Last post on Feb 13, 2011 at 4:11 AM
You are in the BMW 1-Series
What is this discussion about?
BMW 1 Series, Car Buying, Car Financing, Car Leasing, Convertible
#1 of 16 Advice for a first time college grad
Jan 10, 2011 (2:58 pm)
Hi! I'm going to be a college graduate this May and have a job that will leave me with about $600/month towards a car. I'm pretty much set on getting a 1 series convertible (probably a 128i, really depends on the cost difference), but I need some advice on the graduate program.
I've seen the checklist a couple of places online, and I feel confident about passing most everything, except the income to debt ratio. The only thing I'm concerned about are my student loans. Since I went to a private university, I had to finance a good portion of that on student loans, and if they're included, I'm at a debt to income ratio above 45%. If I apply for a loan through BMW using the recent college graduate program, will they take that amount into consideration when looking at my income to debt ratio? My loans will not be in repayment until January 2012, so my income to debt ratio in May (when I apply) will be around 9 or 10%, if they are not included. Other than that my credit report has no flaws.
Also, is it easier to qualify for a lease or for financing to purchase it? I really enjoy cars, so the idea of having a new one every three years is appealing. I had previously had a 2000 Mustang convertible for five years before it was totaled a few months ago, and I adored that car. However, I was definitely tired of it, and ready to move on. However, a few members of my family have expressed sentiments that I'm crazy for wanting a BMW straight out of college, and even more so for considering leasing it.
#2 of 16 Re: Advice for a first time college grad [hikari07]
Jan 10, 2011 (3:35 pm)
First of all, congratulations on your upcoming graduation and job!
Now, I'll probably be the first of many to say this, but in my humble opinion, if you have student loans and have to even ask about income-to-debt ratio, then you have no business buying a $600/mo car. You can't afford it.
Do yourself a big favor, set your car sights lower - like <$20,000, pay off all your debts, and put the rest into your company 401K plan.
#3 of 16 Re: Advice for a first time college grad [hikari07]
Jan 10, 2011 (3:31 pm)
However, a few members of my family have expressed sentiments that I'm crazy for wanting a BMW straight out of college, and even more so for considering leasing it.
Depends. Are you living on your own (paying your own rent or mortgage)? If not, then your money is certainly better served elsewhere. Are you taking those student loan payments into account when figuring you have "about $600/month towards a car"? What about insurance?
#5 of 16 Re: Advice for a first time college grad [garycullar]
Jan 11, 2011 (1:40 am)
This economy is horrendous and you can't absolutely guarantee that you'll have a job for that many years, especially as a new hire.
Buy what you can used for cash. In fact, the average person who buys new every five years(or leases) spends several hundred thousand more over his lifetime on vehicles than someone who buys used. What are your criteria for a car, and how much cash do you have/what's your budget?
EDIT - if you're dead set on a lease, there are alternatives. The best leases usually are from Honda, Subaru, Mitsubishi, and VW. The Fit or Civic is only $190 a month. The Impreza is only $179 a month. $179 as well for the Lancer. The Jetta is also $179. If you want something sporty, the Suabru WRX is only $299 a month, and honestly gives a BMW a serious headache performance-wise. This seems to be the "hot hatch" deal currently, at a good $200 a month less than the 1 series.
In any case, I'd not spend more than 1/3 to half of your "car budget" each month - put the rest into paying off your student loan early.
#6 of 16 Re: Advice for a first time college grad [plekto]
Jan 11, 2011 (9:48 am)
Thanks for all the feedback so far... here's a few more details to clairify. I currently have an on campus apartment and will be moving into a regular apartment. I've set up an excel spreadsheet that takes into account my income and other taxes, pre-tax retirement contributions (maxing out my company match which is enough to retire on over 40 years assuming a 5% return), and my rent, utilities, renters and car insurance, and other expenses. Also included is my student loan payment which is above the minimum enough to pay it off in 5 years. All other debts will be entirely paid off by the end of this year, if not sooner. I've got sufficient life and health insurance to cover someone like myself as well. After all that, I still will have a few hundred dollars a month to sock away for emergencies, unexpected costs, etc.
