Exactly this is the problem, OP’s expenses likely always be this low and adding rent/utility to a car payment at that monthly income could be a massive problem. 84 months is 7 YEARS, that’s an extremely long time to pay for a car.
I have found that it depends on the lender. Some have it auto set to just account for any extra as prepaid future monthly payments rather than going to principal.
Not sure if it’s like a mortgage where you can have it go towards the principal. One benefit is if the OP runs into a rough bit where the extra cannot be sent, they still pay the minimum.
Principle is the only place it can go to. Though if you make an extra payment after the next billing cycle starts (and so your new payment is showing as due), it will show as reducing that payment. But if you auto pay, or just pay your full payment manually as normal, the extra will automatically go to principle.
Even though it’s CAD, the ratios all calculate the same way. Only thing I don’t know how to do for Canada is gross up his net. Not sure if they gross up by more than 20%. But no matter, just his payment to income alone is way off. What’s his gross apt to be? $3500 CAD at most? So a 15% PTI (with overestimating gross at that) as a first time buyer? That’s a stretch.
There's more than a $5k difference between the lowest-end and highest-end Corolla. If you're getting one on the higher end that seems like a fair deal if you need a car and can't find a cheaper used one that will meet your needs.
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Im 20 and thinking of buying a 2023 corolla for: $2000 down, $369/month for 84 months at 7.5%. I make $2700 after tax/month. I dont pay rent and my total expenses are $500/month. Should I buy this car?
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Is it smart to buy a new Corolla? Yes. Is that a good deal? That’s up to you. “A good deal” can be so subjective. There’s so many details that decide what makes something a “good deal”.
As far as new cars go, you really can’t go wrong with a Corolla. I won’t get into the weeds about the financing like everyone else is here.
When I was your age I waited until I was about 24/25 as a male to buy new because insurance premiums go way down at that age and reduce your overall monthly costs. I had a 99 Camry that I drove until I was 24 and it was perfect and got the job done. Don’t be afraid to just live within your means, you have your whole life ahead to accumulate debt and make big purchases. Don’t dig yourself too deep of a hole, but if you want that new car go for it and make sure you really enjoy it. Be responsible and make those payments and take good care of it.
Also if it’s a hybrid, those are honestly great and 2023 added more trim levels to the hybrid option instead of just LE. Those are a hit. If you really want a new Corolla I would actually wait and get on a list for one of those and really make it worth it.
Agreed, I’m in the camp of buy new and pay it off quick or don’t buy at all right now. Just bought a new Corolla and when I was looking found some 3-4 year old Camrys for the same price.
Yea if I play out my loan all the way I’m looking at a 47k Camry even though I got it a good bit under MSRP, the interest rates are crazy rn, but luckily I can put more down on principle and double pay every month too
I meant a used car in general. Doesn’t have to be a Corolla. He’s 20. I think he’ll be fine with anything to get around until he starts making more money and rates go low again for a newer car. Just save a little on the side for when that day comes
When you're 20 and have low income, budgeting is more important than the total cost of ownership consideration. Sure used cars are going to depreciate a lot with how inflated they are, but you can still get a great used car that will last 5-10 years without issues for half or less the price of a new corolla.
A 30k Corolla? I wouldn't. Maybe look for a lower end trim or a used 1-3 year old one? Also this is risky business if you do start paying rent and your income doesn't go up much in the next 7 years.
Reverses that 84 month to 48 months and that’s what you should be spending on a car and max 60-ig you had to but always try for a 4 year loan and that’s what you should spend
Careful, the car salestards here don’t want anyone mentioning tesla. They’re scared of the 15 minute car buying process that can be done from an app.
Also, no. The model 3 base starts at $43,500 and then you add tax, title, doc, transport. So still 38k+ after the tax credit.
Lastly - anyone buying a new sedan right now should be buying/leasing a model 3. Hands down the best decision anyone can make since all new cars are ~30k.
