CarVsHouseDilemma #NewCarVsHouseDownpayment #FinancialPlanningAdvice
Hey Reddit,
I am in a bit of a pickle and could really use your advice. Should I buy the car next year or save up for a house downpayment? Let me break it down for you:
🏠 House Downpayment Pros:
- Investing in a house can provide long-term stability and potential for appreciation.
- Building equity in a property can be a smart financial move, especially in California.
🚗 New Car Pros:
- Enjoy the luxury of a brand-new car with modern features and longevity.
- Owning a new car could save time and effort on maintenance and repairs.
Given your salary, savings, and future goals, it seems like you have the financial discipline to make either option work. Here’s a suggestion:
Possible Solution:
- Consider a compromise – save for a house downpayment while budgeting for a slightly less expensive but still reliable used car.
- This way, you can work towards both goals simultaneously and achieve a balance between rewarding yourself and planning for your future.
What are your thoughts? Have you faced a similar dilemma before? Share your experiences and advice in the comments below! Your insights could help me make a more informed decision. 🤔💡
Let’s navigate this decision together! 💪🏡🚗
Sorry if I missed anything. That’s a lot of text and the information density isn’t super high. I’m a little confused at how the $50k car turns into a $20k or $30k car (down payment?). I don’t blame you on being sick of repairs. I’m at that point as well (granted, I put up with it for 5 years longer than you, lol). I prioritized a house first, so you know what path I chose up front.
You can’t buy a $600k house on $75k income. I would recommend you do some math on what mortgage you can afford. Assume it’s 30% of your gross income going towards PITI+HOA (30% is a little high, but it’ll give you a hard ceiling). Just pull local average numbers for insurance/HOA. You’re probably looking at being able to borrow around $300k, so your down payment would have to close the gap (divide by 0.8 to get maximum house value assuming a 20% down payment).
$50k is also way more than you have to spend on a car. My wife and I are looking at spending about $35k on a new *shared* car, and we both make more money than you (so, more than double income, yet you’re spending like 1.5x what we are). I get your reasoning for buying new, but there’s no reason you should be spending more than ~$30k. You simply don’t make enough money, and don’t forget that every $1k is working against your lofty home purchase goals.
If you want to buy it anyway then I’d check to see what kind of interest rate you can get. If <5ish% then finance, if not then go cash. Regardless, you’ve got a lot of savings to do. I don’t think you’re going to be able to get in a house before you have to replace that car.
There’s an obvious option that you’ve restricted yourself from, which is renting. I guess you don’t want to move in with your GF before marriage? You also leave out her income, which may or may not significantly change all of this.
FYI: if you buy new car, your auto insurance will be higher due to a new car coverage (I learned it when I bought a new car two years ago. Before that, I always have used cars).
I would buy a 2 years used car with very low mileages. With that, your car insurance will not be too expensive.
I would say that spending twice your accumulated life savings on an immediately depreciating asset (car) is a bad idea, but I think you already knew that. It sorta feels like you’re trying to lean into buying a new car, and sort of justifying it to yourself with all of these concerns about having to fix a used one. A slightly used car is basically going to have the same reliability as a new one.
I get it, though. I like shiny new stuff too. However I think your financial situation would erode too much if you bought a $50k vehicle. You’d have minimal savings left, and what to show for it? A box with wheels that moves you places sometimes, and then just sits in your parents driveway depreciating?
On the flip side, houses are EXPENSIVE right now and for the foreseeable future. Maybe something will pop and interest rates and/or pricing will drop, but I would never bank on that. A house, however, is usually an appreciating asset that you can use to finance a nice car if you’re so inclined. If your goal is to have a large family, then prioritize the house and probably lower your standards on what type of house you want, or increase your income somehow. $75k, or even $120k combined won’t be enough to purchase a $500k-$600k house within a reasonable timeframe.
Best of luck!
I would not spend that much on a brand new car. cars depreciate immediately when you drive off the lot. A Camry is a great car but I’d buy some that’s older. Don’t do upgrades on it. Keep saving for your down payment. I’ve seen your comments and 120k isn’t gonna be enough to buy a 500-600k house especially if you want to have kids etc. you’re young, you’re just starting out don’t go over the top on the car (this is coming from a mid 30s Californian, who owns a townhouse worth about what you are looking at, drove my beater until last year)
You can’t afford a $50k car on a $75k salary. Don’t be stupid.
I paid half that just last year for a 2021 Prius with less than 30k miles that’s going to last me just about as long, and save me a ton in gas costs. There are lots of options between the latest/greatest and getting a functional pile of old car scraps that you might consider for the sake of reaching your goals sooner. Though I think you may be overestimating, since the 2025 Camry seems to cap out at about $36k with full features…so the 2026 probably won’t be much more than $40k if you’re maxxing it out. Which you probably shouldn’t be doing if you’re trying to save.
