Buying expensive car, how to keep payments low?

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bloom2708
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Re: Buying expensive car, how to keep payments low?

Post by bloom2708 »

In the end, how to keep the payment low:

1. Don't buy
2. Pay cash for 100%
3. Pay cash for 75%
4. Pay cash for 80%
5. Pay cash for 85%
6. Pay cash for 90%
7. Pay cash for 95%

All of these will result in a pretty low monthly car payment.

I read no "ridicule" into any responses. Just different perspective, viewpoints and ideas.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
edge
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Re: Buying expensive car, how to keep payments low?

Post by edge »

If you have to worry about this, you shouldn't be buying it.
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HomerJ
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Re: Buying expensive car, how to keep payments low?

Post by HomerJ »

BW1985 wrote:
tin369 wrote:Yes I don have $70,000 but I would rather keep it liquid instead of putting that into a depreciating asset.
:confused Then you shouldn't buy it. When you buy a 70K car you are putting 70K into a depreciating asset whether you finance it or not.
This.

OP, you are not thinking this through correctly. Borrowing $70k is the same as spending $70k (possibly worse because of interest).

Either way, you are buying a depreciating asset.
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HomerJ
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Re: Buying expensive car, how to keep payments low?

Post by HomerJ »

JupiterJones wrote:Basically, when it comes to "toys" like fancy cars, grand pianos, vacation homes, ski boats, etc., the rule is that you should either pay for it out-of-pocket, or go without. Ignore this rule at great peril. :beer
Excellent rule. It should be in the wiki.
GrayS26
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Re: Buying expensive car, how to keep payments low?

Post by GrayS26 »

tin369 wrote:Hi all,

I have a rav4 which has about 128,000 miles and I have had the car for about 7 years now. I want to buy a new car (luxury) and considering the Q7. The price as optioned comes out to around $67,000, CarMax gave me a quote of $7000 for the RAV4, if I trade in the rav4 my cost for the q7 will be $60,000 and any discount I get on top of the MSRP.

I don't know if I want to sell my rav4 for $7000 as I can keep it as a 3rd car as a beater.

If I don't sell the rav4, I can either take a $67,000 loan for 72-74 months (Audi lease is really expensive), or should I put a $10-$15000 down payment to have a lower Monthly payment. With a 3% loan rate the monthly payment is coming close to $1000, which is really high.

Should I put more money down, I was thinking of using the cash to invest instead. What do you guys think?

I drive a Mercedes and IMO when I test drove it I liked it more than when I test drove an Audi. It was $50,000 so a bit cheaper than the Audi.
s0me0nesmind1
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Re: Buying expensive car, how to keep payments low?

Post by s0me0nesmind1 »

"I have enough money to buy everything, because I don't buy everything"
randomguy
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Re: Buying expensive car, how to keep payments low?

Post by randomguy »

bottlecap wrote:
How do you figure the odds are not in his favor? A quick count gives me ~20 out of 83 5 year samples of the S&P 500 you would have come out by paying off the car instead of investing. I would consider 3 out 4 as having the deck stacked in your favor.
It's an abstract idea that comes from probability. You ignore risk or otherwise must assume that a good portion of the the market gains come from inefficiency. That is not so.

Another way to look at it is you are looking at average gains while ignoring the possible magnitude of a given loss.

JT
Risk isn't being ignored. Taking on risk is the whole point. I am not looking at average returns and ignoring losses. I am looking at the spread of all possible outcomes and saying that on average I come out ahead by investing. That is the basic definition of a bet where the odds are in your favor. If you could make this bet 1000 times, you would do it all day long. It would be like printing money. When you can only make a bet once, you have to decide if you can live with the outcome. Is the risk of losing 15k worth the chance to make 100k? Only you can decide.
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Will do good
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Re: Buying expensive car, how to keep payments low?

Post by Will do good »

s0me0nesmind1 wrote:"I have enough money to buy everything, because I don't buy everything"
+1, thats' our family too.
Admiral
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Re: Buying expensive car, how to keep payments low?

