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Buying new car options vs Buying first house within next 2 years
Posted on 3/13/14 at 2:41 pm
Posted on 3/13/14 at 2:41 pm
I got in a wreck and my car was totaled. Im expecting to receive around 10K for my car. I'm also saving right now for a down payment on a house in the next year or 2.
Should I put the $10k i get for my car towards my new car or should i save half and put it in savings for my house?
Im thinking of throwing it all towards my new car so I can have a lower monthly note so i can continue to save each month for the houe downpayment.
Thoughts appreciated.
Thanks
Should I put the $10k i get for my car towards my new car or should i save half and put it in savings for my house?
Im thinking of throwing it all towards my new car so I can have a lower monthly note so i can continue to save each month for the houe downpayment.
Thoughts appreciated.
Thanks
Posted on 3/13/14 at 2:44 pm to HowboutthemTigers
How's your credit?
Will you be able to avoid PMI if you keep the $?
Will you be able to avoid PMI if you keep the $?
Posted on 3/13/14 at 2:46 pm to crazyhorsedog
i have credit in the 730-740 range.
IDK what PMI is
IDK what PMI is
Posted on 3/13/14 at 2:48 pm to HowboutthemTigers
It depends on what your current and projected savings are... We have no idea what your income is and your ability to save... too many unknowns...
Posted on 3/13/14 at 2:50 pm to BAMAisDIESEL09
Without getting too personal here...
If i put it all down on the car, i would be able to save more towards the house than I am now.
If i saved it and paid half, my note would be what I am saving now and my note would go into that savings.
If that makes sense?
If i put it all down on the car, i would be able to save more towards the house than I am now.
If i saved it and paid half, my note would be what I am saving now and my note would go into that savings.
If that makes sense?
Posted on 3/13/14 at 2:52 pm to HowboutthemTigers
You got the money from a car, put it back into a car and save. You don't have to buy a new car.
Posted on 3/13/14 at 3:26 pm to HowboutthemTigers
Depending on what else you have, debt wise, it might help to have a lower car note when it comes time for the mortgage company to calculate your debt to income ratio.
Personally, I would take the 10k and buy a used car without a note. In 2005, I got 10k from a totaled car and didn't want a note, so I bought a 10 year old Lexus for 7500. I figured if it lasted 3 years I'd be happy. It's been almost 9 years and 80k miles later, still have it. Just don't buy a used car that you wouldn't buy new.
Personally, I would take the 10k and buy a used car without a note. In 2005, I got 10k from a totaled car and didn't want a note, so I bought a 10 year old Lexus for 7500. I figured if it lasted 3 years I'd be happy. It's been almost 9 years and 80k miles later, still have it. Just don't buy a used car that you wouldn't buy new.
Posted on 3/13/14 at 3:44 pm to HowboutthemTigers
Buy a $5k car and put the rest towards the house. Cars are depreciating assets, so why spend more than you have to?
Posted on 3/13/14 at 5:10 pm to seawolf06
quote:Yeh, and nice clothes, who cares? Wear a potato sack because they hold no value. Oh, and food? You crap it all out anyway so beans and water shall do. Just hope you dont die before you retire, what a waste that would be
Buy a $5k car and put the rest towards the house. Cars are depreciating assets, so why spend more than you have to?
Posted on 3/13/14 at 11:07 pm to lsupride87
This is a complicated question, with a bunch of variables not supplied (annual income, importance of having dependable transportation, amount of emphasis or importance he puts on what he drives, any other income sources/assistance in getting into a first house, and prolly some more issues). Even after knowing all the variables, the answer would still be subjective. Generally though I agree with the "get the cheapest car you can live with for the next four or five years and bank the remainder" camp, but $10k today is a base 2008 Honda Accord with 100k miles on it. If someone can live with something less sexy than that, they are pretty prudent. But maybe they logistically need something more reliant. Tough question. Good luck.
Posted on 3/13/14 at 11:59 pm to soccerfüt
A house will gain in value.
A car will not. I agree with the guy who bought the Lexus. Find a good used car and put the savings on your down payment.
A car will not. I agree with the guy who bought the Lexus. Find a good used car and put the savings on your down payment.
