#CarBuying #NewCarVsUsedCar #CarLoanVsCash #0PercentAPR #CarFinancingOptions
When it comes to buying a car, the decision of whether to purchase a $16k car cash or a $30k car with 0% APR can be a tough one. Both options have their pros and cons, and it ultimately depends on your financial situation and priorities. Let’s dive into the details to help you make an informed decision.
##Understanding the Options
###Buying a $16k Car Cash
– Pros:
– No monthly payments
– No interest paid over time
– Lower insurance costs
– Cons:
– Limitation on the selection of cars
– Potential for higher maintenance costs
– Depreciation on older car models
###Buying a $30k Car with 0% APR
– Pros:
– Spread out the cost over time
– Lower upfront financial burden
– Opportunity to purchase a newer model with advanced features
– Cons:
– Higher insurance costs
– Possible depreciation of the car value over time
– Monthly payments commitment
##Considerations for Your Situation
First and foremost, it’s essential to consider your specific requirements and financial situation. Here are some factors to keep in mind as you weigh your options:
1. **Car Usage**: Since you are looking at a Mazda CX-5 for commuting, trips to the mountains, and transporting your child, reliability and safety are crucial. Consider the long-term benefits of a newer model in terms of advanced safety features and efficiency.
2. **Financial Goals**: Given your annual income and the aim to buy a house, it’s important to assess how each car option aligns with your overall financial goals. Purchasing a car outright might free up more funds for your house down payment in the short term, while the 0% APR option allows you to manage your cash flow efficiently.
3. **Long-Term Plans**: If you intend to keep the car until it’s run into the ground, the long-term cost of ownership and the potential for higher maintenance with an older car should be factored in.
##Making the Decision
###Advantages of Buying a $16k Car Cash
– **Financial Freedom**: Paying upfront for the car means no monthly payments, reducing the financial burden.
– **Cost Savings**: With a used car, you avoid the significant depreciation that occurs in the first few years of a car’s life.
– **Lower Insurance Costs**: Older models often have lower insurance premiums, adding to your overall savings.
###Advantages of Buying a $30k Car with 0% APR
– **Cash Flow Management**: The 0% APR offer allows you to spread the cost over 60 months while maintaining your liquidity for other investments or purchases.
– **Newer Technology and Safety Features**: A newer car comes with advanced technology and enhanced safety features, which could be beneficial for your family’s transportation needs.
– **Potential Resale Value**: While not immediate, the higher initial value of a new car may translate into better resale value down the line.
##Final Thoughts
Considering all factors, both options have their merits, but your decision should align with your long-term financial goals and the specific needs of your family. If you prioritize financial freedom and minimizing long-term costs, buying a $16k car cash may be the more practical choice. However, if you value the benefits of modern technology, manageable monthly payments, and the potential for higher resale value, the $30k car with 0% APR could be a sensible option.
Ultimately, it’s essential to do thorough research on the specific used car models you’re considering and to evaluate the terms and conditions of the 0% APR offer for the new car. By understanding the long-term implications and opportunities of both options, you can make a decision that aligns with your current and future financial aspirations.
In conclusion, while the 0% APR may seem like an attractive offer, it’s essential to weigh it against the overall cost and commitments of a new car purchase, especially considering your plans for a significant life investment like a new house. It’s a big decision, but with the right information and perspective, you can make the choice that best suits your needs. Good luck with your car purchase and your upcoming home buying journey! 🚗🏡
can you afford to splurge on a $30k luxury or a $16k luxury?
Did you total your car or did another driver?
Depends on what cars exactly you’re looking at. Assuming they’re comparable and the used one is in good condition I think buying used and saving the extra cash is more sensible
What car is the used car and how many miles and what is the new car? How much money do you make?
This sub will always tell you to buy used but I think that’s too simple
How long do you plan on keeping the new car?
Personally, I like a new car that I know is going to last me 10+ years and I’ve been the only driver. Also the warranty from the dealership is always nice peace of mind. But I would only do this with Toyota or Honda. I’d double check they’re really going to do 0% APR.
What/where are they offering 0% in todays world?
If it was me just figure out what you’d lose by not investing that money instead. Roughly 6-7%. Then I would add a few thousand to that to cover repairs that a new car won’t need or that would be covered under warranty (its a guess obviously). Then id also add a few thousand more because a new car today should last roughly 7 years longer before needing a replacement since its 7 years newer. Its all approximations and guesses obviously but that should roughly give you better numbers to compare.