Post by Admiral »

Subaru currently offering 0% financing on the Outback. It's a nice car and you can get it loaded for $39k. Just sayin. It's not a Q7, but I'm wondering why, if you were ok with a RAV4, you need to make such a big jump...?

I disagree with the whole "unless you can pay cash, you can't afford it." It could be a cash flow issue for you, who knows. I would say, however, that if you really want it that badly, take your $1000 or $800 or whatever per month and throw it into a savings account. Then in a year or two you will have a) a nice down payment b) a good sense of how much you like a big car payment and perhaps c) delayed gratification on a big purchase.

A fraction of that $1,000 per month will pay to keep your RAV4 running very well.
deltaneutral83
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Re: Buying expensive car, how to keep payments low?

Post by deltaneutral83 »

I've got to get into the "0% financing" car business. I had no idea this was so trendy. New car loses 10% the moment you drive it off the lot and they aren't budging much off MSRP if you get 0% interest. So for a $39k car when you get home to show the wife and kids it's worth just north of $35k.....but at 0% interest! I'd have to be worth 2-3 million with all major life events paid for (college for kids/healthcare squarely in place/etc etc) to even think about something like this which i am completely aware that high income earners can do and the math suits just fine.
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jimb_fromATL
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Chuckle

Post by jimb_fromATL »

Jack FFR1846 wrote:You say the Audi lease is really expensive. I don't really know Audi mini vans very well ...

:D :D :D :D For somebody who wants to buy an outlandishly expensive SUV they can't afford with money they don't have to impress people they don't even know, calling it a mini-van is probably the ultimate insult.

jimb
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Re: Buying expensive car, how to keep payments low?

Post by Shackleton »

We just bought a new Q7 last month. And I came up with a sure fire way to keep the payment low -- I wrote a check for the full amount. When people ask why I don't take out low interest loans I give two reasons: 1) I like knowing that when I get paid, the full amount is mine and not ear-marked for a bunch of installments and 2) I keep my investment money separate from my spending money. I've got my investments all squared away and being added to monthly and I keep spending money for when I want to buy things, like cars.
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Admiral
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Re: Buying expensive car, how to keep payments low?

Post by Admiral »

Shackleton wrote:We just bought a new Q7 last month. And I came up with a sure fire way to keep the payment low -- I wrote a check for the full amount. When people ask why I don't take out low interest loans I give two reasons: 1) I like knowing that when I get paid, the full amount is mine and not ear-marked for a bunch of installments and 2) I keep my investment money separate from my spending money. I've got my investments all squared away and being added to monthly and I keep spending money for when I want to buy things, like cars.
So, just to play devil's advocate, you were absolutely fine with taking, oh, 10-15% of your 70 large and basically flushing it down the toilet when you drove off the lot. Because with depreciation, that's what you just did, for all intents and purposes.

Now obviously it's your money, and you earned it, and you can do with it what you wish. But it just seems like odd behavior--at least from an investment standpoint--for someone on this forum. And yes, I get that a car is not an investment, but that's still a pretty big immediate loss.

Not trying to start an argument, it's just interesting how prudent investors think about vehicle purchases.

To OP: I'd look at gently used.
bloom2708
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Re: Chuckle

Post by bloom2708 »

jimb_fromATL wrote:
Jack FFR1846 wrote:You say the Audi lease is really expensive. I don't really know Audi mini vans very well ...

:D :D :D :D For somebody who wants to buy an outlandishly expensive SUV they can't afford with money they don't have to impress people they don't even know, calling it a mini-van is probably the ultimate insult.

jimb
I had a good chuckle at the "Audi mini-van" reference. Still laughing in fact. A person lives longer if they laugh..so I've been told.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
GrayS26
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Re: Buying expensive car, how to keep payments low?

Post by GrayS26 »

Shackleton wrote:We just bought a new Q7 last month. And I came up with a sure fire way to keep the payment low -- I wrote a check for the full amount. When people ask why I don't take out low interest loans I give two reasons: 1) I like knowing that when I get paid, the full amount is mine and not ear-marked for a bunch of installments and 2) I keep my investment money separate from my spending money. I've got my investments all squared away and being added to monthly and I keep spending money for when I want to buy things, like cars.
I prefer paying cash than payments which is what did for my Mercedes. It's just easier writing a check IMO. I don't really separate money but I just try to spend only a little while still enjoying.

