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Help me understand what will be better for my new car situation
Posted on 8/9/15 at 9:12 pm
Posted on 8/9/15 at 9:12 pm
I currently have a 2011 Hyundai Sonata with 140,000miles that I bought new 4 years ago. I drive about 35,000 miles per year for work and get reimbursed for mileage and a fixed portion for depreciation and insurance.
Wife and I will both be purchasing new cars at the turn of the year. We will be buying the same brand from the same dealership to hopefully have more negotiation power.
Being that I drive so much for work, I will likely own the new car for a max of 5 years. Wife and I both have 790+ credit so I'm assuming sub 2% APR, and possibly get in on a 0% deal like Ford is running right now. Knowing the information about how long I expect to keep the vehicle, would a 48/60 month finance be preferred to a 72mo? Are there any negatives to owing money on a car when its time to sell/trade it in?
(Used car is out of the question due to some rules on the reimbursement surrounding age of vehicle. The used cars I see within 1 model year are nearly the same price as new.)
Wife and I will both be purchasing new cars at the turn of the year. We will be buying the same brand from the same dealership to hopefully have more negotiation power.
Being that I drive so much for work, I will likely own the new car for a max of 5 years. Wife and I both have 790+ credit so I'm assuming sub 2% APR, and possibly get in on a 0% deal like Ford is running right now. Knowing the information about how long I expect to keep the vehicle, would a 48/60 month finance be preferred to a 72mo? Are there any negatives to owing money on a car when its time to sell/trade it in?
(Used car is out of the question due to some rules on the reimbursement surrounding age of vehicle. The used cars I see within 1 model year are nearly the same price as new.)
2
Posted on 8/9/15 at 9:19 pm to TigerTatorTots
Sub 2% is basically free money. As long as you are disciplined and won't blow the money because it is in your bank account at the end of the month, why would you want to pay it back faster than you have to?
Posted on 8/9/15 at 9:33 pm to hombreman9
I've never owed money on a vehicle when its time to get a new one. Wasn't sure if there was any drawback to that.
Posted on 8/9/15 at 9:36 pm to TigerTatorTots
As long as you aren't upside down on the loan there isn't any drawback. You'd just take out what you still owe from the trade in amount.
Posted on 8/9/15 at 9:53 pm to Big Saint
Good thread idea. I was curious as well
Posted on 8/10/15 at 8:57 am to jimbeam
Only downside really is if you happen to get laid off, and are unable to make payments. You have a car you don't own outright. Always in the back of my mind, but I guess you could always sell it quickly.
Posted on 8/10/15 at 9:05 am to bawbarn
Good point
We have worked out our monthly expenses to where we could still manage all bills no problem if one of us (myself or my wife) get laid off. I just factored in two new car payments to that equation and we are still covered
We have worked out our monthly expenses to where we could still manage all bills no problem if one of us (myself or my wife) get laid off. I just factored in two new car payments to that equation and we are still covered
Posted on 8/10/15 at 9:31 am to TigerTatorTots
With as many miles as you will be putting on that car, I think that financing it for longer than you will own it puts you in danger of being upside down when you trade it in. I don't finance cars for longer than 5 years, but I'm also pretty sure that I will be keeping said car for 8-10 years, so I usually will have time without a note. I'd stick to 60 month finance, and maybe try and pay it off a little early if possible.
If you're buying 2 of the same model at the same time, you might consider in 4-5 years trading in your wife's car instead of yours, especially if she has exceptionally low miles on her car. Then she can drive your car for 3-4 more years and let the miles average out a little.
If you're buying 2 of the same model at the same time, you might consider in 4-5 years trading in your wife's car instead of yours, especially if she has exceptionally low miles on her car. Then she can drive your car for 3-4 more years and let the miles average out a little.
Posted on 8/10/15 at 9:36 am to LSUGUMBO
quote:That is a very good idea that I didn't even think of. I've been trying to figure out how to extend the life of whichever new vehicle I purchase and this will be a great idea.
If you're buying 2 of the same model at the same time, you might consider in 4-5 years trading in your wife's car instead of yours, especially if she has exceptionally low miles on her car. Then she can drive your car for 3-4 more years and let the miles average out a little.
Posted on 8/10/15 at 9:51 am to TigerTatorTots
quote:
If you're buying 2 of the same model at the same time, you might consider in 4-5 years trading in your wife's car instead of yours, especially if she has exceptionally low miles on her car. Then she can drive your car for 3-4 more years and let the miles average out a little.
That is a very good idea that I didn't even think of. I've been trying to figure out how to extend the life of whichever new vehicle I purchase and this will be a great idea.
Good luck when you tell her this great idea, Butter her up for a week or so before you break it to her...unless of course you are the MB alpha male and tell her wWWW&H it's going to be all the time.
Posted on 8/10/15 at 10:07 am to NoleTideNole
Because I spend most of the day in my car, I will be getting all the bells and whistles. Because she rarely spends time in hers, she will be getting the base model. I'm sure she wouldn't mind driving my car at all other than going from a SUV to midsize sedan. I'd be the one that would have to suck it up and drive a bunch of miles without the luxuries
I'm looking at the ford Fusion Titanium and she is looking at the Escape S.
I'm looking at the ford Fusion Titanium and she is looking at the Escape S.
This post was edited on 8/10/15 at 10:09 am
Posted on 8/10/15 at 10:21 am to TigerTatorTots
My work car is a Fusion. I just got mine in February, but have 12k miles on it so far. It is just the SE model, but I love it. The 2.0 ecoboost has me averaging 30 mpg combined for life of car.
I am trying to get my dad to sell his Ram 3500 and get one for a run around car and use my truck to haul once a month.
I am trying to get my dad to sell his Ram 3500 and get one for a run around car and use my truck to haul once a month.
Posted on 8/10/15 at 12:15 pm to TigerTatorTots
Don't lock yourself into the same brand. You can work an equally good deal independently. The 2 cars at once is a nice bargaining chip, but it won't make or break a deal. Especially if a trade is involved.
Also, as mentioned, you should definitely try to level out the miles, or consider a lease for your wife (if she enjoys having a new car often).
As for length of loan, I'd simply look at it on a interest paid perspective. At 0%, finance as long as possible. At 0.9-1.9, I'd probably still stretch it out. Higher than that, I'd just look at cash flow and make the decision. At the incentive rates vehicle loans are at, it doesn't make a huge difference.
Also, as mentioned, you should definitely try to level out the miles, or consider a lease for your wife (if she enjoys having a new car often).
As for length of loan, I'd simply look at it on a interest paid perspective. At 0%, finance as long as possible. At 0.9-1.9, I'd probably still stretch it out. Higher than that, I'd just look at cash flow and make the decision. At the incentive rates vehicle loans are at, it doesn't make a huge difference.
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