Despite good economy, many still in trouble with car loans.
02-13-19, 12:31 PM
#31
Lexus Fanatic
So 2K in monthly payments, gets you a 36K Camry and a $36K Accord if you pay it off on 3 years. Years 4-10 are payment free. You then pocket $144K in years 4-10. Most people are incapable of thinking along those lines long term lines. Most people get snookered into a lease at $1000 per month and they get to drive something they think is superior to the Camry or Accord (whether or not it is or it is not). I would say one needs to make about 200K household minimum to properly do the above.
02-13-19, 12:32 PM
#32
Super Moderator
But personally, I would never (and have never) spent more than half of my gross income on the purchase price of a car, regardless of how it's financed. That means no more than 25% of household income (and even that's pushing it) now that I'm married, because we need 2.
02-13-19, 12:36 PM
#33
Lexus Fanatic
Average mortgage payment just hit a new high of 15.8% of gross household income. I would say car payments of even half that would be getting into the danger zone. But let's round to 8%. That would mean a gross of $25k/month, or $300k/year, and would have the family spending around 30-40% of their post-tax income on mortgage and auto loans.
But personally, I would never (and have never) spent more than half of my gross income on the purchase price of a car, regardless of how it's financed. That means no more than 25% of household income (and even that's pushing it) now that I'm married, because we need 2.
But personally, I would never (and have never) spent more than half of my gross income on the purchase price of a car, regardless of how it's financed. That means no more than 25% of household income (and even that's pushing it) now that I'm married, because we need 2.
02-13-19, 12:41 PM
#35
Lexus Fanatic
Thanks. So, IMO in all of this. Most people like paying lots for their car. I would say the average car payments is about $700 a month. That does not get you a lot long term if you consider the average new car costs $35Kish. The key to car ownership IMO, is to get them paid off as soon as one can.
02-13-19, 12:46 PM
#36
nope, depends on interest rate. Back in 2015 I got my mustang for .9% interest, i put zero down and milked the loan all the way through. If one gets a 0% interest for 72 months like you can at some end of the year, why on earth would anyone pay it off sooner?
02-13-19, 12:49 PM
#37
Lexus Fanatic
My 36 month, $1000 per month assumes 0% finance. I guess I should of said that.
02-13-19, 12:55 PM
#39
Lexus Fanatic
Average mortgage payment just hit a new high of 15.8% of gross household income. I would say car payments of even half that would be getting into the danger zone. But let's round to 8%. That would mean a gross of $25k/month, or $300k/year, and would have the family spending around 30-40% of their post-tax income on mortgage and auto loans.
But personally, I would never (and have never) spent more than half of my gross income on the purchase price of a car, regardless of how it's financed. That means no more than 25% of household income (and even that's pushing it) now that I'm married, because we need 2.
But personally, I would never (and have never) spent more than half of my gross income on the purchase price of a car, regardless of how it's financed. That means no more than 25% of household income (and even that's pushing it) now that I'm married, because we need 2.
edit Just thought of those nutty YouTubes where they tell you not to borrow for depreciating assets, and that you borrow for appreciating assets, and then that pays for the Bentley. Kinda funny. As if it's a no-brainer on how to do it.
Last edited by Johnhav430; 02-13-19 at 12:59 PM.
02-13-19, 12:57 PM
#40
Lexus Fanatic
Part of being married is to enjoy economies of scale. Sound like some households are where the spouses are outdoing one another. At any rate, what I take away from this thread is people spend. It makes a person wonder how anyone could possibly live in a 1.6 mil. house and drive an old car. Go to Westfield NJ. Half the cars are completely ordinary (the typical Accord, Camry, Pilot, Explorer). My theory is with a mortgage on a 1.6 mil. house and a 28k property tax, they choose not to have a $1000/mo. car payment. They can actually choose that part. They cannot chose the amount the town taxes them, nor the selling prices of the homes.
02-13-19, 12:59 PM
#41
Lexus Champion
Thanks. So, IMO in all of this. Most people like paying lots for their car. I would say the average car payments is about $700 a month. That does not get you a lot long term if you consider the average new car costs $35Kish. The key to car ownership IMO, is to get them paid off as soon as one can.
I have a $55K car and a $38K car and my combined lease payments for both are $885/ month. in both cases $5K down on the leases. I see no point in purchasing a vehicle outright, I refuse to own anything out of warranty with all the electronic crap they have today, so 3-5 years is the longest I keep a vehicle.
02-13-19, 01:00 PM
#42
Pole Position
I was a total outlier among my co-workers a few years ago - we didn't receive company cars but got $.50/mile for driving (we had to pay for gas, repairs, etc. out of pocket). I was driving about 40k miles/year and paid off my car in 12 months by just making my normal payment amount + 100% of the mileage amount I received. After that car was paid off, I was able to pay off our LX in under 15 months using the same philosophy. Everyone else was buying bigger, better and more expensive cars every 12-18 months. I didn't mind or judge based on what they were doing - I just have a different approach that fits my financial narrative.
02-13-19, 01:00 PM
#43
Lexus Champion