And for those arguing the new is a ripoff is that true? I've always gotten new. Where is the best place to buy used?
stoptothink
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Re: Buying expensive car, how to keep payments low?

Post by stoptothink »

GrayS26 wrote:
Shackleton wrote: And for those arguing the new is a ripoff is that true? I've always gotten new. Where is the best place to buy used?
For luxury vehicles, absolutely. For cars on the lower end of the spectrum, especially Hondas and Toyotas, it isn't quite that simple.
srt7
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Re: Buying expensive car, how to keep payments low?

Post by srt7 »

bloom2708 wrote:
Rupert wrote:Boy did you pick the wrong forum to ask your question. I bet half a dozen people tell you to buy a Honda Fit instead.
If the OP had said:

I have $70k cash saved up for my next car purchase. Should I buy the Q7 or the LS 460?

That would have been a "slam dunk". :shock:

We are here not to please but to provoke thoughtfulness.
Exactly why I loiter around here :D
canbonbon
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Re: Buying expensive car, how to keep payments low?

Post by canbonbon »

GrayS26 wrote:I drive a Mercedes and IMO when I test drove it I liked it more than when I test drove an Audi. It was $50,000 so a bit cheaper than the Audi.
So just out of curiosity, *which* Mercedes was $50,000 less than *which* Audi? If you are comparing apples to apples, then this is not possible.
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Raymond
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Re: Buying expensive car, how to keep payments low?

Post by Raymond »

canbonbon wrote:
GrayS26 wrote:I drive a Mercedes and IMO when I test drove it I liked it more than when I test drove an Audi. It was $50,000 so a bit cheaper than the Audi.
So just out of curiosity, *which* Mercedes was $50,000 less than *which* Audi? If you are comparing apples to apples, then this is not possible.
I think he meant the Mercedes was $50,000 - therefore a bit cheaper than the Audi.
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avalpert
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Re: Buying expensive car, how to keep payments low?

Post by avalpert »

Admiral wrote:
Shackleton wrote:We just bought a new Q7 last month. And I came up with a sure fire way to keep the payment low -- I wrote a check for the full amount. When people ask why I don't take out low interest loans I give two reasons: 1) I like knowing that when I get paid, the full amount is mine and not ear-marked for a bunch of installments and 2) I keep my investment money separate from my spending money. I've got my investments all squared away and being added to monthly and I keep spending money for when I want to buy things, like cars.
So, just to play devil's advocate, you were absolutely fine with taking, oh, 10-15% of your 70 large and basically flushing it down the toilet when you drove off the lot. Because with depreciation, that's what you just did, for all intents and purposes.

Now obviously it's your money, and you earned it, and you can do with it what you wish. But it just seems like odd behavior--at least from an investment standpoint--for someone on this forum. And yes, I get that a car is not an investment, but that's still a pretty big immediate loss.

Not trying to start an argument, it's just interesting how prudent investors think about vehicle purchases.

To OP: I'd look at gently used.
It's not a loss - its an expenditure. Whether the expense is worth it and affordable for them only the individual can decide but assuming they asses the utility value accurately there is nothing odd about it even if they take this forum's approach to investing.
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Re: Buying expensive car, how to keep payments low?

Post by jimb_fromATL »

canbonbon wrote:
GrayS26 wrote:I drive a Mercedes and IMO when I test drove it I liked it more than when I test drove an Audi. It was $50,000 so a bit cheaper than the Audi.
So just out of curiosity, *which* Mercedes was $50,000 less than *which* Audi? If you are comparing apples to apples, then this is not possible.
I took that to have an implied comma, as in "it was $50,000, ... which is about one new Corolla less than the Audi.

jimb
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ram
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Re: Buying expensive car, how to keep payments low?

Post by ram »

How to keep payments low:
1. Negotiate lower intt rate
2. Make duration of loan longer.
3. Give bigger down payment.
4. Combination of above.
Ram
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wander
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Re: Buying expensive car, how to keep payments low?