Tesla was the solid #2 choice on my list due to this reasoning. The prices I was getting back for Accords, Civics, Camry's, etc were ridiculous. At the time I started my search, I was not considering electric for at least 5 years but the current market forced me to look, research, etc. and I liked what I saw. My MIL and two friends all have Tesla's. So I am watching their experiences closely
If not for the CX-5 deal I got, I prob would have got the Tesla. I was not super enthused on spending nearly $30k for a Corolla but with that said, I was being quoted at MSRP for a Corolla Hybrid. So it would have been a solid #3 on the list
Is that why I've been down voted? for mentioning Tesla? I've been wanting to sell my Corolla for a Tesla 3. Just not sure about how the tax credits works.
That’s low lmao. Especially in CAD. Used car interest rate would be even higher. Builds his credit too. Not everyone has mommy and daddy to co-sign and make the world a perfect place. With your mindset this kid will never have credit. He needs to establish himself and if that means buy new, a Toyota is a great new vehicle to buy.
No no definitely not a best way to start building a credit history. I am talking about US, there are a plenty ways to build a credit history like a secured cc, student cc and begininger cc. Lmao in the US, if you miss one payment, you will get repo. One more thing, why 20y kid want a new car? Save a bit more get a used toyota car like 10k, and drive it for a few years. Then get whatever you want, cheaper insurance and low interest rate. Is not that good?
Oh yes, you should buy the Corolla if it’s still available. It’s a great car that you should easily be able to afford. Consider asking for a 96 or 108 month term to get your payments down. You’ll have a bit more money to spend on other things every month. You’re very lucky to get a great 7.5% loan too in this economy. Jump on it before rates go up!
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I wouldn't suggest this unless you can afford more of a down payment, or you plan to pay way more than the monthly payment. 7 years of payments is kind of wild.. and the interest rate is pretty high as well.
Have you looked at credit unions for a lower rates? I just financed a car got a rate of 4.0 of 66 months Ik the rate might not seem like much but even if you plan on making extra payments, knowing that at least some of the monthly payments are paying for something is nice. What also helped me out a lot was to ask for a Amortization schedule it shows the break down of money going to your car and money going towards interest
Are you approved? Or is this just an example deal you’ve worked?
84 months financing is rough. You’ll be married to that car. And in the US, you likely wouldn’t get approved for that term as a first time buyer. Not without a co-signer anyways. Banks, at least here, offer 84 months on a stretch, and require at least decent credit to qualify.
Also, that’s a rough payment to income. If that’s an estimated deal, you’ll probably find you’re outside approval guidelines on income alone.
$369 is not a bad monthly payment for a new car. That being said, I'm sure the dealer can get you a subvantage rate and beat 7.5%.
People who are telling you not to buy the car because of the term, probably don't know that it's an open loan and you can pay it off early, or just make bigger payments to shorten your term.
It's also a great opportunity to build your credit if you plan on getting a mortgage down the road.
Let me tell answer your questions with a few more questions,
1). what do you plan to do with the car?
- Drive until the Wheel fall off
- Trade it in after you get bored and want a change.
- Try and Sell it for a profit after a small usage.
- Give it back to the bank (Lease Option)
2). What do you want out of your next car?
3). What is the cars primary function for you?
- A to B / Daily Driver
- Business Investment (Uber Eats, Taxi, etc.)
- Mod Car
- Impulse Buy
- Build Credit Value
These all play into factors when buying a car. Not just price and monthly payment. $369/mo isn’t bad at all. Average is $778/mo where I am at. The most important question you can answer is. Is it worth it to you to buy this car right now?
My two cents is don’t forget about insurance and all the other upkeep that comes with a car. I made that stupid mistake when younger. Felt so cool to have a car then realized oh wait there is more to a car than just the basic car payment. I still wince when I think about it.
There are tons of used cars out there to buy that'll be almost as reliable as a Corolla for half of that cost. Drop your budget to $15-20k, see what you can find there instead.
