Quick Advice for Buying a New Car Needed

Lhowlz on 21/09/2022 - 11:46

Yo, I'm 19 buying my first car and as we all know used car prices are cooked right now, so I've saved up about 25 grand for one :)

I know what you're already thinking, and nah I trust myself and it's my decision so don't want to see people going on about how it's too much money to spend on my first car and whatnot, so don't bother making a comment like that because I won't care haha.

ANYWAY I'm making this post because I need advice on what method I would be better off using to purchase one I've already got my eyes on. Specifically, should I pay full in cash, or should I finance it even though I can already afford to pay it in full?

Personally I would prefer to finance it because I don't want to chuck all my money away after I saved up for almost 6 months. However my parents said that I might end up getting stiffed by the dealership and paying more for it, which honestly I don't care THAT much about because it's preferable to instantly having no money. Also, I think financing would make it easier to pay for insurance and rego since I'd have more money available.

What do you guys think :) ? Should I pay in cash or finance?

Poll Options expired

  • 219
    Pay in cash.
  • 26
    Finance it.
Automotive

Comments

    • Euphemistic on 22/09/2022 - 15:54
      +2

      Ha ha ha. 19yo with an accountant?

  • Herbse on 22/09/2022 - 13:58

    What are you looking at? Most cars start at $30k driveway these days.

    Dont forget that there's also servicing fees, rego, tyres, petrol, insurance etc you'll need money for. So hopefully you also have a steady income to support all that.

    The good thing is you're being sensible and going for a cheap car with money you have and not an expensive car on finance.

    If you have the money and need a car, go for it. You can go second hand but then you're buying someone else's potential porblems and if you're not car savvy or have mechanic you trust, you could be out of pocket in the near future. New car warranty is always good peace of mind for new car owners.

  • peterw1 on 22/09/2022 - 14:32
    +1

    if you buy a 22k car with cash, you paid 22k for your car. If you finance, it is no longer a 22k car it costs more, capiche. If you are buying, pay cash.

    • Dreamcast on 22/09/2022 - 17:39

      Mario, great advice!

  • conza on 22/09/2022 - 18:00

    I think it's all about income and you capacity to borrow.

    Financing a car, I mean 5 years ago it cost me basically nothing, had a 4 year lease and interest rates were dirt cheap + factoring in I had a fair sized balloon (1/3), I basically got 1/3 of the interest rate off, because it only applied to the 2/3 I was paying down, 5/6s I didn't need to have on day 1, I put in, a 15% deposit so roughly.

    If you're determined to do it, finance it I'd say, used car I wouldn't do that but a new one sure.

    Again, income and capacity to borrow, and look after the thing.

  • Jaspa7 on 22/09/2022 - 18:36
    +2

    get something ~5 years old for around 15k and pay cash and make sure it's fuel economical. Something like this: https://www.carsales.com.au/cars/details/2017-suzuki-baleno-…

    That way you haven't broken your savings, aren't answerable & have to pay interest to the greedy banks and you can easily do the same thing in 5 years again if you get sick of it.

  • AlanHB on 22/09/2022 - 18:46
    +6

    I know you don't really want to hear this, but it's your first car, you're 19 and you're likely to damage it in some way that makes you regret paying 25k. I'd opt for a cheaper second and car ($15k or less) and use the rest of the money to travel or move out of your parents house.

    If you must buy, don't finance, just pay in cash. Yeah it hurts, but that because you're personally spending your money on it. If you're uncomfortable paying that much in cash, it's probably too expensive and you should opt for something cheaper anyway.

  • Elnato on 22/09/2022 - 19:30

    Finance and look for an interest free period if possible, pay off over time and prepare for the balloon payment at the end etc, make sure you get a decent comprehensive insurance policy if you're dead set on spending that kind of money incase the worse happens too.

    Even though you'll ignore it, you should take the advice of the majority and get something alot cheaper for a 19 year old, I had an old magna a decade ago and it was a great car!

