So according to everyone here how much do you have to make to buy a 3? 150k? 200k? 300k? If someone has budgeted and feels that they can handle their expenses that is their choice. Some people don’t care about cars, some people are passionate. Everyone spends their money in different ways.
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670 Credit score and 50k for Model 3 RWD.
- Thread starter astrn
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Wooloomooloo
Member
Yes it is for credit purposes, depending on how much of approximate net income is going on existing debt payments it could affect the terms - longer terms usually have higher APR.
voip-ninja
Give me some sugar baby
Your example does not account for cost of living. For example, cost of living in greater Los Angeles is probably double what it is in Louisiana.
$500,000 buys a so-so condo in LA and probably not even in a great neighborhood. $500K buys a 4,000 square foot mansion on an acre of land in Baton Rouge.
If OP is paying $1500-$2000 a month just for rent and utilities then suddenly his purchase looks a lot more foolish. Maybe though he has a great love of eating ramen noodles.
Anyways, people can do whatever the hell they want as long as they don't lean on me for "help" while doing it. I personally think it's insanity to spend 2/3 of a year's pre-tax income on a new car purchase, but that's the OPs choice to make.
voip-ninja
Give me some sugar baby
General rule of thumb that you will hear from financial advisers is to not spend more than 20% of your monthly net income on a car purchase.
Or, looking at gross;
That means for the OP, don't spend more than $26,200 on a new car.
Rather than splurging on a $50K + taxes + registration new Tesla it would be smarter for him to buy a $20K reliable car he can drive for a few years, invest his money, and then when he's ready to purchase that Tesla put $15,000-$20,000 down on it.... or just wait for the $35,000 version to become available next year and do a stretch to buy that.
His money though and his choices.
The general rule of thumb is to keep ur debt/pre-taxincome ratio under 40%, not a made up number most banks do not loan to anyone with a DTI above that number.
$12000 monthly salary. You have $2000 rent/utilities + $1600 car payment is 30%. Even after tax income $7000 (probably more im not familiar with that level of withholding), thats 51% DTI. So you still have $3400 a month to live of after paying for rent/utilities and car. Thats not stretching thin by any means.
Obviously people can do whatever they want with their money, but blanket statements like "buying a car 2/3rds your salary is stupid" are incredibly misinformed.
Exactly. I always say there should be a factor of the "accommodation appropriation scale". Basically, you can have/do what you want, but you are responsible for your comfort level in supporting it through the other aspects of your life. Finance is less about money and more about philosophy, IMO.
voip-ninja
Give me some sugar baby
I'm not sure where your $12,000 a month ($144,000 per year) example originated. In this case we know that the OP has income about 1/2 that.
So let's halve your numbers.
$6,000 a month salary. $1,000 rent/utilities (doesn't seem realistic AT ALL for Los Angeles but maybe he lives in a very low rent area or rents a room, etc.). $800 a month for a car payment. After tax income about $3500, so, per your example 51% DTI.
He now has $1700 a month to live off of after paying for rent utilities.
It does not seem realistic to me in a very high cost of living area like Los Angeles. As I already pointed out, rents/mortgage would be a whole lot more. Additionally leaves OP with little to no retirement investment which is a very bad financial decision.
As I said, everyone can do what they want, or what the bank agrees to in the case of getting highly leveraged with a car loan. I'm not here to tell people what to do, but if something looks financially disastrous I'm at least going to mention that there are other avenues.
We currently live in a culture in which being leveraged to the hilt is celebrated. The tail end of this are the 80 year old people you see working as greeters at Walmart or the 60-70 year olds who didn't plan ahead and are making coffee at Starbucks or working at McDonalds.
Free country do what you want... just don't ask me to bail your ass out from your short sightedness.... which unfortunately is what does happen, starting with the construction of the social security scam, which allowed Americans to become even less responsible with their financial planning.
That was a rebuttal on why someone shouldn't spend 2/3rds their salary on a car. That blanket statement does not apply to all income levels.