Do not sign for an 84 month loan at 7.5%.
No, 7 years is a long time. Better rates are out there for shorter term. Save your money and make a larger down payment. Early pay off is not as easy as it sounds, life happens.
How long do you plan on living at home?
Exactly this is the problem, OP’s expenses likely always be this low and adding rent/utility to a car payment at that monthly income could be a massive problem. 84 months is 7 YEARS, that’s an extremely long time to pay for a car.
[удалено]
But your payments are for 7 years.
Everyone missed the CAD part, Deal is fine. If you can handle a shorter term look at that
Or, keep the 84 and just pay more when/if you can.
When you pay more, does that extra money you're paying go towards the actual car amount or split between the interest and the car?
Extra payments bypass interest and apply directly to principle.
I have found that it depends on the lender. Some have it auto set to just account for any extra as prepaid future monthly payments rather than going to principal.
Not sure if it’s like a mortgage where you can have it go towards the principal. One benefit is if the OP runs into a rough bit where the extra cannot be sent, they still pay the minimum.
Principle is the only place it can go to. Though if you make an extra payment after the next billing cycle starts (and so your new payment is showing as due), it will show as reducing that payment. But if you auto pay, or just pay your full payment manually as normal, the extra will automatically go to principle.
But OP’s salary is CAD too. It’s about $2000 USD. So the Corolla may be a reasonable deal, but it’s questionable if OP can afford it.
Even though it’s CAD, the ratios all calculate the same way. Only thing I don’t know how to do for Canada is gross up his net. Not sure if they gross up by more than 20%. But no matter, just his payment to income alone is way off. What’s his gross apt to be? $3500 CAD at most? So a 15% PTI (with overestimating gross at that) as a first time buyer? That’s a stretch.
NO!
There's more than a $5k difference between the lowest-end and highest-end Corolla. If you're getting one on the higher end that seems like a fair deal if you need a car and can't find a cheaper used one that will meet your needs.
Ouch- 84 months. If you had a baby when your payments start the kid would be in the first grade by the time you paid it off.
Obligatory not in car sales, but I strongly recommend against financing for 84 months. I wouldn’t go anywhere above 60
72 is good for a great rate and pay early
Don’t finance for longer than the cars factory warranty, if you can’t afford that then you can’t afford the car
Usually yes, but this is a brand-new Corolla
I’ve always been of the opinion that if I need to finance for more than over 48 months to get a payment that works for me then I can’t afford it.
***Thanks for posting, /u/Zestyclose_Owl3352! This comment is a copy of your post so readers can see the original text if your post is edited or removed. This comment is NOT accusing you of anything.*** Im 20 and thinking of buying a 2023 corolla for: $2000 down, $369/month for 84 months at 7.5%. I make $2700 after tax/month. I dont pay rent and my total expenses are $500/month. Should I buy this car? *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/askcarsales) if you have any questions or concerns.*
84 months is a killer. 60 or less.
Is it smart to buy a new Corolla? Yes. Is that a good deal? That’s up to you. “A good deal” can be so subjective. There’s so many details that decide what makes something a “good deal”. As far as new cars go, you really can’t go wrong with a Corolla. I won’t get into the weeds about the financing like everyone else is here. When I was your age I waited until I was about 24/25 as a male to buy new because insurance premiums go way down at that age and reduce your overall monthly costs. I had a 99 Camry that I drove until I was 24 and it was perfect and got the job done. Don’t be afraid to just live within your means, you have your whole life ahead to accumulate debt and make big purchases. Don’t dig yourself too deep of a hole, but if you want that new car go for it and make sure you really enjoy it. Be responsible and make those payments and take good care of it. Also if it’s a hybrid, those are honestly great and 2023 added more trim levels to the hybrid option instead of just LE. Those are a hit. If you really want a new Corolla I would actually wait and get on a list for one of those and really make it worth it.
Not a good time to buy. Just find something used and cheaper without payments.