If your car is failing, you will need to buy a car. That’s not really optional unless you live somewhere super walkable. I was in the same boat buying mine. HOW MUCH you spend on that car is very optional, though. If you value getting that down payment ASAP, being willing to compromise even a little on the kind of car you get can go a long way in helping you towards that goal. Do you need the best model of Camry, or can you sacrifice some features like heated seats? Keeping a blanket in your car is a hell of a lot cheaper than buying that upgrade.
How long would it take you to save up $10-20k? Is that amount of time worth the difference between a brand new Camry and a gently used one? Camry’s last for ages, so one that’s a few years old is likely still a great investment as long as it wasn’t driven into the ground.
It be lot more time saving to find a partner with good career prospects and values, date, marry, then combine incomes to achieve goals like purchasing a home.
I can tell you for sure many girls do not want to wait on a promise to marry and be provide the world. That’s how people end up in these situationships, ten years and no ring in-sight.
If you’re serious on the lady put a ring on it with 3 years.
You’re young. Buy the car in cash and try to buy a house by 30.
Get a cheap used car that works and save the rest for a house
I’d wait to see if they offer special financing on the car and do that. I just bought a new car at 1.9% for 36 months. I’m earning 5% in my money market (before tax) so it makes sense. I know people say never buy new. However I buy new, get the bells and whistles, and keep my cars for a long time. Get the full initial warranty.
I personally wouldn’t spend the down payment house money on a car. I’d keep saving for the house. Good luck! Nice to see young folk with good head on their shoulders. You’ll go far in life!
# Buying the New Car
**Pros:**
1. **Reliability:** A new car, especially a Toyota Camry, is likely to be more reliable and last longer than a used one. This will save you time and stress associated with repairs.
2. **Efficiency:** Newer cars often have better fuel efficiency, which can save you money on gas over time.
3. **Peace of Mind:** Owning a new car can provide a sense of achievement and peace of mind, knowing it’s less likely to break down.
4. **Cash Purchase:** Since you can pay for it outright, you avoid interest and financing fees.
5. **Time Savings:** As your professional responsibilities increase, having a reliable car means less time spent on maintenance and more on your career and personal life.
**Cons:**
1. **Opportunity Cost:** The $50k spent on the car could be invested or saved for a downpayment on a house, potentially yielding higher returns in the long run.
2. **Depreciation:** New cars depreciate quickly, meaning the value of your investment will drop significantly once you drive it off the lot.
# Saving for a House
**Pros:**
1. **Long-term Investment:** A house can appreciate in value, providing you with a solid financial foundation for the future.
2. **Personal and Family Goals:** Owning a home aligns with your goals of starting a family and providing stability.
3. **Independence:** Moving out and having your own place can enhance your sense of independence and personal growth.
4. **Leveraging Income Increases:** With your expected raises, stipends, and bonuses, your ability to save more quickly will improve, potentially allowing you to purchase a house sooner than you think.
**Cons:**
1. **Delayed Gratification:** You’ll need to wait longer to enjoy the benefits of a new car.
2. **Continued Repair Costs:** Your old car might incur increasing repair costs and inconvenience.
3. **Market Volatility:** California’s housing market is unpredictable, and saving up might take longer if prices continue to rise.
# Balancing Both Goals
Given your financial discipline and the fact that your income is likely to increase, you might consider a middle-ground approach:
1. **Semi-New Car:** Consider purchasing a certified pre-owned (CPO) car that’s just a few years old. This could save you money while still providing a reliable, nearly-new vehicle.
2. **Balanced Savings Plan:** Allocate a portion of your savings towards a house downpayment and the rest towards a car fund. For example, save 70% for a house and 30% for a car.
3. **Future-proof Financing:** If you do decide on a new car, look into low-interest financing options that won’t significantly impact your ability to save for a house. With your good financial habits, you might qualify for favorable terms.
Always remember car is a liability.
Never buy a new car unless you really have to. If your car still running, dont get rid of it and keep driving. Save your money. But your money your choice.
I bought a car once and it was rear-ended 16 days later. It was totaled.
Cars lose value over time, that’s called a depreciating asset.
Houses increase in value over time, that’s called an appreciating asset.
First generational wealth is hard because you may not have the family/friends to help.
As a first generation college and inactive CPA in my 30’s, stay in your current car until you drive it into the ground. Save for the house.
And here I am with 225k income and 800k savings trying to justify a 30k car purchase, lol