Rant : How much is too much to spend on a car?

[pbonsalb]

Yes, I would have financed the difference between the X5 40i and the X5M.

[Donatello.]

It's too much when it impacts bills that matter or being able to put $ in savings, etc

[Donatello.]

Originally Posted by iX nOOky

How much is too much to spend on a car? At my age if you can't afford to write a check for it you can't afford it .

People still think this nonsense?

Maybe with today's interest rates if your 401K, IRA, etc is not earning more than said rate and you can stroke a check without depleting savings.

Anyone with half a brain knows most Americans cannot afford to pay cash for their car. That does not mean all of them are overextended.

The average new car payment in the US is over $700. The real problem is the prices of new cars is OUT OF CONTROL

[RPM33]

Originally Posted by Donatello.

People still think this nonsense?

Maybe with today's interest rates if your 401K, IRA, etc is not earning more than said rate and you can stroke a check without depleting savings.

Anyone with half a brain knows most Americans cannot afford to pay cash for their car. That does not mean all of them are overextended.

The average new car payment in the US is over $700. The real problem is the prices of new cars is OUT OF CONTROL

Donatello is 1000 percent correct. Not too many people can write a $100K check for a new M3 or M4.

The smart ones have a decent trade-in car and/or decent cash down payment to reduce the loan balance.

[XutvJet]

Originally Posted by Donatello.

People still think this nonsense?

Maybe with today's interest rates if your 401K, IRA, etc is not earning more than said rate and you can stroke a check without depleting savings.

Anyone with half a brain knows most Americans cannot afford to pay cash for their car. That does not mean all of them are overextended.

The average new car payment in the US is over $700. The real problem is the prices of new cars is OUT OF CONTROL

Is it that prices are out of control or is it that people's tastes and willingness to buy more high end cars has increased? In 1989, BMW sold around 68ķ cars in the US. In 2023, it sold 362k cars and SUVs. That is a staggering increase. In the 1980s and 1990s, is wasn't overly common to see German cars on the road in the US. Now it's common place. Many people over-leverage themselves for status. Same with houses. Someone living in a 2500+ Sq ft home wasn't very common prior to the 2000s. Now 3500+ Sq ft homes are the norm. Bigger house means filling it with more stuff too.

In 1990, a Honda CRX Si with manual everything including steering, windows, door locks, no ABS, a manual trans, a tape deck, and damn near nothing else in it in it had an MSRP of around $12500. In today's money, that's $31k.

And yeah, I'm one of those rare people that writes checks for their cars. Always have.

[pbonsalb]

Originally Posted by RPM33

Donatello is 1000 percent correct. Not too many people can write a $100K check for a new M3 or M4.

The smart ones have a decent trade-in car and/or decent cash down payment to reduce the loan balance.

There aren’t that many smart ones. Most BMW, for example, are leased. Most of the rest are financed. Just a small percentage are bought with cash. Leasing cost less per month than financing, since you are really just financing about 1/3 of the cost of the car (the balance is the residual that BMW estimates it can sell the car for after the lease).

If you have a good income, you can drive a nice car. Not everyone wants to wait probably years until they have the cash to purchase. And that is often perfectly OK. I have financed most of my cars, whether they cost $15k or $100k, even when I had the cash to pay in full. Preserving cash can be useful. I also usually keep cars a while (E39 528i for 15 years, E36 M3 for 20 years, E90 M3 for 10 years, E61 535xi for 13 years and will have 4 years with my F90 M5 in a few months).

[G MONEY]

I also don’t think 72 and 84 month long financing was a thing back then. If you have to go that long, maybe it’s a bit to much for you at this time?

[David70]

Originally Posted by XutvJet

Is it that prices are out of control or is it that people's tastes and willingness to buy more high end cars has increased? In 1989, BMW sold around 68ķ cars in the US. In 2023, it sold 362k cars and SUVs. That is a staggering increase. In the 1980s and 1990s, is wasn't overly common to see German cars on the road in the US. Now it's common place. Many people over-leverage themselves for status. Same with houses. Someone living in a 2500+ Sq ft home wasn't very common prior to the 2000s. Now 3500+ Sq ft homes are the norm. Bigger house means filling it with more stuff too.

In 1990, a Honda CRX Si with manual everything including steering, windows, door locks, no ABS, a manual trans, a tape deck, and damn near nothing else in it in it had an MSRP of around $12500. In today's money, that's $31k.

And yeah, I'm one of those rare people that writes checks for their cars. Always have.

