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Subjective Question: Minimum Annual Salary to Buy Perf 85kWh w/options
- Thread starter rorystewart
- Start date
Johann Koeber
Happy Owner
Call me short witted:
The person would need to have such an income that she could save the purchase price of the car during the time from ordering it to payment due (about 6 months - currently).
The person would need to have such an income that she could save the purchase price of the car during the time from ordering it to payment due (about 6 months - currently).
Alexander
P# 8,878
My take home income is 40K and I'm finalizing my order now. I'm getting the base model with the 85kWh battery. My bank already approved the loan as long as I sell my car and pay off the loan on it. You save up enough money, and put enough down, you can buy anything.
Arnold Panz
Model Sig 304, VIN 542
^^^Right on!!^^^
Save on the small stuff and you can afford the big stuff, and always live below your means. My parents were raised during the Depression and drilled this into our heads.
For most people being able to pay for something doesn't always translate to it being financially prudent. Your situation with the MS is very unique. The value proposition for BEV is obviously tightly tied to miles driven and you sir are the king there (I'm actually rooting for you to end up with the S just to see the miles rack up)!
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jat
Member
I think it is silly to compare the price of the car with your annual salary. First, a car is not an asset -- you would do better burying money under a rock compared to buying a car just for an investment (there are exceptions, such as collector's items). What you should care about is the ongoing costs of having the car -- property tax, maintenance, fuel, etc. In that regard, even a $100k Model S is reasonably cheap (if you live in a state with high property taxes on cars it may not be).
Now buying the car in the first place is more relevant -- if you have money sitting around to buy the car, your house is paid off, etc, then you can afford a Model S on a retired income. If you are already straining to make payments on your house and other things, then you probably shoudln't buy it even if you make $250k.
I have always believed in paying cash for a car. However with the model S one can justify financing the tax rebate and gas savings. I have been setting aside $5000 per month this year and I still am short of my purchase price. Like many on this board I am far enought along in life that many of our financial goals are in sight.
It's your money and it's still a (fairly) free country so you can spend your money as you wish.
BUT. since you asked.. Rule of thumb is your car payment should be about 10% of your income or equivalent.
So we'll say 5 yr loan at 4% for a 50k S and a 100k S.
Its about 900/mo for the 50k S and 1800/mo for the 100k S so that would be an income of $9,000 - $18,000 or roughly 100k/yr - 200k/yr.
This seems low to me, but then I have three kids in private school and a house payment. (I couldn't imagine spending half a year's salary on a car!)
But then I'm getting the loaded MSP because its a free country and I have the money and most of all I and my family want one.
BUT. since you asked.. Rule of thumb is your car payment should be about 10% of your income or equivalent.
So we'll say 5 yr loan at 4% for a 50k S and a 100k S.
Its about 900/mo for the 50k S and 1800/mo for the 100k S so that would be an income of $9,000 - $18,000 or roughly 100k/yr - 200k/yr.
This seems low to me, but then I have three kids in private school and a house payment. (I couldn't imagine spending half a year's salary on a car!)
But then I'm getting the loaded MSP because its a free country and I have the money and most of all I and my family want one.
Calling a car an asset is a stretch IMO. An asset is something that puts money in your pocket. A liability takes money out.A car does not put money in your pocket.
Agree with your second point. The way I see it is I can take my free cash and easily generate returns greater than the ~2% loan you can get.
I can definitely afford the 85kwh from a cash flow perspective, but I think the 60kwh meets my needs nicely. I'll stick with that, and load it up.
Odenator
Member
Another rule of thumb by Suze Orman: if you have to finance the car for more than 3 years to afford the monthly payments, then the car is too expensive to purchase.
I'd underscore the words "have to": there are sound reasons to carry some debt even when you could pay the debt off from your financial assets.
If you finance 100%, then I agree. Otherwise you'd be upside down far too long. If you on the other hand have a 25% downpayment I see no problem in financing over the period you usually keep new cars. For me that would be around 8 years. I'd rather pay a lot less over 8 years and put the excess into savings every year than pay a lot over 3 years and then nothing the following 5 years (with no savings the first three years and lots the last 5).
No. My house puts no money in my pocket, but it's certainly an asset. My wallet puts no money in my pocket (though it holds it) and it's certainly an asset.
Perhaps you're intending a different word than 'asset'.
stopcrazypp
Well-Known Member
He's half right. I think he's referring to the fact that an "asset" should be able to produce value (doesn't have to be money directly). He's wrong in that a house, car, wallet, etc. all fit that criteria because they are all useful in some way (you can live in a house, drive a car, carry things in your wallet; this is all part of the produced value of those assets). Plus the definition of asset explicitly allows for depreciation and for the value that you get out of that asset to be lower than what you spent to acquire it.
Jointguy
Member
Incorrect. An asset does not have to "produce value", but rather have value. Example: many precious metals don't "produce value" but are just traded in coin form.
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