What Percentage of Income Should You Spend On a Car? (account, mortgage)
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I rarely see the best rated cars at zero percent. Wonder how many let zero
% impact their car choice.
Also consider that many zero percent financing offers are zero percent or cash back and if you choose the financing option you are just overpaying for the car by paying the interest up front instead of taking the cash.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Originally Posted by mysticaltyger
As little as possible, ... you should pay as little as possible for the most reliable car you can get.
Quote:
Originally Posted by cpg35223
It's a depreciating asset. As little as possible.
..
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Originally Posted by brightdoglover
I buy the cheapest entry-level car that is cheap to run and runs like iron ...
^^^these are good advice ^^^
Quote:
Originally Posted by cleasach
I'm not a believer in the idea that one should purchase things based on their income. ...
Quote:
Originally Posted by DennyCrane
...
For someone starting out, building a good credit history is important. Maybe the only thing you ever had to worry about was a credit card. ...a guy who, in addition to the credit card, could also handle a $30000 car loan?..Taking on a car loan is one way to build up your credit rating, which helps you later on when you're ready to buy a house.
WRONG I go that advice too.... I got a loan for my first car ($800) for this reason. I hated making the payment SO BAD (realizing how much that money was COSTING me) that I paid CASH for my first house at age 19 ($19,000). There are many ways to get / utilize credit. As a loan officer, I would not think to kindly of a young / lower wage person getting a $30k car loan. Sounds like a train wreck to me as a lender. (Demonstrates Poor use of funds, bad decision making EVEN if all payments were current... remember... LOAN officers are interested in getting their (clients) money back!! 1st criteria is a savvy and industrious applicant WITH attachable assets for collateral. NOT an overextended borrowing nut case that can be sunk with the loss of ONE paycheck)
My answer?.... What is the car for ? (work vehicle (depreciable / write off) or commuting) How often do you need it for something else ? (long road trip... I rent cars for $10. day if I need something NICE)
How broad are your options?
I spent 0.04% of income (0.002% of net worth) on my car . (it gets 50 mpg on free fryer grease as fuel and will run 500,000 miles +, BTW: I didn't take out a loan to get it (nor have I EVER taken another loan for a car since I was age 15).
BUT... check your neighbor's brier bush... I got some FREE cars doing that.
I dont look at it as a function of income. But I do look at what it would take to pay it off in 2 years. Much depends on what your house note is and what your other debts are. Best raise you give yourself is paying off the car note.
I'm not a believer in the idea that one should purchase things based on their income. Just because you earn x, doesn't mean you should buy a more expensive car or home or whatever.
Agreed. As your salary goes up, raising your standard of living by the same amount is unwise.
You should always endeavor to live below your means.
You could save that big lump sum and start a business that one year.
You could also lose it all with the high % of businesses that fail. If I was going to start a business I just wouldn't buy a new car and use that cash.
I would probably say that a rough (and I mean ROUGH) estimate would be approx 15% to 30% of your annual income is a good starting point. If you're a car guy (like me), you'd probably lean towards the 30% ratio.
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..Taking on a car loan is one way to build up your credit rating, which helps you later on when you're ready to buy a house.
