Can I afford this car?
 

I know this isn't the standard post for this forum, but I thought I'd ask since the group here is either in my same situation, or has "been there done that" and knows if this would be something I regret ten years from now. Please delete or move if this isn't appropriate for this area of the forum mods!

Anyways, I am looking at purchasing a BRZ. I've never bought a brand new car. I have really only owned two in my life time (98 Jeep Wrangler - Sold, and a 99 Jeep Cherokee, current DD). I'll bullet point the pertinent info...

• I am 26 years old
• I hold a steady job, making in the low 40k range
• I am single
• The only debt I carry is student loans (which I do not plan to pay off immediately.)
• I rent, I do not have a mortgage or home repair concerns
• The BRZ will NOT be a daily driver. It will be a second car for longer journeys. My work commute is less than a mile.
• Insurance wise, I am looking at approximately 70-80 a month for my Cherokee, renters insurance, and the BRZ...reasonable IMO
• I will be looking at a 5k deposit approximately. Shooting for a 60 month finance rate (I want to be around $350 per month on payments...I do want to avoid the 72 month financing.)

If I have forgotten any necessary information, please let me know and I will answer as soon as I can. I graduated college in 2011, took my current job in late 2012. I haven't ever been pressed for money since I've been on my own. I live on a strict budget, not because I need to but because I want to. My concern is that at my age, I have better obligations to put my money towards. However I also believe that if one where to purchase a car like the BRZ...your mid 20's are the target area. It is an enormous decision and I am hoping to get some insight from you good folks here.

Again, sorry if this has been posted a million times, or doesn't belong here. I did search but didn't see too much in the way of answers for this question. I contacted Clint several months ago, but I decided to pay off some credit card debt I had and finish paying off my Cherokee in order to shed some monthly payments and save up a bit for a down payment on the car.

Thanks!

You'll need more than 5 down for a 350\month payment. Figure about 200 per 10 K financed.

I was appraised at 1.84% directly through Subaru. With my trade in, I put about $8000 down and my payments are $370 I believe. I always pay more each payment though. I'm 22, full time student with GI Bill. No debt or anything.

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I'm paying more than that on a 6 year, practically nothing down though

I put down 7 for 350 over 72 months car cost me ~30k out the door new but that is 3.5% since I had zero 'real' credit when I bought it (you might get better since you have lines of credit already).

The financing I got through the dealer was a chase loan and on my document I do not get charged interest on early payments or closing the loan early. So I have been making 500-600 payments to get it done.

I work for 40k a year and rent/internet (I pay a shit-ton more money on insurance due to daily driving a sports car ~220/month state farm)

But I am only 24 so I have not hit that magic 25 year old insurance drop yet...and damnit that better be stellar.

I know it is do able for me, but you might need to throw some extra starter cash down or stretch out the payments.

dang that's harsh. Pretty much the reason I didn't get a new license when I moved to Michigan. I'm about 60/month in Ohio on my parent's insurance, and 300/month if I transfer my license (I don't have the best record)

I had a perfect record prior to buying this car (got 4 tickets in 30 days after buying it), previous 2 cars were car fires and was covered (which is why I think my insurance company is billing me so high). I need to refinance the loan asap because 3.5 is really high. needed to wait 6+ months for my bank to give me better. Hoping for a 1.5%

Common misconception, affording repayment is not the same as affording the car.

Whatever you do, just make sure you leave yourself with a decent amount of money every month for mods. ;)

good point. The BRZ is not a bad "asset".. and at least while making payments, the car at least holds good value. I think I calculated $500/month payments.. after the cars paid off, if I held no value on the car at all, it's more like $320/month after trade in


But the best part about paying off a car, is trading it in with a huge downpayment on the next car :D


Seriously, I am blowing money like mad, I have the mod bug. I'm having a hard time holding myself back in order to not get bored after 2 years after it's fully modded out.

I had a similar problem with firearms...bought one a month for about a year...then bought my BRZ. Now spending money on mods and ammunition rather than new firearms.