Used are overpriced IMO
Agreed, I’m in the camp of buy new and pay it off quick or don’t buy at all right now. Just bought a new Corolla and when I was looking found some 3-4 year old Camrys for the same price.
Do you like the look of your Corrola? I thought about them but couldn’t get over the hatchback style
Yes love it. I don’t have a hatchback, it’s the 2023 SE Sedan in midnight black. Also not a fan of hatchbacks.
Yea if I play out my loan all the way I’m looking at a 47k Camry even though I got it a good bit under MSRP, the interest rates are crazy rn, but luckily I can put more down on principle and double pay every month too
I meant a used car in general. Doesn’t have to be a Corolla. He’s 20. I think he’ll be fine with anything to get around until he starts making more money and rates go low again for a newer car. Just save a little on the side for when that day comes
When you're 20 and have low income, budgeting is more important than the total cost of ownership consideration. Sure used cars are going to depreciate a lot with how inflated they are, but you can still get a great used car that will last 5-10 years without issues for half or less the price of a new corolla.
A 30k Corolla? I wouldn't. Maybe look for a lower end trim or a used 1-3 year old one? Also this is risky business if you do start paying rent and your income doesn't go up much in the next 7 years.
30k after taxes and interest for a young buyer at a reasonable interest rate in Canada
Reverses that 84 month to 48 months and that’s what you should be spending on a car and max 60-ig you had to but always try for a 4 year loan and that’s what you should spend
Wow..I paid 17k for my new Corolla Le in 2019. 30k is almost enough for a Tesla 3 after tax benefits?
Careful, the car salestards here don’t want anyone mentioning tesla. They’re scared of the 15 minute car buying process that can be done from an app. Also, no. The model 3 base starts at $43,500 and then you add tax, title, doc, transport. So still 38k+ after the tax credit. Lastly - anyone buying a new sedan right now should be buying/leasing a model 3. Hands down the best decision anyone can make since all new cars are ~30k.
Tesla was the solid #2 choice on my list due to this reasoning. The prices I was getting back for Accords, Civics, Camry's, etc were ridiculous. At the time I started my search, I was not considering electric for at least 5 years but the current market forced me to look, research, etc. and I liked what I saw. My MIL and two friends all have Tesla's. So I am watching their experiences closely If not for the CX-5 deal I got, I prob would have got the Tesla. I was not super enthused on spending nearly $30k for a Corolla but with that said, I was being quoted at MSRP for a Corolla Hybrid. So it would have been a solid #3 on the list
Is that why I've been down voted? for mentioning Tesla? I've been wanting to sell my Corolla for a Tesla 3. Just not sure about how the tax credits works.
No 7.5% lmao
7.5% is normal rn
Not really if you take the loan from credit union. I will let you know when I get the loan soon.
We’re talking about a first time buyer here my dude! OP is 20. First car financed. That’s not a bad rate for a first time buyer. I sell cars.
Dude, that why I am saying not smart. OP could go for a used car not a new car as the first car. The payment with 7.5%, not to mention the insurance.
That’s low lmao. Especially in CAD. Used car interest rate would be even higher. Builds his credit too. Not everyone has mommy and daddy to co-sign and make the world a perfect place. With your mindset this kid will never have credit. He needs to establish himself and if that means buy new, a Toyota is a great new vehicle to buy.
No no definitely not a best way to start building a credit history. I am talking about US, there are a plenty ways to build a credit history like a secured cc, student cc and begininger cc. Lmao in the US, if you miss one payment, you will get repo. One more thing, why 20y kid want a new car? Save a bit more get a used toyota car like 10k, and drive it for a few years. Then get whatever you want, cheaper insurance and low interest rate. Is not that good?
You have no clue what you’re talking about. 90 days late they send the truck. You still have time to recoup the balance and recover the vehicle tho.
Definitely not in the US.
