Quote:
Originally Posted by strat61caster
This has been the first "can I afford it thread" where I actually think the OP can.
My only question is if your payment is about $400 will you have cash left over or will your savings cease to grow as you pay this car off? If it's the latter then you'd be living paycheck to paycheck, a terrible terrible idea which is inadvisable.
The numbers don't make sense in a gut way, $40k a year, paying rent, bills, and student debt usually does not leave a lot of wiggle room for luxuries. I generally agree with dadhawk, if you can't afford to pay cash for it you can't afford it, I don't delve into the interest rates and investment returns and such but the idea is easily understandable. You make it sound like your a bit better off than intuition would lead us to believe (i.e. ridiculously low cost of living or you really enjoy ramen).
I financed my car, and I'm terribly glad I did. I payed it off in about a year. I knew going in that I could finance and pay it off in about a year OR I could have waited a year and payed cash. If I had waited I wouldn't have gotten the credit score bump from financing a large item, I would have been driving something else for a year, and I probably would have ended up with a mumbojumbo touch screen I hated. Sure it cost me an extra couple hundred dollars to the bank but that's the way the world works, it's hard to pay cash for everything.
Again it really boils down to this: will this car sap your budget such that your savings is no longer growing and you're living paycheck to paycheck? Are you prepared for the unexpected? If you can confidently answer these questions positively then all that remains is the self control required to keep yourself from digging a hole to bury yourself into.
Take a quick look at the classified section on these forums, notice how many are selling due to "changing life circumstances", they probably wouldn't have been able to confidently answer the two questions I posed above.
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I can do the math.
Assuming OP is paid a W2, ~$42000 a year translates into $31500 or $2625 per month.
Less rent food gas and ... a car?
Everyone's circumstances are different. Just remember that a car adds not just the payment, but insurance/registration/expenses associated with it.
If you don't have a total of $800 (double of what the car payment will be) to put towards the car, you're borderline "can't afford the car"
Just my two cents from prior experience. Much like owning a house, it's not just the upfront cost of the purchase you have to worry about when you buy a car.
-alex