That being said, the OP does appear to have a salary that does not support a car thats nearly $60k.
voip-ninja
Give me some sugar baby
I agree that at a certain income level it becomes irrelevant. I'm not sure what income level that is, but surely cost of living in the area the person lives is a factor.
$300K a year in a more rural part of the country makes you very wealthy. In an extremely high cost of living area like Manhatten, Los Angeles, San Francisco, not so much... more like upper middle class.
Free country, do you what you want.... just don't take my money, when I've lived below my means and foregone luxuries, to make up for terrible financial decisions when you're old and penniless.
That i can agree with. im blessed to live a very comfortable life because despite my parents living in the 1% income bracket, they lived pretty simply and frugally and saved up loads of $$.
My dad buying a tesla at age 60 was the first time he ever spent over $50k on a car.
voip-ninja
Give me some sugar baby
Then recognize that what your parents did is 100% at odds with someone making $75K a year in a very high cost of living city spending $50,000 + taxes + registration + insurance on a luxury purchase.
Your (apparently smart) parents would have bought the Honda Civic and put 20% of their money into investments so that they didn't have to worry every month about their next paycheck coming in or leaving them homeless.
Can they do it? Sure.
Is it wise? No.
Does that matter? Probably not.
Jedi2155
Model 3 has Arrived.
48 months actually with a 78k loan @ 1.74%. I probably will take a smaller amount than that but we'll see. Still telling myself I dont need the performance upgrade. Nope.
That is a monster monthly payment. I had a similar loan, but longer term at a higher rate. Would have been $500 more probably in financing cost over 60 months but my monthly “obligation” goes down.
Of course you can probably get better than 1.74 return elsewhere but you cant understate the risk factor of size of monthly obligation.
Individual financial circumstances vary but you should consider possible risks with that kind of payment obligation.
Best way to leverage OPM in my opinion is aim for 72 months at 2.29 or 60 at sub 2.
Jedi2155
Model 3 has Arrived.
TBH, this is far more than I normally spend on anything other than my home. As I mentioned before, my home mortgage has a lower monthly rate. The other thing to consider is that, I originally was planning a $800-1000/monthly rate, and the money I would've put down wasn't going to be allocated to another major expense except maybe a interest bearing account or mutual fund (which is still risky giving the current uncertainty in the market).
The key question I had for myself, was what would be my exit strategy in terms of the following:
- Lose my job
- An expensive life changing event
I calculated my total financing cost over 4 years to be about $2730 assuming I don't pay off the loan early. In regards to other general life expenses, I asked my wife to support me if necessary
. She was a key component to determining whether or not I could afford the vehicle (by myself, the answer is no, but with dual income and a secondary support system, I could risk it).
Glamisduner
Active Member
I think it only makes sense financially if OP qaulifies for the full federal tax credit. Otherwise he should buy a cheap used car and save his pennies for a few years until he has cash saved up, pay down debt and get his credit score up. Then he can buy a used (or new) one in 2 years from a much better financial position.
I know im crazy but Ive always paid cash for cars. That meant when i was cash poor I drove cheap used cars even several years into making good money. If you save and delay expensive purchases then you never have to get aboard the debt train and everything is cheaper.
I know im crazy but Ive always paid cash for cars. That meant when i was cash poor I drove cheap used cars even several years into making good money. If you save and delay expensive purchases then you never have to get aboard the debt train and everything is cheaper.
@astrn
No one can tell you your APR since they are not you. You just have to check a dozen places and get the best deal. The best deal for me was NOT from Tesla financing.
Everyone else shouldn’t telll you what to do because you are an adult and they are not you.
No one knows your ENTIRE financial situation other than you.
Just shop and then decide for yourself if it’s “worth it”.
No one can tell you your APR since they are not you. You just have to check a dozen places and get the best deal. The best deal for me was NOT from Tesla financing.
Everyone else shouldn’t telll you what to do because you are an adult and they are not you.
No one knows your ENTIRE financial situation other than you.
Just shop and then decide for yourself if it’s “worth it”.
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