How much down on new? Should I get used?
 

Hey fellas, I have been lurking on the site for a couple of months finally registered.

I am looking for input/advice. I am interested in a BRZ, black, limited, automatic(wife will drive as well) below 10k miles if used.

I currently have $20k cash, but I can only find FR-S's that are around 18-22k, it almost seems as if with the BRZ you might as well purchase new because of the pricing out there.

I will not be modding anything, I am going to keep it stock and drive to work and back basically.

Any advice on purchasing options?

I would check out your local dealer and see what financing rate you can get on a new BRZ. Subaru has been pushing rates below 3% if you use their financing department.

I would generally agree that buying a BRZ new, gets you a better deal than an used one. There aren't many used BRZs for sale and I don't think most subaru dealerships are very good at selling the new ones.

I would also send Clint a message.

edit: I put 10% on my new BRZ

If you've got $20k to put down, I think buying new would be a pretty safe idea. You wouldn't really be saving all that much when buying used, and you wouldn't run the risk of inheriting someone else's problems.

And like @calidus mentioned, Subaru's got some very good financing deals - I thought that USAA was giving me a fantastic rate, but the dealership easily beat that for me.

FWIW, I put about 15% down on mine.

You'll have to do the math, but generally APR on a used vehicle loan is more than on a new one. So in the end, you *might* end up paying almost as much on a used one than new. If you pay cash, you avoid the higher apr on used...

Subaru was offering 0.9% on new BRZ's up here in new england, for example, but that offer expires today (3/31).

at that price, buy a new one for 0% (2013) - 0.9% (2014) financing, no down payment, and sock the money away.

Send a message to Clint @HeubergerMotors. As others have said about buying a BRZ, it's probably best to be buying new for them, in addition to Subaru's spring sales. You could very well get a really good interest rate through Subaru finance and make this worth financing, especially if your downpayment is $20k in cash (like have this paid off in a year with a low interest rate). Clint's dealership has been one of the better places to buy Subarus for a while, especially for those living in high-sales-tax states. Talk to him and see if they're able to offer you something you're willing to pay for. :)

Thanks bud

Every time I've asked USAA about an auto loan, Subaru finance was always able to beat it.

IIRC, Subaru (at least here in Phoenix) uses JP Morgan Chase as their bank for auto loans.

This was my first time looking to finance a new car so I can't speak for past experience, but I was pleasantly surprised that Subaru came through cheaper. USAA has given me awesome rates for mortgage, insurance, and credit cards.

And FWIW, my loan ended up being handled by PNC Bank. So far, so good - but haven't made my first payment yet ;)

Yeah, I think Subaru Finance sends out loan offers to different banks, and they offer at an APR based on your credit history that they think they can get, and they go with whoever gives the best rate. Or at least that's what I understand it from what the finance manager from my local dealership told me, but that Subaru Finance does have one main bank they mainly use, even though they can get the loan through other banks. Or something like that.

I'm not really good at applying my math skills and whatnot to business stuff like this. So, it's a little fuzzy to me.

And yeah, USAA is usually #1 in hooking me up on everything else. But I'm starting to think that part of how such a small company such as Subaru is so spectacularly successful among the big car manufacturers is partly due to this. Maybe just part of what they need to do to stay competitive?

In regards to payment, I use what's called "smart pay". It's a separate company that makes automatic payments for me once every two weeks. They pay half the monthly payment every 2 weeks. Since that's actually MORE than twice a month, but close to it, it ends up costing monthly about the same amount, but actually pays more. Anything extra over the monthly goes directly to paying off the principle loan amount (what you actually owe). It ends up paying off the loan 6-7 months early for 5-8 year loans, which results in you overall paying the bank less than if you just faithfully paid the monthly once a month. And it being automatic means you won't be missing a payment due to "oops I just forgot" (which is common for me). So it helps you to keep building a positive credit history too. It's part of what's made owning a financed vehicle fairly easy, as it just makes the car payments just part of the normal monthly expenses that is simply automatically taken care of, just like my rent and utilities.

