Future car questions

[Jonasterg]

I'm getting ready to finish up college, and, having just sold my Turbo T, I will be looking for a new car upon graduation. Does anyone know of some good guidelines for a sensible amount to pay for a car related to yearly salary?

Example: If I'm making $55,000/year, is buying a $30,000 car not feasible?

I know that I will have to take into consideration many factors, such as down payment, monthly payment plan, length of financing, etc. I'm just trying to figure out what kind of car I might be able to afford when I start my life in the real world.

I'm hoping to buy back my T sometime after graduation, or get another TR. I will definately have a Turbo Buick sometime in the next few years, but only after I have a daily driver that I can put miles on and not have to worry about.

 

[VADER]

For some reason, I always thought people buy cars that cost half a years salary, so the price is right.

 

[MaxVO2]

I'm getting ready to finish up college, and, having just sold my Turbo T, I will be looking for a new car upon graduation. Does anyone know of some good guidelines for a sensible amount to pay for a car related to yearly salary?

*****Congratulations on finishing up college.

Example: If I'm making $55,000/year, is buying a $30,000 car not feasible?

*****If you plan on financing most or all of it, and have to also pay off school loans, pay rent, save for eventually buying your own place, etc.. I would say $30k is way too much car for you at that salary. Plenty of people do it, but most people in the US save less than 1% of their income year to year. Many who make good salaries truthfully have nothing to show for it other than a nice car, and big credit card bill payments.

I know that I will have to take into consideration many factors, such as down payment, monthly payment plan, length of financing, etc. I'm just trying to figure out what kind of car I might be able to afford when I start my life in the real world.

*****The rule my financial planner gave me when I asked him this question was to spend no more than approx 8% of your monthly salary on a car payment, insurance for it, etc.. Therefore, at $55,000 per year, you are bringing in $4583 per month, so 8% of that is about $367 dollars per month.

***** The exception to the above rule was if you are in the type of work where you need to have a nice car for more than transportation (driving around clients as a real estate agent has to sometimes, etc..), and can write off mileage, depreciate the vehicle due to your line of work, etc.. In that case, leasing a car might make more sense depending on whether you tend to keep cars for a long time, etc..

***** Since a car you presumably use as a daily driver is not generally considered a good, appreciable investment (it loses value as you drive it off the lot and use it..etc..), it might almost make better sense to just get something cheaper (mebbe used..) at first using the above guidelines, to keep your payments truly affordable until you have more savings, get raises, etc... than to splurge on a really nice car now.

***** It's always easy to spend money, especially with so many financing options available now, but by getting a really nice car now and being saddled with high payments for 4-5 years or whatever, you are greatly limiting your ability to get some other things that will mean so much more for you and your future, like a nicer house, or a more diversified true investment portfolio (strong 401k, ROTH IRA, etc..) which will add up to much more money down the line for you to spend on stuff that others only dream about. It's the magic of compound interest.



I'm hoping to buy back my T sometime after graduation, or get another TR. I will definately have a Turbo Buick sometime in the next few years, but only after I have a daily driver that I can put miles on and not have to worry about.

*****You sound like a smart guy, and congrats again on finishing college. Having in essence delayed gratification somewhat by improving your earning potential through getting a college degree - get yourself a car you can truly afford, that may not be as nice as others at your salary range (or usually less..) may have now, and in the future as you are more established with more disposable income, get whatever you want.

Good luck in your decision

Billy
Montgomery Village, MD

 

[Robbie-87plz]

...depending on your job like the others said, bite the bullet and drive something "humbling" for now, then as you build up your eggnest, you'll be ahead in choosing a nice car...Luck to ya...

 

[VADER]

I agree with getting a cheaper car, maybe $10-15K. Most people spend everything they make and then some, all to impress others or feel good about themselves. Most of my neighbors are like this, but they would crumble in 2 weeks if they lost their jobs.

 

[BuickMike]

I agree with buying a somewhat inexpensive car, but with all the killer deals going on you should look at new cars. You need a reliable car when starting your career. My wife and I are on a tight budget since we just had our first child and she is no longer working, but we decided on getting an inexpensive new car because I no longer have time to wrench on a higher mileage daily driver. We ended up sacrificing a little but are happy with our Saab 92-X Aero. It's basically a Subaru WRX Sport Wagon with a Saab nose job and a few other extras. We got ours with Premium Package, 5spd, and cold weather package (comes on all of them) for $22K. So far I'm very happy with the car. The hatch back is nice and there is tons of cargo room with the seats down. It handles great and has decent power once you learn how to deal with the turbo lag. Here's some pics:

 

[Robbie-87plz]

Heehee, does the same mods work on that as for the reg subbies? Nice car, Mike.