Post by wander »

How about this: Suppose the new Honda Accord is about $27k and you have $40k available, you can put down $40k and then make payment with smaller amount as buying a Honda Accord. :sharebeer
lazydavid
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Re: Buying expensive car, how to keep payments low?

Post by lazydavid »

Admiral wrote:So, just to play devil's advocate, you were absolutely fine with taking, oh, 10-15% of your 70 large and basically flushing it down the toilet when you drove off the lot. Because with depreciation, that's what you just did, for all intents and purposes.

To OP: I'd look at gently used.
Often true, but not in this case, due to a combination of being a relatively new model (just over a year from introduction), in very high demand, and low supply in the used market. There's just not that much depreciation on the Q7 right now. Oh sure it'll come, but it hasn't yet. Probably in about two years when the supply drought diminishes due to lease turn-ins. The dealer by me has two used ones, both a hair under $60k, against an MSRP of $64k. But general consensus on AudiWorld is that you can get a 3-5% discount on new, if you work a couple of dealers against each other. For a $64k sticker, that means just under $61k. So you literally save a thousand dollars by buying used. Considering that grand also buys you a full warranty, choice of color (both of the used ones are black) and options, that savings is a false economy.

The Q7 is--at the moment, at least--in the same category as many Toyotas and Hondas. It just doesn't make sense to buy "gently used", because you don't actually save anything.
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Re: Buying expensive car, how to keep payments low?

Post by rralex1 »

This thread title is like chum to sharks on BH.. Less than 12 hours and 74 responses..

Miriam Webster's Definition of "expensive"
1: involving high cost or sacrifice, an expensive hobby
2a : commanding a high price and especially one that is not based on intrinsic worth or is beyond a prospective buyer's means
2b : characterized by high prices expensive shops


With that said, to buy an expensive car and keep payments low one can:
1. Pay most of the principal in cash.
2. Put down an increased down payment.
3. Finance for as long a time as possible.

Rationalizing the purchase is a different discussion.
GrayS26
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Re: Buying expensive car, how to keep payments low?

Post by GrayS26 »

I mean the Benz was $50,000.
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Re: Chuckle

Post by Crimsontide »

bloom2708 wrote:
jimb_fromATL wrote:
Jack FFR1846 wrote:You say the Audi lease is really expensive. I don't really know Audi mini vans very well ...

:D :D :D :D For somebody who wants to buy an outlandishly expensive SUV they can't afford with money they don't have to impress people they don't even know, calling it a mini-van is probably the ultimate insult.

jimb
I had a good chuckle at the "Audi mini-van" reference. Still laughing in fact. A person lives longer if they laugh..so I've been told.
I didn't know what a Q7 was, I had to Google it. Looks kind of mini-vanish to me too...
randomguy
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Re: Chuckle

Post by randomguy »

bloom2708 wrote:
jimb_fromATL wrote:
Jack FFR1846 wrote:You say the Audi lease is really expensive. I don't really know Audi mini vans very well ...

:D :D :D :D For somebody who wants to buy an outlandishly expensive SUV they can't afford with money they don't have to impress people they don't even know, calling it a mini-van is probably the ultimate insult.

jimb
I had a good chuckle at the "Audi mini-van" reference. Still laughing in fact. A person lives longer if they laugh..so I've been told.
Please it doesn't look remotely like a minivan. It is clearly a station wagon:)

Now if you every meet a Mercedes R-Class owner, you definitely need to ask them how the minivan is. I used to joke that it was the ultimate early 30s single guy car. It tells the girl you are ready for a family and you have stupid money:)
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Re: Buying expensive car, how to keep payments low?

Post by randomguy »

Raymond wrote:
canbonbon wrote:
GrayS26 wrote:I drive a Mercedes and IMO when I test drove it I liked it more than when I test drove an Audi. It was $50,000 so a bit cheaper than the Audi.
So just out of curiosity, *which* Mercedes was $50,000 less than *which* Audi? If you are comparing apples to apples, then this is not possible.
I think he meant the Mercedes was $50,000 - therefore a bit cheaper than the Audi.
Sure and an audi a3 is only 30k which is a lot cheaper than a 50k mercedes. Similar models (GLS versus Q7) are very close together in price. The winner often depends on how you want to option them up.
GrayS26
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Re: Buying expensive car, how to keep payments low?

