Question on 21 year old buying a car

[paulsharvey]

At 21, it sounds like he can buy anything they will fiance. You can advise some, but even that, at this point, probably should be reserved for when requested by him.

No idea on quality, but Mitsubishi had some Very affordable compact cars, new, available. Mirage? Lancer? Like $16k, brand new, with warranty, 2024 models.

But, hes grown, and not just barely, grown grown, so I would only offer advice if asked

 

[paulsharvey]

He "might" need to look at more than one bank. Our credit union, my 19 y/o son can't have a solo account until 24, which is complete BS, IMO, but there are plenty of banks that, with credit, will absolutely treat an 18 y/o or 21 y/o as an adult

 

[LouNY]

As I recall as a young Marine that financing a vehicle was quite easy. Especially at those thieves right outside the gate. They knew that a simple phone call to a Marines command would get immediate attention. I was fortunate enough to have my vehicles before I enlisted and to buy at a good price when others were getting rotated out.
I did have the misfortune to get involved with a couple of younger men at my last duty station at Cherry Point that got screwed by shysters, it was not nice seeing them being called in front of the 1st Sargent and one even had to see the CO before getting an automatic deduct from their salary.

 

[paulsharvey]

So, for the son, I would rather pay 15% interest on my own, then 8% with a parent co-signing.

Is he trading in the old vehicle? It sounds like he can pretty easily do 20%+ down. Even if he had the cash and trade value to not fiance; I would still fiance for 5 years. Get the incentives for using their preferred leanding partner, and after 6 months, if it makes since, pay it off; or dont.

 

[kenmac]

It's been so long since I've financed anything other than my home, I couldn't tell you what interest rates are on vehicles. I did try to finance my 2024 Kawsaki mule profxt (3.99%) but they denied my application even though I had a high credit score LOL

 

[ultrarunner]

Finance is a profit center and it can be more than the vehicle sold.

Growing up around the car business we would have mostly Navy come in to buy and opted for clean used and avoided finance.

I’m guessing rust free used doesn’t apply where you are?

I’ve never had a car loan going back to age 13 and same for the folks, etc. mostly because it makes it easy to get upside down on value in addition to paying twice for the car with some of the dealer rates and long terms common today.

Credit Unions often have straight forward auto loans for those going that route.

Most of the single military guys just need wheels and the smart ones sock away as much pay as possible to build a nest egg and buy for cash…

Can’t comment on all the offerings with CVT transmissions but older non CVT Toyotas in rust free states just run and run…

What about a lease return?

 

[Sigarms]

As I recall as a young Marine that financing a vehicle was quite easy. Especially at those thieves right outside the gate. They knew that a simple phone call to a Marines command would get immediate attention. I was fortunate enough to have my vehicles before I enlisted and to buy at a good price when others were getting rotated out.
I did have the misfortune to get involved with a couple of younger men at my last duty station at Cherry Point that got screwed by shysters, it was not nice seeing them being called in front of the 1st Sargent and one even had to see the CO before getting an automatic deduct from their salary.

I have to laugh. They pretty much warn the guys on base about used car lots just outside the gates.
That said, car salesmen pretty much has ruined the sales profession no matter where you live LOL (somewhat joking and no offense meant to anyone into selling cars).

Like anything else, good people and bad people people in every career choice.

 

[Yander]

Lenders do not trust anyone for whom they cannot see a payment trail. Their actuaries need to see payment history, not just on a CC. They will give you a loan without having had it if he is employed with adequate income, but it may not be the best rate.

Unfortunately, car rates went crazy for a while, and that is why I held off on buying another truck after totaling mine.

I would maybe advise him to buy a $10k car he can finance and put a nice down payment on it to make the actuaries happy and get the best rate. At this point, it isn't just about securing a car but also establishing a payment history without giving the bank 8% interest on your hard-earned cash. 8% interest on $10k is better than on $25k. Then, when rates come down a little more, they start to, and he sells the $10k car and buys the car he wants.

Getting strapped to a large car payment could also affect some of his career choices when he gets out. If he decideds to continue with any college or schooling, large car payments are not ideal.

 

[Sigarms]

Lenders do not trust anyone for whom they cannot see a payment trail. Their actuaries need to see payment history, not just on a CC. They will give you a loan without having had it if he is employed with adequate income, but it may not be the best rate.