Posted on 3/14/14 at 11:45 am to lsupride87
quote:
lsupride87
Upvoted.
Posted on 3/14/14 at 3:58 pm to seawolf06
quote:
Buy a $5k car and put the rest towards the house. Cars are depreciating assets, so why spend more than you have to?
its a complicated equation, its not just the depreciating part its also what you do with the car, how you drive it, how long you drive it, extended warranties, reliability of car, etc.
And wives. Wives man, wives.
Posted on 3/14/14 at 4:09 pm to Hawkeye95
quote:It is not just that. Some times the money board can be insufferable. Spend 5k on a car because it is a depreciating asset? Really? Really? Life is meant to be enjoyed while you are in it, not saving for some magical day 40 years in the future when you can start to have fun. If you have the money saved up and it isnt going to put you in a financial hardship, buy that nice new car, you deserve it. Now saving money along the way is smart, but i have never heard someone on their deathbed say i wish i would have been more practical and saved more money
ts a complicated equation, its not just the depreciating part its also what you do with the car, how you drive it, how long you drive it, extended warranties, reliability of car, etc.
And wives. Wives man, wives.
Posted on 3/14/14 at 4:15 pm to lsupride87
quote:
It is not just that. Some times the money board can be insufferable. Spend 5k on a car because it is a depreciating asset? Really? Really? Life is meant to be enjoyed while you are in it, not saving for some magical day 40 years in the future when you can start to have fun. If you have the money saved up and it isnt going to put you in a financial hardship, buy that nice new car, you deserve it. Now saving money along the way is smart, but i have never heard someone on their deathbed say i wish i would have been more practical and saved more money
I sorta agree that buying the cheapest car you can stand is a good idea, but its not a slam dunk.
and wives. plus I actually like having a newer car for road trips
Posted on 3/15/14 at 6:28 pm to Hawkeye95
If you are in/was any kind of service you can qualify for a VA loan on a house which has incredible benefits, if not try for an FHA and you do not have to put much down for a house. Most banks shop for a conventional, but you should research for a FHA/VA loan officers at different lending institutions.
I agree you should only put about 5k max for a car.
I agree you should only put about 5k max for a car.
Posted on 3/16/14 at 3:54 pm to Bushwackers
Pay cash for a used car.
Save enough money till you can put at least 20% down on a house and then make darn sure you are willing to live in it at least 10 years. Think about things that might changed your mind--marriage, children, new job ect.
Buying houses is not on the top of my list for young people. Big debt around you when you really need to be flexible.
Have you thought about buying a property you could easily rent out if you wanted too? a duplex? townhouse near LSU or something?
One more rule of thumb that is hard to do but really pays off---never borrow money to buy depreciating assets--ie cars, boats, ect. Do what you can to pay cash for such things and save your borrowing power for assets that will increase in value. A house when you are certain you are ready to settle. Stocks, land, rental property ect. borrow if you can.
Save enough money till you can put at least 20% down on a house and then make darn sure you are willing to live in it at least 10 years. Think about things that might changed your mind--marriage, children, new job ect.
Buying houses is not on the top of my list for young people. Big debt around you when you really need to be flexible.
Have you thought about buying a property you could easily rent out if you wanted too? a duplex? townhouse near LSU or something?
One more rule of thumb that is hard to do but really pays off---never borrow money to buy depreciating assets--ie cars, boats, ect. Do what you can to pay cash for such things and save your borrowing power for assets that will increase in value. A house when you are certain you are ready to settle. Stocks, land, rental property ect. borrow if you can.
Posted on 3/16/14 at 5:56 pm to matthew25
quote:
A house CAN gain in value.
A car will not. I agree with the guy who bought the Lexus. Find a good used car and put the savings on your down payment.
FIFY
Posted on 3/16/14 at 8:17 pm to HowboutthemTigers
If you get a > 2.0% interest rate, I wouldn't put much down on the car. Drop that money in the market.
Buy a cheap used reliable car if you're trying to buy a house. That's my $.02
Buy a cheap used reliable car if you're trying to buy a house. That's my $.02
Posted on 3/16/14 at 8:44 pm to Slickback
Coincidently in the WSJ today
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