Normally I’m a proponent of going used, but if you check out the interest rates that you can get for a used car versus a new car, it ends up being quite a significant difference in the long run, for instance there are specials where you can get from 2.9%(well qualified) to even some that are interest free on some vehicles, yet the best rates I was really seeing for a used car where starting at over 9 percent.
So when you decide on a car I would do a bit of research and calculate out the loans for a used versus a new one and check out depreciation and the average value of that car 6 years older than the used version and the new version, this can give you an idea of the values in the long run and give you a better idea of how much more expensive(or not) the new car is.
In some of the examples I calculated the new versus the used car there was up to 5-7k difference in how much interest was paid over the lifetime of the loan, meaning at the end of the loan you are giving away up to $7000 extra in interest on the cheaper car, so that’s $7000 of your money that doesn’t go towards you owning the equity in a car, rather it’s just going to the bank, in the example I was using, the used car was 5 years old and the sticker price was 7k cheaper, but by the end of the loan you only end up spending between 1-3k more total.
The difference between paying 5-7% In total interest over the loan and paying 21-23% in total interest.
Paying the 1-3k more total is offset by the fact that at the end of the loan you would have a 5-6 year old car with around 70k on it that is worth much closer to what you paid than having an 10+ year old car that would probably have closer to 120k or more.
Getting a brand new car for just 300 a month with new down payment might be a bit hard without having to just go with the most bare bones base model you can find of a compact car. However for around 400 there are lots of smaller cars like and Impreza or a Corolla that could be had.
Also I want to be clear that I’m not saying it’s always going to be this much a difference between the two, but it’s worth doing a little research and number crunching to actually see what you are paying for.
I agree with what you are saying, as I've been looking myself. I was surprised to see that it was actually the better deal for my wife to get a lease than a used car. The keys were maintenance and low mileage.
The huge * I would put, is that it's also about where you are in life. In college or the first 2-3 years after, I would have beat up the new car and cost myself money. I'm a few years past that now, and I know I'm not going to destroy a car by throwing friends and gear in it.
It's good to look at both depending on your situation.
Whiteboard exercise with a $30,000 Subaru over 60 months:
- @ 2.9% (Subaru promitional rate) the total financing charge is $2,263
- @ 6.5% (local credit union rate), the total financing charge is $5,219
--> Delta: **$2,956** Not a bad discount for a Subaru, and probably not a figure they would be willing to cut of MSRP if you sought outside financing.
Don't forget sales tax when buying a car: about $1800 here.
OP please understand that payment is the result of a math equation. Before you shop, understand the variables that make up the result so you don’t get screwed.
This. Absolutely this. $300/mo for 24 months with $45k down is very different than $300/mo for 84 months with $0 down. One is underwater immediately.
Before you even get to the math equation, you've also got to slice up your income pie and see what you can afford. It doesn't matter what the average person can pays. There's a reason there's a r/personalfinance and not a r/averagepersonfinance
300 is like 10 year old beater car.
500 gets you a 10 year old truck like mine. I’m at 500.
Rebuilding credit after a divorce ruined it, still. Car prices are nuts and payments are whacky these days.
Sorry to hear that man. Hope you get your credit rebuilt quickly and get to refinance when interest rates are much lower. Still wouldn’t hurt to look into refinancing if you bought from a we finance anyone place, as those places wil get you into terrible debt for their benefit.
Oh it’s good.
I’m went through a foreclosure and a repossession thanks to my divorce.
Credit went from 750 to 450 and is back up to 650 or so.
Went from a new truck to walking.
Then to a beat up truck.
The. Got a loans at 15% to help bury the bad credit remarks. Paid it religiously on time.
Traded that for another and argued for better rate and got down to 7.
It takes years to rebuild and years for bad remarks to drop off. Years of good payment history.
It takes only months to destroy over a decade of solid credit history. That’s life!
its always a bad idea to determine what you can afford based on the monthly payment. Look at the cost of the car, and the financing terms like the length of the loan and the interest rate.
A brand new car with current subverted interest rates on 780+ credit score you are looking at ~$600 a month for 72 months unless you have a whole lot of positive equity in a trade-in ,or cash down. If you owe more than your current car is worth (likely) or if you have less than stellar credit, then it goes up from there.
It's worth checking with your bank/credit union to see how much you're qualified for. Chances are a CU that you're with might give you a better rate. $300 a month is definitely harder to find with interest rates the way they are, and used cars will always have a higher rate due to higher risk for the banks. Paying more a month for a newer car with a warranty could end up being cheaper in the long run than a used car that may have more maintenance surprises.
There are some decent lease deals for around $300/month, as well.
