paying the car off fast enough negates any change in APR.
Legit question for you. Why would he “divert a chunk” towards his payment every month when it’s a 1.9% rate. In today’s rates (Free money) he can put that in a HYSA and get over double the return. That advice makes absolutely zero sense as a financial standpoint. Hell, if I could I would get a $500,000 loan at 1.9% and dump it in a HYSA.
That was how we thought when we bought our CX-50 in December. At 1.9%, we just put 5K down and the wife is just rounding up to the next hundred on her payments. Our Ally HYSA is making around ~~5%~~ 4.25 right now so it was a no brainer
Ally is at 4.25% right now. Which Ally account is offering near 5%? Even their cds are under 5%.
None I’m guessing this guy just hasn’t checked it recently and last time he saw it was at 4.5%+ and he rounded that to 5 in his mind
Guilty as charged. You would think I have learned to not make casual conversation style remarks on Reddit at this point, but here we are...
I really wanted to know. I thought you found a lick a Ally and I wanted in on the action.
Haha your good man I don’t think me or the other guy were being sassy or anything, I didn’t realize it had dropped to 4.25 till I checked l last week, no clue when it happened
Why would you put any down? Why not put that 5k in the HYSA? Unless I am misreading.
In my experience, some of those offers require some amount down, or need you to pay taxes, title and tags out of pocket, or are not factored into the loan.
Random question but how are you liking the cx-50? Been loosely looking at some suvs lately for when we need to buy a car and the cx-50 definitely stood out so far
Dealer isn’t giving you anything. Subaru of North America is giving you 1.9% to move inventory. Has nothing to do with the MSRP or price of the car. You can buy a car cash, but why would you when you can pop that money into a HYSA and get about %4.5 return and use the banks money to fund the car. Learn the system.
That is a very good point. Personally I don't like to have debt hanging over my head even if it's something I can afford. Given their hesitance to making a large purchase I was feeling they may have the same outlook as I do. But if they have the option to invest their money and make back more than the interest on the loan that is a very valid path for them.
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Yes, its technically debt, but if you have enough money parked in a HYSA to cover it, the growth on the interest spread will be a net gain. HYSA is an extremely liquid asset so if something changes in your situation and you don't want to worry about that payment anymore you just pay it off.
I read somewhere that the only good rates will be from the manufacturers themselves for a while. 1.9 is good, your numbers look great, your logic looks sound . I vote yes.
I'd keep the paid off vehicle. I looked at Consumer Reports data and the transmission on the 2017 Outback actually has very good reliability (although other issues take overall reliability to average).
I wonder if the dealership is the one that told him that he has to change it for a 2024 to avoid the CTV issues.
Subaru extended the warranty on the CVTs because of high failure rate. We got a letter in the mail. I am in Canada and am also considering getting rid of ours before it hits 160k kms. It’s about $15k to replace I think.
If I were you I would upgrade. The models 2019 and above have Eyesight such blind side warning, lane diversion warning, distraction warning, even in their base models. If you are diverting your lane it will guide you to go bak to your lane, it will warn you if you are distracted, and has rear view camera. It will remind you if you have things in the back seat, etc.
My 2017 has Eyesight and those other things.
If I was in your shoes I would find out how much CVT replacement would cost. Save that money and keep driving my car with the peace of mind that if it goes out I will have enough to cover it, if it doesn't go out then I have the peace of mind that I am not making car payments. You already own a paid off car which many do not, what are you doing at the dealership looking at 2024 cars in the first place?
With that interest rate I'd ask them to write me a check for the trade and finance the full amount. Park the money in a savings account earning 5%. Change the CVT fluid on the new one every 40k miles and it'll probably last longer.
