How much income would you need to afford a car like this?

[KingstonU]

How much yearly income you think would be necessary to be able to reasonably afford the following tiers of cars? (assuming the quality tier of the car also reflects the other aspects of your life).

1. The most basic, barely functioning, used vehicle (<$1000).
2. Used but good condition car or a new Rio/Accent (~$10,000).
3. New Toyota Camry/Ford Fusion or equiv. (~$25,000).
4. BMW 5-series/Audi A5/Mercedes E-Class or equiv. (~$50,000).
5. Porsche 911/BMW M6/Audi R8 or equiv. (~$100,000)
6. Ferrari 458 Italia/Lamborghini Gallardo/Aston Martin DB9 or equiv. (~$250,000).
7. Bugatti Veyron or other very rare supercar (>$1,000,000).

 

[Zeze]

It also HUGELY depends on how long you plan on driving the car.

Two people can make $50K and buy the same $25K accords.

Person A will drive that car to the ground over 15+ years and has been financially free for 11 years since he paid the car off from the 4 yr finance.

Person B will get bored of his toy and buy a diff car/more expensive/lease something at 3rd or 4th year. Over 15 years, he's been perpetually leaking $500~ every single month.



I bought my Mazda6 when they first came out 2003. It's still going strong (and looks damn stylish and relevant). I paid $15.5K for it and fully paid it off in 4 years. It just passed 100K miles.

My dumb coworker spent $20K on a near decade old BMW 3 series because "I always wanted to drive a BMW." It ALREADY HAD 90K. 4 years later today, I see it on her FB that her car is FUBAR 'd and saying good bye.

 

[jlee]

Hahah...I'm at step 1.5. I'm afraid I'll never see 7 - quite possibly not even 4, but maybe.

I did see an R8 the other day. It was pretty nice.

 

[QueBert]

For #7, the typical ATOTer could easily afford 1 with the cash back they get from their credit card - which they pay off in full every month.

 

[WelshBloke]

It depends on how much you like cars.

For me I doubt I'd go for number 4 ever, I'm just not interested in cars being anything other than an item to transport me and my stuff around.

 

[dbk]

#2! 07 Honda Fit $12.5k used purchased back in 09 got like $5k to pay off... I'll probably drive this thing until it falls apart...

edit: I got the car as soon as i started working out from college

 

[MotF Bane]

At the low end, 3-4 times the purchase value, and then the gap starts to narrow to perhaps double? As for the exotics, the six figure plus cars, I have no idea.

 

[rh71]

You have to consider your expenses which is different for everyone. Annual income alone does not answer this. Kids, different mortgage amounts & taxes, etc. Someone a couple years out of college still living at home can get a nice car while the man with 2 kids making the same amount and paying a mortgage would be hard-pressed. Also, some people are able to save more than others over the years so they use that money and splurge once. Lastly, there's also the dual-income factor. Speaking from experience.

Anyway, you can always lease if you want to (if you like renting cars and be perpetually in debt - well-off people can do that though), or buy used - huge market out there, even for #4.

 

[Tweak155]

I bought 2 new vehicles last year and paid them both off within 2 months. First car was just over $30k and the 2nd was around $23k.

This was done on an annual income last year of just breaking into 6 figures.

What also helped is I traded in a Jeep GC which I paid off in 18 months and received a trade in value of $13,200 (I bought it at 15.5k and kept it for 2 years). Rest was income / extra savings.

I could go out and buy another car and pay cash today if I wanted to.

What is my point? Not really to brag but I am proud that I am doing good with what money I've made and I don't have to focus on income. We may have broke 6 figures last year but prior to that it was $65k or less and we had a leased vehicle and mainly lived off my income, so it isn't like I had lots of extra cash. But the extra cash I did have was saved.

I personally know a family set to pull in a few million (yes mutliple) this year, but due to them being so bad with finances and running a business, they still lease a $200/mo Toyota, and it isn't because they are good with money. It is because when they get money, they don't know how to handle it and blow it on stuff and then hurt their credit.

Not to mention when they went to lease the Toyota, they needed a cosigner. To their credit, this was before they started reaching seven figures, but they've had plenty of years with $100k+ net income.

 

[TwiceOver]

Not interested in anything past 2. I'm not a car guy so it's just a waste of money to me.

 

[BeauJangles]

My friend bought a brand-new Lamborghini Murcielago lp670sv last summer. He makes ~$1 million / yr.

 

[SandEagle]

My friend bought a brand-new Lamborghini Murcielago lp670sv last summer. He makes ~$1 million / yr.

what a loser

 

[dpodblood]

I'm at around 2.5 right now. I think if I were making 70K or more per year I would be able to afford a 4 level car, if my other expenses remained the same. In order to buy a level 5 or above money would basically have to be no object. I wouldn't buy an un-practical car like that unless I could afford to buy it flat-out.

