Your M3 price vs. your disposable income

[tpatana]

On FB someone was asking how much is M3 compared to their income. It's not perfect question for many reason, taxes and living costs are very different in certain places. Try living downtown Seattle or SF with $2000 monthly salary but other places it would be different. So I think better question is that how big hit it makes on your disposable income. On the other thread there was discussion if some people don't have $7500 tax liability so they don't get the full tax refund. It makes me wonder how tight people are budgeting the M3.

So for the poll, calculate:

The price of your Model3 ($35000 if base, $54k+ if first etc.), divided by your monthly disposable income.

That basically says how many months of your disposable income is needed to pay off the car. Not taking into account loan interest or such, trying to keep it simple.

So e.g. if you get the first batch with paint for $55000, and your disposable income is $500 -> 55000/500 = 110

 

[bmms8]

Hmm fun and interesting thread. Subbing to see how peoples ratios come out

 

[siggyfreud]

We supposed to factor in the tax credit, like configuration cost minus tax credit and state rebate?

 

[bmms8]

We supposed to factor in the tax credit, like configuration cost minus tax credit and state rebate?

No nothing from OPs post tmu

 

[jsmay311]

You might want to be more specific about how you want to define "disposable income" for this poll.

Investopedia defines it here: Disposable Income as (Income - Taxes), with no factoring in of cost of living.

Others, I imagine, would interpret this differently and subtract all sorts of things.... housing, food, utilities, healthcare, childcare, etc. But that aligns more with "discretionary income". Discretionary Income

 

[JeffK]

I didn't factor in the tax credit as it plays no part in the purchase or resulting loan price.

 

[tpatana]

No nothing from OPs post tmu

Yea I thought it's more simple/clear this way, since depending on your location you might not know how much you're getting, if any. Although for quite many it might be important they do get it, but then especially for the AWD it'd be speculation if they get 7500, 3750 or what.

 

[insaneoctane]

I spend or save all my money, none of it is "disposable"

 

[JeffK]

I spend or save all my money, none of it is "disposable"

Perhaps someone is confusing Model 3 buyers with Model S buyers...

(This is James Cameron, and yes, he owns a Model S)

 

[Krugerrand]

What if you're planning to make a fairly large down payment and possible other lump sum payments along the way?

 

[Phrixotrichus]

I´d never ever loan/finance/lease something. I always buy cash.
And what I can`t afford to buy cash is something I consider not affordable in general for me.

 

[JeffK]

I´d never ever loan/finance/lease something. I always buy cash.
And what I can`t afford to buy cash is something I consider not affordable in general for me.

I sure wish I could afford a house with just cash...

Some of us are not rich or old enough to have saved money forever and yet we still want nice things.

 

[Phrixotrichus]

I sure wish I could afford a house with just cash...

How was that hip-hop song? "get rich or die tryin"
But yes, I guess a house as a real long term investment makes financing ok.

For a car however.....

 

[SageBrush]

What if you're planning to make a fairly large down payment and possible other lump sum payments along the way?

Ignore. After all, you then have to (or probably want to) replete the savings from your future discretionary income.

A bigger unknown is trade-in allowance or avoidance of buying a different car, but we should ignore that too to KISS.

Fwiw, I think exactly this way in terms of my use of discretionary income. The people who are choosing 50-100 months are pretty much saying that all of their discretionary monthly income is directed towards the car. That is commitment! It is also behavior I avoid if it means spending future money I may not have if my income stream changes for the worse.

 

[Thomas Edison]

Personally, I feel a car forum isn't the right place to compare incomes. But that's just me.

 

[jsmay311]

I´d never ever loan/finance/lease something. I always buy cash.
And what I can`t afford to buy cash is something I consider not affordable in general for me.

For my last car I got a loan with 0.9% APR.

I could've paid cash, but at such a low rate it would've been foolish since I could invest that money in the meantime instead.

 

[jbcarioca]

Remember that Model 3 buyers will be similar to BMW 3 series so the distribution will be multi-modal.
I won't guess exactly the population of modes but:

1- some will have the 3 a a third, fourth or... car among whom many will substantially exceed the Model 3 price in monthly after tax income.
6-9- second largest cohort generally in multi-car households.
10-15- a large cohort will be in this range, probably an absolute majority of sales regardless of MSRP.
18-24- third largest cohort, often with leases and long term loans
>24- not many, but where it happens most will be actually owned by other people with higher incomes.
>36 zero. There will not be sub-prime for new Model 3. Later on there could be for used ones. Nobody will get any reasonable loan that much exceeds 25% of net income. It won't be zero actually but it will round to zero.

That said there are quite a few people who are asset rich, income poor. These people tend to be cash buyers, just like the first group, but income calculations aren't too relevant for them.

It will be fascinating to see the age distribution for Model 3.

Thus far Tesla ownership has been far more diverse than the price would suggest. I expect Model 3 will surprise us too. After all, they are Teslas.

 

[Foxhound199]

But yes, I guess a house as a real long term investment makes financing ok.

For a car however.....

What's smarter: Get a 30yr mortgage and save up to buy your car with cash, or get a 15yr mortgage and finance a car at <2.00% APR?

You can manage your finances however you want, but I never quite understand the people who feel the responsible use of credit is akin to devil worship or something.

 

[Stolz25]

I sure wish I could afford a house with just cash...

Some of us are not rich or old enough to have saved money forever and yet we still want nice things.

Lol. This guarantees when you are old enough you still won't be paying cash.

 

[SageBrush]

You can manage your finances however you want, but I never quite understand the people who feel the responsible use of credit is akin to devil worship or something.

You are setting up a straw-man, but the view you do not hold says this: use credit for appreciating assets. Examples might include a home, an education, or a business. The flip side says to avoid using unrealized future income to enjoy today since it reduces your future more than the benefit today due to opportunity costs and the risk of losing the future income stream.