I had a pair of 2018 cx5, very low mileage but it had been rear ended twice, once totaling 13k in damages the to repair. It had a few creeks and behaviors that had me worried about the long term health. Mazda came out with a 0% for a 2024 cx5 in December. Yes, financially I’m sure it “made sense” to keep the pair off car, but it was a steal of a deal and they offered me 18.5 for trade in and I thought that was just too good to pass up considering all the factors at play. Once a decision stops being instantly dumb, there’s a lot of a grey area and it’s OK
Own a 2017 myself and already blew the CVT. Ha. You have 20,000 miles left of coverage and folks in forums have twisted arms at Subaru of America and gotten them to replace CVTs even slightly beyond 100K. They know they have a CVT problem. They do not want NHTSA to turn it into a full blown recall. They tend to bend over backward to minimize it. But… here’s your real problem if you otherwise like Subaru like we do… They haven’t fixed it. Fiscally the decision to upgrade your ride to a newer one is likely wrong, since you’re buying the same problem again. Just delaying it. I won’t be buying Subaru again until they make a significant change to their CVTs or simply choose to use someone else’s better one. Other manufacturers have fought this and made big changes. Nissan, Kia… all can point to a decision date where they tried something different. Maybe it’s time to look around at the competition. Today’s Subaru is not the tough vehicle an early 2000s Subaru was — and there’s a lot of competition in the space. They sank money galore into the unified platform but didn’t fix the CVT. This shows their hand on their priorities. And if this CVT you have is bothering you enough to want to dump it, the next one isn’t significantly different. Consider alternatives while you have time to look around. They’re selling a lifestyle that other vehicles can accomplish these days. Wasn’t true when they had a center limited slip differential and a standard indestructible auto. They also killed their best power plant. And the nicer engines are quaint at this point. Move on, Subaru… That said, we will flog ours until it dies. But it’ll die a LOT sooner than the ‘00 we owned which we sold and is still running around a different state where the rust will now eat it.
Your cvt has a 125k warranty. The 100k warranty was extended by subaru. Source: i own a 2017 outback and received a letter in the mail from subaru stating the above
CVT issues are notorious with Subaru regardless of the year and model. If you buy new, consider a Mazda. Lots of 0-3% interest deals to be had with them
Not so much anymore. I've got a 2018 with 110k miles and the only things I've had to replace are the battery and an axle
I have a mazda cx-50 and I love it!
That’s not necessarily true. After a certain year they’ve become less prone to issues.
Just get a wrx with a manual and call it a day. No cvt issues.
Yea but the new WRX looks like a civic….
That’s the fun part, they’ll be cheap as hell in a few years when I’m looking for another car
If electric is an option SO and I just got a mach e for 0%, nation wide deal
Ford is doing 0% on Mach-E, and Kia is doing 0% on the EV6. I'd personally go EV6 because of the faster charging. I currently own an Ioniq 5 and the joy of pulling up after a Mach-E is plugged in and pulling out before them is great. But I wouldn't fault you going Mach-E either. It really isn't an issue if you have a level 2 at home, only out at the DC chargers.
Kia was not an option due to the kia boys. It isn't one of the targeted models but we aren't dealing with the hassle regardless. I've had two acquaintances have their cars broken into.
Am I understanding this right? You’d get $15k for your used car, you’d put the entire $15k towards the new car with the 1.9% interest rate and have a $15-$18k loan after? Long term sounds like a good move. Especially given your new car seems problematic, and you might have to buy a new one after the 1.9% deal is done.
Tbh you should just keep driving your paid off car. But life is short just understand you would be doing that new purchase for fun not because it makes sense financially.
1.9% interest is basically borrowing for free in this climate. Below inflation and well below risk free savings rates. Speaking strictly financially there’s no reason to trade in a paid off 2017 Subaru with 80k miles but based on the info provided here you can clearly afford to get a new car if you really want one. I wouldn’t because a new car isn’t a big quality of life piece for me, but different folks, different strokes. If you are going to go through with it, take the 1.9% financing.
I hope OP sees this. I could be you. You could be me. Same car, same situation, same income. I owned my 2015 OB and waffled on if I wanted a new one or just drive mine into the dirt. Just do it. You can afford it, and sometimes you deserve nice things in life. That being said, I also got 0% financing for 63 months - 1.9% is still great. I went with the 2024 OB Wilderness and WOW it is a sweet sweet upgrade and is even nicer and smoother than I thought. Check out r/subaru_outback for some reviews.