I just went through this last week :)
 

Used.

How so... Well my 2-cents

Up here in NorCal... a used 2013 (Spring) BRZ is around $23k for the limited. The dealers want $26.5k for new. For $3500 more, what are you getting? About 5k-8k miles.

I personally only drive less than 10 miles a day to work, so miles didn't bother me. But also, note, the break in is 1000 miles. For me that's like 4 months of not driving the car to it's potential.

Warranty - it's bumper to bumper, transferrable. Used, that's still 2 solid years plus the whole drivetrain warranty.

Interest rate - 0% is tempting right? But each 1% is only about $15/month in payments. Subaru financing gave us 2.49% with a credit score in the 800s. So a used car WILL cost you $38/month in interest BUT... a car that is 3500 more a month will cost you $70/month in payments (roughly $20 for every $1000).

One side note, IF you have to buy new... get the Limited. The dealers are all overstocked in those cars and want to unload them. A thorough check of all the NorCal dealer stock showed roughly a 4 to 1 ratio of Limited to Premium cars. So they may want to deal so clean inventory for the 2014 cars coming for early summer deliveries.

With $20k in hand earmarked to spend on a car, I'd buy the best and cry once. Meaning, get a loaded model by putting the $20k down and financing $7-8k for the shortest term you are comfortable with. I'd go 36mos so you aren't making a payment after the warranty period.

I know a lot of folks who have a lot of money and they are some of the most unhappy people I know. They fret over ever dime they spend. I'm not advocating being frivolous with your money, but if you've saved up $20k for a car, then you obviously know how to save and plan for major purchases. Reward yourself and buy what you want. Too many times in life I've settled for what was practical and in the long run it's cost me more than I've saved. I ended up trading a perfectly good car for a loss because I ended up not liking it.

This next time around. I'm getting what I want.

The less you can put down, the better, assuming a sub-2% interest rate. Cash is king, and you can invest that money elsewhere to actually get returns

Actually, the less you have to finance, the better. Let's say the OP puts down $20k in cash and finances the rest, but decides to pay like he only put $2k down. It'll get his loan paid off much more quickly, as all the extra after covering interest goes directly against the principle. The longer you finance, the more the bank gets in pure interest, ie, the more you spend just paying the bank, not paying off what they loaned you. So, the faster you pay it off, the less money you spend overall.

$20k cash down is $20k you didn't have to ask the bank for and then pay more $$ in interest while paying off the loan. That is, you save even more.

The closer you can get to, in the end, paying what the car cost (with fees like TT&L and any service agreements you want as well), the better. The way to do that is pay it off as quickly as you can. A lower APR will help with that, as more of your extra payments will be towards principle.

Though let's talk about investing that $20k. Okay, good idea. Perhaps $15k down, and drop the remainder into an appreciating account with someone like Edward Jones. With the right financial manager, that $5k will grow pretty steadily with dividends being reinvested, and thus any capital gains taxes deferred until actual stock is sold, so investments remain untaxed until they're cashed in upon, and the investment just keeps growing on itself in a compound manner. And all you did was pay $5k less on a downpayment for a depreciating asset (car). After the loan is paid off quickly, I'll bet that investment account is close to being worth what you put as the downpayment.

A good investment will grow quickly with just a small boost, provided you have a smart guy wisely investing your money. Concentrate more on keeping the auto finance principle low.

The differing opinions offered here reflect everyone's unique financial situations.

To me, it's simple:

What can you do with $20k? What is the cost of you borrowing money?

Those two questions will answer whether you should buy new or not, and how it would be paid for.

-alex

That was my initial logic as well, and it is sound logic indeed: pay off as much of the car as I can afford to so I can owe less money and pay less interest, since it is a depreciating asset (I was raised to be a frugal Asian guy). But when I started getting approvals for seriously low interest rates (0.9%), I had to reconsider.

