I was in an accident recently, and got the estimate back; it’s higher than my loan and most likely going to be totaled. Someone I know said it would be better to try to buy a new car instead of a used one, claiming I can get better deals, including better payment plans and interest rates than I’d get on a used car at this time. I checked my credit score with Credit Karma and was told it’s 688(they did explain that it was most likely higher than that, so likely low 700s). If I get a new car I’d likely try to go for something like a new Toyota, something in 2023 most likely. With my credit score, would it be possible to get a new car with a payment plan of say $300 or less a month, without having to put down a high down payment? Ive checked around on the sites for local dealerships, and the prices for these new cars are around $30k-$35k(not sure what the real price would be after fees obviously). Is it better to try and get a new car instead of used, and would my credit score allow me the kind of lower payment plan I’m hoping for?
$300 payments will get you only a part of the amount needed for a new car. Even assuming 0% interest (hard to get with your credit rating) and 60 payments (too long in my opinion), that’s $18,000. You would need to come up with the rest. I’d be looking for a decent $15,000 used car, pay it off on 3 years, save up for your next one.
But that’s my opinion. You should sit down with your bank or credit union to see how expensive of a car you can realistically afford. It’s easy to over spend.
Your payment will, at best, get you a lease. It solves your immediate problem but leasing is the most expensive way to buy a car. Buying a 3-4 year old used car cash is by far the cheapest.
You are in a box many people fine themselves in… Not enough cash to put a down payment on a new car to get the monthly payment you want.
You can’t 100% finance a used car because the bank won’t allow it AND your interest rates will be higher than new AND if repairs are needed that’s a problem. So that may not be an option.
My suggestion is to lease or buy the cheapest car you can possibly find. Maybe in a color or options you, or anybody else, doesn’t much like (a better deal can be made!). The next step is to do your best to pay it off early and then drive it until it dies while saving for a better car.
The best financial advice I can give is; Pay cash for depreciating assets like cars and boats, finance only things that GAIN (appreciate) in value, like a home or land.
You owe more than the car is worth? Bummer. How did you get in that position? Paid too much? So, you want to get a new car and take out a loan. With a less than stellar credit rating? I see a trend.
$48k Mercedes? Or $7k Kia?
You can find a 10yr old toyota for $10k. Try it
A 25000.00 new vehicle if you can even find one will have a momthly payment of 416.00 @ 60 months before interest cost . So you 300.00 number is for used .
@vaydrioness_183446 We have no idea where you are located but if you are in the US most dealers have web sites showing what they have in stock with prices . Also some where they will have the part about their closing fees to sell you a vehicle . One near me has a 500.00 closing fee .
It is much, much better to buy used, but I would go much older than 3-4 years, and here’s why. Say that a new car of a particular model costs $40k. A 2-3 year old CPO with 20k-30k miles might cost $37k. A 4-year old non-CPO might cost $35k, and have 35-60k miles. It is only when the car reaches 10 years old/100k miles that the depreciation curve steepens out. At that point, this car might cost around $20k. A 15-year old model with 150-180k miles might cost $6-7k…
The problem is that late-model low-mileage used cars are too overpriced at their current prices versus new, and here’s why. The total usable miles, as well as the total warrantied miles have been depleted by a far greater percentage than the tiny discount from new. These type of cars are neither cheap to buy, nor do they have much (if any) warranty remaining, and you are taking a risk that previous owner(s) may have run the engine low on oil or skipped oil changes, and the next owner (you) will be stuck paying for costly mechanical problems as a result. Another reason why late-model used cars are a bad deal is that they are still expensive enough that most people will need to finance, and used car loans have much higher interest than a new car loan of similar dollar amount.
Now once the car is 10 years old, it has lost at least half of its value, but based on an expected life of 200k miles, it still has about half of its useful life remaining (assuming proper maintenance throughout its life…which is not a given). At 15+ years old, the car becomes a real bargain, and although most of its usable miles have been depleted, it can still offer decent transportation at a low price, assuming that the body is in good condition, and it has received decent maintenance over its life.