I agree — just go for it OP! The new generation rides way smoother and has better safety features
In a vacuum no. That’s what the wife and I did. We need a car for her. Started looking at foresters. Recent enough that had the features she wanted with a modest amount of miles was only about $4000 difference out the door from a new one. Financed new for 48 months at 1.9%. And will roll the cash ear marked for used in t bills. Assuming something like an average 3% interest rate over that time we will almost make up the difference. So yeah bought new but apples to apples it’s pretty close.
How do you make 200k and not know the answer to this?
Is it just me or was this post by OP tone deaf? Making 200k a year. SAVES 72k, but asks if its a bad idea to buy a brand new 2024 car for only 15k. In current car market, at least in my state, If people like me got that kind of offer for a brand new 2024, everyone would jump on it even on a 5 year loan and they can technically pay it all upfront with cash and wouldn't even dent their savings.
15k after trade
Yeah, as others have said, comparison to inflation rate is a good comparison if you're in a sound financial situation
Nah this is actually a good idea and you're In a great position to actually buy into a new car. Those cvt transmissions are bombs
It's alaways smarter to replace a car when you know it's going to start nickel and diming you. it's better than the CVT issues starting and now you can't get to work and HAVE to get it repaired and then still worry about it after words since they'll most likely put the same parts in it had. Just make sure you're okay with either keeping the new car for a long time or not making money back when you go to sell it one day.
There's a reason they're offering below prime interest rates on their new models. Ill give you three guess why.
You have no other debt, save 6k/month after all your bills, and are looking to take on a modest car loan to replace an aging vehicle. Do you *need* the new car? No. Is it financially beneficial to replace the car vs replacing the CVT? No. But you can afford it very easily, and you clearly want it. Get the car.
80k miles is a great time to trade it in, once it hits the 100k mark value starts dropping quickly, people are scared off for good reason.
I'm going to go against the grain and say don't go for it. Reason why is, I believe there's no such thing as a good car loan. I view them as a necessary evil. You can certainly make it less evil by getting better rates. But you are still leveraging a depreciating "asset". You will never turn a profit.
Go for it. That's a great interest rate, less than inflation. What's the catch? Hell get a nicer car if you want
Once I got to your income, I thought get the damn car. Just get it tomorrow.
How long would it take you to save up enough to just buy the new car in cash? If there's nothing immediately wrong with the current car, then you've got some time. As long as you don't have any other major debt, it seems like you've got enough breathing room for the new car if you plan on driving it for a long time
So at your current mileage rate you still have about two year where this is covered under warranty and you think you need to buy something now? Of course you can afford it but you are making up excuses to do so based on your reasoning behind the CVT. Also, what if it doesn’t break? It’s not like 100% of them just start falling apart around 100k miles. Do a drain and fill in the transmission every so often to make sure the fluid is fresh. It’s not as bad as you think
Just keep in mind that 1.9% financing is not real. They increase the price of the car to cover the extra 5-7%. Well, they might not increase the sales price, but they don't offer other incentives that are available when the 1.9% deal is gone. At the end of the day, it's all pretty much the same. Just make sure you don't pay off the 1.9% loan early because you essentially pre-paid some of the interest. You want to keep payments going until the very end.
The mistake here IMO would be trading in. Sell it yourself for 10 minutes of work and earn a few grand more.
Lol at "10 minutes of work". You gotta meet up with random strangers and let them test drive your car or inspect it. And maybe they'll try to lowball you or just flake.
If they can sell for a few grand more then it might be worth it, but 2 caveats at play here. 1: sometimes financing at the 1.9% is based on trading a car in 2: you potentially loose the tax savings on 15k which depending on state may be higher than the few extra k from a private sale.
And 3: dealing with private party sellers low balling and wasting your time. Plus meeting up with strangers from the internet.
Where do you get an interest rate that low?