The girlie is expecting me to trade it in once we get married and have kids...she might be wrong. This car just does not get old, as fun to drive today then when I bought it 10k ago.

are you looking at the premium or limited?

i'm 27, make roughly the same, but the brz limited is my only car right now.. i put 10k down, and my payments are $350/mo @ subaru's special rate of 1.9%..

currently it looks like subaru is offering 0.9%, so you might be able to fiddle with the numbers a little more..


especially with a tuner car like this!! see next point

+100... for 2 months before buying the car, and the last couple months of ownership, i've been buying stuff like crazy-- i still was able to make the minimum payments, but it's been a little close here and there.. much closer then i had intended.. my goal when buying the car, and what i had budgeted/planned for before buying the car, was to always make double and triple payments.. so at least try to attempt taking modding into account ;)

I'm way over my planned budget, though I'm good as long as I don't do "this" every year.


I'm hoping I'll blow tons this year.. then make it back next year when I'm not modding. We'll see

This is how I view questions like this. If you feel you will be strapped for money each month of even question yourself on whether or not you can afford something, you should not buy it. This of course is not permanent but save up to be able to afford it. Please keep in mind affording the vehicle includes routine maintenance, gas, insurance, repairs, and taxes after purchasing/renewals. I am pretty much in the same boat as you but I put a ton of money down from saving the whole year.

I am 24 and got my car last year. If this is something you really want to do and everything is in check then I say go for it. But double check your finances. I also planned out my payments on how much I can over pay to pay the vehicle off sooner. I am not a person that buys a new vehicle every few years and I plan on keeping this. Also try and see what your price would be with the maximum loan duration. I took out a 6 year loan and this was due to the fact of possible unforeseen circumstances that may come up. Would I be able to afford this car if I somehow got injured and could not work? Would I be able to afford this car if gas prices became $7.00 a gallon. Would I be able to afford this car if I lost my job? These are the questions you need to ask yourself.

Exactly my fear, that I don't quite understand what I'd be getting into with this.

Thanks for the constructive posts! Really great community here. I've never really been pressed for money, and doubt I would be even with a 400 dollar payment. I just worry that I might be getting in too deep with a brand new car like this...

I prefer to do all my maintenance and mods on my vehicles myself, however I'm a little limited here (part of the reason I'm looking at new rather than used).

Can you afford it? Maybe.

Should you? Doesn't sound like it so far.

i think you should ask Suze Orman..............she'll tell what you need to hear.....

I agree, especially with the 2nd car. You'll be stretched real thin. You'll love the car, but its never fun spending at full capacity.

Id wait a bit and maybe try to buy one around 20k miles.

You appear to be doing well as a thoughtful and responsible young adult. If only your peers would do so well. ;)

A couple of points:

1) Are you participating in an employer 401(k) match plan? It is foolish to ignore that if it's offered. You double your money right from the start with the employer match; it's free money and one should take advantage of that.

The time to start saving for retirement is NOW. Do your homework, and you'll see that I'm right. :)

2) You can borrow $20,527 @ 0.9% for 60 months, giving you a monthly payment of $350 (if available at your Subaru dealer). As you can see, you'll need to modify your plan.

3) You've done well. Personally, I am sympathetic to the notion that you get a nice reward for your efforts, and for your self discipline so far in your young life.

Is it the smartest financial move to buy a new car right now?

No, of course not. (Especially not if you are not participating in a 401(k) match plan.)

But, if you've got your 401(k) going and you're getting the full match, well darn it ... it would sure be nice to enjoy this wonderful car now in your young years before you get caught up in marriage and children and houses and bills and more bills and, well...

If you've got that 401(k), and you're still able to save for a rainy day, then if you were my son (I'm older than your dad), I'd say, "Do it, kiddo!" Reward yourself. You've earned it. Find the joy in your life! :)



P.S. Don't call me if you get into financial trouble later. Okay, so it's a tough call in these uncertain times. Are any of us safe? :)

I remember from the subaru marketing they said an expected owner would be in 30s making like 90k. I dont think they pull these numbers out of a hat. That said do what you want to do, YOLO as they say. If you are comfortable living check to check without an emergency fund, retirement account, etc then go for it.

