Can I afford this car?

[SCsailor]

This is discussion is a bit premature. You've not even started the job yet. Five years is a lengthy financial commitment for a car. Wait until you get settled into the new job and get a handle on what your monthly expenses will be. You may find that 85k doesn't go as far as you think.

[woodie96]

LOL....great analogy DS.....made me chuckle...
I have to agree with SCsailor.....give the new job a while to soak in and balance the budgets, get everything on the right track then re-assess...

[dczech09]

If you have a goal of financial freedom and independence, then you are gonna put yourself further away by financing this type of vehicle. My advice: by a reliable vehicle that you NEED. Do not by a fancy sports car. Cars are TERRIBLE investments as they go down in value as soon as you drive off of the lot. By what you need, not what you want, and invest the difference in some things that can produce growth and/or income. Overtime you will be able to outright buy your fancy wheels without financing and you will not notice the cost.

Do not take financing advice from a car salesman. Of course he/she is saying you could afford 35k on 60k; they are trying to manipulate you in to taking on a larger loan so they get more commission. Car companies pull in MUCH more money from financing that cash purchases. This is simply common sense. A commissioned car salesperson never bought steaks by advising customers on financial responsibility.

Ultimately, it is your job to watch out for yourself and do what is best for you. If you feel this is what is best for you, then thats cool. But really, you have the power to do a lot of good things with that net $67,200 per year. I make a little less than you do and I've amazed myself with what is possible with smart financial management.

[coach2wealth]

Car payments are one of the major factors keeping the middle class middle class! I use to believe I'd always have a car payment. I've since learned to pay cash for older cars and build wealth. I'm much happier and less stressed then I've ever been. Pay cash for decent older sports car and take care of it. Make the car payment to yourself and upgrade every 2-3 years. You'll be surprised how quickly your paying cash for your dream car and have tons of cash left over. Trust me, that sweet vet will be a nightmare within a year if your not financially ready for it, and your are not.

[snshijuptr]

I like Coach's idea. Get yourself a slightly older sports car and save up. I get the feeling from the post that you currently do not have a car and need one for your job. I would caution that depending on your industry and position, driving a sports car can give the wrong impression to bosses and coworkers. My brother gave up his Camaro when he became a financial planner. People wanted to see him driving a "sensible" car.

[Slug]

After reading your replies to the feedback already given, the answer is clearly NO. I congratulate you on getting a great job in a rough economy. Now you must use your income wisely.

Buy a used Honda or Toyota for less than $10k. Feel free to splurge and get one with a sunroof.

[disneysteve]

Feel free to splurge and get one with a sunroof.

my last car had one. My current car (for the past 12 years) doesn't and I've always been sorry about that. Next car definitely will have one.

[Like2Plan]

I agree with much of the advice already provided.

Our apartment will cost between $1500 and $1800 per month

#1--It doesn't sound like you and your DW are actually living in the your planned living situation. yet. Maybe you won't be so lucky as to find anything in that price range. Does that include a garage and/or parking space? Once you actually move into your apartment, you may find you have other expenses you didn't count on.

#2--I am not adverse to financing a vehicle, but in our family we only carry one car note at a time. That means we have to keep a car for at least 8 years. A lot of folks recommend financing no more than 3 years. We always finance for 4 years and pay the loan off early and we stagger our purchases. Would you keep your 2005 Corvette for 8 years (or even 5 years--the length of your loan)? In what kind of shape is your DW's car?
What sometimes happens to folks who have financed their vehicle for a long period of time is they become "upsidedown" on the loan and then are in a bind because:
1. vehicle got into an accident and was totaled.
2. Car was stolen.
3. their lifestyle has changed--for example: a carseat won't fit in the car--now what?
4. they want to buy a different vehicle--gas goes up to $5.00 a gal and they want one that is less expensive to maintain.
Your strategy should include a realistic plan for your next car and your DW's next car.

[jpg7n16]

Needs:
1) Emergency Fund
2) Money for retirement
3) A car

Wants:
4) A really nice corvette

I say make sure #1-3 are covered 1st. Build a proper EF w/ 3-6 months expenses. Save enough so that you are on target for the retirement you want. Get a decent cheaper car (cause you gotta get to the sweet job somehow!).

