How can you afford the cost of a new SUV?

[DarthStig]

Hi everyone,

Apologies for the sort of asinine question. It's on my mind and this might be more of a way to convince myself to pull the trigger.

I'm looking at an almost brand new Tahoe for my wife and I'm having a hard time pulling the trigger. Outside of it not having captain's chairs (just posted a question regarding that), something else is knawing at me. I've never spent more than $40,000 on a car, and that was for a sports car before I was married and had kids. I know hyper inflation has caused a good bit of the cost, but some of these SUVs are costing 6 figures and I can't pull the trigger for something that costs as much as some people's houses. I make a good wage and I'm well in the middle class area of my income (around 120k). My wife works as well, but it's a negligible amount since it's only once a week typically. I don't want to go into our finances and I suppose I'm getting distracted from the question at this point...

We can 100% afford the car. Sure we'll have to cut down on some other luxuries but I suppose the question is, should we? With the exception of things like old project cars, cars lose their value and it's a quick slope to worthless. I live in a city where morons rule the streets. My car has been hit 4 times and has gone from perfect and superb where I took it to car shows to now, I don't care about it, it gets me from A to B. So I'm asking is spending around $80,000 for a car I know is only going to depreciate over time worth the sticker price.

I don't want to buy used past '21 mostly because I want the 3.0L for economic and maintenance purposes. Plus the used market is insane right now and seems like buying new is a better idea.

 

[ivin74]

Darth,
I have bought plenty of new and used vehicles, with that said I've always put a heavy down payment and only finance for 4 years max. I find it hard to pay bank interest for longer than that when I can keep that $. When it's time for a new vehicle I always sell the old to private parties and have never done a trade in.

I think folks these days finance for 6, 7 or 8 years to be able to afford those $80k plus vehicles. I work in the corporate world for a construction company and see craftsman drive $100k trucks and smh and wonder how they pay for those vehicles. I know craftsman do get alot of overtime but even then why would you give up that hard earned money for that kind of luxury. I would rather spend time with my kids and family than working Saturdays & Sundays just to be like the Joneses.

 

[WalleyeMikeIII]

Darth,

These rigs are spendy. Spendy to buy, Spendy to insure, and Spendy to put fuel in and maintain. Interest rates are up, so if you have to finance, also realize the interest expense is up too.

Honestly, you can do as you please, but if buying one causes you to have to “cut back on other luxuries” then I think you should consider something else. If what you need is a nice ride and a lot of room, a Honda Odyssey or Toyota Sienna can be had for 45-50k, and is a pleasure to take a road trip in. My family had 2 Odyssey vans and my kids loved them…and I actually loved driving them. And they were not that expensive, in that their maintenance, license, fuel, and depreciation were not bad. Pilot may also be a good choice.

I’m not telling you what to do, but if my gross income was in the 120-140k range, I would not be looking at 70-100k vehicles. 84-96 month loan on a car is insanity, even 72 is marginal…and at 72 months, financing 75k at todays rates is going to be $900+ a month. Add in insurance, license, and maintenance and you are north of 1100 a month…I just can’t make the math work…and have enough cushion to be comfortable.

Your kids are not going to remember what they rode in as much as who they rode with and the things you all did together.

Net, find some comfortable and reliable transportation in the 40k zone..that’s my 2 cents.

 

[B-train]

It's a great question actually. Thanks for bringing up what a lot of people think themselves. My first house cost 105k and went up 40k in value. Buying something that depreciates like a rock is a poor investment.

My wife and I budget, pay cash for good used vehicles, and are 100% debt free. I will NEVER go back to payments again.....for anything.

If you're fine with good used and can see the value in a clean, dependable vehicle, there are many options available for 20% of 80k and will do the same stuff.

If you have to keep up with the latest screen size, gizmos, gadgets, dick extenders, etc, then the sensible used market isn't for you.

Theoretical idea: buy a nice used 2015-2020 tahoe, yukon, escalade from a salt free state. Invest $500 into rust proofing at a shop, or do it yourself for $100 and some labor. Take it to a reputable shop for an inspection and address any age/mileage related issues with genuine OEM parts. If it's big ticket items, put in GM remanned parts with a 3 year 100k warranty. You can rebuild a clean, newer used vehicle for a fraction of a new one, have the piece if mind of warranty as well.