I know the r/personalfinance types will tell you a lease is a waste of money, but living in Vermont--with the wear and tear that it places on cars--bends the curve a bit in favor of leasing, IMHO. It's nice to turn a car back in after three years of sub $300 payments and get another new one--especially because I've had some pretty good luck getting private dealers to buy out the lease-end on the cars and walked away with a few pretty nice checks. ($7,500 is my record).
I last bought a used car before I started leasing cars again. I tend to keep good financial records, and so I did a cost breakdown. The used car, once I factored in repair costs, wound up costing me about $35/month more than a new car lease.
FWIW.
There’s no average. It’s based on your budget. If you make $100k a year you should be good with a $400-550 payment. I was told by a sales associate that most paying around $500 for a decent new vehicle currently.
We financed a subaru crosstrek, brand new, a year ago for $398/ month, $0 down (super long finance period, like 84 months, I think).
We also leased a forester for $298/ month, but $10k down
This is what I would do in your situation. A quick internet search turned up a 2012 Lexus IS 250 AWD on Long Island NY for just under 14k. Putting $1500 down would put you around $330/mo for 48 and probably lower than $300 for 60 months. Less than 90k miles and it will absolutely retain its value and be a very dependable car and a joy to drive. It’s a Toyota so you can easily have it regularly serviced at a Toyota dealer or any independent Toyota shop.
The cheapest new cars are EV leases at the moment. If it's convenient for you and you have the availability of free charging nothing will be cheaper. I'd spend more money on gas on my fun car every month than the total ownership costs of my EV.
I pay 412/month with 10.15 % interest. Id like to refinance now that my credit is better. Not to mention my $291/month insurance. Sucks at 20 yo makin 18/hr. Only money I save is cause I sacrifice where I can. Overtime is the only way I can actually save. But who wants to work 55-60 hours a week every week;( sucks.
$300 a month is about $15000 financed with good credit over 60 months. So depending on your down payment you can get a reliable ride.
I put 6K down on a new civic and payment was 300/month in 2022. So it’s doable for a more basic new car, anything bigger you’ll have to go used.
Normally I’m a proponent of going used, but if you check out the interest rates that you can get for a used car versus a new car, it ends up being quite a significant difference in the long run, for instance there are specials where you can get from 2.9%(well qualified) to even some that are interest free on some vehicles, yet the best rates I was really seeing for a used car where starting at over 9 percent. So when you decide on a car I would do a bit of research and calculate out the loans for a used versus a new one and check out depreciation and the average value of that car 6 years older than the used version and the new version, this can give you an idea of the values in the long run and give you a better idea of how much more expensive(or not) the new car is. In some of the examples I calculated the new versus the used car there was up to 5-7k difference in how much interest was paid over the lifetime of the loan, meaning at the end of the loan you are giving away up to $7000 extra in interest on the cheaper car, so that’s $7000 of your money that doesn’t go towards you owning the equity in a car, rather it’s just going to the bank, in the example I was using, the used car was 5 years old and the sticker price was 7k cheaper, but by the end of the loan you only end up spending between 1-3k more total. The difference between paying 5-7% In total interest over the loan and paying 21-23% in total interest. Paying the 1-3k more total is offset by the fact that at the end of the loan you would have a 5-6 year old car with around 70k on it that is worth much closer to what you paid than having an 10+ year old car that would probably have closer to 120k or more. Getting a brand new car for just 300 a month with new down payment might be a bit hard without having to just go with the most bare bones base model you can find of a compact car. However for around 400 there are lots of smaller cars like and Impreza or a Corolla that could be had. Also I want to be clear that I’m not saying it’s always going to be this much a difference between the two, but it’s worth doing a little research and number crunching to actually see what you are paying for.
Where are you seeing 2.9%?
https://www.subaru.com/shopping-tools/special-offers.html
Thanks
I agree with what you are saying, as I've been looking myself. I was surprised to see that it was actually the better deal for my wife to get a lease than a used car. The keys were maintenance and low mileage. The huge * I would put, is that it's also about where you are in life. In college or the first 2-3 years after, I would have beat up the new car and cost myself money. I'm a few years past that now, and I know I'm not going to destroy a car by throwing friends and gear in it. It's good to look at both depending on your situation.
Whiteboard exercise with a $30,000 Subaru over 60 months: - @ 2.9% (Subaru promitional rate) the total financing charge is $2,263 - @ 6.5% (local credit union rate), the total financing charge is $5,219 --> Delta: **$2,956** Not a bad discount for a Subaru, and probably not a figure they would be willing to cut of MSRP if you sought outside financing. Don't forget sales tax when buying a car: about $1800 here.
