Car Payments % Poll! - Page 3 - FMVperformance.com : The site for all your Ford Mazda and Volvo needs
View Poll Results: What should your car payments be, as a percentage of your total income?
Less than 5% 9 27.27%
Between 5 and 10% 11 33.33%
10 - 15% 4 12.12%
15 - 20% 3 9.09%
20% and over 3 9.09%
Doesn't matter... get the car you want! 3 9.09%
Voters: 33. You may not vote on this poll

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post #21 of 29 (permalink) Old 05-09-2019, 01:25 AM Thread Starter
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Reviving a 14-year old thread.

Mine now is ~5% of total income.
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post #22 of 29 (permalink) Old 05-12-2019, 09:24 AM
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The secret to car payments is not to have one. The second is never to buy new since cars are a depreciating asset and require continuous maintenance. As unpopular as that statement might be, the math adds up every time.
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post #23 of 29 (permalink) Old 05-12-2019, 10:15 AM
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Originally Posted by VWandDodge View Post
The secret to car payments is not to have one. The second is never to buy new since cars are a depreciating asset and require continuous maintenance. As unpopular as that statement might be, the math adds up every time.
  • Car payment for a new car...
  • Car payment for a used car...
  • No car payment for a new car...
  • No car payment for a used car...
I can make arguments, pro and con, for each.

As for what percentage of one's income should be devoted to payments for a car (new or used), geez, that could be all over the place. If a young person *needs* a reliable car to get to and from work, lives rent free with his or her parents, and has few other expenses, I see no reason why payment even as high as 25% would be considered unreasonable. Then again, if someone is taking home say, $150,000 per year, it would be pretty silly to have a $3,000+ per month payment.

For me personally, I try and keep any payments to less than 5% of my take home income; either that or have no payment at all (my current status).

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post #24 of 29 (permalink) Old 05-12-2019, 10:43 AM
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Quote:
Originally Posted by shipo View Post
  • Car payment for a new car...
  • Car payment for a used car...
  • No car payment for a new car...
  • No car payment for a used car...
I can make arguments, pro and con, for each.

As for what percentage of one's income should be devoted to payments for a car (new or used), geez, that could be all over the place. If a young person *needs* a reliable car to get to and from work, lives rent free with his or her parents, and has few other expenses, I see no reason why payment even as high as 25% would be considered unreasonable. Then again, if someone is taking home say, $150,000 per year, it would be pretty silly to have a $3,000+ per month payment.

For me personally, I try and keep any payments to less than 5% of my take home income; either that or have no payment at all (my current status).
I can see the argument against a payment as high as 25%. Another flaw in the argument is people who assume new car means reliable. It would take some digging, but some basic Internet research will yield loads of examples of new vehicles that have been unreliable. The most reliable vehicles I have ever owned I purchased used: 1991 Ford Escort Wagon (5-speed); 1996 Mazda Protege (auto); 1991 Geo Storm (fluke deal); and, my 2006 MZ3. The 2001 Cavalier (5-speed) I bought new because I was turning in a lease vehicle. Leases are financially bad as well.

As I stated before, buy used as someone else takes the initial hit on depreciation. Take the money saved and put it into an IRA or 401K (if it's available).

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post #25 of 29 (permalink) Old 05-12-2019, 11:28 AM
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Originally Posted by VWandDodge View Post
I can see the argument against a payment as high as 25%. Another flaw in the argument is people who assume new car means reliable. It would take some digging, but some basic Internet research will yield loads of examples of new vehicles that have been unreliable. The most reliable vehicles I have ever owned I purchased used: 1991 Ford Escort Wagon (5-speed); 1996 Mazda Protege (auto); 1991 Geo Storm (fluke deal); and, my 2006 MZ3. The 2001 Cavalier (5-speed) I bought new because I was turning in a lease vehicle. Leases are financially bad as well.