Post by GrayS26 »

I actually like the look of the Q7 a lot. I don't own one or know for sure but I don't think it's a bad ride at all or that it looks bad or something. It's just expensive IMO if it's $67,000.
Incendiary
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Re: Buying expensive car, how to keep payments low?

Post by Incendiary »

This is the first time I've heard someone saying to buy a vacation home in cash. Is this a common sentiment here?
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Re: Buying expensive car, how to keep payments low?

Post by randomguy »

Incendiary wrote:This is the first time I've heard someone saying to buy a vacation home in cash. Is this a common sentiment here?
I think the common sentiment is don't squander money on a 2nd house. Get a hotel room.:) Personally as a don't pay off the house type of guy, I can't imagine buying a 2nd house and paying cash. I would lose too much sleep at night thinking of the opportunity cost of doing that. I can definitely see the debt is bad crowd though thinking paying cash for a luxury good is the only way of going. It is the type of choice that pretty much doesn't matter.
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Re: Buying expensive car, how to keep payments low?

Post by Incendiary »

randomguy wrote:
Incendiary wrote:This is the first time I've heard someone saying to buy a vacation home in cash. Is this a common sentiment here?
I think the common sentiment is don't squander money on a 2nd house. Get a hotel room.:) Personally as a don't pay off the house type of guy, I can't imagine buying a 2nd house and paying cash. I would lose too much sleep at night thinking of the opportunity cost of doing that. I can definitely see the debt is bad crowd though thinking paying cash for a luxury good is the only way of going. It is the type of choice that pretty much doesn't matter.
I would never buy a vacation home either, but paying cash for a several million dollar house in the Hamptons or Aspen or wherever seems unrealistic even for most Bogleheads.
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Re: Buying expensive car, how to keep payments low?

Post by avalpert »

Incendiary wrote:
randomguy wrote:
Incendiary wrote:This is the first time I've heard someone saying to buy a vacation home in cash. Is this a common sentiment here?
I think the common sentiment is don't squander money on a 2nd house. Get a hotel room.:) Personally as a don't pay off the house type of guy, I can't imagine buying a 2nd house and paying cash. I would lose too much sleep at night thinking of the opportunity cost of doing that. I can definitely see the debt is bad crowd though thinking paying cash for a luxury good is the only way of going. It is the type of choice that pretty much doesn't matter.
I would never buy a vacation home either, but paying cash for a several million dollar house in the Hamptons or Aspen or wherever seems unrealistic even for most Bogleheads.
Taking on net debt for a several million dollar vacation house in the Hamptons or Aspen seems unrealistic for most Bogleheads too. I think the sentiment is you should have the money to cover the vacation home before buying it - whether you then buy it outright or finance it is a separate question you should evaluate based on mortgage rates and expected return on your investments along with your tolerance for risk.
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Re: Buying expensive car, how to keep payments low?

Post by StevieG72 »

Flashes1 wrote: I got the "fancy car itch" taken care of and will be buying a really nice used Lexus next time. I found the stress from worrying about my kids' bikes scratching my "fancy" car, and other such things, not worth it.
+1

I bought the vehicle I have wanted for years. While I am pleased with the purchase the stress over dents, dings, & scratches is on another level!

Nice used car for me too next time...
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Re: Buying expensive car, how to keep payments low?

Post by HomerJ »

Incendiary wrote:This is the first time I've heard someone saying to buy a vacation home in cash. Is this a common sentiment here?
Well, I would tell someone they shouldn't get a mortgage on a vacation home until the primary home at least is paid off. One should definitely not go into debt to buy a boat, a luxury car, a jetski, etc. If you can't pay cash for those, you can't afford it. But that's just my opinion.

In our case, we indeed did pay cash for our vacation home a few years after paying off the primary home.
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Re: Buying expensive car, how to keep payments low?