I feel confident about job security - my company has not had layoffs in their IT department during the economic downturn, and I had multiple job offers for internships. (I didn't finish go all the way through the interview process with other companies for new hire positions as I received and accepted my offer before I could. It was my first choice anyways.) $600 is about 10% of my monthly pre-tax take home salary, and is the ceiling of what I'm willing to spend.
I'm not opposed to purchasing used, and I'm pretty much dead set on a convertible. I know they cost higher and have higher insurance, maintenance costs, etc. but I've owned one before and can't go back. I don't want to go for anything more expensive than a 1 series, and it has to have four seats. Most four seater convertibles are ugly or expensive, so I had narrowed it down to the Mustang, Eos, and 1 series. I honestly think the Eos is too expensive for what it provides compared to the 1 series, so I'm not very inclined towards it.
That leaves me at either purchasing a 2008 or newer 1 series, or a 2011 or newer Mustang. I've decided against leasing for now - I think I will keep a car longer than 5 years.
Perhaps it's youthful ego, but I can't think of what I've missed here. Plus I've denied myself a lot of things most college students take for granted, and feel that I deserve something nice in my life -- if I can reasonably justify it financially.
Sorry for the super long winded-ness!
#7 of 16 Re: Advice for a first time college grad [hikari07]
Jan 11, 2011 (1:34 pm)
Sounds like you've put alot of thought into it, so that's great.
I suggest you just go ahead and visit a dealer (knowing what you should be paying for the car beforehand through research here on Edmunds, of course) and move forward with the purchase. If you don't qualify, they will certainly let you know.
I advise against leasing mainly because you are young and your circumstances could easily change (married and commuting further, for one example). No point in getting locked into a lease.
#8 of 16 Re: Advice for a first time college grad [qbrozen]
Jan 11, 2011 (2:20 pm)
Mustangs are decently reliable and a good choice, since they are only $20-$25K for a base model. The 2011 model has a fantastic V6 engine as well, but the fact that they made such a change means that the older generation is suddenly very inexpensive.(old V6 was junk, V8 was/is a tank)
Good choices, used - get a loan and pay it off in 1-2 years if possible:
2008-9 Mustang V8. 3-4 years is the sweet spot where off-lease vehicles start to trickle into the economy. It also is the best price to-age-point for CPO and used vehicles in terms of depreciation.
2008-9 Pontiac G8. The V8 version is a "poor man's" Corvette, and used, they are tremendous bargains. Handling is almost at the level of a CTS.
2008 Lexus IS350. Also very good value, used. My top "Import pick"
2008 CTS - excellent car. The V6 is amazing.
2008 C350 sport. This is a hidden gem and reliability is very good compared to past models by Mercedes and BMW. My top "European sedan" pick.
You shouldn't have to spend more than 25K for any of these. The Mustang V8 and the Pontiac G8 should be closer to 15K.
This is a typical example. The 4.6 V8 is the same one they still use in the Crown Vic./Grand Marquis and is un-killable. 0-60 in 5.1 seconds is enough for any sane or even slightly insane driver
#9 of 16 Re: Advice for a first time college grad [plekto]
Jan 11, 2011 (3:06 pm)
I think you missed the part where he said he wants a vert.
#10 of 16 Re: Advice for a first time college grad [qbrozen]
Jan 11, 2011 (5:48 pm)
She actually... I'm one of those weird girls that is really passionate about cars and computers. All my guy friends make fun of me for loving convertibles so much because it adds so much weight, but I'm not out to race my car - just have fun in it.
Also, a small side note - I HATED the mercedes 300 series I drove (I don't remember exactly what it was). I couldn't feel the road at all, since I was used to the mustang. It felt wrong, and entirely way too smooth. I know thats their draw, but it just felt weird for me.