Personally, if I needed to buy a used car, and wanted maximum bang-for-the-buck, I’d look for a 1997-2001 Toyota Camry with the 4-cylinder engine. There literally does not exist a better quality, more reliable, easier-to-maintain, cheap-to-run car even for twice the price. I have recommended this type of car to co-workers and acquaintances who were considering financing a late-model used car, so far one person has taken my advice, a co-worker, and he is happy with his 2001 Camry.
Lease it. It lowers your payment considerably.
This is the right answer. You’re not in a financial position to be spending the price of a new car at this point.
It appears that the OP has just enough of a FICO score to lease but not enough to get decent lease payments . The initial down payment might be a problem plus if the insurance does not cover his current loan balance that will be included in the lease cost.
If I had to buy a used vehicle now and had a budget of 20000.00 or less than I would look at Carmax . They do offer some kind of warranty and have a short turn policy .
And I certainly would not tell anyone to buy a 21 year old Camry for their only vehicle.
Wait for the market to bottom out before even considering new. The semiconductor shortage is coming to an end. The companies that participated in supply gouging using the pandemic as an excuse to reduce production are now in trouble as companies have switched to other parts.
If you follow the advice to purchase a 20+ YO vehicle, you need cash (or credit) available to cover deferred maintenance that the car needs, ie, tires, transmission service, plugs, brake service, etc.
Sometimes you get lucky and find an old car that was well maintained, but that is rare. By then, most were rode hard and put away wet.
here is some info you might be interested in…
Complete Guide to Saving Money Buying or Selling a Car (realcartips.com)
How to Buy a New or Used Car and Get the Best Deal Every Time - RealCarTips.com
This particular car, which I am recommending is very forgiving, even if that is the case. For example, there are no timing chain guides to wear out, no VVT system to get gummed up, the timing belt is easy to change (and the engine is non-interference), the water pump is external (and driven by the timing belt) so it won’t leak coolant into the oil, etc. The spark plugs are not difficult to change, nor is it difficult to change the coolant, or even the transmission fluid and filter.
This is really a cheap car to maintain and repair, and an incredible bargain compared to the suggested alternative of buying a 3-4 year old car at a slight discount from new, or buying an 8-12 year old car for $15k and financing it. Unless you live in a region where rust is a problem, there is no better value out there!
Were I in the market I’d be happy to buy a 20 year old Camry myself. Worse case it breaks, I can ride my bicycle until I find time to do the needed repair my diy-er self. But I wouldn’t recommend it for someone who needs a reliable daily-driver car, and is unable to do their own repairs, so when repair needed, would have to pay shop rates.
You need 2 20+ year old cars in this situation, because one will be off the road for days at a time for repairs!
My goodness, just scanning through the responses it hard to find a compendium of poor financial advice.
- Vehicles are a "Wasting Asset’, worth less in the future than you paid for it.
- Leased Vehicles, unless you can deduct the cost from your taxes, are even worse.
- New Vehicles, with low interest dealer financing and manufacturer’s warranties, have generally been the total lowest cost options but maybe not today,
Assuming your need is transportation, my continuing advice has been the “Bubby Cars” through your local Credit Union. Oldsmobile, Buick, etc… Low cost, reliable, low mileage, low cost of repair, low cost of insurance, 4.75% loan rates and an incredible ride for the price.
@Beancounter OK , I will bite . What is a ’ Bubby Car ’ ?
Not true. The 3-4 year old used car is the lowest cost of ownership and has been for decades.
Second paragraph…
Low milage Oldsmobiles? Do they warehouse these cars for 20 years?
LOL No. For even a modest Toyota, like middle-of-road Corolla, the OTD price is going to be around $28k. With a modest $1000 down payment that would put you at around $500-$550 a month at 60 months. This is assuming you don’t have a trade, if you do that will change things. Sub $300 payments without a massive down payment or a very good trade isn’t happening. For a $35k vehicle, with a small down payment ($2k-ish), You’re probably going to be in neighborhood of $700 month at 60 months. Realistically though, if you can’t pay the car off in 48 months, then you probably can’t afford the car.
A FICO score around 700 isn’t terrible, but it’s not top tier either.