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

[Farmer]

I'm about to buy a used '05 Nissan Sentra with 30K miles for $8500 outright. I currently make $60K annually, but will very soon go back to school and make around half that.

 

[OlafSicky]

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.

It's hard for me to believe that someone making multiple millions a year is this bad with money. I call shens what do they do?

 

[xanis]

1) could buy in cash right now
2) ~6 months

Not sure on the rest. I'd need a better job first.

 

[BurnItDwn]

If your live was based upon your car, and you lived in a shitty apartment with roommates, you could get a hell of a lot more car than somebody who doesn't make their car their primary focus. Also, for the 1K beater car, it makes a huge difference between somebody who lives with mommy and daddy vs living out on your own and taking care of your self.

I've purchased a 15K car when I was making 30K and purchased a 15K car when I was making 60K. When I was making 30K, my share of the rent was only about $400 a month, when I was making 60K, my mortgage was about $1600 per month....

That said,

That said, I want an Ariel Atom, and will totally get in line for that waiting list if and when my income ever hits 100K.

 

[Elbryn]

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.

unless you have the luxury of having an employee plan. employee plans go for under invoice and allow you to use whatever incentives there are as well. 5 years ago we got a focus wagon, relatively loaded (power everything, overdrive, heated seats, etc) for 13.5 out the door. msrp was something like 18k but with plan and 2.5k in incentives at the time, we got a great price.

 

[dbailey]

I am going to charge $2000 on my credit cards for gift cards. I will then sell them for less than they are worth. Half the money goes into car 1. The other half I save for the minimum payments.
Profit.

 

[jupiter57]

I am going to charge $2000 on my credit cards for gift cards. I will then sell them for less than they are worth. Half the money goes into car 1. The other half I save for the minimum payments.
Profit.

$2000?
If you're an ATOTer, The CC rewards alone would be enough to pay cash for a Ferrari 458 Italia.

Ya just gotta know how to work the system.

 

[amdhunter]

Take 10% of your current salary towards the price of a vehicle, per year.

For example, if you make $50k a year, it would be $5000 divided by 12 months, or $416 maximum a month.

For $416 and some good shopping, you can get an extremely nice car. Don't forget about insurance and gas in your estimate either.

 

[Argo]

Depends on age and priorities. When I was 21-25 the monthly car payment was ~20% of my take home income. Now, when I'm 30 the car payment is roughly ~4% of my take home. So while I technically could afford a car in category 5 or 6 (not 7 ) I chose not to do that.

And P.S. your cost of cars in category 4 is incorrect, it's more like $60,000+

 

[Tweak155]

It's hard for me to believe that someone making multiple millions a year is this bad with money. I call shens what do they do?

Internet retailing.

They pull in a few million (roughly $300k a month avg), but they are bad at running a business. So they are paying people, buying office supplies, etc, but if they managed it correctly a lot of that money would be profit (at my best estimate based on our discussion, 20-30&#37.

But instead I go to their house and see a new kitchen, new bathroom and in the meantime they are laying off employees.

They just bought an out-of-state house for around $250k and are putting down at most $50k, which given their past, is probably money they owe elsewhere.

They actually have recorded complaints on the internet where they keep people's money for items they are out of stock on. Rather than wait for the stock to come in, THEN authorize the payment, they authorize right away and spend the money. This causes issues when now you have a lot of customers waiting for items they purchased but you already spent their money on other crap (possibly other stock you didn't need just yet) and you can't fill their orders. So now you get a lot of cancellations and now you don't have money for other customers.

Then you start building up customers when stock actually arrives but you're so bad with money you get back into the same situation.

Rather than investing the income into the stuff they need they misappropriate it.

Even on a lower end of my estimation (let's say they could only keep 10%) that is $360k this year they would have which is more than enough to get a decent car and some other things.

 

[rh71]

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% 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.

You're assuming they had no savings and they're starting from year 1 of the job. Could've paid most or all in a very short amount of time. It all comes back to what are your other expenses.

"Afford" means nothing unless it's exclusively a monthly payment item.