  • Black Brown Blue on 22/09/2022 - 19:45
    +1

    Buy a cheap and reliable car under 5k
    Invest rest of money or put it in high interest saving account.
    Are you trying to impress someone with brand new car or what is reason? It is depreciating asset.
    I bought a car worth above amount at 20 and have it until now, just bought my first home. I know heaps of people with new cars and renting. Invest in your career too.

    • CocaKoala on 23/09/2022 - 23:15
      +1

      cheap and reliable car under 5k

      Such a thing hasn't existed for 2 year or so now since the used car prices went up. I would in fact be buying a new car this year because used car prices are just ridiculous and is no longer a value for money proposal. Given I'm not in a similar situation as the OP, but the sticky point is that cheap reliable cars have become hard to come by.

  • Raj09 on 22/09/2022 - 20:53
    +2

    Do you really need a 25k car? Spend 15k at most and invest the rest of the 10k. Anyway à car is a expenditure not an asset

  • dylan345 on 22/09/2022 - 22:33

    Hear me out, get a cheap safe car with cash for now, one that's suitable to your needs not your wants.

    Invest the rest of your money, then use that investment money later in life to buy a much better car that will meet all your wants.

    PS credit ratings here don't work like they do in America, credit histories are built a very different way and I'm fairly sure car loans lower your borrowing power until the loan is paid off in full. Same with expenses related to expensive cars i.e higher insurance and upkeep means banks don't want to loan you as much.

  • Laurana on 23/09/2022 - 01:43
    +1

    Pay cash. For the love of god, do not finance. If you can’t afford to buy a car with cash, then don’t buy one. Just save more until you can. And please get insurance.

    I’ll nod everyone’s advice to not spend that much on your first car, but you already said you don’t want to hear it. So fair enough. 19 is the age to make (profanity) like these.

  • vroomkroom on 23/09/2022 - 07:12
    +2

    I sold my 2011 Mazda 3 (Hatch) to a 19-year-old girl ( & dad ) for 11K in 2021 with 59K Kms … A year later she text me to say thank you for selling it to her and the car is in perfect condition after adding 20K Kms in the 12 months. So my suggestion is to find a good car for 10 to 15 K and keep saving money for other things.

  • dono2 on 23/09/2022 - 07:29
    -3

    Take the 25k to the casino, double it then you could get a Tesla

  • NocteRegem on 23/09/2022 - 08:51

    You don't have enough cash to pay for it in cash right now IMO. I did the same thing when I was in your position and financed it and didn't have to worry about not having money lying around, even ended up using my cash as part of a house deposit a few years later which enabled me to grow a couple hundred k in equity which is obviously better. My advice is to keep your finance separate from the dealership though, use a credit union or something they will be more honest.

  • Sinnerator on 23/09/2022 - 09:12
    +1

    Useless advice following:

    1995 250,000km Toyota Corolla Sydney Peak Hour Traffic Driving $8K
    Gaming Desktop $2K
    Hookers $7.5K
    Nose Candy $7.5K
    TOTAL $25K

    Report back here in 2 weeks.

    • Vote for Pedro on 24/09/2022 - 10:54

      Obligatory user name checks out.

  • [Deactivated] on 23/09/2022 - 09:47

    Your cash reserve brings you comfort, so you want to put the car on finance and keep the cash reserves…

    You will be paying interest immediately on money you don't need to borrow. Think of it this way - would you rather spend $25k on the car today, or $30k for the same car spread out over a loan?

    Spend the cash now on the car, if you need 5k for a holiday or whatever later, borrow what you need then.

    The only time you should finance a car is if you can claim it is used for work purposes, so you can claim payments as a tax deduction

    If I was in your position I wouldn't be paying inflated prices on a used car, a new Kia Cerato is $28k.

  • Canberralad92 on 23/09/2022 - 10:09

    Buy a shit box and put the money into a house deposit.

