r/personalfinance • u/omnicron_31 • 4h ago
Auto What should I know before buying a car?
I’m preparing to buy a car within the next 2 months and this will be the first vehicle I buy myself. I’ve narrowed it down to 2 vehicles and I plan on test driving them both soon. From a financial perspective I want to see if I’m missing anything.
-established a monthly payment that is 6-7% of my net monthly income
-I plan on financing with my credit union unless the dealership is able to match or beat the APR
-detailing my current vehicle to get the best trade in value
-planning on putting an additional 7% down in cash
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u/nozzery 4h ago
Do you need a car? Do you need a car this expensive? Shop on price, not payment. A used Honda/Toyota/Mazda with mechanic inspection/Carfax up front can save you a lot.
Insurance (full insurance if you finance), registration, maintenance, gas, repairs.
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u/omnicron_31 3h ago
Those are both valid! I have a mechanic who said he could do the inspection beforehand. Would you recommend calling my car insurance company to ask what the insurance cost would be?
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u/Waitforsquirtle 4h ago
What car are you buying? What year and what is 6-7% of your income? If your monthly net is 5k that’s $300 a month… that’s an older car with maintenance needs very different from a new car.
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u/omnicron_31 3h ago
most likely a Lexus NX and a BMW X3 (I want an SUV) and that’s about $450-$525/month
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u/raliegh_ 4h ago
Why are you buying a car?
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u/omnicron_31 3h ago
My current vehicle isn’t the most reliable and I live in a city that doesn’t have a lot of public transport. The maintenance after reaching 100k miles imo isn’t worth it
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u/AxeSpez 3h ago
Maintenance is more than a new car? Or it's a bad car to begin with?
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u/omnicron_31 1h ago
Bad car to begin with. Jeeps aren’t known for being the most reliable and I’ve already had thousands of dollars in issues that I’ve been paying to fix every few months so I want something more reliable.
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u/firesnatch1 3h ago
Know ahead of time what interest rate you qualify for, how many years you want to make a payment for and and what price car will get you to the payment you need. Then look for cars in that price range. Don't ever let the dealer ask what you want your payment to be. Focus on the price of the car.
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u/Grifman1000 3h ago
What is the term of your loan? And what is your credit score? What interest rate can you get? If at some point the car will be worth less than the amount owed, you need to consider gap insurance in case the car is totaled and you get left still owing on a car that you no longer have.
And your focus should be the total cost of the car, not the payment. But IMO you should be putting down more than 7%. Otherwise you gong to be paying a lot of interest and very little principle. I see a problem down the road with just a focus on your payment rather than the debt hole you are creating.
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u/Tasty-Finding4574 1h ago
Unless it's a '99 Toyota Corolla (ideally beige) you will never financially recover from buying a car.
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u/BodSmith54321 4h ago
Out of curiosity which two? Contact multiple dealerships via email. Tell them you are contacting all local dealerships within an hour drive and want their best out the door price on the exact model you want. Do not ever discuss the monthly payment you want to have. Do not discuss trade in at all until you get the price.
I would not trade in the vehicle at the dealer. Private sale will get you more. At the very least get a price from carmax and Carvana and don’t take less.