And please tell how i can insure two cars and an apartment for $80 wtf

Limited, but I am not really set on that. If the price was right I could go with the Premium.

Thanks for the compliments. My employer offers a 100% match (up to 5% of your pay) for the 401k. I have not been putting anything in. When I moved here, I was basically starting from scratch and needed every thing I could get in order to furnish my home and get all the requisite "home needs". Truthfully, until your post I had forgotten about the 401k entirely. :lol:. I'll be getting the paperwork from HR tomorrow to start into that program ASAP.

When I had my credit card bill and previous car payment, I tried to judge how well I would do with a larger car payment by adjusting how much I paid per month on the card. By the time I was comfortable, I was paying 430 per month on them both and probably could have gone a bit higher. I don't feel I would be stuck living paycheck to paycheck even with the car payment, but my emergency fund isn't quite where I want it to be.

Just to be sure, I quoted the BRZ with my insurance company (USAA) this morning. The insurance for both cars would be around 70, plus 20 a month for my renters....so around 90 for 2 cars and renters. I've never been in an accident (knock on wood) and have been a customer with USAA for 10 years, including two car loans.

Wow, almost exact same boat as you. I graduated same time, started work at the same time. The difference is I have no student debt and my salary clocks in at about 60k. My employer also does 401k match (contribute the maximum, you should too if you don't already). I've saved up enough in cash to just buy it outright now, but several things keep stopping me from jumping the gun.

1) Having lived through the recession and being unemployed etc, has made me slightly paranoid and I go through a lot of needless self-drama whenever it comes to purchases that aren't 'necessary'

2) I'm a full fledged believer in the pending retirement crisis, so a lot of my money goes into mutual funds/stocks.

3) Even if you can afford it, doesn't mean you should. All depends on your life circumstances.

Although I'm starting to realize that constantly planning for the future isn't the way I want to live, and I'll be buying one sometime soon. The thing that's helped me rationalize not getting one yet more than anything, are all the 'WHEN WILL POWER UPDATE HAPPEN GUYS 2015? 2016?'

I leased just to be safe and keep the door open after 3 years. $2k down and $320/mo out the door.

Jesus, I hope nobody gets butt hurt by this but for the the 700-800/mo youre paying for this car every month between insurance and payments, you could get a much nicer ride...

As has been said in all of these style posts: If you have to ask....

One side of me says save the loot until you're really comfortable in making the purchase. The other part of me says do it instead of saving for a tommorow that's never promised.

If after car payments, insurance, tax and gas (and obviously after all your current obligations/needs) you have a comfortable amount of cash left over each month then you can afford it in my eyes.

Personally, i use Mint to track my monthly spending/income and always ensure I'm leaving a sizeable chuck each month after expenditures/savings/stocks.

All sports car purchases are unnecessary and bad investments. Just comes down to how much you like/want the car.

I was in a similar situation, it was either the BRZ or purchase more stocks. While stocks can definitely be fun I've got enough of those for now.

I moved to the US when i was 21 and was paying quite a bit more than you each month for an 09 2.5S Altima sedan. Was more than my car payment :(

Now at 26 i'm paying 150/month for the BRZ.

As much as I want Toyota/Subaru to sell as many as possible, I really don't get the point here. You want to spend something like 80-90% of your yearly take-home pay on something that will drop rapidly in value, and you won't even use it very often.

If it was me I would get something used that's already past the steep part of the depreciation curve, you're tying up less capital and the value should remain pretty stable if it's not driven often. Or, wait until I could pick up a 2013 FRS/BRZ for pretty cheap and DD it to avoid the expense of owning/maintaining/insuring two cars.

My 2 cents, no you can't. But then again, it depends on the type of lifestyle you want. If saving for retirement, not having to pay off your student debt 2-3 times over, putting a down payment on a house, or establishing an emergency fund aren't priorities for you, then go for it.