    • SoapyWooder on 23/09/2022 - 10:29

      And be a millionaire in 10 years

  • jsheroes on 23/09/2022 - 12:42
    +3

    I've never bought a new car, and I'm in my mid 40's with a salary of 160k p.a.Total cost of car depreciation to me in my 25 years of car ownership to date is roughly $8k. Number of times I've died cos I owned an old car = 0. Number of women who were interested in me and then told me to get (profanity) after they saw my used ride = 0.

    Financial freedom and a nice place to live are worth more than a flash car. The nice place to live also appreciates in value, unlike the car.

    Moral - buy used cars and you'll have a better life, probably. Also, I had an onion on my belt at the time. You're welcome.

    • CocaKoala on 23/09/2022 - 12:55
      +1

      Number of women who were interested in me and then told me to get (profanity) after they saw my used ride = 0.

      Ftfy :p

      • jsheroes on 23/09/2022 - 12:56

        Lol. Happily married with kids. But well played.

  • LoserScott on 23/09/2022 - 13:57

    If you pay in cash, the dealership can both you, if you finance it their obligated to meet your expectations on repairs.

    Pay on card,
    Or finance… Well that's different then

  • Hackney on 23/09/2022 - 14:08

    Cash means diddly squat to a dealer, it gives no extra ‘bargaining’ power.They make more money out of financing a vehicle..I only tend to pay up front as I don’t want that loan hanging around my neck.

  • nephilim on 23/09/2022 - 18:10

    Need to talk to a free broker such as Aussie
    Not to mention most of the loans for 19 year olds are horrible

  • acersaurus on 23/09/2022 - 20:48
    -1

    Brand new kia rio. Reliable, cheap to service, 7 year warranty.

  • hopper on 24/09/2022 - 08:30

    Are you an influencer on tiktok?

  • Kegsta on 24/09/2022 - 08:35

    Be sure to get insurance quotes online before purchasing anything if you just got your licence, you may be looking at 2-4k per year for comprehensive insurance + up to $2000 to make a claim on the policy being under 25.

    For the first 5 years of driving Third party Firre and theft cover + a car worth 4-10k might be a lot better value.

  • Vote for Pedro on 24/09/2022 - 10:49

    Don’t listen to those telling you not to buy a new car. I always owned used and more often than not, eventually money down the drain in repairs.

    Bought a modest new car 8 years ago, I know how I’ve driven it, always serviced and taken care of and am happy with it still - goes like new(ish). Of course it doesn’t have the whiz bang tech, but has enough.

    Not saying that used cars are bad, I’ve had a mixed bag of good and bad. Just sharing some of my experience - including the added enjoyment of buying new and being first owner.

    Good luck.

  • Willy Beamish on 24/09/2022 - 13:32

    $16k got me a 2016 Subaru Impreza 2.0i-S G5 Auto AWD MY17 with 62k kms on the clock in January 2020

    • od810 on 24/09/2022 - 13:49
      +1

      2020 and 2022 are very different years. You are likely having a small profit if you sell your car now.

      • Willy Beamish on 24/09/2022 - 13:52

        Yeah we actually bought 2 at the time from the couple that was upgrading, asked 18.5 each but we bought both for 32k, judging by the prices on car sales 10k profit if both sold but they are great cars and not going to sell.

        Still can't believe our luck when buying those, we were looking and found them the night they were listed and bought the next day, then covid happened and prices went nuts. Both cars had a full year rego on them too…what a bargain find that was.

  • yokel on 24/09/2022 - 15:52

    For a robust car that can be bought cheap I think a Honda Civic sedan from 2005–2012 is a great option. Don’t buy the 4 door hatch which was assembled in UK and were delivered rusty. Both the manual and the automatic perform well. I would get a car like that and drive it with third party fire and theft insurance till you get closer to the 25 year old mark.

  • bigbadboogieman on 24/09/2022 - 21:46
    +1

    Someone once told me to follow the 1/10th if your gross annual income rule to determine the value of the car you ought to buy. Also no financing. I still had to go with 1.7/10th to get something reasonable.

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