How do you decide how much $$ to spend on a car?
07-14-2012, 09:26 AM
#41
Banned
How?
First establish your priorities and IGNORE impulses of the moment or "love", that kind of crazy stuff.
In my case, car spending is a 5-6th priority (after retirement, vacation, housing, investing, teens in university soon, etc...). If you are at 1-2, you have a problem.
Then an budget according to those priorities. And if your net worth doesn't improve assuming a decent income, you are doing it wrong.
The rule of thumb of max 50% of gross annual income for a car with tax is not bad either.
Personnally I could afford much more $ on cars, but I refuse to commit on an high value toy that loses 50% in 3 years. That's typical of 60-80K$ ones.
First establish your priorities and IGNORE impulses of the moment or "love", that kind of crazy stuff.
In my case, car spending is a 5-6th priority (after retirement, vacation, housing, investing, teens in university soon, etc...). If you are at 1-2, you have a problem.
Then an budget according to those priorities. And if your net worth doesn't improve assuming a decent income, you are doing it wrong.
The rule of thumb of max 50% of gross annual income for a car with tax is not bad either.
Personnally I could afford much more $ on cars, but I refuse to commit on an high value toy that loses 50% in 3 years. That's typical of 60-80K$ ones.
07-21-2012, 01:09 PM
#42
Three Wheelin'
Daily cars I try to pay cash for (my FX4), or finance with a huge amount down for a very short term-1 year (my wifes QX56). My GT-R I financed for a good rate with a good amount down to never be anywhere near upside down. It doesn't make good financial sense to pay interest on a toy but I don't really care. I figure if life takes a downturn the toys can go first. Cars are more than just a transportation expense for me. Totally emotional. Many of my partners at work have $1mm homes, hunting camps, huge RV's, 38ft sportfishers etc. I don't like any of that stuff but I love my rides.
You must have one hack of a career.
07-21-2012, 01:57 PM
#43
Depends on a number of factors:
- how much I want the car
- whether or not there are any upcoming big ticket items
- what my neighbor drives
- estimates on how much I would get laid from said car
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civicdrivr (07-21-2012)
07-22-2012, 11:53 AM
#44
Someday, an RS6 Avant+
I have not paid for a car on a loan since 1999. I've just been smart with my money, not bought brand new (until the Volvo in October), and very careful about having 0 debt. So I save a lot, and yes, three kids and a wife are a part of the deal. It all comes down to not spending at the drop of a hat.
My Subie is 6 years old, and still looks good / runs great. I'd love a new ride but I have a kid starting college in a year. So its better I keep the money on hand than spend it. But if there's a scholarship.....GAME ON
edit: Having said the above, I have been living outside the US for a long time, and if I were to return, a loan would make sense at a 1.9 % APR or .9% APR. Hell, that's free money. I would finance as much as possible and invest what I would have spent.
My Subie is 6 years old, and still looks good / runs great. I'd love a new ride but I have a kid starting college in a year. So its better I keep the money on hand than spend it. But if there's a scholarship.....GAME ON
edit: Having said the above, I have been living outside the US for a long time, and if I were to return, a loan would make sense at a 1.9 % APR or .9% APR. Hell, that's free money. I would finance as much as possible and invest what I would have spent.
Last edited by mrmako; 07-22-2012 at 11:55 AM.
07-22-2012, 10:36 PM
#45
I think this question is really best answered after looking at each individual situation.
Personally, paying for a car in cash with interest rates being where they are makes 0 financial sense. I can invest that money and earn much more than the 1.99% Id be paying on the car loan...
Personally, paying for a car in cash with interest rates being where they are makes 0 financial sense. I can invest that money and earn much more than the 1.99% Id be paying on the car loan...
07-22-2012, 11:25 PM
#46
אני עומד עם ישראל
I share the same sentiment as others. We don't have kids and will probably hold off another 3-5 years still. So that's an expense I don't worry about. Personally I look at what I want in a car (rwd/awd/turbo/V6 or V8, etc) and the most car I could afford without stretching myself too thin.
For what I made at the time 40k was the most I was willing to spend on a new car. The most car I could get for that budget after researching was a G37S and after test driving it and the 4G TL SH-AWD, I made the decision to get the Infiniti. I plan on keeping it for quite sometime as the "bug" has not bit me yet and I doubt it will since I still have fun driving my car.
The only debt I have now is my car. I just made my last CC payment on Wednesday. That was our wedding/honeymoon debt over 24k
My wife still has some CC and student loans, but those are going down pretty quickly too. To be honest that's the only debt we want anymore is our cars and when they are paid off no more debt period until a house comes along.
So now I can pay myself each month and still pay over the minimum on my car to pay it off early. Feed the pig baby. Just remember to balance what you want and what you can afford; do not over extend yourself over a car. There will always be time for nice wheels, get yourself financially stable first.
For what I made at the time 40k was the most I was willing to spend on a new car. The most car I could get for that budget after researching was a G37S and after test driving it and the 4G TL SH-AWD, I made the decision to get the Infiniti. I plan on keeping it for quite sometime as the "bug" has not bit me yet and I doubt it will since I still have fun driving my car.
The only debt I have now is my car. I just made my last CC payment on Wednesday. That was our wedding/honeymoon debt over 24k
My wife still has some CC and student loans, but those are going down pretty quickly too. To be honest that's the only debt we want anymore is our cars and when they are paid off no more debt period until a house comes along.So now I can pay myself each month and still pay over the minimum on my car to pay it off early. Feed the pig baby. Just remember to balance what you want and what you can afford; do not over extend yourself over a car. There will always be time for nice wheels, get yourself financially stable first.
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