Example: $30,000 @ 1.99% for 60 months
$0 down: $526 * 60 mo. = $31,560 = $1,560 interest
$20,000 down: $175 * 60 mo. = $10,500 = $500 interest

You end up paying roughly $1,000 less to the bank by putting $20k down. Personally, I would take that hit just to have $20k more to spend today (mods ^.^). Additionally, you can throw half of it into a decent compounding CD account, and you will likely come up with more than $1,000 in 5 years depending on the APR.

Of course, the logic would change for a higher-priced car and higher interest rates, as well as varying individual goals

Good point there, with the downpayment difference between $0 down and $20k down.

Putting that $20k into a good compounding interest investment account will net you WELL more than $1k in growth over 5 years. If it doesn't, get someone else to manage your money as they're not doing a good job. I'd expect in 1 year without a massive, explosive clinton-bomb like we had in 2000, that that initial investment should at least net $5k return in one year. That'd be $25k in growth over 5 years if left untouched (as it ought to be). Not talking just putting it in a money market account, but into a growth fund account.

I would really look for new car if you can. Used market isn't much lower than brand new on these cars.


you can buy a brand new BRZ limited in manual for under $26,000 with 1% interest. You will only be paying about a total of $600 in a 60 month period with $5000 down. Used vehicle will have much higher interest rate. Not to mention New 2013 model BRZ's are going for 0% interest. I would really take advantage of that, anything under 2% is a good deal.


check here and plug in your numbers. http://www.edmunds.com/calculators/


Problem with scion is that they have Pure Pricing, which is pretty much means buy the car for MSRP. There are few dealers that will lower the price. but it won't be as much as a Subaru.

Since you have the $20k in cash wouldnt it be smarter/easier to buy new? I think the dealership would very happy to negotiate since you have all that money ready to be put down for it. But then again I'm a kid so i dont have much experience haha I think that sounds right

If you want a Limited BRZ, then get a Limited BRZ. Don't settle for a FRS just because you can't find a BRZ. They're worth the extra coin for all the extra premium features it has. Call around.

If they're trying to move volume, maybe. Otherwise, they would prefer that you finance so you pay interest to their affiliated bank

I put 5k down on a BRZ limited with auto trans for around $1500 off sticker. 7-year financing at a super low interest rate put my payments around $450/mo. Making steady payments on a vehicle for 2-3 years does wonders for your credit.

I say put 5-10k down, get gap insurance, put the rest in the bank, and set up auto pay. After a few years, pay it off and get most of the interest back. You never know what stupid crap might happen. After having gone through several not at fault accidents (wife got hit by three different people several years apart), I'd rather have gap insurance pay off the car and end up with close to what I paid for a vehicle than get financially screwed by some drunk on a rainy night.

Whatever you do, get EXACTLY what you want and work out a deal on any factory extras you want installed before delivery. I did minimal work and ended up with what I assume is a dealer car. It only had 70 miles, but came with just about the full catalog already on it for no extra charge. (fender trim, fog lights, rear bumper applique, wheel locks, and Homelink mirror)

OP, hard to say. You have a wife and gotta be a responsible family man.

How much savings do you have and do you already own a home? (hope that 20K is not all your savings)

If I was married and already didn't own a home, I would not be buying this car. Your first priority has to be getting a home for your family.

- Edward Jones has high fees and an inherent conflict of interest in their business model.
- A company like Edward Jones is primarily going to push you into mutual funds vs individual stocks, and in mutual funds you can have capital gains distributions even without selling the core fund.
- You're not getting a $5k investment account up to $15k during the life of the loan unless the market goes crazy for several years straight, which is seriously unlikely, or you get lucky with one homerun stock.

you're not getting those kind of returns every year, and thinking you should get "at least net $5k return in one year" is seriously ignorant.. it would take returns almost like last years (~30%), every year, to get $25k growth in 5 yeaars, and that ain't happening (last years' returns were the best since 1997).

You try checking out a credit union for better rates? I know a lot of them run 1.49% specials a lot on new or used.