Took me a while to get there but hit the mark about 20 years ago. I didn't get to this point by purchasing new BMW's. I bought reasonably priced used cars, kept them a long time & while I had them saved for the next vehicle. On a BMW forum hearing about people that can't afford another way LOL.

For the "most can't do it" - one way or the other each person buys multiple cars throughout their lifetime, 1 may finance each car they purchase, may buy a lot more than they need, may end up paying far more than someone else. For these 2 people, 1 buys 6 cars in their lifetime, all long payment terms, another finances 2 & pays cash for 4. They both figured out a way to buy the 6 cars, not like the guy that financed everything got a break (he actually paid more).

If I can't afford to pay cash for a vehicle I get something less expensive. Also add that the process of writing a $50k check instead of a $600 monthly payment has me not interested in upgrading nearly as much.

[Donatello.]

Originally Posted by XutvJet

Is it that prices are out of control or is it that people's tastes and willingness to buy more high end cars has increased? In 1989, BMW sold around 68ķ cars in the US. In 2023, it sold 362k cars and SUVs. That is a staggering increase. In the 1980s and 1990s, is wasn't overly common to see German cars on the road in the US. Now it's common place. Many people over-leverage themselves for status. Same with houses. Someone living in a 2500+ Sq ft home wasn't very common prior to the 2000s. Now 3500+ Sq ft homes are the norm. Bigger house means filling it with more stuff too.

In 1990, a Honda CRX Si with manual everything including steering, windows, door locks, no ABS, a manual trans, a tape deck, and damn near nothing else in it in it had an MSRP of around $12500. In today's money, that's $31k.

And yeah, I'm one of those rare people that writes checks for their cars. Always have.

It is prices out of control

[pbonsalb]

Originally Posted by XutvJet

Many people over-leverage themselves for status. Same with houses. Someone living in a 2500+ Sq ft home wasn't very common prior to the 2000s. Now 3500+ Sq ft homes are the norm.

You are right about a dramatic increase, but your numbers are off. Averagej house square foot in 1950 was about 1000; 64 years later it was about 2650. https://amp.newser.com/story/225645/average-size-of-us-homes-decade-by-decade.html

America loves huge.

[David70]

Originally Posted by pbonsalb

You are right about a dramatic increase, but your numbers are off. Averagej house square foot in 1950 was about 1000; 64 years later it was about 2650. https://amp.newser.com/story/225645/...by-decade.html

America loves huge.

Agree, houses are bigger, vehicles are bigger, number of people in families is smaller. Some of the reasons for higher housing and car prices are because we now "need" it.

Add in general inflation, what a standard car has in it now, new regulations, hp/torque (now "needed") and I am actually surprised cars are as cheap as they are.

Length of 1988 5 series - 182"
Length of 2024 Honda Civic - 184"
(note the 0-60 for both is about the same).

[Snave01]

How long is a piece of string? It's all a matter of what's important to you and what you are willing spend/sacrifice. Some will drive an "expensive" (the term being relative) car and spend less on vacations, clothes, etc. to make it affordable for you.

Personally, short of having FU money, I like to stay at ~$80k and below (I lease) though I can easily afford much more. Partly because my wife has heartburn with anything over $50k and sees a car as nothing but a tool to get from A to B which is the stance of a lot of people.

I like cars in general and spend a fair amount of time commuting and I do the driving for road trips so I place a high importance on what I drive. That said, I also have expensive hobbies like scuba diving, enjoy nice vacations, and want to be able to retire and still be able to afford all the things so I try to be sensible about it. I have an X5 40i on order...would I love to have an M60? Absolutely! But I can't really justify the extra spend against the aforementioned things.

[spicyB48]

I would say the ideal amount to spend on a car is "more than I have, less than I want"

[dfox]

Originally Posted by David70

Also add that the process of writing a $50k check instead of a $600 monthly payment has me not interested in upgrading nearly as much.

This is a pretty good justification for writing a check...

On about half the cars I've bought, I got 0% financing. No reason to write a check in that situation, keep the cash and pay the minimum until it's over.

I don't necessarily think one needs to have the cash upfront, but I do think people should go for a max of 3 years on their payments. If you can't do that, then no, you can't afford that car, you're overextending yourself financially.

[David70]

Originally Posted by dfox

This is a pretty good justification for writing a check...

On about half the cars I've bought, I got 0% financing. No reason to write a check in that situation, keep the cash and pay the minimum until it's over.

