I make about $40,000 a year and I am considering purchasing a 2026 Plug-In Prius which costs $33,000. Am I nuts, or does this decision make some sense?
TLDR: Receiving $9500 grant for plug-in hybrid, used market for plug-ins is pricey, I assume battery tech is better on newer models, dealership offers 2% financing and 2 years free maintenance on 2026 models. Excellent credit, and about $18,000 available in HYSA for down-payment.
I currently drive an '02 Subaru Impreza that's on its last legs. I expect it will need at least transmission replacement soon(probably more), which would cost at least $1500 if I did it myself. The car is rough and I dont think it's worth the expense and effort.
I applied to the California bay area Clean Cars 4 All program and if I choose to I can receive a grant of $9500 towards a 2018-2026 'plug-in' hybrid as long as I scrap my current vehicle. The car I purchase must be a plug-in hybrid to qualify; regular hybrids won't work. This leaves me with quite a narrow selection of affordable cars that qualify for the grant.
Traditional wisdom says to buy used when car shopping on a budget, but the used market seems expensive in my area. For example, a 2022 Prius prime XLE with 20K miles is $28,000 while a 2026 plug-in prius LE is $33,000. I assume that the battery technology gets better in these every year as well, so I would prefer to avoid much older (i.e. 2018) models. In addition to the seemingly expensive used market and newer tech in the new cars, the dealership offers 2% APR financing and 2 years of free maintenance on 2026 models (if my understanding is correct).
I have excellent credit (800+) and would expect to qualify for the dealership incentives. In addition to the $9500 grant I have about $18,000 saved for the purchase. This puts me at $27,500 cash with the 2026 model costing about $33,000 out the door.
I currently am living at home and have been saving about 50% of my income for a while now, but I plan to move out in the next few months. Insurance is estimated at $150/mo, and my car payments can be anywhere from $80 to $341 per month depending on how much I put down.
This is easily the largest purchase I have ever considered and would appreciate any feedback.
Considering spending nearly my annual income on a new car. Am I nuts?
byu/LordOfTheBrambles inpersonalfinance
Posted by LordOfTheBrambles
5 Comments
Show budget. Can you actually pay the monthly payment and insurance payment?
Hard to understand due to poor phrasing what you are even paying yourself for this, does the $33k include the grant payment or not? The number pre-free money basically doesn’t matter, the net cost to YOU is what matters.
Regardless though disregarding the English skills, yes this is a nuts terrible horrible idea. You live somewhere in the ‘Bay Area’ and make $40k? How is that even possible, thankfully I live nowhere nearby but there are even jobs that exist paying that little there? Do you have no bills do you not pay your own way, are you subsidized by somebody else?
Like how do you currently survive and live, presumably you aren’t homeless? None of this makes any normal sense at all
I don’t know about the California plans but a used polestar 2 is like 20-25k.
Still seems like too much unless you’re living rent free though.
Even with the grant this is a $23500 car
That’s too much car for a 40k/yr salary. I’d aim for something in the 10-12k range until your income is higher.
If the 18k is truly earmarked for car (i.e. you already have an emergency fund, are contributing to retirement, etc.) then maybe we can squint and make it work, but otherwise you should be focused on much cheaper cars until your income is higher.
When I began to make six figures, I still drove a $4000 car
You are crazy