With the average new truck costing almost $40,000 to buy, you might be wondering how people can afford to buy a new truck.
So, how can you afford a new truck?
Financing, leasing, and paying cash can make it easier for you to afford a new truck. However, it’s important to follow some tips to ensure that you get the best deal possible, such as financing through a credit union or properly maintaining your truck if leasing.
This guide will give you a better understanding of what it takes to buy a new truck and whether it is the right move for you financially.
So keep reading to learn what you should do to improve your chances of affording a new truck.
Can You Really Afford To Buy a New Truck?
By researching your income and determining whether financing, leasing, or paying cash makes the most sense, you can easily figure out if you can afford to buy a new truck.
When comparing cars and the national average of buying one new, you can expect to pay close to $500 a month when financing.
We’ll discuss financing a little closer here in a moment.
For now, consider the selling price of a new car.
They currently sit at around $27,000.
Contrast that number with the average price of a new truck, which is around $50,000.
You also want to be sure that you are capable of affording the required payments each month for the life of your agreement, which is typically 5 years.
As such, you want to first examine your budget before you start shopping for different trucks.
Once you have determined how much you can afford each month, you’ll have a much easier time deciding on the right truck for your needs.
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How Do People Afford New Trucks?
Let’s take a look at some of the ways people manage to afford to buy new trucks and how you can save money doing so.
1. They Pay By Cash
If you’re reading this article, like most people, you probably can’t afford to pay for a new truck with cash.
However, if you can afford to pay cash for a new truck, there are a few things you want to keep in mind.
Firstly, it’s important to keep in mind that car dealerships make the bulk of their money off of financing and warranty.
You should therefore not discuss how you’re going to be paying until you have secured the selling price.
When discussing the selling price, always get the “out the door” price.
This means that you will not end up paying more taxes and fees.
What’s more, you should avoid talking about what you want to pay each month.
This is done to talk you into agreeing to a drawn-out loan.
Furthermore, it also means that you will end up paying more for the vehicle than what you want.
2. They Get Financing
Most people who buy a new truck can afford to do so because of financing.
If you’re considering financing your new truck, your best option is to get a financing quote from a credit union.
And although the average monthly financing price for a new truck is $715, you’re going to get a better rate from a credit union as opposed to a bank.
This applies to financing, leasing, and loans.
So with that said, it’s always better to avoid financing through a dealership.
While it might sound like you’re getting low financing payments, you’ll end up paying more than what’s necessary.
Remember, this is how car dealerships make their money.
Also, you want to try to put down a large down payment if possible, as this will help lower your monthly payments.
Not everyone can afford to do this.
But if you’re in a position where you can, consider doing so to get comfortable monthly payments.
And lastly, try not to be vague about how much money you want to borrow.
Shoot for an exact amount after you have determined what you can afford to borrow.
In doing so, you can avoid getting talked into borrowing more than is needed, and thus, you won’t have to pay back as much in interest.
3. They Lease It
Leasing new automobiles have risen in popularity in recent years. In fact, leases account for over 30% of all new vehicle purchases.
That said, trucks aren’t leased nearly as often as cars and SUVs.
Be that as it may, the rate at which trucks are leased has nearly doubled, so it’s evident that it’s a viable option.
Since we already know that the monthly financing cost for trucks averages $715, can you lease for less?
As it turns out, you can.
The average monthly payment to lease a new truck is about $430.
The great thing about leasing is that if the value of your truck drops, you’re not going to be affected by it, as your payments will remain the same as long as you’re on time and current.
Leasing is a great way to free up cash every month if you know you’re going to buy the vehicle anyway.
Instead of buying your new truck outright, leasing can give you some breathing room each month. You’ll just want to be sure to keep up on repairs.
Furthermore, racking up high miles can cause your truck to depreciate faster, in which case it might not be worth as much as when you pay it off.
4. They Claim It As a Business Expense
Many people driving trucks are doing so because their business requires it.
If you are going to use your truck primarily for business, then you claim your truck as a business expense.
Trucks qualify as transportation equipment and qualify for 100% first-year bonus depreciation meaning you could claim the entire cost of the truck against your business profits.
5. They Buy An Affordable Truck
Some of the more expensive trucks, like the Ford F-450, can cost over $100,000.
However, there are lots of affordable trucks that get good reliability ratings and have high customer satisfaction.
Let’s take a look at some of the most affordable trucks of 2021.
|Make and Model||Price|
|GMC Sierra 1500||$31,695|
|Chevrolet Silverado 1500||$30,595|
|Ram 1500 Classic||$29,895|
Toyota’s 2021 Tacoma takes the lead as the most affordable truck, with a price tag of $25,630. That’s less than the average cost for a new car.
You should be able to get a better leasing or financing plan, too, so you might want to seriously consider this option.
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Are New Trucks Worth It?
New trucks are definitely worth it if you can afford to pay for one.
One major benefit of buying a new truck is that you can choose its specifications.
Want a unique color? You can have it.
Prefer cloth seats rather than leather seats? You can have them.
Buying a used Truck means you have to settle for a truck that might not be exactly to your liking.
The other good thing about buying a new truck is that you know its history.
No wondering how well-cared-for the truck was, no hours of due diligence research.
It’s much less stressful buying a new truck.
However, if you’re on a tight budget and wondering if you can afford a new truck, they are probably not worth it.
The biggest problem with buying a new truck is that its value depreciates the moment you drive it off the car lot.
A new Ford F-150 that costs $50,154 will depreciate by $14,349 just in the first year.
That’s a value loss of over 28%!
When you buy a slightly used truck, you’ll not only save a significant amount of money, but you’ll be investing in a vehicle that often has many more years of service left to give.
Many trucks today are very reliable machines, and can easily reach 200,000 miles without experiencing major issues.