I don't necessarily think one needs to have the cash upfront, but I do think people should go for a max of 3 years on their payments. If you can't do that, then no, you can't afford that car, you're overextending yourself financially.

My point is that by deciding I won't buy a car without paying cash I end up deciding I don't care enough to get a new car which is a far better financial decision than either paying cash or financing (regardless of the rate). It has nothing to do with either being able to afford it, the rate, or the number of payments.

I think in a lot of ways great financing rates and the "it's only $X" per month has most not thinking about the bigger picture of what it still costs, the reasons a lot of financing exists. No I don't care if others buy/lease a new car every 3 years, just pointing out what and why I do what I do. I think everyone would find that if they tried to get to the point that they only paid cash for their cars that they would spend a lot less on cars.

I purchased an Aston Martin recently (cash) so I also make bad financial decisions, cash for cars is just a way I control it.

[Donatello.]

Originally Posted by pbonsalb

You are right about a dramatic increase, but your numbers are off. Averagej house square foot in 1950 was about 1000; 64 years later it was about 2650. https://amp.newser.com/story/225645/...by-decade.html

America loves huge.

Let's all be honest, if you have kids etc 1k sq ft ain't even close to to enough. Can you do it? Sure, but if you can afford not to then why?

[Donatello.]

Originally Posted by dfox

I don't necessarily think one needs to have the cash upfront, but I do think people should go for a max of 3 years on their payments. If you can't do that, then no, you can't afford that car, you're overextending yourself financially.

Another nonsense blanket statement that does not take reality into account

[Donatello.]

Originally Posted by Snave01

How long is a piece of string? It's all a matter of what's important to you and what you are willing spend/sacrifice. Some will drive an "expensive" (the term being relative) car and spend less on vacations, clothes, etc. to make it affordable for you.

:w ord:

Some people like to hit the bar or club all weekend every weekend & drop lol money. I'd rather have the "nicer" car or enjoy my other hobbies like firearms & riding horses. Both of which are not cheap

[medphysdave]

Originally Posted by Donatello.

:w ord:

Some people like to hit the bar or club all weekend every weekend & drop lol money. I'd rather have the "nicer" car or enjoy my other hobbies like firearms & riding horses. Both of which are not cheap

People poke fun at me at work because I complain about my antenna tv signal and won't buy a TV service, but I'll buy a new suspension for my car. So many variables and so person dependent.

[pbonsalb]

“What you can afford” is not defined and people have different definitions. The conservative guy will say you need $3 million in net assets to be comfortable writing a check for $150k. The not conservative guy might say you just need an extra $30k in income per year to finance or lease a $150k car. You might have an extra $30k if you make $100k or more depending on housing costs, family size, expense and pay. Big, big difference between having $3 million in liquid assets and an extra $30k income per year. Both would be ideal….

[XutvJet]

Originally Posted by Donatello.

Let's all be honest, if you have kids etc 1k sq ft ain't even close to to enough. Can you do it? Sure, but if you can afford not to then why?

1,500' is plenty for a family of 4 (3 bedroom home). What has changed is all the extra space people think they need. Massive master bedrooms with wasted space, huge master bathrooms with walk-in closets that could double as bedrooms themselves, 3+ bathrooms, multiple "living areas", living rooms that aren't used, huge kitchens for people who can't bake a potato, etc. It's just wasteful, IMO but that is our society in the US.

Thank God builders are finally coming around to the idea of building sub 2K sq ft homes again.

[dreamingat30fps]

Originally Posted by XutvJet

1,500' is plenty for a family of 4 (3 bedroom home). What has changed is all the extra space people think they need. Massive master bedrooms with wasted space, huge master bathrooms with walk-in closets that could double as bedrooms themselves, 3+ bathrooms, multiple "living areas", living rooms that aren't used, huge kitchens for people who can't bake a potato, etc. It's just wasteful, IMO but that is our society in the US.

Thank God builders are finally coming around to the idea of building sub 2K sq ft homes again.

Our house is like 2200 sqft and honestly as a couple with no kids we use maybe 60% of the space. It has the whole double living room thing one of which we never use and a dinning room which is also rarely used except for events like Thanksgiving or what not if we are hosting. Extra bedroom thats just for the occasional guest and for storing junk we don’t need.

That being said we are looking to move from this area and want a bigger lot, pool bigger garage etc. VERY hard to find what we want in something under 2500 sqft that’s nice. You might find a 1200 sqft house in the middle of nowhere that looks like it was built DIY but anything “nice” is typically very large. Or anything smaller is typically not nice or a townhome or something like that on a zero line lot.