 

[Gunslinger08]

Depends a whole lot on other expenses. I would say that buying anything above half your annual gross income is pretty irresponsible for most people though. So if you make $50k/year, you should stick with a $25k car at maximum, assuming you don't have other big expenses.

 

[HardcoreRobot]

really depends on your other spending habits. what is your mortgage? what are your student loans? how is your day to day spending? if you are frugal in other areas, buying an expensive car may be fine. you cant boil this down to an equation, income is only part of it.

 

[goog40]

For #7, the typical ATOTer could easily afford 1 with the cash back they get from their credit card - which they pay off in full every month.

I've actually received over $5k worth of bonuses from credit card sign-ups alone, which require very minimal spending, in the last full year. A lot of it is in the form of free airline miles/flights/points, but they could be converted to cash if you were motivated to do so. So #2 is actually doable with bonus money alone, and possibly a good portion of #3 if you get a 0&#37; financing offer.

Just received $1000 in Amex gift cards from one offer this week. Received 75k points for signing up for the Amex Gold, transferred to Delta Miles with a 50% transfer bonus = 112,500 Delta miles, and redeemed those for $1000 worth of Amex gift cards. Had to pay a $45 fee for the transfer though. The Amex Membership Rewards points are actually worth quite a bit more than $1000 if you actually transfer and use them for flights, but I have too many miles already.

[/brag]

 

[Spikesoldier]

you need a new step 4, in the ~35K range.

 

[Lifted]

I'm at around 2.5 right now. I think if I were making 70K or more per year I would be able to afford a 4 level car, if my other expenses remained the same. In order to buy a level 5 or above money would basically have to be no object. I wouldn't buy an un-practical car like that unless I could afford to buy it flat-out.

Thinking such as this blows my mind.

Somebody who makes 70k GROSS has no business buying a 50K car. On the off chance that you are single, have your house paid off, and can retire tomorrow on your retirement fund and savings, then I could see blowing 100&#37; of your annual take home on a toy. You'd have to really LOVE your job to be willing to work an entire year just to buy a toy.

 

[spidey07]

A basic rule of thumb is your gross income should be 4 times the cost of the car. That means you can afford it.

 

[Oil]

You have to consider your expenses which is different for everyone. Annual income alone does not answer this. Kids, different mortgage amounts & taxes, etc. Someone a couple years out of college still living at home can get a nice car while the man with 2 kids making the same amount and paying a mortgage would be hard-pressed. Also, some people are able to save more than others over the years so they use that money and splurge once. Lastly, there's also the dual-income factor. Speaking from experience.

Anyway, you can always lease if you want to (if you like renting cars and be perpetually in debt - well-off people can do that though), or buy used - huge market out there, even for #4.

This.

I could afford the ~$50,000 vehicle right now but if I had a wife, kids, etc....

$100k+, 1 year out of school, not living at home

 

[BlahBlahYouToo]

1. The most basic, barely functioning, used vehicle (<$1000).
any min wage job for a summer
bought my first civic for $5k and ran it for 7 years.

2. Used but good condition car or a new Rio/Accent (~$10,000).
$30k

3. New Toyota Camry/Ford Fusion or equiv. (~$25,000).
$50k
bought my accord when i was making roughly $50k

4. BMW 5-series/Audi A5/Mercedes E-Class or equiv. (~$50,000).
$100k
could do this now, but the accord is running just fine

5. Porsche 911/BMW M6/Audi R8 or equiv. (~$100,000)
$250k
maintenance really starts getting expensive here

6. Ferrari 458 Italia/Lamborghini Gallardo/Aston Martin DB9 or equiv. (~$250,000).
$1M+

7. Bugatti Veyron or other very rare supercar (>$1,000,000).
you'd have to be a mega star entertainer or CEO to do this.

 

[CrazyAznDriver]

My wife and I drive cars in the #3 category. She is one of the only surgeons that she works with that doesn't drive a Porsche

 

[ViviTheMage]

Not interested in anything past 2. I'm not a car guy so it's just a waste of money to me.

Exactly, kind of irrelevant thinking unless you are a car guy.

I am in category 4, but I am a car guy.

 

[SearchMaster]

A basic rule of thumb is your gross income should be 4 times the cost of the car. That means you can afford it.

I think a better rule of thumb is not to buy a car unless you can pay cash for it but if you must finance it, your rule is good. Unfortunately too many people use 50% or so as a guideline which is just crazy to me.

 

[waggy]

Not interested in anything past 2. I'm not a car guy so it's just a waste of money to me.

i'm the same. to me a vehicle is a tool to get me from point A to B.

I also think its silly buying new cars. You can get a 2-3 yr old car with low miles for 1/3rd the cost of it new.


i prefer spending the money on my the house, kids etc.