Unfortunately, car rates went crazy for a while, and that is why I held off on buying another truck after totaling mine.

I would maybe advise him to buy a $10k car he can finance and put a nice down payment on it to make the actuaries happy and get the best rate. At this point, it isn't just about securing a car but also establishing a payment history without giving the bank 8% interest on your hard-earned cash. 8% interest on $10k is better than on $25k. Then, when rates come down a little more, they start to, and he sells the $10k car and buys the car he wants.

Getting strapped to a large car payment could also affect some of his career choices when he gets out. If he decideds to continue with any college or schooling, large car payments are not ideal.

Keep in mind, he's already bought 2 cars at a around a 10K price.

He'd rather go with something more "practical" but with mileage under 30K on the odometer. That raises the price point substantially.

When he bought a Mercedes when he hit 16 or 17, he paid outright for it with cash he earned working. I thought it was a mistake, but he earned that right to make that choice IMO. He learned pretty quickly that although he could do some work on the car, it was hard on him due to the brand and pricing of parts for the car, and finding a good mechanic that could work on that brand car wasn't cheap (good learning experience).

The mustang would not have been my first choice for a second car, but he was able to trade in the Mercedes for the the V6 ford. Although the car had a clean history and was a one owner car, it did have 110k on the odometer, shortly after buying it he did have a couple of somewhat expensive repairs to be made that required a lift that he couldn't do the work himself.

He's taking some college classes now online as he sees it's a way to better himself in the Military now. Hopefully if he decides to get out after his first 6 years, his college will be taken care of by the military as he pointed out to me.

As I told my son, he's not getting back to his duty station here in the US until early summer time next year, so bank his money now and look at the car when he is getting closer to coming back.

 

[sandman2234]

The only time I ever "asked" for help to buy a car, my Mom put a transferred the purchase price into an account at the Credit Union and I used that as collateral for the loan instead of the car. Typically the Credit Unions will give you a 2 percent increase over the cost (* what they pay you for interest) on that money. So if a CD is paying 4 percent, then you can borrow against it for 6 percent. My sister borrowed her last roof replacement from Mom this way. It doesn't protect the money if the person paying the loan defaults, but it does keep you from co-signing the loan and gets a lot better interest rate.
David from jax

 

[paulsharvey]

My mom financed my first truck, and my sisters first car, and the other two kids got free hand-me-down cars, and then eventually she financed them cars too. I know she thought she was helping, but... She would buy them, and we would make monthly payments to her. The problem was, we didnt build any credit history, and she kinda strong armed us into what to buy. Which, yes, she's fiancing, but we paid it.

My first purchase of a new truck, mom consigned for the first year, then then I went to the bank and refinanced into my own name, once I established a bit of credit history. I was 20? 21? some thing like that, but because of the way the first vehicle went, i had zero credit history.

Edit: I know the strong arming was probably from a "looking out" stand point, but for instance, I was looking at a 94, 3.9L, extended cab, 4wd Dakota with maybe 130k miles; i was pretty strongly lead to a 95 2.5L, reg cab, 2wd Dakota. Little brother was looking at an IROC Camaro, and was basically drug by the ear to a 98 Corolla.... was it maybe "smarter" maybe, But, if I had bought the 3.9l, extended, 4wd, I likely would have kept it, rather than upgrade when I got the chance. I know my brother Hated that Corolla... So, you can imagine how he felt about making the monthly payments on a car he didnt want

 

[paulsharvey]

Guess what my point is; the parent might Think they are helping, but actually be in the way trying to help. Sure the kid might make a bad decision, but its their bad decision to make.

 

[ultrarunner]

There may by some attractive lease rates…

This way repairs would be under warranty and you are driving new for the least out of pocket dollars…

Several I work for actually made money as in thousands of dollars when their leases ended 2021-22.

They did the buyout and private party sold.

 

[dougtrr2]

I was married at 19, and my wife and I had some credit struggles early on. In Missouri, where I was stationed, you couldn't even sign for a loan until you were 21.

A couple years later when we were getting ready to have family and the gas shortage hit, we decided that we needed to trade in my 340 Duster for a Toyota Corolla wagon. We had saved up to add to the down payment. When we were finalizing the deal, the salesman was working on submitting the paperwork to the bank they dealt with. We told the salesman that we didn't know if the bank would even consider loaning us money since we had no track record. He laughed and said "Your putting $3,000 down on a $4,000 dollar car. I'll finance you!"