Once those are all good to go, then start saving for the wants in your life. First up would be the awesome corvette. Save up enough (on top of the EF) to pay 1/3 - 1/2 down. Then sell your car and take out a small loan for the difference.


Oh and how the 401k saves you on taxes: well it saves you on current taxes.

It's like you told someone at your job, "hey don't pay me 85,000 now. Only pay me 75,000. Pay the 10k to me later. And invest it in ____ until then, and pay me whatever it grows to." So your taxable income for this year is lower (75k vs 85k), so your current year's taxes are lower.

When you withdraw it -say 35 years later-, it's like they paid you then, so you get taxed at that time.

(Technically you still have to pay FICA -social security- taxes on it now, but no income taxes until it's withdrawn)

[b4freedom]

This is what you do: Take the $6k as your down payment and buy a used car (for $6k). Open an ING savings account (or something similar). Label the account "car payment". Set up an auto transfer to the savings account for $500 month for 60 months. In 60 months you'll have over $30,000 to buy your next new car. When you buy your next new car, do the same thing. Pay cash but then pretend you’re making a car payment equal to what you would normally be paying for such a car payment. This way, you're saving money and paying yourself the interest that you would otherwise be paying someone else. Trust me; it might not be fun to have an old used car now. But in 5 years, when you have $30,000 in cash to buy a car, you'll thank me (and everyone else on this forum). Plus, a personal note, in five years you may want to use that money to buy a house, or get the mini-van for the kid on the way. Plan and spend for what you want in 5 years, not for what you want today.

[gpoitras]

If you can get rid of the idea of wanting a flashy new sports car, you will get ahead alot faster. Save a bit and pay cash for something that will get you from point A to B. I've had lots of fancy sports cars that I could never afford...but I could afford the monthly payment. In the end, I've lost thousands of dollars and while I had intentions on keeping them for ever, always got rid of them after only a few years. It's easy to justify to yourself why you should have something.

[autoxer]

You aren't going to get many people on a financial advice forum to recommend buying a sports car. I'm a car nut and I want one myself, but I'm also not going to recommend it for you.

A few years ago, I sold my newer sports car to get rid of the monthly payment. I didn't feel like I couldn't 'afford' it, but I was struggling to save up for a house down payment. I do have plans for another sports car, but I'm going to be sensible about it financially. I currently have a car payment on a used Civic SI for my wife, but I don't like debt, so I have a three year loan (3.9% interest), which I am on track to pay off in two years. Once that 'sensible' car is paid off, I'm going to start saving up for my own sports car.

[Beppington]

Dave Ramsey says, & I agree, if you have to finance a car, you can't afford it.

Save up & pay cash. At your income it won't take long. You will be so satisfied if you do that. Not only will you own a bad arse car but you won't have any debt.

Wealthy folks delay gratification, until they can actually pay cash for what they want.

[jpg7n16]

Dave Ramsey says, & I agree, if you have to finance a car, you can't afford it.

Save up & pay cash. At your income it won't take long. You will be so satisfied if you do that. Not only will you own a bad arse car but you won't have any debt.

Wealthy folks delay gratification, until they can actually pay cash for what they want.

Dave Ramsey also says, "Don't go around saying 'Dave Ramsey says'"

[cicy33]

I have a question that I have not seen yet. How old are you? If you under 30 or even 40 and I am assuming you are then you not only have to take into account the cost of the car but the cost of an insurance payment for that car. I ran the numbers on my age (42) and at my current coverages (0 comp and 100 collision deductibles) my increase per month is about 100.00 to add this car. Recently you may have noticed that I reported that we are coming into a little bit of money. Well, part of it was left for the teenager in our lives and he wants a brand new car. I ran the numbers just to show him and to add a similar car (2010 camaro) was going to be 350.00 per month for insurance on my policy. to add a nissan 370z was going to be over 400 per month. now granted he is only 16 but I can safely say insurance won't change much til over 30. So the question is not only can you afford to buy the car but can you afford to drive the car?