Can i afford a 40,000$ vehicle making 50,000$ per year?

Question

Can i afford a 40,000$ vehicle making 50,000$ per year?

Answer 1

No.  If you were able to find the financing the loan would probably be for 6 or 7 years and cost a massive amount of interest over the life of the loan.  A car loan should never be a longer term than 3 years at the most because after that you will be paying a great deal of interest for a used car.  I believe that is NEVER a good plan to finance anything that depreciates (goes down) in value.  When a person buys a new car it loses value the moment it is driven off of the car lot.  So the person financing the new car is immediately "upside down" on the loan.  They owe more than the car can be sold for since it is now "used".  Since you are making a good income ($50K), save an amount of money equal to the car payment every month every month for 6 months or a year.  That way you can "practice" the payment and see if it really works for you.  By doing this you will also save a large amount of money and then you can buy a nice, less expensive car for cash.  You will be making the interest instead of paying it.  If you keep saving the "car payment" every month, then in 3 years you can sell the car, use your savings and buy a nicer car for cash again.  You can "trade up" in car at that time.  Keep repeating this method and you will always be able to pay cash for your vehicles, get a nicer vehicle each time,  and you will always be the one earning the interest instead of paying the interest.

Answer 2

Easy answer, how well do you budget? How much a month do you/can you afford? How LONG do you want to pay on this?

Answer 3

Take it from someone who has been there.  You do NOT want to buy a $40,000 car on $50,000 income (unless you have $20,000-30,000 in the bank for a down payment).

I bought a brand new 95 Maxima SE 5-spd (one of the first ones off the boat) in May 94.  I forget if I had a 4 or 5 year loan.  Several years later I added up my credit card bills and discovered I owed over $25,000.  But I had assets to cover it, so I had to sell my deer woods and inherited a little money from grandma to get back on my feet.

The last vehicle I bought was a 2001 Pathfinder I purchased with cash in 2004 for half the price of an almost identical new one.  Okay it had 99,000 miles on it, but they were highly rated by CR and I knew they were durable, because I still own that 14 year old 95 Maxima I could not afford, and it still runs great.

So consider a vehicle a few years old, where someone else ate that initial depreciation.

Answer 4

The car dealer may let you finace the car on that salary but you would be a fool to do it.  Buy a less expensive car and put the extra money in your 401K or other savings.  Good finacial decisions will make your life much easier.  Bad finacial decisions will make car dealers rich and you poor.

Answer 5

Auto finance is what I do for a living and math wise yes you can as long as your credit is good enough to get a good interest rate.

$50,000.00 a year is $4,166.00 a month and auto lenders allow up to 20% of monthly income for a payment so you would qualify for $833.00 a month which should be enough as long as your interest rate is good.

Additional information;

3-thumbs down, give me a break.

I did not say it was a good idea people, all I did was answer the persons question truthfully.

Answer 6

Not if you want to pay all your other bills and have food and gas money left over.  Remember you have to pay the loan, the interest, the registration, the insurance, gasoline, and upkeep (oil changes...).  The 40,000 is more like 50,000 so no, not really.

Answer 7

If you only make $50,000 a year, why in Baal's name would you want a $40,000 car? The payments will eat you alive, and the minute you sign the paperwork, it's a "used" car worth 25% less!

Dumb idea.

Buy a three-year-old $4,000 car for cash instead.  A $40,000 car will cost you about $700/month over 5 years (assuming you have excellent credit), and will be worth perhaps $12,000 by the time you have paid it off.  So you lose $28,000.  If you buy a $4,000 for cash instead, and make $700 a month payments into a mutual fund earning 8%, you'll have $53,000 and an eight-year-old car (worth perhaps $200), rather than having a five-year-old car and being $28,000 in the hole.

Answer 8

you can lease it.