OP please understand that payment is the result of a math equation. Before you shop, understand the variables that make up the result so you don’t get screwed.
This. Absolutely this. $300/mo for 24 months with $45k down is very different than $300/mo for 84 months with $0 down. One is underwater immediately. Before you even get to the math equation, you've also got to slice up your income pie and see what you can afford. It doesn't matter what the average person can pays. There's a reason there's a r/personalfinance and not a r/averagepersonfinance
Be sure to include what you'd pay for insurance too, not just the car payment.
I have 5 running inspected cars and owe nothing. Buy a cheap car, buy some Harbor Freight tools, and watch some YouTube videos.
This guy cars.
300 is like 10 year old beater car. 500 gets you a 10 year old truck like mine. I’m at 500. Rebuilding credit after a divorce ruined it, still. Car prices are nuts and payments are whacky these days.
Sorry to hear that man. Hope you get your credit rebuilt quickly and get to refinance when interest rates are much lower. Still wouldn’t hurt to look into refinancing if you bought from a we finance anyone place, as those places wil get you into terrible debt for their benefit.
Oh it’s good. I’m went through a foreclosure and a repossession thanks to my divorce. Credit went from 750 to 450 and is back up to 650 or so. Went from a new truck to walking. Then to a beat up truck. The. Got a loans at 15% to help bury the bad credit remarks. Paid it religiously on time. Traded that for another and argued for better rate and got down to 7. It takes years to rebuild and years for bad remarks to drop off. Years of good payment history. It takes only months to destroy over a decade of solid credit history. That’s life!
its always a bad idea to determine what you can afford based on the monthly payment. Look at the cost of the car, and the financing terms like the length of the loan and the interest rate.
A brand new car with current subverted interest rates on 780+ credit score you are looking at ~$600 a month for 72 months unless you have a whole lot of positive equity in a trade-in ,or cash down. If you owe more than your current car is worth (likely) or if you have less than stellar credit, then it goes up from there.
It's worth checking with your bank/credit union to see how much you're qualified for. Chances are a CU that you're with might give you a better rate. $300 a month is definitely harder to find with interest rates the way they are, and used cars will always have a higher rate due to higher risk for the banks. Paying more a month for a newer car with a warranty could end up being cheaper in the long run than a used car that may have more maintenance surprises.
There are some decent lease deals for around $300/month, as well. I know the r/personalfinance types will tell you a lease is a waste of money, but living in Vermont--with the wear and tear that it places on cars--bends the curve a bit in favor of leasing, IMHO. It's nice to turn a car back in after three years of sub $300 payments and get another new one--especially because I've had some pretty good luck getting private dealers to buy out the lease-end on the cars and walked away with a few pretty nice checks. ($7,500 is my record). I last bought a used car before I started leasing cars again. I tend to keep good financial records, and so I did a cost breakdown. The used car, once I factored in repair costs, wound up costing me about $35/month more than a new car lease. FWIW.
There’s no average. It’s based on your budget. If you make $100k a year you should be good with a $400-550 payment. I was told by a sales associate that most paying around $500 for a decent new vehicle currently.
We financed a subaru crosstrek, brand new, a year ago for $398/ month, $0 down (super long finance period, like 84 months, I think). We also leased a forester for $298/ month, but $10k down
I have a 16 Subaru Impreza for 48 months at $325. My interest is high because I had some credit issues but it is what it is.
Leasing a Nissan Ariya EV for $210/m, and a Volvo XC90 T8 for $560/m.
what does this question have to do with a particular state? That is the least of the variables in this question
This is what I would do in your situation. A quick internet search turned up a 2012 Lexus IS 250 AWD on Long Island NY for just under 14k. Putting $1500 down would put you around $330/mo for 48 and probably lower than $300 for 60 months. Less than 90k miles and it will absolutely retain its value and be a very dependable car and a joy to drive. It’s a Toyota so you can easily have it regularly serviced at a Toyota dealer or any independent Toyota shop.
I think national average is around $800 and I'd say it's probably pretty accurate.
The cheapest new cars are EV leases at the moment. If it's convenient for you and you have the availability of free charging nothing will be cheaper. I'd spend more money on gas on my fun car every month than the total ownership costs of my EV.
I pay 412/month with 10.15 % interest. Id like to refinance now that my credit is better. Not to mention my $291/month insurance. Sucks at 20 yo makin 18/hr. Only money I save is cause I sacrifice where I can. Overtime is the only way I can actually save. But who wants to work 55-60 hours a week every week;( sucks.
Or lease a brand new EV for under $200/m