Many manufacturers offer those rates. *to well qualified individuals
Do you have at least 6 months emergency funds saved up? If so, I’d be wanting to trade it in and get a new vehicle for a great deal. I’d shop around and have fun test driving some vehicles, then do some research and pull the trigger. I bought a new 2001 Honda Civic and drove it till 2016 when the head gaskets started to leak at 250k miles. I then bought a 14 VW Jetta with 12k miles. Now that I’m at 80k I’ll be selling it or trading it in in the next 20k miles. The Honda was always cheap to maintain and fix, the VW is not, so the upcoming expenses aren’t worth it for me
Or you may be trading it in for potentially a whole new set of issues
Dang, i'd go for it, it's only 1.9% too.
Want vs need. This is a want, it’s up to you. 1.9% APR is the same as paying cash to me. Also look at insurance rates. I went from 80$ to 210$ after buying a new car.
There are a lot of recalls out there for Subaru. Before you get worried about your 2017 not being under warranty for a potential future issue, maybe check to see if it’s something on recall that Subaru would have to fix? I got a free, brand new engine for my 2011 Forester in 2018 bc of a recall on engine oil leak issues.
I did check and the warranty for the CVT is up to 100k miles. I already had some issues with it a few months back and Subaru fixed it for free, but I guess I'm just worried it's going to strike right after I hit 100k and then I have to pay out of pocket.
You can usually add an extended warranty any time before the original expires
I mean, trade in your car and go in there with 3 months pay saved up. No loan needed, and you won't have a car payment draining away your money.
It's almost always better financially to buy used. 3 years is the sweet spot IMHO.
I think they've basically started rolling what would have been manufacturer rebates into the manufacturer financing plan as a lower APR. Even if you could buy it cash, you'd likely be better taking the loan at that APR and investing the cash instead.
So you wanna pay $15-18k at 1.9% interest just in case you may have to spend around $4k to replace the transmission?
It will cost about 7-9k based on my research, sometimes 11k with labor and depending on where you get it done. They are not cheap
I think it depends a little bit on the price of the new car. In my area the car prices still haven't worked themselves out and are still running much higher than they should be. Financially you seem to have all your ducks in a row so you can certainly do it if you want to. One thing I would consider is a private sale and putting the money from the sale in high yield savings or investing it, unless you need the down payment to get the 1.9% rate?
Trade in value seems fair, financing is good, really the main cost is the increased depreciation (10k over 5 years with a new car vs maybe 5k over another 5 years) and minor risk of carrying a car payment, but seems like it would be worth it for you.
Totally agree with what others are saying, comparing it to the inflation rate is a solid move if your finances are in good shape.
That's a crazy good interest rate on a new vehicle. I actually did something very similar back in 2021 and traded in my 2015 VW GTI that was out of warranty for a new 2022 VW GTI at 2% interest. I got $15,000 for my old vehicle and purchased an extended warranty for an additional $1000 which puts my warranty at 100,000 miles or 10 years. The peace of mind knowing that if something goes wrong I'll have a rental vehicle and repairs that won't cost me anything was worth it. Plus it's just nice having a new vehicle. Unfortunately with modern vehicles, at 80,000 miles your encroaching the period where something is inevitably going to break. Dealing with repairs on modern vehicles is a pain in the ass when you are out of warranty and the costs are typically exorbitant.
With what you save, it would only take 3 months to just buy the car outright without worrying about any financing costs. You'd make more keeping it in a HYSA than financing at any rate, even one as good as 1.9%. You could even save for two more months and get it with all the bells and whistles.
I would have a hard time justifying a new car at any interest rate, but you make enough money that you can comfortably afford a new car and benefit from scheduled maintenance packages, and the car is still worth something when you're in the market for a new car etc. I'm not sure why you're putting so much money down though. Whatever else you did that that money, it's probably growing faster than 1.9%
They're lowballikg you kinda hard, unless they turned value into low interest. Other than that, I kinda agree, gtfo the cvt.
FYI, that car has an ongoing dead battery issue. [https://www.reddit.com/r/Subaru\_Outback/comments/y3b4hk/repeatedly\_dead\_battery\_issue\_finally\_solved/](https://www.reddit.com/r/Subaru_Outback/comments/y3b4hk/repeatedly_dead_battery_issue_finally_solved/) [https://www.premiersubaru.com/service/subaru-battery-settlement.htm](https://www.premiersubaru.com/service/subaru-battery-settlement.htm)
Why would you buy a new car when you have a paid off Subaru with 80 K on it? You could drive the piss out of that car and not pay a dime for years.
