Acura TSX within my means to purchase?

[ones3k]

To put a long story short, i will be starting my first salaried job on July 10th at an annual salary of 65,000/yr. I will also need to buy my first car and i am seriously considering the 2006 Acura TSX with a MSRP of 28,500.

I've looked a the numbers, i can easily afford this car, but i'm more concerned about the financial decision. In your opinion, would it be considered extravagant for me to finance such a car with my salary? Is buying a TSX a sound financial decision?

EDIT: I will be living in eastern massachusetts, I'm single, 22 years old, cost of rent will be in the range of 5k to 12k per year. I have no student loans, no debts, nothing.

 

[Heisenberg]

Do you have a wife/kids or are you by yourself? How many other expenses do you have?

 

[DBL]

Since you have no other expenses apparently worth listing, you should be fine.

 

[franksta]

Depends on your other expenses but that will end up being around $500 per month on a 60 month loan.

 

[jaedaliu]

all depends on who you ask.

If you grew up in my family, anything's an extravagant waste of money if you get something nicer than a grocery getter.... until you own a house.

Just prioritize your expenses and savings, and figure out if you can afford it. Then compare the TSX to what your coworkers with similar salaries drive, and you can figure out if it's too much or not.

 

[PricklyPete]

Originally posted by: DBL
Since you have no other expenses apparently worth listing, you should be fine.

Agreed.

What is your rent/mortgage going to be?
Do you have student loans? If so, how much?
Do you have a vehicle to trade in that is worth anything?

 

[Strk]

Would it be 100% financed? Also, you may want to look into a slightly used TSX, if you really want a TSX. You can avoid that initial depreciation somewhat that way. It's not like the car has really changed yet.

 

[ones3k]

Originally posted by: Strk
Would it be 100% financed? Also, you may want to look into a slightly used TSX, if you really want a TSX. You can avoid that initial depreciation somewhat that way. It's not like the car has really changed yet.

I'm only 22 and i have 1.2k to my name atm =P, so its going to be mostly financed.

 

[mugs]

You can most likely afford it with a 5 year loan, but that doesn't mean it's a good financial decision.

 

[Strk]

Originally posted by: ones3k

Originally posted by: Strk
Would it be 100% financed? Also, you may want to look into a slightly used TSX, if you really want a TSX. You can avoid that initial depreciation somewhat that way. It's not like the car has really changed yet.

I'm only 22 and i have 1.2k to my name atm =P, so its going to be mostly financed.

Well, it would pretty much be around a 500 a month loan (60 month), so it's plenty manageable with your salary. And you could always have it paid off within a couple of years, while not really hurting your budget that badly -- unless you suddenly get a little bundle of joy

Personally, I'd wait a few months until you have a decent sized bank account. A windfall account is kind of nice to have when you take out such a large loan, especially when you're freshly out of college.

 

[ones3k]

Originally posted by: mugs
You can most likely afford it with a 5 year loan, but that doesn't mean it's a good financial decision.

Exactly, i already know i can afford the damn car, i've looked at my budget situation. I'm asking people if this is a reasonable financial decision?

 

[mugs]

Originally posted by: ones3k

Originally posted by: mugs
You can most likely afford it with a 5 year loan, but that doesn't mean it's a good financial decision.

Exactly, i already know i can afford the damn car, i've looked at my budget situation. I'm asking people if this is a reasonable financial decision?

I don't think it is, but different people have different priorities in life. At your age, your biggest priority should be saving money, not spending it.

 

[GrammatonJP]

So basically you're dumping half ur assets into a car ?

Would you drive a civic at around 20k ?

 

[DBL]

Originally posted by: ones3k

Originally posted by: mugs
You can most likely afford it with a 5 year loan, but that doesn't mean it's a good financial decision.

Exactly, i already know i can afford the damn car, i've looked at my budget situation. I'm asking people if this is a reasonable financial decision?

Do you own a house or apartment?

 

[Strk]

Originally posted by: mugs

Originally posted by: ones3k

Originally posted by: mugs
You can most likely afford it with a 5 year loan, but that doesn't mean it's a good financial decision.

Exactly, i already know i can afford the damn car, i've looked at my budget situation. I'm asking people if this is a reasonable financial decision?

I don't think it is, but different people have different priorities in life. At your age, your biggest priority should be saving money, not spending it.

Actually, at his age, a car loan is a great idea. Car loans are an incredible source for a credit builder. However, getting a large one is questionable when you're just starting a job. That's why I said I'd wait a few months and build up a decent bank account, then purchase it. Also, by that time, you'll have a little more assurance on if your company likes you

 

[AgaBoogaBoo]

Try putting your money into a condo, small house, etc. instead of a car, the value of that generally appreciates every year and is something you can keep for a lifetime if you choose to.

Have you thought about maybe buying a house and finding 2 or 3 other people looking for a place to live? You could end up distributing 75% of the mortgage cost among them or something, you'd build equity at a fast rate with something like that.

