"A BRONCO IS A BRONCO" - Buying a new Bronco, making payments, and affordability!

[Vigor]

Really creative way to get people to drop their reservations.

Just kidding! Really sound advice. Thanks.

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[Vigor]

great post. one of the reasons why i've postponed my order. wouldn't make sense to spend the money on a vehicle with payments if i'm not really going to be driving anywhere with the current pandemic, etc.

This actually gives me a reason TO drive

 

[Sampsonrustic]

I'm in the same boat, this will be my first new vehicle and my first vehicle newer than 1989

Man that's like time travel! Should be a great ride!

 

[Vigor]

No, I’m not actually asking you to post how much you can afford. This is not a competition.

As someone who is involved in some other hobbies that can get pretty expensive if you’re not careful, and given the fact that this vehicle generally caters to a younger demographic, I just wanted to share some information and suggest that before you place your order...

Take a good, hard look at your financial situation before you over extend yourself on a vehicle with a ton of upgrades and features.

I’m only writing this because I want nothing more than a bunch of lifelong, happy bronco owners. So I figured I’d just lay out a few points to consider for those who may not have a lot of experience with car loans.

• The easiest way to reduce your risk is to increase your down payment or lower the total vehicle cost. Monthly payment numbers are not a measure of cost. Extending your monthly payment over time does not save you money, and it may actually hurt you if you need to sell (see “under water” section below.
• The bronco being new and exciting does not make it a good purchase decision. If you wouldn’t buy a brand new vehicle anyway, you should examine your expenses.
• Do not buy a higher trim with the intent of recouping increased resale value. The depreciation percentage is likely to be higher on more expensive models, and either way, this is a big gamble. Buy the features that make sense for YOU, not what you THINK the market wants.
• Lower trim levels with upgrades over time are a smarter financial decision for most people. Sure you might save a few bucks if you need everything in a certain package, but not being locked into those costs as part of a loan is a major advantage and far more important when it comes to selling early.
• Tax is NOT included in the purchase price of the builder. On a $40K car, this can add $3000 in certain states! Generally, you pay the tax of the state you live in, not the state you are buying from.
• Insurance premiums on a new vehicle can be significantly higher than an old vehicle. Run some quotes on your vehicle (or a similar one) before ordering.
• If you have a sizable cost of the bronco tied up in the loan and you need to sell in the first several years, you will be UNDER WATER. This is because of depreciation. The bronco may have an extra years worth of demand to cover it, but I don’t really expect it to cover the cost of depreciation at all as Ford ramps up production - especially of some of the more expensive models with accessories. If you don’t know what it means to be under water on a loan, you really should examine whether you need to increase your down payment or reduce the total vehicle price.
• if you don’t have at least 3-6 months of cash for your existing lifestyle + your new payment, you should lower your payment or increase your down payment until you do. People will lose their jobs over the next year, no question.
• you should start putting away the payment amount in a bank account now to practice having enough cash to afford your bronco, then use that money to increase your down payment
• there is a lot less shame in having a lower trim level and owning your own bronco than having to sell in a year because you couldn’t afford the payments or lost your job, or being beholden to your loan and being car-poor
• 72 month loans are LONG. Just because people do them doesn’t mean they are a good idea. It will likely take years for you to get above water on the loan. A lot can happen in your life in 5 years. Families, kids, houses, emergencies... being under wanted on a car SUCKS and you should calculate how long it will take you to be above water considering average vehicle depreciation.

-you can see how much car you can afford using a calculator like this: https://www.moneyunder30.com/car-affordability-calculator

-you can estimate depreciation value here (I used Jeep as an example) https://www.themoneycalculator.com/...tors/car-depreciation-by-make-and-model/JEEP/


Now: please buy the bronco you want, that you can afford.

A bronco is a bronco.

You don’t have to validate your decision to me. I’m just sharing this info because I know there are a lot of people on this forum buying an expensive vehicle for the first time.

If it feels expensive NOW, it’s probably too expensive.

Wonderful advice. Although I feel like I just got spoken to by my dad

I make a pretty comfortable living. As does my fiance. I actually spend a car payment a month on stupid shit that I ask myself why I bought this. So I'm financially A-ok for a 60k toy. But your post definitely made me question my wisdom

 

[SevenT]

Thanks dad...

 

[CanadianFord]

Very good information indeed. And remember also it doesn't matter how much money you do have, buying a vehicle isn't an investment, it's a liability.
Regardless of resale value, you lose.
I've beat the system (and the banks) somewhat, by looking after my vehicle from day one....and driving it as long as I can after its paid for.
I literly started the day I bought it. My current '07 has been paid for since 2012. And the banks hate me because of it.
As badly as I want a new Bronco, the marketing department doesn't have me fooled. And it helps that I'd rather walk through the woods than drive through them lol.

 

[BennyBronco69]

Sound advice. I will be dropping 120k (60 cash and 60 financed) and even though I can easily afford it.... it still gives me pause bc I grew up w/ little and my parents ingrained in me to save.

My motto is to save 25% - 30% of your monthly income. After that you can budget the rest in to bills, the house you should buy, and of course the car you should buy.

 

[North7]

The opportunity cost of purchasing an asset outright (regardless of whether or not it itself appreciates) is what you could do with that same cash had you instead financed the purchase with debt.

In this case, one would only have to outperform average inflation with that same cash to make financing the purchase with debt worth it. If you can get even a 2.5% annual return with that $60k, it’s objectively smarter to finance the vehicle at an interest rate <2%.

The fact that people do not have the will power to manage their finances appropriately does not change math or objective fact. If one is not responsible enough to take on debt that’s one thing, but it’s not empirically “better” to avoid cheap debt, and your dogmatic statements only prove your lack of credentials in discussing this.

Good points, but not everyone has the knowledge or disipline to be able to to implement your ideas.

 

[gentlemanbronco]

I wish I could bill and ted back to 2012 when I was buying my first car on my own at 30k, with no down payment, and no understanding of financing, depreciation or even interest rates.....

I really really want a Black Diamond but realistically I know i might have to settle on a base or big bend. No matter, I'll be content.

 

[BroncoBass]

...I had to check your handle...not @DaveRamsey...but all good advice.

BS4/5/6. Paying cash for mine. This is my "Dave" Car! Yeah!

 

[Sampsonrustic]

I wish I could bill and ted back to 2012 when I was buying my first car on my own at 30k, with no down payment, and no understanding of financing, depreciation or even interest rates.....

I really really want a Black Diamond but realistically I know i might have to settle on a base or big bend. No matter, I'll be content.

a bronco is a bronco... is a bronco!

 

[North7]

• The easiest way to reduce your risk is to increase your down payment or lower the total vehicle cost. Monthly payment numbers are not a measure of cost. Extending your monthly payment over time does not save you money, and it may actually hurt you if you need to sell (see “under water” section below.

Great thread, thank you, a few more tips:

If you don't have enough cash to buy your Bronco outright, you cannot afford the Bronco. For those that disagree, fine, but every dollar you spend in intere$t keeps you from other goals in life.

First things first:
Do you have an emergency fund set aside with 6 to 12 months minimum?
Do you have your retirement investments / 401K on track for your age?
Do you have your children's college savings fund on track for their ages, if applicable?

If you have all these covered and you still have enough cash to buy your Bronco, enjoy.

 

[Vigor]

Great thread, thank you, a few more tips:

If you don't have enough cash to buy your Bronco outright, you cannot afford the Bronco

Yep. I agree! Everyone follow this advice and cancel so that I can get my bronco sooner

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