I read that you should only spend about 25% of your annual income on a car purchase… It makes sense but it’s fucking boring. That means I should only buy a car worth under $8k…
I make 30.7k a year and I want to buy a $30k car (2011 Genesis Coupe 3.8 track). I’m a young guy with no kids, paying $700 rent and about $500 in other bills. I think I can afford another $500 a month for a car I really want. But I know that also means a higher insurance rate and maintenance fees. With my current income, it’s do-able but is it smart? Probably not, but you only live once!
Anyways what’s YOUR income and how much did you buy your automobile for?
The exchange rate at the time of this post is 1.00 AUD -> 1.01 USD…I earn $40000USD, and my car will cost me only $5000 a year (2005 Mazda 6 Series 2 Classic), including loan, registration, insurance and saving for services.
The whole 8k car thing is only if you plan on paying for the whole car in a year. Annual is the key word here. A 30k car on a 3 year plan would be ~10k a year. Or a 4 year plan would be ~7500k. So it really depends on what payment plan you take and the car you get.
I wouldn’t spend more than 15% of my income paying for a car… and that includes the expenses associated with it, such as insurance, gas, and maintenance. Start putting away 15%-20% of your pay right now in savings for the car down payment while you think about it. I would recommend to do that only if you have saved up about 6 months of living expenses in your savings first though. If not, don’t even bother spending more money on a car. It’s nice to have a nice car but shouldn’t be a priority if you don’t own a home or anything yet. The car should come last IMO. My daily driver I got for $2600 and it runs great. I’ve wanted to buy a new 5 series for a few years but just couldn’t bring myself to do it. I put away a “car payment” in my savings every month that I thought about it and now I have enough to pay off the car I want in under a year… but I still haven’t committed to it. With a big purchase like a car, it’s best to take your time with it. This situation is definitely more a want than a need.
So I decided that it is in my best interest to buy a cheapo beater until I can get a promotion. I think I want to spend 50% of my annual income on a car. So I guess I’ll have to wait till I make at least 60k to get that car. Maybe for the 2012 model… =[
I know some pretty reliable dealers with inexpensive cars that run well. Currently driving a 2002 Buick Century that cost me a whopping $2700. Runs just fine. It’s not much to look at, but I’m not really one of those types who has to have a “sporty” car, I just need something to get me from point A to point B, and this does it just fine. No car payments (paid it all in cash) is nice too.
