How do you decide how much you want to spend on a car?

[cschin4]

But I think that is sort of pricey..

So go and negotiate on the price.

[jIM_Ohio]

SnS- I know you are close to your dad, trying to mimic his car buying techniques might not make sense depending on your ability to maintain it.

For example- did your dad do his own maintainance, or did he use a mechanic?
how about yourself?
Have you ever owned a car past its warranty expiring? How has that experience been?
Do you object to $1000 repair bills?
How many $500-$1500 repair bills would you need in what amount of time before a car became a liability? I have spent $10,000 in 6 months on car repairs, so I know my threshold... but every person is different (some people might get a new car at first repair bill over $700).

My thought is along lines of "car always has residual value". Every car I needed to get rid of, except 1, was donated to volunteers of america for a tax deduction at blue book value. Worked for me.

So my take on this would be drive car into ground for 1-2 more years. Keep building up a cash cushion.

I know you have 6 months in EF.
How about house repair savings?
is retirement savings on track?

Get every financial tree in order before cutting down the new car tree is my advice, then when you need the new car, finance it. Probably 3 years makes sense.

[zetta]

Get every financial tree in order before cutting down the new car tree is my advice, then when you need the new car, finance it. Probably 3 years makes sense.

jIM -- what's your reason for recommending 3 year financing instead of saving up and paying cash?

I would LOVE something like this:

Murray Motors of the Lehigh Valley

And am positive that I would drive it for more than 5 years.

But I think that is sort of pricey...

I think if you save up and pay cash for a car, it is reasonable to spend a bit more to get what you really want. It just means you have to live with your current car longer in order to have the nicer car later (24 months to save up for the Acura with 50k miles vs 35 months for the one with 21k miles.)

[mainyy]

my rule:

the total fees that I spend on a car per month must be less than my monthly incomes.

[whitestripe]

There isn't really any one answer for whether or not you should finance a vehicle. People may say and believe that they know what is best for you but in the end, you are the one that decides what you want to do with your money.

In essence, financing something IS a ridiculous concept, you are paying money, for money, because you haven't bothered to save it yourself. That's what it's all about and really I am sure there are many people that would be better off if financing wasn't around.

However. It IS around and people utilise it every day, including myself. The reason people have money and earn money is so they can decide what they want to do with it and how they want to spend it.

Your initial question was How Do You Decide how much you want to spend on a car?

DF and I decided a few years ago that when the time came to buy a newer car, we would most likely buy a Subaru. I would never buy a brand new car, simply because of the depreciation it suffers once you turn the key for the first time. But that's just us - DF is handy with mechanical things so it would not bother us to buy a car that is a couple of years old - perhaps people who have no mechanical skills and knows no one with them, would feel safer buying a brand new car. This doesn't mean nothing will ever go wrong, either.

We kind of agreed we'd spend around 15k on our next car. I don't know where that figure came from, but it was most likely from how much the model we wanted seemed to cost at the time. So I guess we decided on how much we would spend, based on the car we decided to get.

Technically speaking I am sure you could argue that, based on our logic, we could also decide to spend $200k on our next car, because we decided we wanted a Porsche. But that's just silly!

[Caoineag]

When we got our car, it was because it was ridicuously cheap and we knew the previous owner and how well the car had been maintained. Since we had just bought a house, I weighed the cost of rental cars (to transport stuff like tools) vs owning this one outright, and owning was the better deal. I also knew that I would probably have about 2k in repairs within the first year of ownership and I was right. Still a good deal.

I am not a big car person. It shows in that I rode the bus for a number of years to keep expenses down. We will probably keep this car till it falls apart. We don't mind a couple grand in repair costs because its still cheaper than a newer vehicle and part of that is just basic maintenance. I would never be able to convince myself to get a car loan. I am still wondering if when this car falls apart whether I will be willing to part with the money or will go for another beater.

[jIM_Ohio]

jIM -- what's your reason for recommending 3 year financing instead of saving up and paying cash?



I think if you save up and pay cash for a car, it is reasonable to spend a bit more to get what you really want. It just means you have to live with your current car longer in order to have the nicer car later (24 months to save up for the Acura with 50k miles vs 35 months for the one with 21k miles.)

I see where SnS is financially, and if she wants something new, my best guess (SWAG) is that SnS will not have 20-30k saved in 2-3 years to get a car SnS wants.

My advice is more big picture- SnS has the 6 month EF, but appears that might be one house repair away from depleting some/most/all of it. My advice is to make sure the secondary EF is built up. SnS did not object to financing, so my comment was 3 year financing is plenty long enough.

[ScrimpAndSave]

Actually, I'm starting to think that if I keep my current car for about year a half, I would be able to start a car fund and probably save up close to $10,000. If I sell or trade my car in for around $3,000...then I am looking at $13,000 towards a new purchase. I would be able to get something close to new at that point and finance very little.

That is probably my best bet...this current car (although it has a lot of miles and is 12 years old) really has never given me a reason to feel unsafe. It's been well maintained and is kept in a garage every night.

Well, I am off to open a new ING sub account for the car...haha...

[jasonnoguchi]

I have 3 fully owned houses, a bunch of investments and plenty of income and no, I don't even own a single car nor contemplate buying one.