As I stated before, buy used as someone else takes the initial hit on depreciation. Take the money saved and put it into an IRA or 401K (if it's available).
You can cherry pick all you want, but the fact is, new cars are overwhelmingly more reliable than used cars. I've had numerous new cars and quite a few used cars, and as a general rule, the used cars are no less expensive than the new ones to own for a give period of time and/or miles. Case in point, I had a 2001 Honda Accord; over the six years and 80,000 miles I owned it, the car cost upwards of $20,000 between acquisition costs and maintenance and when I donated it, it was needing roughly another $2,000 in maintenance to keep it on the road. Then there were the days when the car was not available due to being in the shop for repairs.

My TL is another example, I've owned it for almost exactly two years and 40,000 miles, and between acquisition costs and maintenance to date, I'm over $16,000 into it; had something new appealed to me more than the TL, it would have been significantly less expensive to have bought new.

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post #26 of 29 (permalink) Old 05-12-2019, 07:45 PM
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Zero.

If you can't afford to buy your car with cash, then you can't afford your car. I'm being 100%, dead serious.

Read


. He goes into great detail about how starting car payments are one of the very worst financial decisions a person can make.

Last time I made a car payment was in 1999. I haven't looked back, either, and I'm so, so much better off for it.
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post #27 of 29 (permalink) Old 05-12-2019, 09:38 PM
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Zero.

If you can't afford to buy your car with cash, then you can't afford your car. I'm being 100%, dead serious.

Read Dave Ramsey's "The Total Money Makeover". He goes into great detail about how starting car payments are one of the very worst financial decisions a person can make.

Last time I made a car payment was in 1999. I haven't looked back, either, and I'm so, so much better off for it.
Sorry, when you consider how low the interest rate is on cars, especially new cars, the future present value of the cash you'd have to lay out for a car versus financing it comes out in favor (ever so slightly) in favor of financing the car. Said another way, even though I can afford to pay cash for any car I'm likely to buy, it is highly unlikely I will.

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post #28 of 29 (permalink) Old 05-14-2019, 07:20 PM
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Quote:
Originally Posted by shipo View Post
You can cherry pick all you want, but the fact is, new cars are overwhelmingly more reliable than used cars. I've had numerous new cars and quite a few used cars, and as a general rule, the used cars are no less expensive than the new ones to own for a give period of time and/or miles. Case in point, I had a 2001 Honda Accord; over the six years and 80,000 miles I owned it, the car cost upwards of $20,000 between acquisition costs and maintenance and when I donated it, it was needing roughly another $2,000 in maintenance to keep it on the road. Then there were the days when the car was not available due to being in the shop for repairs.

My TL is another example, I've owned it for almost exactly two years and 40,000 miles, and between acquisition costs and maintenance to date, I'm over $16,000 into it; had something new appealed to me more than the TL, it would have been significantly less expensive to have bought new.
This is highly debatable, especially the cost of ownership part. Really, what could you possible buy new for $16K that could compare to a TL? That's base model econobox money today. Also, you aren't factoring in depreciation. In just one year some cars loose $10K in value where as if you bought the same car when it was 2-5 years old you stand to save a lot. Even new cars end up in the shop, usually for more complex problems than what a 5+ year old used car would. We had a customer with a CX-5 that they bought brand new, out of the blue it refused to crank, it was some kind of ECU issue that involved the keyless fob and factory security system. They had it towed to our shop, none of our scan tools could read it because it was too new and they had to have it towed to the dealer. The car was down for over a week and they ended up paying for two tows plus whatever the problem was because I believe it was just outside of warranty.



I've personally never had a car payment and my parents haven't had one in at least 25 years. We just buy decent used cars with cash and run them until they become unreliable. Obviously, some people get in a pinch, need a car, and don't have the money on hand which I completely understand getting one with a payment. You do need to look at how much money you usually have left over at the end of the month before deciding what monthly payment you can afford and understand that having $500 left that doesn't mean you can afford a $500 payment. Ideally though, if you don't have cash on hand to pay for something then you can't afford it.
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post #29 of 29 (permalink) Old 05-14-2019, 07:43 PM
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Certainly debatable. I stand by my arguments.

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