Buying first new car, advice on my perspective

Car Talk Lackey
See JoeMario above for CTC Upside Down thread

What I consider a very important question. Is your job 100% secure? Unemployed with a $1200 per month payment on a car you can no longer afford to drive would be a nightmare.

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I think that very few people could answer a solid yes to that question.


Congratulations @cornflakes2 ! First, for planning your first new vehicle purchase, and second, for thinking ahead. Too many of us buy with our hearts and not our brains. To the above comments, I would add that a new expensive car is going to cost you more on insurance, sales tax, excise tax, and other “hidden” car costs that add up to a lot of money. Nicole at BestRide recently did a comparison of New, Used, and Lease advantages and disadvantages that may be helpful to you. I think your estimates on depreciation are a little optimistic. Here’s another little secret only we car testers know; The cars that cost $35K (Kia Optima SX Limited) are as good, or better than the $50K models from luxury brands in many cases. Shop value, whatever you decide to do. Many of the luxury brands’ models are really just rolling Rolexes.

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It’s funny how people will spend enormous amounts of ‘easy money’ on automobiles, etc., but if/when they struggle and through years of rice and beans budgeting accumulate the cash to make an extravagant purchase they choose not to. And of course the dealers will convince shoppers they deserve all that they can afford to make payments on with a 7 year note… Ain’t life sweet.

What car loses 50% value in 2 yrs? 50% of retail price or purchase price? A 50k truck sells for 40k. It ain’t worth 20k in 2yrs with 24k miles.

Real estate sales agents are just as predatory. When I bought my house in 1996, the builder’s sales agent told me, “With your income and your credit rating, you could qualify for the xxxxxxx model, rather than the much smaller yyyyyyy model that you are interested in”. I told her, “No thanks, I really don’t want or need a YUGE home like that”.

Of course, her sales commission–rather than my wants and needs–was the prime factor in her trying to push me to buy a larger and much more expensive home. In the long run, car salesmen and real estate people have similar motivations, and they rarely include being honest or trying to keep the buyer’s interests in mind.


Being old and operating a somewhat profitable business for many years brought me a few people looking for advice over the years and that is one reason I investigated my hunches back in the late 90s until the bust. And my worst recollections of that time are of young families who were intent on buying the “happily ever after” home of their dreams and looking to confirm their desires to get financial support from their families. When I discouraged them many were quick to dismiss me as an old out of touch cheap skate. But those who let themselves become tangled in all manner of lease purchase options and using their parents homes as collateral to buy overpriced properties at adjustable rates usually found themselves being evicted and dead broke within 2 years. Several couples relationships couldn’t survive the misery, likewise a few parents who tried to help them.

If anyone were to GAD I would suggest that banking regulations for financing both real estate and automobiles leave the lender holding the bag if the borrower walked away from the deal. If banks knew they could not get more from the buyer than past due payments and possession of the property in cases where the buyer found him/herself unable to pay the mortgage and the property being bought banks would be much more realistic to the finances of the buyers and the market.

If you can afford it, buy the car you want. Only the OP can decide if they can afford a 40K car or not. Seems a little steep on a 35 K income, but not completely out of reach I’d guess. I presume you’d require a loan, so the lender will be having their say on this idea too; good thing since you have the bank’s common sense working for you too. The bank is actually on the buyer’s side in a situation like this, you want to be able to pay off the loan and so do they, so a good idea to listen to what the bank thinks about your plans. This is a case where the bank gives you some free advice. Take it.

Remember there’s other expenses of car ownership that just the cost of the car. Insurance, maintenance, repairs, traffic tickets, and the like. And not every car holds its value the same. So doing a little research on which make/model is time well spent. Kelly Blue Book’s website will allow you to see how well that make/model you are looking at holds up over time in value. & compare the total cost of ownership from car to car. This number is available in many of the published car buying guides. I think Consumer Reports new car guide has that info. Best of luck there OP.

One more suggestion. When you buy your car, buy the factory service manual at the same time. While you may not intend to do any of your own work, having the FSM on hand will help you communicate with your shop, and in fact may help your shop get your car fixed. Shops don’t have all the FSM’s. Instead they have abridged forms in electronic format usually, and sometimes what’s left out in that abridgement is what they need to actually fix your car. But if you have the FSM, they can look it up there.

George-$40,000 on $35,000 income?? Really??? A sure recipe for financial distress.


The new car will have warranty and modern cars are not really do it yourself friendly.


Not saying it is something I’d do myself. But everyone has different spending priorities. If the OP is asking if it is possible thing to do, and are willing to cut back spending in other areas, I think it probably is possible. If OP is asking if it is a wise thing to do, like you say @texases , probably not.

Probably not? I say absolutely not. You are young and single, use you money to be able to eat good meals, preferably with girls (ot guys I guess0 that you might want in your life.
Never be a slave to a car or a house, buy what you can EASILY afford. Everyone has financial reverses in their life, this will help you survive them and let you enjoy the good times while saving for the future.


