Source
r/personalfinance•
saedrin

New Car Decision

Auto

Hi all, seeking some independent feedback on my situation!

Age: 30

Income: ~$110k

Debt: none

Retirement: maxing 401k, maxing roth IRA, receive additional ESOP shares from company (current total of retirement ~$150k)

My current take home to savings is ~$2500 a month

I'd like to buy a new car for the first time in my life. I typically hold on to my vehicles for 5-7 years, and my current car is 18 years old and needs to be replaced. At my current income level, how bad of a decision is financing say $40k for a new car purchase?

Posted Apr 19, 2018, 4:21 PM UTC

139
Pikkymager90•

if you really like the car and it makes you enjoy life more, sure why not.

3
saedrinOP•

Appreciate it. Looks like this thread had a bit of a spat while I was away!

Cars were always my passion and I'm in a place in my life where I can afford to enjoy myself a little.

1
ThirteenTears•

Looks like you're on a good track. I would recommend looking at cars with about 15k - 30k miles on them though. At that point they're still practically new, and someone else has eaten the biggest depreciation on the vehicle.

2
saedrinOP•

Thanks! For context, the model I'm looking at will be a first-year production for 2019 so used isn't really an option yet. Since I'll keep the car for at least 7, maybe 10 years the extra up front cost seems worth it to know the entire history of the vehicle. :)

1
BlazinAzn38•

If it makes you happy then yea you're fine. I would suggest looking out for those cars that are current model year but have like <10K miles on them if you can.

2
contaminatedesert•

Not an expert, but I'm sure you're aware of how much the value of a new car depreciates as soon as you drive it off the lot. Is there a particular reason why you want new rather than slightly used?

-1
JohnQK•

At my current income level, how bad of a decision is financing say $40k for a new car purchase?

Extremely.

Income level does not change the value of a vehicle or whether an expense is appropriate; it just provides you with more options and lessens the impact of poor decisions. Burning $5 is still a bad decision, it just hurts less when you have $20.

You're making a $2,500 profit each month. Even if you start with $0 in savings, you can purchase a very high quality vehicle in 3-4 months. It is absolutely unnecessary to finance it or to buy a $40,000 vehicle.

-3
Wakkanator•

He makes $110k per year and is maxing his retirement accounts. There's no reason he should be looking for a $10k car if he wants something nicer.

1
JohnQK•

Income level does not change the value of a vehicle or whether an expense is appropriate; it just provides you with more options and lessens the impact of poor decisions. Burning $5 is still a bad decision, it just hurts less when you have $20.

-1
Wakkanator•

Different people enjoy different things in life. If this fellow enjoys it, a nice car is definitely not a bad decision

1
JohnQK•

Enjoying a bad decision doesn't make it any less of a bad decision; it just makes it easier to justify and harder to notice.

-1