Lastly you really consider what 2 cars your buying between from a tco perspective. If the used car is a gas hog pickup that happens to be a brand known to need a lot of repairs vs a used great gas mileage honda, that makes a difference too.
If after all that stuff and if the cars were pretty comparable, id assign a few thousand to the fact that you get to own the new one from the very beginning. I tend to be a buy new and drive it till it dies type of person. When you own it from the very beginning you get to make sure it was properly maintained and well cared for and if you do that cars last so much longer.
Also consider if you do or may have a job in the future where the condition of your car matters. If so you may have to replace an older one sooner etc because it isn’t as nice.
So if you go with the 0% put just enough down to get the deal. Put the rest in a HYSA and draw from it to put towards the payments. No need to pay off a 0% loan faster than the bare minimum.
If the 0% is for a Hyundai or Kia, don’t do it. Insurance will be expensive and someone may break into it hoping it’s the easy to steal ones.
This depends wildly on the vehicles in question.
Depreciation will be your biggest cost with the new car, and maintenance will be your biggest cost on the used car.
I could do a scenario in which each version is a cheaper scenario. The cars in question matter.
So, let’s just do some quick math.30k car with 16k downpayment vs 16k car.
In 5 years, the 30k car will depreciate to around 12k. You will have a few loan origination fees as well. So the total cost will come to around $18,500 for owning that car for 5 years.
With the 16k car, you are looking at depreciation to around 8k. So that means repairs would need to exceed 8.5k for the 32k car to be a better financial decision.
Advanced Math Mode?
Take the 30k car, and pay minimum monthly’s while you stick your money into a HYSA at 5%. Could probably get about 2,000 in interest over the course of the loan. Helping the above numbers a touch, but you still need repairs over 6k at the point for it to be worth it. However, with paying off the first car completely, your monthly payments could go into investments as well.
Overall, no matter which way you slice this, from a purely financial standpoint, the 16k car is going to be the better option 95% of the time. The only way it wouldn’t be is if you buy a crap car. I had a buddy who’s 2016 Ford Focus with 85k miles had the transmission go and is now totaled. Your used car needs to be reliable!
Depends on the cars and the mileage on the used car. I prefer new because I will drive it into the ground for 10-15 years.
Get an insurance quote on whatever you’re about to buy BEFORE you actually buy it
Go used if you’re buying a house soon why have another item to be added to your Debt ratio
Oh wow they are doing 0% for 60 months?? That should be a monthly payment of 500-600 for a brand new car completely under warranty with zero worries. The CX5 is great but it’s also old, not sure if mazda is doing it on the cx50 as well but that would be the better choice imo. People here will yell at you for not getting a cash used car but on your salary you should be good.
You’re telling me you can get a free loan on a new car, keep your cash to make you returns, and the only difference is 12k while you make 180k a year? Sir get the new car
Generally, I prefer No Payments vs Payments.
If you’re wanting to buy a house too, I’d just buy the used car at $16k. You can get a decent vehicle for that and won’t have any payments which you could “use” to build up your downpayment for the house.
Really all depends on your budget for the house as well.
This isn’t poverty finance, if you want the new car, you can afford it, and you’re getting a free loan, go for it.
While you’re at the Mazda dealership, check out the CX-50, as well. I planned to buy a CX-5 over the summer, but fell in love with the 50. Great vehicle.
ETA: I have 2 kids, live in the Northeast, and we are a skiing family- so my check list was similar!
ETA 2: whatever you decide, make sure you get something with a hatchback. Do you know what sucks? Getting kids into ski gear in a sedan.
What would be your rate of return on the $16k? If you can get more money than 0%, and the payments at the higher price are acceptable to your budget, buy the new car, keep it until it dies, and use the 16k in the market.
Why not borrow money at 0% if the math works?
I have a Mazda CX5 2020 and they are fantastic cars and great value.
I’d say get the 0% interest deal, it’s pretty rare to see 0% now days.
A new car gives you a warranty and other things that a used car won’t have.
There are decent HYSA deals and other places you could put that $16,000 while receiving an interest free loan.
$16k cash.
The $30k car will be worth about $16k by the time you’re done paying for it.
Assuming comparable vehicles, paying half of new 2024 price for a 7 year old car is insane. That is only for people who can’t afford a new one.
The value of the 3yr new car warranty is about $3k. Then you should have another 4 years that should have minimal to no repairs. At that point you now have a 7 year old car that you personally should have done a good job of maintaining. It will still have decent value, the used one will be 14 years old at that point and worth near nothing.