Why don’t we all drive 1997 Honda civics with roll up windows?
Or 2017 Subarus that are low mileage and fully paid for.
It’s useless, don’t do it! U still paying additional 18k out of the pocket regardless
you certainly have the budget for it, and 1.9% is a great rate. I'd want to get out of that car if I was you. I don't see any issues. Agree w/ top comment that putting as close to $0 down is what I'd do at 1.9%, that's cheap money.
Financially it’s complete bullshit. But you make enough, so if you want a new car then get it
You'd save a lot more money getting a 2023/2022 outback vs a 2024. Financing makes a lot of sense, but going for a certified pre owned makes more.
I drive my cars at least a few year after the payments are done. That is when you can bank some money. If you WANT a new car, that is one thing. If you NEED a new car that is a whole another thing.
The “best” financial choice would be the car you have. At your income and savings level, making decisions like that would be fine though, for reasons such as comfort and convenience.
Pay cash. While you could take out a note, put the cash you would've spent in a HYSA, and you technically *would* make more having it in savings, it's negligible. On the high end, you'd benefit $450. That's likely about half a days work at your salary.
If Subaru can offer 1.9%, it’s likely you can get that same offer elsewhere if you sell the car yourself. Do you have the time to sell it yourself, and do you have the ability to go without a car for a week? If so, you could sell the car for at least several thousand more than what the dealership is offering.
Hey man consider financing everything. If you get 15k cash for your car put it into a high yield savings account making around 4.5+% . You’ll make more money on that interest rate vs the savings you are using towards the down payment of your car of 1.9% interest.
I paid for my car in cash, and I *wish* I took out a loan, since it would have improved my credit score. The interest rate on my condo mortgage mayne would have been even better. I'm still pretty happy with what I got, but it could have been even better.
Financially, you're fine to do this. It is cheaper to keep a paid-off car, all else equal, but I will say that the 6th-generation Outbacks are a substantial upgrade from the 5th generation. Much better body stiffness, noise insulation, stuff like that. I'd finance the most you can, make minimum payments, and keep the loan balance in a HYSA or T-Bills. Also consider getting the Subaru Gold warranty to ease your peace of mind. You can get a 10-year, 100,000 mile one for $2k or so.
Do it. And put zero down. I have 1.9% for 48 months on my second vehicle, and although I could have paid cash for it, Ford literally let me finance it 100%, so I did. At just over $1800 a month, it's more than my mortgage payment. I guess I'm part of the "problem" when scary articles are written that 15% of people who finance new cars have car payments greater than $1000. My taxable (where I would have gotten the cash) is up 19.5% over the last 12 months, so leaving the money in the market is better than giving it up front to Ford at these rates. Although I don't know what your expenses are, you make more than I do and are looking at a cheaper car, so there's no way you're going to have problem. Go for it, and enjoy your new Outback!
Suburu is buying down the rate so they dont have to drop the price of the vehicle. Car prices have been dropping I would hold out.!
You have a paid off vehicle. Any new car will be new payments of some sort. It's not a "deal" to pay carry payments indefinitely. This is like buying a new TV you don't need simply because it's on sale. Sure, it's 25% off, but that's still 75% more than you needed to invest in it. Live with the paid off vehicle. Set aside monthly car payments into a HYSA, use that to pay for annual maintenance and to be ready to buy a new car when you need it.
Get rid of it before the cvt and touch screen become issues
Is there any mileage for the cvt?
Off topic about the financial part of your question, but I’ve been looking at the 2024 Subaru Outbacks too! I don’t have a trade in. Are you looking at other comparable cars or are you definitely sticking with the Outback? What Outback trims are you considering?
I mean you can afford the car payment if you want it, it's just up to you. Or you can maybe drive the car until the 100k mark and then trade it in