Example: I found a 2018 Escalade for 14k. I missed it, but someone picked it up for 14k or less because the owner dumped it because of a lifter failure. A few thousand at a shop and you'd have a nice rig for 1/4 the price of a new one.

OK, I'm done on my soap box. Best of luck, but kudos for listening to your gut in the first place.

 

[Chad G 1979]

These are nice vehicles. We went with a bare bones LS Tahoe, and it was just under 60k. Only options on it was the red tint oat and blackout lettering and emblem. Only thing i wish i had was heated seats and steering wheel, but it is just as fancy as my previous vehicles. I have never understood the need for every bell and whistle and techy option on a ride.

 

[GMCnewbee]

Agreed, there are plenty of very nice used vehicles out there. Don't overburden yourself financially. The kids will need things that a new car can't give them. I know the search can be a real pain in the ass, and the prices of used cars are also way up, but look for something being sold by the owner or at least in very good shape. They are out there. It does not have to be perfect. We were very happy with our 2007 Toyota Sequoia, the first generation (I think). They seem to last forever and are easy to fix up.

 

[Stbentoak]

Vehicles are the biggest waste of money out there, but for some odd reason we seem to end up with a new one every 4 to 6 years. The way I look at it is….I like them… I enjoy them…. and there’s plenty of other things that other people waste money on that I don’t. if you get too old of a vehicle you get behind on technology and safety features that once you are older, you actually count on a little bit to keep you out of the weeds.
if you are truly somewhat frugal, and mostly practical. You will never buy new or nearly new car. It makes zero sense really. But I’m not going to have too many more new cars, so it’s kind of like what the hell…It’s something that I like….

 

[Doubeleive]

I am dirt ass poor by comparison and I have never purchased a new car in my entire life, nor would I.
buying a brand new car is like rolling the window down on the freeway and throwing cash out the window, not gonna happen
must be nice
I little hole in my pocket leaking some change i can handle, dollar bills out the window, hard no.

 

[mikeyss]

In my opinion, these vehicles are not worth their price. The interior finishings look nice, but most of the materials are the cheapest the factory can buy. Look at the amount of cheap plastic, and the fake leather bits, is where most of my opinion comes from. I honestly don't know why people are willing to throw away their hard earned money by overpaying for these things, all the while making the CEO's even richer. I even feel that the top trim Escalades are only worth 60-70k tops.

 

[Marky Dissod]

If you have your heart set on a brand new vehicle it will cost whatever it costs.
Never owned a new vehicle.
Needless increases in complexity and excessive additional features that have nothing to do with actually driving, actually turn me OFF.

It'll cost me only slightly more to maintain, upgrade, acquire, or cobble together the vehicle I want
(6.0L or 6.2L V8 and 4.10 axles for a Tahoe Z71)
than to rebuild an 8L90E or 10L90E with upgrades.

 

[Joseph Garcia]

In your opening statement, these sentences say it all, IMO.

"I live in a city where morons rule the streets. My car has been hit 4 times....."

Purchasing a new vehicle in an area like this makes no sense at all. As you stated, it won't be a new looking vehicle for long. Purchase a used vehicle at a fraction of the cost of a new vehicle, and save yourself a boatload of money.

 

[mountie]

From experience...... An old girlfriend wanted a 'new' convertible. ( in about 1990)..... We discovered something.... We went to Enterprise Rental / used cars. We found a nice 'one-year lease' corporate rented car. ( 1990 Chrysler Sebring convertible ) It had 12,000 miles. We bought it for $12,000 ( I think?) The exact car, for sale at a Chrysler dealer used with 26,000 miles was $24,000.

Check out rental company auto sales... They never owned the car they just lease it, to rent. They are pretty well maintained. They sell the cars / suv's at a wholesale price, because they didn't 'buy it'. Plus..... You will be the "1st owner", so a " bumper-to-bumper " warranty is in affect. Plus you can get financing, because it is the 1st buyer of the car.

