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  • New Car: Reality Check

    How much is reasonable to spend on a vehicle, relative to income and/or net worth? I’m a few years out of training. I have 3 little ones and my 4 door sedan is getting tight. It only has 50k miles and is fine otherwise.

    I make a good income for an academic (~300). We save 20% plus about 10% from employer. We have >350k saved for retirement and our mortgage is 580k on a house worth >800k on a 30y fixed at 2.75 which we have auto-paying at a 15y rate. We are on track for kids college and we tithe. Paid off student loans. Wife’s car is new and paid off. We have 60k in cash.

    I started looking at new SUVs since it seems like we’re in a reasonable place to consider a new vehicle for me and the kids are getting bigger. I was shocked to see that top of the line GMC/Chevy/Ford SUVs can cost 80k. Is this unreasonable for me to spend on a vehicle? I’d get 15-20 on my trade in, probably put 25-30k cash and finance 25-30k that I’d pay off in the next 5 months or so. We have enough in cash and taxable to pay, but don’t want to lose all liquidity.

    Part of me is blown away by the sticker price of these vehicles and thinks I should just buy a larger vehicle for a lot less that I enjoy less (e.g. Honda Pilot) or a car with 50-80k miles on it that I like and is 3-5 years old (e.g. used Yukon Denali) for 40k.

    Thoughts? Thanks.

  • #2
    It isn't unreasonable if you're planning on driving it for a while but there's probably something out there that will give you what you need for less. It's a bad time to be buying a vehicle. It'll probably be better in a year or two...but you know what they say about timing the market.

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    • #3
      Yeah bad time to buy a car but good time for a trade in lol.

      Maybe someone else with kids can throw in the recommendation to stop being cool with 3 kids and look at minivans instead of suvs.

      As long as you’re saving 20% spend away on whatever else. If you can get great financing rates highly recommend paying it off slowly to keep liquidity. You’re not the person to worry about financing lifestyle increases at the cost of decreasing savings.

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      • #4
        Spend what you want but why not get a minivan? Is that what your wife has already? We only have 2 kids so no need for giant vehicle but I know other families really like the Honda pilot if they are not going the minivan route.

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        • #5
          Originally posted by wideopenspaces View Post
          Spend what you want but why not get a minivan? Is that what your wife has already? We only have 2 kids so no need for giant vehicle but I know other families really like the Honda pilot if they are not going the minivan route.
          Can’t do a minivan. Just won’t. I see the appeal of the sliding doors, but I just can’t bring myself to do it.

          I don’t like the pilot. It’s a fine car, but I don’t want to drive it. It would certainly be acceptable, but I would like something nicer. That’s kind of the struggle - vehicle I don’t like for half the price, or vehicle I do for much more.

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          • #6
            Originally posted by VentAlarm View Post

            Can’t do a minivan. Just won’t. I see the appeal of the sliding doors, but I just can’t bring myself to do it.

            I don’t like the pilot. It’s a fine car, but I don’t want to drive it. It would certainly be acceptable, but I would like something nicer. That’s kind of the struggle - vehicle I don’t like for half the price, or vehicle I do for much more.
            Get what you want. You have some real potential for buyer’s remorse. Sounds like the packaging appeal. I would really suggest you try renting for a weekend or a week serious contenders. Let both spouses give it a go. A test drive or appearance fade oh so fast.

            Basically, size and fit for a new pair of shoes or a blind date. With a vehicle, appearance counts in catching your eye, BUT by far the feel of blindspots, parking, ride and feel are much more important. You are changing sizes drastically. I doubt the performance and actual feel of the cars will last. Virtually all interiors can be loaded.

            It takes some time to get to know the different options. None of the above dealt with price. All about your perception of value. Get what you really want. Each type and brand has a personality. Choose wisely, not on price and appearance.

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            • #7
              Originally posted by Tim View Post

              Get what you want. You have some real potential for buyer’s remorse. Sounds like the packaging appeal. I would really suggest you try renting for a weekend or a week serious contenders. Let both spouses give it a go. A test drive or appearance fade oh so fast.

              Basically, size and fit for a new pair of shoes or a blind date. With a vehicle, appearance counts in catching your eye, BUT by far the feel of blindspots, parking, ride and feel are much more important. You are changing sizes drastically. I doubt the performance and actual feel of the cars will last. Virtually all interiors can be loaded.

              It takes some time to get to know the different options. None of the above dealt with price. All about your perception of value. Get what you really want. Each type and brand has a personality. Choose wisely, not on price and appearance.
              Thanks. This seems like really good advice.