Doug in SW IA

 

[Sigarms]

The only time I ever "asked" for help to buy a car, my Mom put a transferred the purchase price into an account at the Credit Union and I used that as collateral for the loan instead of the car. Typically the Credit Unions will give you a 2 percent increase over the cost (* what they pay you for interest) on that money. So if a CD is paying 4 percent, then you can borrow against it for 6 percent. My sister borrowed her last roof replacement from Mom this way. It doesn't protect the money if the person paying the loan defaults, but it does keep you from co-signing the loan and gets a lot better interest rate.
David from jax

Interesting...

 

[Sigarms]

Guess what my point is; the parent might Think they are helping, but actually be in the way trying to help. Sure the kid might make a bad decision, but its their bad decision to make.

I completely agree with you.

I've tried my best to treat my boys the exact same way my parents treated me.

Both of my boys bought their own vehicles, both with their own money.

No different than the way my parents treated me

However, my parents saved to the point that they didn't want me paying interest if I had to do a auto loan when I was a young man looking for a vehicle. I'd doing to the same thing for my son.

Son made a mistake with the Mercedes he bought with his own hard earned money. He made a mistake IMO on the mustang, but he paid for it.

I'm just happy that he might have seen the errors he made and now wants a more practical car. I have NO doubt he would pay the loan back if I co signed, so if he wants a practical car, I will co sign if he asks, and if he doesn't want me to co sign, I won't.

He's doing better than me when I was at age 21, so I'll give him the benefit of the doubt.

 

[Rockbadchild]

I completely agree with you.

I've tried my best to treat my boys the exact same way my parents treated me.

Both of my boys bought their own vehicles, both with their own money.

No different than the way my parents treated me

However, my parents saved to the point that they didn't want me paying interest if I had to do a auto loan when I was a young man looking for a vehicle. I'd doing to the same thing for my son.

Son made a mistake with the Mercedes he bought with his own hard earned money. He made a mistake IMO on the mustang, but he paid for it.

I'm just happy that he might have seen the errors he made and now wants a more practical car. I have NO doubt he would pay the loan back if I co signed, so if he wants a practical car, I will co sign if he asks, and if he doesn't want me to co sign, I won't.

He's doing better than me when I was at age 21, so I'll give him the benefit of the doubt.

I think everyone would agree that you’re doing a great job, at least from what I can tell. It’s obvious that you care and that you provide guidance without pushing too hard. I lift my hat to you, keep it up.

 

[etpm]

The year of the vehicle is way less important than the mileage. I just bought a 2020 Toyota Tacoma that looks great and has less than 40,000 on the odometer. Because of the quality of modern vehicles I expect to get at least 200,000 more before any significant costs. Tell your son to look at the mileage and the cosmetic appearance rather than the year. He may be able to save a considerable amount of money by not insisting on a newer car.
Eric

 

[Sigarms]

The year of the vehicle is way less important than the mileage. I just bought a 2020 Toyota Tacoma that looks great and has less than 40,000 on the odometer. Because of the quality of modern vehicles I expect to get at least 200,000 more before any significant costs. Tell your son to look at the mileage and the cosmetic appearance rather than the year. He may be able to save a considerable amount of money by not insisting on a newer car.
Eric

Good point, and it's something I look for as well when buying a used car.

For my wife and myself, we generally push up to 75K on the odometer when looking, depending on where we can get the price point at.

At this point I'm just glad our son has seen the issues with buying a "sporty car" with higher mileage for the 10-12k price point and is looking at a more "practical" car at a substantially higher price point for lower mileage. He just wasn't certain if he could get the loan himself with a better interest rate.

I've already told him I was lucky because when I was his age, I wasn't into cars and I was just fine with my "hand me down" 72 olds with 8 track tape player . That said, in the grand scheme of things in life, there are worse things to be addicted to as a young man in todays world.

 

[paulsharvey]

Milage vs year; in this day, I think its not unreasonable to get to get something below 120k. Id rather a 3 year old vehicle with 120k, than a 15 year old vehicle with 60k. Of coarse there is a lot of room between those two extremes. I worry when I see something with less than 6k/year, meaning it just sat.