 

[BLACK6PACK]

I agree with those that suggested getting a cheaper car to start off with. I've always been car crazy and really wanted to get a newer camaro or TA after graduating. After looking at $350-$400 a month in car payments, $250 a month in insurance and another $100 in gas a month I realized I could buy a decent house for that. I've been out of school for a little over 10 years and drive a Eagle talon TSI. I bought it used with 20k miles on it. Put some money down, had payments of $250 for 3 years, and have been driving it for the last 3 years with no payments. With the money I don't spend on an expensive car I can go play and do whatever I want, whenever I want and don't have to worry about having cash to play with. I also bought another cheaper house. The houses are going up in value while the car goes down in value. Other than gas, insurance and regular upkeep, I figure the car has ended up costing me about $95 a month, and that figure keeps going down for every month I drive it without a car payment.

 

[BuickMike]

Heehee, does the same mods work on that as for the reg subbies? Nice car, Mike.

Thanks for the compliment. All the Subaru WRX mods work on this car. The main differences between the 92-X and the WRX Sport Wagon are that the Saab has different nose, Xeon headlamps with premium package, leather with premium packcage, sunroof with sport package, more sound deadening material, softer springs for a less harsh ride, STI suspension bushings, and STI steering rack. It's not the greatest car in the world, but a very nice ride for the low $20K range. BTW, you can pick one of these up with a NA 2.5L for under 20K.

 

[JoeNational]

Well as being 22 and working full time and actually working on another degree i was going to buy a new car, i said " wow new car right out of the factory" but then when i actually broke it down i was going to be spending almost $600 bucks a month. screw that. so instead i put the money had saved and bought a house I also have the luxury of working in Manhattan so not having an every day car is not so bad do to our transit system. but now that i will be moving soon i will need an everyday car but my plans are for something very cheap and reliable. I dont see the sense in buying something brand new when it will make a tight budget even tighter. so being in the same boat as you i would go for something cheap and used and save your money for something that will last a lot longer and appreciate in much larger intervals (a house)

 

[salvageV6]

Limited Turbo for a long commute, GN for a shorter one.

Next question.

 

[scottyb]

You will get varying opinions.

Personally, I wouldn't even consider a new car. Not just fresh from college, either. I bought a new car after I graduated, and unless I have CASH to burn I'll likely never buy another new car. The loss is too great IMO. Certainly I wouldn't consider a 30k car while making 55k. there's other variables such as rent/mortgage, debt, lifestyle, etc.

Use this rule of thumb, and you'll do well in life: If you can't COMFORTABLY afford the payment with a 3 year note, then it's too much car.

Please make it a priority to buy a home before buying a fancy car.

 

[Robbie-87plz]

Salvage, you're my new hero...lol...limited/gn split duty

 

[XLR8]

I would pay more than 10% of my gross monthly income for car related costs. That being said I bought a $15,850 new car right out of college - a 1986 Buick GN.

 

[Jonasterg]

Thanks for all the input, guys. I think I'm going to take the advice I've been hearing and look at purchasing something quite a bit cheaper than $30,000. I was originally looking toward an Infinity G35 coupe, Mitsubishi Evo, or WRX STi, but I think those are all going to be too much money for a guy right out of college (especially when I might be going back for grad school in a few years).

I think I am leaning heavily toward some sort of hybrid car, for two reasons. Obviously, the gas savings is a big plus. In addition, I am fascinated by the technology that goes into hybrids these days. I am graduating with an Aerospace Engineering degree, and have spent a considerable amount of time researching computer fuel management technologies, advanced propulsion systems, etc.; I just think hybrid cars are "cool." (Yes, I'm a nerd.) Maybe a Toyota Prius? We'll see.

Thanks again for the advice, you guys are the reason I love TRs so much.

 

[Robbie-87plz]

I think the initial cost of the hybrid to be a bit high, although I don't own one. Friend of mine has one gets about 50 mpg no bs. Nice pickup/etc...'Luck to ya...