Post by hightower »

I like WCI's rule of thumb for car buying. The car shouldn't cost more than 20% of what you make per year. And he recommends paying cash for cars as well.
For my wife and I we could technically afford a 64k car with that philosophy, but for me that's too much. I just bought a BMW i3 for 44k and that's about as much as I'd ever consider spending again. (Of course with the $7500 dollar tax credit it only actually cost me $36500).
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Re: Buying expensive car, how to keep payments low?

Post by livesoft »

My rule for car buying is that it shouldn't cost more than what your portfolio drops on a single worst day or goes up on a single good day.
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Re: Buying expensive car, how to keep payments low?

Post by deanbrew »

I like WCI's rule of thumb for car buying. The car shouldn't cost more than 20% of what you make per year. And he recommends paying cash for cars as well.
The average wage in the US is about $44,000. So, by that rule, there should be little market for any car costing more than $8,800. The average new car price is now $33,000. While one could argue that a lot of people spend more than they should on vehicles, it's a bit unrealistic to use a 20% of salary figure.
My rule for car buying is that it shouldn't cost more than what your portfolio drops on a single worst day or goes up on a single good day.
What is the drop/gain you are speaking of? 2% in a day? So, someone with $1M portfolio, which is an exceedingly small percentage of people, should only spend $20,000 on a car? Do you have another percentage figure in mind?
"The course of history shows that as the government grows, liberty decreases." Thomas Jefferson
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Re: Buying expensive car, how to keep payments low?

Post by randomguy »

deanbrew wrote:
My rule for car buying is that it shouldn't cost more than what your portfolio drops on a single worst day or goes up on a single good day.
What is the drop/gain you are speaking of? 2% in a day? So, someone with $1M portfolio, which is an exceedingly small percentage of people, should only spend $20,000 on a car? Do you have another percentage figure in mind?
Market dropped 22% in 1987. You can afford a 220k car. It went up 15% in 1933. You can afford a 150k car. Rule seems very aggressive to me.:) Rules of thumb are limited. If you are making 100k/year and paying 1k in rent you can afford a lot nicer car than if you are making 100k but paying 3k/month in rent. Or single/married with kids. And so on. You know what you make. You know what you need to save. You know what basic expenses are. Where you spend the rest (fancy car, fancy house, kids, private school, watches, vacations,....) is where you think it will maximize your happiness. I have heard people say they drive a cheap car because they spend 3 hours/day in it and it depreciates like made. I have heard people say they drive a nice car because theys pend 3 hours/day in it. Both have a point.
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Re: Buying expensive car, how to keep payments low?

Post by Admiral »

Really there are no useful rules of thumb. Someone may be making 400k with low expenses. For them, a $70k cash payment for a car is affordable: they could save that in a few months. Someone else may be making $375k with huge expenses, and they cannot afford a car half that price.

There are plenty of millionaires on this board who would never in a million years pay 70 grand for a car. There are others who are not millionaires who would. Some don't care about spending that much on an immediately depreciating asset, some run away screaming

To each his own. The OP's question, it seems to me, answers itself. If the payment seems scary, then it probably is, because the car is too expensive. I stand by my earlier advice: Spend six months or more socking away that money you would use for the car payment, then see how it feels. If you can't stand it, you'll know pretty quickly, and you'll look at a cheaper car.
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Re: Buying expensive car, how to keep payments low?

Post by Toons »

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corn18
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Re: Buying expensive car, how to keep payments low?

Post by corn18 »

Admiral wrote:Really there are no useful rules of thumb. Someone may be making 400k with low expenses. For them, a $70k cash payment for a car is affordable: they could save that in a few months. Someone else may be making $375k with huge expenses, and they cannot afford a car half that price.

There are plenty of millionaires on this board who would never in a million years pay 70 grand for a car. There are others who are not millionaires who would. Some don't care about spending that much on an immediately depreciating asset, some run away screaming

To each his own. The OP's question, it seems to me, answers itself. If the payment seems scary, then it probably is, because the car is too expensive. I stand by my earlier advice: Spend six months or more socking away that money you would use for the car payment, then see how it feels. If you can't stand it, you'll know pretty quickly, and you'll look at a cheaper car.
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Wolkenspiel
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Re: Buying expensive car, how to keep payments low?