I took a wild guess at your monthly numbers. I basically took your monthly average take home and subtracted your expenses. If I had a better idea of where you lived the rent and tax rate would be more accurate. Obviously plug in your own numbers. With this you'd have about $400 left to cover entertainment, vacations, mods, and savings for a rainy day fund. If that makes you comfortable then go for it. If it doesn't then I'd hold off.

Gross Pay............................................... ..43000.00
Gross/Week.............................................. ....826.92
Monthly Avg. (4wk/mo)...............................3307.69
Monthly Avg. Take Home (25% tax rate)......2480.76
Savings (5%).............................................. .-124.03
Rent+Utilities.................................... ...........-800.00
Insurance......................................... ..............-80.00
Gas............................................... ...............-100.00
Food ($3/meal for 30 days)..........................-270.00
Cellphone......................................... ..............-50.00
Student Loans ($29k national average).........-300.00
Car Payment........................................... .....-350.00
Remaining .................................................. ...406.73


Creating a monthly budget is fairly simple, they really should stress this a lot more in high school.

If you have to ask, no.

I don't think you can afford it. As others have said, being able to pay for the financing isn't the same as being able to afford the car.

@Longhorn248 was very nice there and took the time to estimate your budget. I think he may have underestimated just a little on a few things, but I realize that also depends on where you live (I pay more than $50/month for my phone, and I definitely spend more than $3 meal on food, despite not eating out more than a couple times a week).

I think you really shouldn't be considering this purchase based on your current finances, but also keep in mind your future finances. You're currently renting, but are you ever planning on buying? Do you have an emergency fund that covers 6 months of your expenses? Are you properly contributing to a retirement plan?

You already have a car, so I don't think it would be financially wise to ignore your other possible financial responsibilities.

If your down with leasing, since your not driving alot. I did 0 down 16k a year 300/month for 42 months. Was a great deal but I did have a bit of equity from my trade, which was a lease as well.

@Prog and @Longhorn248

Just a quick nitpick: Because of the current job market and depending on the field, I'd say it's far safer to have at least 1 year of savings nowadays.

I agree with the underestimate. I didn't want to bias the analysis towards not getting the car. Hopefully he can fill in his own numbers to decide for himself. If I were doing my own personal budget I'd use $5-$6 per meal as I only eat out once or twice a week and consider that "entertainment" and the phone bill would be double. If you throw those into the calc that leaves $290 a month of discretionary spending which is less than $10 a day. I don't know about anyone else, but I'd like to know I can spend more than $10 a day on random shit without having to worry about it affecting my ability to pay my bills.

There's a lot of good advice above. I'll add my $0.02 worth.

If you were my son (and I have one your age) here is what I would tell him, and it is what I do.

• Never buy a car (or any other depreciating asset) that you can't pay cash for, even if you decide to finance it.
• Don't finance it. There is a car out there you can afford to pay cash for, it just may not be your dream car, but it will be great car. Extreme example, I drive an FR-S. I'd love to drive a supercar (say an Adventador), and I could probably find someone to loan me the money for it (at minimum I could mortgage my paid-for house tomorrow to finance it), but that doesn't mean I should.
• The total value of anything with an engine in it you own should not add up to more than half your annual income. That's a lot of money to be losing every year. (That kills the supercar for me!)
• The definition of being adult sometimes means we give up things we want today so we can have better things tomorrow.

(NOTE: For those that are familiar with Dave Ramsey, this will probably sound directly out of his playbook, and it is. However, I've been doing it since I was 16 and paid $300 for my first car, when what I really wanted was a $2,500 used '69 Camaro, so let's just say he and I both understand common financial sense.)


I've posted this before, but here is something to think about (also Dave Ramsey)

[ame="http://www.youtube.com/watch?v=BKyV8CTHeJ0"]http://[/ame]www.youtube.com/watch?v=BKyV8CTHeJ0

Lots of good advice right there ^ from @Dadhawk.

Buy a nice used Miata pretty much the same thing just convertible.

If the point is to save your money for retirement, I think it's a great one and I agree with it whole heartedly, but the math is in that video is a bit...questionable.