The rental / sales company can search for their 'corporate rented vehicles', nation-wide.

 

[tjs3922]

I think this question is very different for everyone. As you get older, you start understanding the old saying "life is short, enjoy it while you are able to". I have 2 Yukon Denalis and could clearly get by with a Traverse and an Acadia. But, I don't want to and am fortunate to be able to afford it (I think!). Our lifestyle fits well with this spend as we don't do exotic vacations and such, and have a 95% paid off home.

Another point on these big rigs. Mine have held their value extremely well. I typically put on 12-15K miles per year and keep them TOP NOTCH. I have done very well going back to my 2015 Suburban. So a decent down payment, keep the rig up, and you should always be in the black.

Clearly these 80-100K vehicles are not for most mid income young folks starting out in life. But live and let live. Just hope everyone makes financial decisions that they can justify within their means.

 

[Marky Dissod]

this question is very different for everyone

for GM, they answer this question by adding increasingly complex features that cost GM pennies, and charging hundreds or thousands for each one.


If you can afford a brand new 2023 or 2024 vehicle, congratulations, you did several things right with your life.
That has absolutely no bearing on how well a K2xx or a T1xx will hold its value after 20 years, given that part of that value may or may not be comprised of features that may be superseded or obsolesced in the near future.
My '02 Tahoe Z71 is holding its value pretty well, and the only fancypants feature that no loner works is OnStar.

 

[K2 Kaiju]

They used to discount the hell out of these just a few years ago - like 15k - and rates were 3%. Now they are msrp which is way higher, and double that interest rate at least. They really keep their value now, so trading one in gets you a lot off a new one...

If you work on these, you will see how similar the generations are to each other - some parts would fit a 2000-2020. The only big change is the IRS, but I feel the solid rear axle still rides pretty darn good. Why would you be truck poor?Get a 18-20 as you will get 90% of the function without the upfront cost. You wont get super cruise but you are already sitting in the driver seat - what else you got to do there, play air guitar?

 

[mountie]

I think this question is very different for everyone. As you get older, you start understanding the old saying "life is short, enjoy it while you are able to". I have 2 Yukon Denalis and could clearly get by with a Traverse and an Acadia. But, I don't want to and am fortunate to be able to afford it (I think!). Our lifestyle fits well with this spend as we don't do exotic vacations and such, and have a 95% paid off home.

Another point on these big rigs. Mine have held their value extremely well. I typically put on 12-15K miles per year and keep them TOP NOTCH. I have done very well going back to my 2015 Suburban. So a decent down payment, keep the rig up, and you should always be in the black.

Clearly these 80-100K vehicles are not for most mid income young folks starting out in life. But live and let live. Just hope everyone makes financial decisions that they can justify within their means.

One thing to consider buying a new version.... Are they higher than my '05 Yukon? The new darn thing has to fit inside my garage.

 

[Blueinterceptor]

Eating is highly overrated

leasing for 3 years used to be a good deal.

 

[Sparksalot]

For a short answer, I’d say many who buy expensive vehicles can’t truly “afford” them.

 

[mountie]

For a short answer, I’d say many who buy expensive vehicles can’t truly “afford” them.

Yup..... that's where the word expensive comes from.
Caveat : Working for wealthy people..... They say, "expensive" when one of their 4, $100,000 race boat engine explodes.

 

[B-train]

In my opinion, these vehicles are not worth their price. The interior finishings look nice, but most of the materials are the cheapest the factory can buy. Look at the amount of cheap plastic, and the fake leather bits, is where most of my opinion comes from. I honestly don't know why people are willing to throw away their hard earned money by overpaying for these things, all the while making the CEO's even richer. I even feel that the top trim Escalades are only worth 60-70k tops.

And at 60-70k they are still overpriced in my book. They probably cost GM 20k to build, or less. I WON'T make a CEO rich if I can help it. A company doesn't make BILLIONS, with a B, in profits without naming 2,3,4,5,6x their investment on each vehicle.

When the jeep Cherokee finally ended production, it cost Chrysler about $500-750 per vehicle to produce. It had such a long run, costs were fixed, etc. Think about them apples.......GM is no different