And does the used one come with new tires? Tech and safety on a 2017 will be much closer to a 2010 than a 2024.
The CX5 is a good reliable and practical family car. I almost ended up getting one but decided to go EV. 0 APR is a good deal. Dealerships are flooded with CX5s so you have some leverage for negotiations. The tech does feel slightly antiquated (no touch screen but had car play) and the 4 cyl is kinda loud but if those things don’t matter then go for it.
this is the one time new makes sense to me. still gonna get depreciation, but 0% is free money boo.
Depreciation is a minimal concern. If OP keeps the new car for 12 years and the older car for 7:
32k / 12 = 2667 per year
16 / 7 = 2286 per year
You could easily argue the difference of $40 per month is worth it for the delay of the most problematic years and repairs, as well as QOL from a newer vehicle.
It’s fine, keep the cash in your pocket and enjoy the car.
Buy used – always. And then put the difference toward YOUR house and not a fancier car
I would say, as long as all of your other finances are in order and the 0 percent apr is truly that, go with the new car. You will get a full warranty and in most cases the first few oil changes are covered and most of your issues in that may pop up in the first few years will be covered by warranty. Also Mazda tends to hold value decently well so you can trade it in if you get bored with it.
Considering your income alone, I would get the new car.
Used cars, you’re rolling the dice on its life before you.
HOWEVER
The tricky part is about you buying the house, I would consult with your Lender and see how much it may or may not affect you
The new car will lose $10K in value in 1 or 2 years. Always buy a slightly used car.
60 months of 0% APR ! Get the new and don’t look back. If you can target paying in 36 months would be beyond great but 5 years is still a steal.
new cars are a scam. get something a year old at least.
Comparing apples with oranges a bit. There is no such thing as free finance. Someone is paying for it… and buddy it’s you. If you paidnthe car dealer in cash they would easily discount the car as then they don’t have to pay for the finance. So that’s strong one.
Is a new car a good investment, no… you drive it off the lot and you burn 🔥 a whole bunch of money.
So it’s about if you want a new or used car. You could probably get a 2021-22 model and with some cheap financing be way ahead of the new car deal. Edit: with interest rates where they are a loan for a car may be expensive, so the value of the 60 months interest free may be quite high. At 5% on 32k it’s about $4k.
Don’t waste your money on the allure of new. It will feel new for only a little while…
As long as you’re not overpaying for the new car to get the 0% rate, offer to pay cash and see how much of a discount they give you
If you can get a car at 0% APR its a win. Your not paying no interest of it so its a pretty damn good deal.
An 8% loan on 18k would cost you $3900 in interest over 5 years. You could really go either way. I’d say go with the used car since you are trying to buy a house. The Mazda you mentioned should be trouble-free for quite some time. Keep your payments and liabilities low.
You make new car money. Enjoy the new car. You’ve earned it. The fact that you’re looking at a 32k car at that income level is responsible.
Speak with a mortgage loan originator. Borrowing at 0% Apr for 5 years is great but not if it drops your credit to the point where you’re paying more for your house payments over 30 years as a result.
No one here can give you a good answer. The entirety of your finances need to be evaluated before you can know the right answer.
OP I was in this situation the other day
I could have bought a used car on a 5 year term with payments of about $525, or I could buy the brand new car on a 5 year term with payments of $540 (APR was a lot lower)
I went with the lower APR $540 payment. Because it would only cost me $900 more over the course of the loan to own a brand new car, so that’s what I did.
And it was for the same reason, the cash price of the used car was low, but the APR was high, but the APR on the new car was low.
Thanks to all the bars/pubs, drunk/high drivers, psycho drivers, the auto insurance on the new car at 0% APR will be more than the used car for $16k. With either, you can’t be cheap and get liability coverage. Getting descent coverage for collision, uninsured/under-insured, comprehensive (theft, broken window, broken side view mirror), and medical is required if you give a dam about yourself and anyone else in your car.
I did this deal back in 2018 on a new Mazda CX-5. I looked at the Edmunds cost to own and calculated out that the new car would likely cost me less over 5 year than a cheaper used model. It’s now 2023 of coarse, recently paid off the “loan” and it was a great decision.
If you can get 0% then new car all day every day. It’s objectively better in every way. You’ll get a higher quality vehicle, you can make investment returns from the cash you didnt have to spend on buying the other car cash, you have warranty, and when you go to resell it you will net much more because your mileage will be lower.
Buy it new, the cost of used is out of control
I’m assuming you have a normal commute ie you aren’t going to put 20k miles a year on it