Afford a house that costs XXX amount... umm, how much did they sell their previous house for and what was the return that's going into this downpayment?

 

[vi edit]

Far too many factors to really say. Housing and kids being the two biggest. If you have $500 a month rent and a $50,000 income you have a more expendible income than somebody making $75,000 a year with a $1500 mortgage.

Next year I'll be looking at $1400 a month in day care bills. If I didn't have that I'd be able to pay for a BMW 7 series. Instead I've got a paid off Malibu Maxx worth a couple thousand bucks.

 

[nonameo]

I have, and always will drive a cheap used car for as long as I live. Vehicles. What a waste of money.

 

[Tweak155]

You're assuming they had no savings and they're starting from year 1 of the job. Could've paid most or all in a very short amount of time. It all comes back to what are your other expenses.

"Afford" means nothing unless it's exclusively a monthly payment item.

Afford a house that costs XXX amount... umm, how much did they sell their previous house for and what was the return that's going into this downpayment?

I think it more sets the tone of what you SHOULD appropriate to something, rather than what you CAN appropriate.

I'd agree it is unlikely a $50k vehicle is a wise investment if your yearly income is $70k, however if you've saved for years or had a large windfall and you only do this once, there is no issue.

 

[JTsyo]

I would only buy a car at $50K or above if I had more money than I knew what to do with. Driving is a chore and would get an automated car if I could. I wouldn't risk a fast car on the track either. At the same time, I wouldn't get a old used car since I would be worried about the reliability.
My current car is 10 yrs old and was $20K. I'll have to get a new one since it's a coupe and too small for the family. Otherwise I would have driven it until it was giving me major problems.

 

[GuitarDaddy]

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.

ROFL! I see you haven't priced used cars in a while

 

[PimpJuice]

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

That's what people that cant afford the car they want say.

 

[rh71]

^ not caring about cars is fine, just like people buy Dells (which are fine) instead of actually knowing what goes into their box.

 

[Sureshot324]

1. Work at McDonalds
2. Live with parents
3. Buy 50k car
4. .......
5. Profit!?

 

[gevorg]

For #3, certified used BMW/Audi with warranty/maintenance plan > New Toyota/Ford/etc. IMHO. Same price, much better driving experience.

 

[Insomniator]

For #3, certified used BMW/Audi with warranty/maintenance plan > New Toyota/Ford/etc. IMHO. Same price, much better driving experience.

True if you are going to get rid of the car in a few years. Totally false if you are keeping it forever because it will cost a fortune to keep the used German cars going compared to the probably still under warranty cheap cars.

 

[amdhunter]

For #3, certified used BMW/Audi with warranty/maintenance plan > New Toyota/Ford/etc. IMHO. Same price, much better driving experience.

lol, I'd rather have a Certified Used BMW than a new BMW. Better warranty, with bumper to bumper coverage for 100k miles.

 

[mattpegher]

Most lenders suggest that you can afford a car that cost about 20% of your yearly income, with payment over about 4 years. Because for most of america, each expense category will increase with income. Better car, better house, better vacations, better restaurants, better neighborhood, better schools, etc.
Sure if your the standard ATOTer you wont get married until your 40 and may not have any kids so you might be able to increase that to 50% (50k car with a 100k job), esp if you still live with your parents.

 

[Tweak155]

Most lenders suggest that you can afford a car that cost about 20% of your yearly income, with payment over about 4 years. Because for most of america, each expense category will increase with income. Better car, better house, better vacations, better restaurants, better neighborhood, better schools, etc.
Sure if your the standard ATOTer you wont get married until your 40 and may not have any kids so you might be able to increase that to 50% (50k car with a 100k job), esp if you still live with your parents.

This is ridiculous. That means you can only afford a 20k car at 100k over FOUR years?

When I started out making $45k / yr I went and bought a 17k vehicle and had a $400 some odd payment.

I paid $1k a month and still had money left over. And no I didn't live with my parents.

 

[Golgatha]

My net worth would have to be about 10x each of those price points listed to even consider them as an option to buy.