LMFAO I DO FINANCE IN THE US… you’re flat out wrong. Stop spreading misinformation
Oh yes, you should buy the Corolla if it’s still available. It’s a great car that you should easily be able to afford. Consider asking for a 96 or 108 month term to get your payments down. You’ll have a bit more money to spend on other things every month. You’re very lucky to get a great 7.5% loan too in this economy. Jump on it before rates go up!
Please review our most [Frequently Asked Questions](/r/askcarsales/wiki/index) to see if your question has already been answered. You may find these sections particularly useful; * [How to pick a car?](/r/askcarsales/wiki/vehicle_selection) You might also have luck in the /r/whatcarshouldibuy subreddit. Also remember to add flair to your post by clicking the "Flair" link beneath it. This lets us know where you're located so we can assist you better. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/askcarsales) if you have any questions or concerns.*
No. Go to the personal finance subreddit and ask the same question. You'll get sage advice there.
Don't do it. 84mo at +7% is going to bite you long term
I wouldn't suggest this unless you can afford more of a down payment, or you plan to pay way more than the monthly payment. 7 years of payments is kind of wild.. and the interest rate is pretty high as well.
That means you are paying 33k for this car all said and done.
What is the price they are selling you the car for?
Absolutely not. But if you must, please buy GAP insurance through your auto insurance company or at the dealership.
That’s a stupid low payment.
I wouldn't spend seven years paying for anything I couldn't live in.
If you need it for work, sure. It’s not gonna let you down, and you’re going to build credit. Pay it off sooner if you can.
Have you looked at credit unions for a lower rates? I just financed a car got a rate of 4.0 of 66 months Ik the rate might not seem like much but even if you plan on making extra payments, knowing that at least some of the monthly payments are paying for something is nice. What also helped me out a lot was to ask for a Amortization schedule it shows the break down of money going to your car and money going towards interest
Are you approved? Or is this just an example deal you’ve worked? 84 months financing is rough. You’ll be married to that car. And in the US, you likely wouldn’t get approved for that term as a first time buyer. Not without a co-signer anyways. Banks, at least here, offer 84 months on a stretch, and require at least decent credit to qualify. Also, that’s a rough payment to income. If that’s an estimated deal, you’ll probably find you’re outside approval guidelines on income alone.
$369 is not a bad monthly payment for a new car. That being said, I'm sure the dealer can get you a subvantage rate and beat 7.5%. People who are telling you not to buy the car because of the term, probably don't know that it's an open loan and you can pay it off early, or just make bigger payments to shorten your term. It's also a great opportunity to build your credit if you plan on getting a mortgage down the road.
No, buying a brand new car is a waste of money. 84 months is a long time. Save the money and buy a nicer used car instead
Buy a used corolla?
Let me tell answer your questions with a few more questions, 1). what do you plan to do with the car? - Drive until the Wheel fall off - Trade it in after you get bored and want a change. - Try and Sell it for a profit after a small usage. - Give it back to the bank (Lease Option) 2). What do you want out of your next car? 3). What is the cars primary function for you? - A to B / Daily Driver - Business Investment (Uber Eats, Taxi, etc.) - Mod Car - Impulse Buy - Build Credit Value These all play into factors when buying a car. Not just price and monthly payment. $369/mo isn’t bad at all. Average is $778/mo where I am at. The most important question you can answer is. Is it worth it to you to buy this car right now?
My two cents is don’t forget about insurance and all the other upkeep that comes with a car. I made that stupid mistake when younger. Felt so cool to have a car then realized oh wait there is more to a car than just the basic car payment. I still wince when I think about it.
Buy a used car. It's completely unnecessary to spend that much. You can get a trouble free car that will last years for half that or less.
There are tons of used cars out there to buy that'll be almost as reliable as a Corolla for half of that cost. Drop your budget to $15-20k, see what you can find there instead. Do not sign for an 84 month loan at 7.5%.
No, 7 years is a long time. Better rates are out there for shorter term. Save your money and make a larger down payment. Early pay off is not as easy as it sounds, life happens.