Post by Wolkenspiel »

infotrader wrote:For those interested in Q7, they should seriously consider VW Atlas.
If I remember correctly, the current Q7 has been around since 2005!!!
No, 2017+ Q7's are "all new" - completely redesigned platform. They just look the same (on the outside). In terms of driving dynamics, the new car is a major step forward, and one of the nicest SUVs around.
timemoveson
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Re: Buying expensive car, how to keep payments low?

Post by timemoveson »

Excellent thoughts regarding priorities and to each their own if you are a actually wealthy. The OP can't afford it and shouldn't do it under any payment circumstances.

I love cars, love engineering excellence and high performance. I've had a dozen high performance cars over the last 20 years or so. But, they were all used and very easily accommodated in cash flow or cash payment terms.

Looking back on it, I spent way too much on cars and their depreciation, despite the fact I could easily afford it. At the time, it must have been what I wanted. None of my interests have changed but my priorities have. Despite the fact I could buy, lease or finance whatever I want now, I wouldn't at this point. It's just not high on my priority list any more. I just read magazines, blogs and occasionally track a Ferrari or something to get it out of my system.
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corn18
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Re: Buying expensive car, how to keep payments low?

Post by corn18 »

It is moderately depressing to see my net worth take a $10k / year depreciation hit due to vehicles in the inventory (3 cars, total value $63k)
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Admiral
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Re: Buying expensive car, how to keep payments low?

Post by Admiral »

timemoveson wrote:Excellent thoughts regarding priorities and to each their own if you are a actually wealthy. The OP can't afford it and shouldn't do it under any payment circumstances.

I love cars, love engineering excellence and high performance. I've had a dozen high performance cars over the last 20 years or so. But, they were all used and very easily accommodated in cash flow or cash payment terms.

Looking back on it, I spent way too much on cars and their depreciation, despite the fact I could easily afford it. At the time, it must have been what I wanted. None of my interests have changed but my priorities have. Despite the fact I could buy, lease or finance whatever I want now, I wouldn't at this point. It's just not high on my priority list any more. I just read magazines, blogs and occasionally track a Ferrari or something to get it out of my system.
+1. Good post. I too have owned relatively expensive cars. My current BMW (which I bought in 2003, CPO, for a LOT less than sticker) has been a decent car, ownership wise, but German cars (and perhaps especially Audis) are expensive to maintain out of warranty. This is something any potential owner--OP included--should know, if they think they will keep the car for a long time. Even after 13 years of ownership, I still have not spent on maintenance what I saved by buying used. Doing some work myself and using an independent mechanic helps.

I too had the new car urge a few months ago (and posted about it) but did not even test drive a car that stickered for over 40k. I love fast cars, but it's just less of a priority now that I'm older. I want reliability + some fun quotient.
mhalley
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Re: Buying expensive car, how to keep payments low?

Post by mhalley »

I never bought a "luxury" car until a couple years before I retired, then splurged on an Acura for me and a BMW for my wife. I did buy new cars, but always made a large down payment, kept them for many years, and usually payed them off early. Because of excellent credit, the loans were usually very low rate.
A couple of Finance Guru's rule of thumb:
Aside from always pay cash, Dave Ramsey says never buy new until you have a net worth of a million. Also, everything you have with a motor (ie, depreciating assets), should not exceed 50% of income.
Clark Howards rule of car loans is to not exceed 42 months.
chendon
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Re: Buying expensive car, how to keep payments low?

Post by chendon »

Can you even afford this car? Judging from your post, it doesn't seem like you can. Go for something half the price, if you can afford that. It's just a car, after the novelty wears off you'll be glad you didn't put yourself into so much debt.
This one million times. The new car feel will wear off and then it just a vehicle that nobody cares about except you.
michaeljc70
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Re: Buying expensive car, how to keep payments low?

Post by michaeljc70 »

lthenderson wrote:If you can't pay cash, you need to consider a cheaper vehicle.
Though I generally agree with that, when I was younger there was no decent car I could afford to buy and pay cash (except the junkers that kept breaking down). I've paid cash for my last 3 cars though and would only finance if the rate was ridiculously low.
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