 

[ones3k]

Originally posted by: GrammatonJP
So basically you're dumping half ur assets into a car ?

Would you drive a civic at around 20k ?

I'd rather spend the extra 8 grand and get the TSX, especially when i'll be able to save over 12k yearly even with the 500dollar monthly payment. Personally for me, its either a) get the TSX and haggle for a price of around 27k or b) get a solid used car for much much cheaper.

 

[GrammatonJP]

How about Honda Fit or Toyota Yaris...

they're decent looking cars... I see Yaris on TV for like 11-14k.. pre-taxed of course..

 

[AgaBoogaBoo]

Originally posted by: Strk

Originally posted by: mugs

Originally posted by: ones3k

Originally posted by: mugs
You can most likely afford it with a 5 year loan, but that doesn't mean it's a good financial decision.

Exactly, i already know i can afford the damn car, i've looked at my budget situation. I'm asking people if this is a reasonable financial decision?

I don't think it is, but different people have different priorities in life. At your age, your biggest priority should be saving money, not spending it.

Actually, at his age, a car loan is a great idea. Car loans are an incredible source for a credit builder. However, getting a large one is questionable when you're just starting a job. That's why I said I'd wait a few months and build up a decent bank account, then purchase it. Also, by that time, you'll have a little more assurance on if your company likes you

Calculate the value of the car once it's 3-4 years old and ask yourself if that loss in value was worth the credit. While it may not be as fast, there are other ways to build credit just by doing things as simple as using credit cards on a daily basis and paying them off in full every month.

 

[AgaBoogaBoo]

Originally posted by: ones3k

Originally posted by: GrammatonJP
So basically you're dumping half ur assets into a car ?

Would you drive a civic at around 20k ?

I'd rather spend the extra 8 grand and get the TSX, especially when i'll be able to save over 12k yearly even with the 500dollar monthly payment. Personally for me, its either a) get the TSX and haggle for a price of around 27k or b) get a solid used car for much much cheaper.

Go with option B and save your money, you can do much more with it that will impact your future. Make sure to properly invest it and you'll come out ahead of the crowd down the road.

 

[mugs]

Originally posted by: Strk
Actually, at his age, a car loan is a great idea. Car loans are an incredible source for a credit builder. However, getting a large one is questionable when you're just starting a job. That's why I said I'd wait a few months and build up a decent bank account, then purchase it. Also, by that time, you'll have a little more assurance on if your company likes you

I've asked on Creditboards, and the consensus there was that having a car loan for the sake of building credit is a waste of money. He could build credit with credit cards. At 23 my credit scores ranged from 730s to 770s without ever having a car loan.

 

[GrammatonJP]

Originally posted by: AgaBoogaBoo
Go with option B and save your money, you can do much more with it that will impact your future. Make sure to properly invest it and you'll come out ahead of the crowd down the road.

I would go with B and put some 401k money away.. your company have flexable spending ? put some in that too.. lower your tax rate if possible..

 

[thirdeye]

Buying a car is RARELY a good financial decision. That being said, I love cars and don't care about the loss.

 

[AgaBoogaBoo]

Originally posted by: GrammatonJP

Originally posted by: AgaBoogaBoo
Go with option B and save your money, you can do much more with it that will impact your future. Make sure to properly invest it and you'll come out ahead of the crowd down the road.

I would go with B and put some 401k money away.. your company have flexable spending ? put some in that too.. lower your tax rate if possible..

Agreed, get started on things like a 401k plan as soon as possible. The sooner you start the better.

Edit: lol, I've made 4 or 5 posts in this thread already, I'll give it a rest but keep what I said in mind

 

[LegendKiller]

If I were in your position I would not buy a TSX, unless it was used and pre-certified or get a much cheaper car.

For people saying buy a place, that is about the worst thing you can do at this point. The housing market *IS* going down, places in Boston have already lost 40% of their value. Here in VA outside of DC the average depreciation is 10%, so far. If he goes and buys a place he will be flipped on it within the next 3 years.

It sounds like you are just out of college and got a pretty nice job. Your position is enviable to many.

Here is what I would do...

1. Check to see if your employer has a 401k program. Shove the max matched amount into it if they do.

2. If your company is public, see if they have a stock purchase program. Put 3% or so of your salary into it. Every 6 months sell it and purchase an index fund, say a Spider or something similar.

If you buy a cheaper car, you could probably save what? 150? Thats 1,800/yr. Not to mention cheaper insurance costs. Make it 2k a year. In 5 years, the term of the loan, you will have saved $10k, not have paid somebody 6%+ interest, AND you will have made your own money.

Essentially you will be up probably 13k, which includes interest saved, insurance saved, and less payments.


Unless you got gobs of money, buying an expensive car at your age is a stupid purchase. Buying a house is even worse, especially considering you will probably want to switch jobs within the next 5 years.

Use that cash, in 5 years, to pay for grad school or something.