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Smart Shopper Percentage of monthly income spent on a car?
390 messages, Last post on Mar 21, 2009 at 5:50 PM
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Spending 25% of your take-home income I agree is way too high. When I earlier referred to cars costing 1/4 to 1/3 of your income, I meant, for instance, a $20,000 car for a person making $60,000. How much of a bite that would be in terms of car payments depends on the length of the loan, but typically it would be around 10-15% or so of your take home income if the loan were around 3 years, and you put some money down. It's sad that people get so in hock for cars that they forgo other things in life, but we each make our own choices. |
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How about 10% of Income + 10% of Cash Savings. Income 60,000 * 10% = 6,000 Savings 60,000 * 10% = 6,000 Car cost 12,000 (Means Used) Or Income 60,000 * 10% = 6,000 Consumer debt -9,000 * 10% =-3,000 Car Cost 3,000 Income of 60,000 sounds nice but really is not an indication of anything. |
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| The person with a six year old Crown Victoria or the person with a three year old Towncar? Answer: Crown Victoria he bought three years ago. Both vehicles seat 6, have 4.6 V8, same tranny, tires, & driveline, plus many other similarities. The CV owner will pay with saved up cash, is self employed, and knows it is not so much what you earn, but what it expenses out to own. He is frugal, wise, and will retire with a healthy income. | |
| Don't happen to own a CV, do you? | |
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Have a friend who went to buy her first new car in 11 years. Smitten with a Ford Escape and I guess dazzeled by the new car and the dealer financing dance. Signed all the papers and took delivery of the car...only then did she really sit down with a paper and pencil and figured that after all her expenses (mortgage, insurance, car payments, etc) she'd have $100 left at the end of the month. That's $100 for food, gas, and all the other little "out of pocket" items! Wasn't long before she was at the local credit union looking to re-finance the Escape! Do the math first!! |
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obviously there are lots of variables in the 'how much to spend' question. I think a good rule (one I now live by) is to either have 'paid for' car that you put money into for repairs, or have payments and little maintenance expense. Almost never a good idea (financially anyway) to have a car that you are paying both a big payment and substantial upkeep costs. Like, if you can afford a $17k car, you're probably going to do better on a new Civic than you would on a 96 Acura. Just my $.02. |
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I was told that running your credit alot can drain your credit score. I have deceided that I want to purchase a new car by the end of the year. I was told that my credit score is very good, but my residence and work history is short. I would like some advice on how to find a reasonable rate on a car loan without lowering my credit score. I am also looking into buying a 2001 Honda Civic EX Coupe - Automatic, but I am not sure on what a good price is since this car is pretty popular. (Will a dealership work with me on a good price) Need some advice... |
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Mnowak1, although many credit inquiries will have a negative effect upon your credit rating, generally speaking a number of inquiries over a short period of time are not really that bad. My advice to you is to get pre-approved to finance the Honda Civic that you are interested in by your main bank, credit union, or even one of the several on-line banks that are out there like peoplefirst.com. Getting pre-approved to finance the car that you are interested in will give you a good idea of what sort of interest rate you can expect to get. Not only that, but if you go into the dealership that you purchase your Civic at already approved at a certain rate, the F & I guy there will be motivated to beat it. As far as the price for this car goes, The Edmunds.com True Market Value for a 2001 Honda Civic EX Coupe with an automatic transmission is currently $16,172. This is only slightly over this car's Dealer Invoice, so as you can see there are certainly deals to be had on this model if you live in an area that has some competition for your business and do some comparison shopping. Car_Man Host Smart Shoppers / FWI Message Boards |
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| Thanks for the advice! | |
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You're welcome, mnowak1. Don't hesitate to ask if you think of any other questions. Car_man Host Smart Shoppers / FWI Mesage Boards |
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