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              • #8
                Every once in a while you just need another vehicle. My 2 cents is that it doesn’t need to be new. You may prefer new. If so, then given your finances I see no reason why you can’t buy what you want. I personally prefer to buy two years old, so already about 40% price depreciation but still a year or so on the warranty.* Just for fun I did a quick search on Cargurus for Ford Explorers. I immediately found a 2020 XLT with 27K miles for $34k. Lots of variability in these searches: how old; how many miles; certified pre-owned, etc.? YMMV, no pun intended.

                *In full disclosure my wife makes me buy her cars new.

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                • #9
                  how old are kids?
                  my 2 young children are absolutely punishing on vehicles
                  zero chance we are getting anything nice (that they are going to be in) until they are past the "daddy i dumped my entire bottle of milk into the crack in the seat" phase.
                  if they are still car seat age buy a used Pilot then upgrade to denali when they can behave.

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                  • #10
                    I got a Pacifica 5 years ago for 35k. Not the highest trim but 1 down. After a quick internet search it seems that it's a little bit more now but you can get something similar for just about 40k.

                    We also have a Subaru outback and I really like the vehicle. They did not make something large enough for us back then but have since come out with the ascent and that also looks rather reasonably priced for an suv.

                    I'm really not sure what you get special from GMC or Chevy or Ford for their larger vehicles. Maybe it's slightly bigger with a little bit more engine and lower gas efficiency.
                    Honestly I think you're paying for the name and pensions.

                    My advice is to check your manliness at the car door and go with the minivan.

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                    • #11
                      Originally posted by MPMD View Post
                      how old are kids?
                      my 2 young children are absolutely punishing on vehicles
                      zero chance we are getting anything nice (that they are going to be in) until they are past the "daddy i dumped my entire bottle of milk into the crack in the seat" phase.
                      if they are still car seat age buy a used Pilot then upgrade to denali when they can behave.
                      Very good point. My van is in pretty rough shape in the second and third row. I keep the front very tidy though. It is 5 years old and I'm hoping to squeak out another 3 to 5 years which would get me past a lot of the spills and more difficult messes.

                      Also the full car seats really dig into the upholstery. If I can make it another 3 years my youngest will be in a booster which is insanely better.

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                      • #12
                        even with the car shortage you can get fully loaded mazdas, kias, hundais, hondas suvs for under 55k- with all the nice interiors of other cars you listed.

                        That being said, I contemplated getting a new car this year but will hold off. The competition due to dealer shortages just guarantees you will be paying over msrp, and I just cant mentally reconcile doing that for a want and not a need.

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                        • #13
                          Originally posted by MPMD View Post
                          how old are kids?
                          my 2 young children are absolutely punishing on vehicles
                          zero chance we are getting anything nice (that they are going to be in) until they are past the "daddy i dumped my entire bottle of milk into the crack in the seat" phase.
                          if they are still car seat age buy a used Pilot then upgrade to denali when they can behave.
                          Agreed, while you can afford a new vehicle, even $80k, you could also spend $1000 on 3 slim car seats and just keep the sedan for 2-3 more years. Then as kids get a bit bigger and out of the throwing food stage, and the vehicle market has normalized, you can get what you really want.

                          If you buy right now you're probably paying a $15k-$20k premium over normal pricing on that $80k vehicle.

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                          • #14
                            3 kids regardless of age I can't see any small or midsize SUV being very reasonable. So it's full SUV or minivan. I was once in your shoes, the noway minivan camp. But they're surprisingly quite nice drivers. I would much rather road-trip our van or sedan than my daily driver tacoma (similar weight to van), much less a giant SUV. I'm a sports car guy at heart but don't get to drive mine much.. I don't see much difference aesthetically in the giant, less-useful, poorer-handling and about as ugly SUVs vs a minivan.

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                            • #15
                              Originally posted by childay View Post
                              3 kids regardless of age I can't see any small or midsize SUV being very reasonable. So it's full SUV or minivan. I was once in your shoes, the noway minivan camp. But they're surprisingly quite nice drivers. I would much rather road-trip our van or sedan than my daily driver tacoma (similar weight to van), much less a giant SUV. I'm a sports car guy at heart but don't get to drive mine much.. I don't see much difference aesthetically in the giant, less-useful, poorer-handling and about as ugly SUVs vs a minivan.
                              I know, I just can’t bring myself to drive a minivan.

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