This is going to be fraught with contradictions but they are my thoughts anyway. Never in my life have I owed more than one years income, including house, school, car, etc. So yeah that price range is a stretch.

You are correct though that the total cost calculation should also include the residual value at trade in but 50% might be too optimistic and you never can depend on that. I paid $10,000 for my 81 Diesel and two years later I was offered $2500 in trade. But you are paying the whole thing up front so its a gamble.

Now I do remember hiring a girl that had been out of college a couple years, worked hard, saved her money, was single. She said she was thinking about buying a new car and I said do it. Everyone should buy a new car at least once that no one has ever driven before and with a warranty. But she was looking at one well within her budget.

So bottom line I think I agree with Mustangman. If you must have one of the higher priced cars, get one just coming off of a lease for about half the cost. If not, then buy a cheaper new car.


I mostly agree with you, but not about the house

I have no idea what you earn, nor do I care to know

Anyways . . . not owing more than a year’s income for a house is going to be flat out impossible in many/most areas of this country

Unless your income is quite high, and/or you live in an economically depressed area with very low home values, but in that case I’d also expect you might not have a high salary, either

I know for a fact I couldn’t even find a short sale or foreclose for less than 1 year’s income for me. Not even close, not even in the most gang-infested area

But you yourself said your statement was “going to be fraught with contradictions . . .”


I think when you start looking at the residual value on a car, you are looking at it as an investment. Unfortunately, cars are not investments. They are $$ on 4 wheels, subject to all sorts of damage.

From a financial standpoint, one would want to know if the OP has 6-8 months of emergency savings, maxing out to retirement accounts/etc. You get the picture.

I have always bought my cars with full cash price. If I can’t pay for it in cash, I can’t afford it. I have had some real beaters and have put some work in pretty much any car I have bought. I also have friends who have splurged on fancy car leases, financially they are not as secure as I am now.

The only thing I had to finance was our house and that is mostly because of the unusually high prices in CA. Even then my mortgage is way lower than what I “qualified” for.

I know for some financing a car is the only option (if you are not handy, do not know much about cars and need reliable transportation ASAP), but even then I will go with the cheapest car that meets the needs.

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thanks bill, it definitely seems way out of my range and I had better reconsider…

Wow, thanks everyone for all the replies. It has given me a lot of perspective and things to think about. I agree with everyone. You have all given very sound and reasonable advice!

Yes, I also do not like to finance anything. I’m the type of person that likes to pay all of it up front. I do have a lot of money saved up, but I realize it’s not a great plan to spend half of my savings on a brand new nice car. I was just trying to convince myself that I wouldn’t actually be spending 50k but that I should minus how much I would get back when I resell it in very good condition and low mileage. I think it’s best for me to reconsider and keep my current used car a little longer and decide again later.

I actually aim each year to put away/save 60-70% of my income. So you can probably guess how much I save each year on 35k salary. I’m not a big spender but a saver, but when I do spend, I tend to splurge big. I do think I should take a step back and clear my head again and re-evaluate this. I was very impressed with everyone’s advice and I’m thankful for everyone’s helpfulness!

note I think I should also mention which cars I was looking at:
I think it was the 2016 (not 2017) Chevrolet Camaro SS (top of the line) or
a Mercedes Benz A Class W176 (AMG 45 top of the line too). I could be wrong
but I imagined that these type of cars, while they still depreciate like all cars do, don’t
depreciate as badly as some of the cheaper cars…meaning, I’d imagine there would be
a lot of buyers willing to buy it off me in private sale for more value than if I were to resell
it to a dealership.

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Db, it was just good timing. Can’t say it would be the same today. But in 76 we built. We had bought the lot and with the work we did ourselves had the 25% down. Stayed there for 20 years through the wild 80s where everything appreciated quite a bit. Then built again and also owned the lot and did quite a little work ourselves. Things appreciated again then depreciated but all in all we made out ok. I’ve always favored building because doing work yourself can contribute greatly to your equity. Plus everything is new and straight and the way you want it. It hasn’t been all easy and fun but worked out over the long run.

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Automobile depreciation is a tricky thing, because it’s affected by many factors other than a car’s quality and mileage. It’s one of those things that is also affected by the invisible hand of the free market, including demand for that model in the used car market, so you can never predict how fast or how slow a vehicle will depreciate, no matter how nice the car is. Therefore, trying to plan for the future based on projected depreciation would be like basing your future on an economic forecast from a source you’re not able to evaluate for reliability. You can try to improve your odds of having decent trade-in value by selecting a vehicle or a manufacturer who has a good history of its cars holding their value better than others (depreciating slower than average), but that isn’t a guarantee your car will hold its value as well as previous iterations of that vehicle.

My take on this is that the point of having a car is to drive it, not sell it, and if I was worried about my car’s resale value, I’d drive it as little as possible, and that gets in the way of having fun with or doing fun things with my car, like go on a weekend fishing trip on the other side of the state.

My grandmother’s generation was the first to grow up enjoying the freedom a car gives you to be able to go where you want when you want, and worrying about the car’s resale value gets in the way of that freedom.

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