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Buying a new errr another used car 

findependent
Posts: 53

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7/15/2016
findependent
Posts: 53
Getagrip smile

This is true... Hahahahgahah
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getagrip
Posts: 29

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7/15/2016
getagrip
Posts: 29
findependent, well...you do realize that people who typically ask for their credit not to be run and buy with large amounts of cash at car dealerships are likely involved in drugs or other organized crime, right? Just saying, that may have explained the odd looks :-)
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findependent
Posts: 53

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5/6/2016
findependent
Posts: 53
http://www.wsj.com/articles/subprime-flashback-early-defaults-are-a-warning-sign-for-auto-sales-1457862187

Google WSJ subprime auto loans for an interesting article on this very topic. The article is just 2-3 weeks old
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licid9
Posts: 45

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5/4/2016
licid9
Posts: 45
I find it to be an Interesting read on peoples perspectives with auto's. I just read an article about how the auto industry has binge financed peoples vehicles lately and created a subprime auto lending market (which is now leading to a bunch of defaults on auto loans). My wife purchased our most recent (used) vehicle at 15% of income.


I've never been a "car guy," but I probably would have bought vehicles out of my league (which I agree is the norm for America). However, almost a decade ago I got in a car wreck (2008) and it just happened to be the time when my Grandmother-in-law "needed to stop driving," so the family used her good will to loan me her car as an excuse to get it away from her (she came up with the idea-- maybe with a little encouragement from my FIL & MIL). She soon decided that she didn't need the vehicle and gifted it to me (which was very generous). I ended up driving a 1996 Mercury Sable with 20k miles around when I was doing Sales and put well over 100k miles on it in a short period of time. Saved me on depreciation, insurance was ridiculously cheap, and I didn't care about scratches or dents (which you get driving all over town and parking in multiple parking lots a day). It just so happens in 2008, we took control of our finances (funny how those things work out).


Congrats on the "new" purchase. =)
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findependent
Posts: 53

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5/3/2016
findependent
Posts: 53
Maybe it should be 13% rule....

But definitely not 50% holy moly!!!!

smile
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findependent
Posts: 53

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5/3/2016
findependent
Posts: 53
Thanks girl next door - I know the 10% rule is very frugal but consider this...

Salary - car value
$30k 3k car +/-
$50k 5k car +/-
$100k 10k car +/-
$200k 20k car +/-
$300k 30k car +/-
$400k 40k car +/-

I know this seems tight but it makes more financial sense than every one driving $40k cars. It seems like there are a lot of folks with $60-90k salaries leasing current model year BMWs...I have a strong hunch that they are over extending themselves and that will lead to some frustration and despair down the line... Maybe not immediately but that spending behaviour will catch up with them.
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girlnextdoor
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5/3/2016
girlnextdoor
Posts: 31
10% sounds really low to me, although probably good advice for people making less than 30k per year who will take out a loan. I think Dave Ramsey says no more than half your salary, though of course that's the very uppermost limit and most should spend below it, and he would recommend if you're in debt (and especially if the car isn't paid off) buying a super cheap car until you can afford to pay cash for something nicer.

I bought my car brand new for about $15k over 4 years ago. My salary at the time was about $60k. I bought a Honda Fit and planned to drive it for at least 5 years, maybe 10. I would be hesitant to judge someone for spending up to 40 or 50% of their income on a car, particularly if they were otherwise responsible with money. I also figured the value of my time (not spending so much time dealing with repairs or waiting for tow trucks when my old car inevitably broke down) combined with needing reliable transportation for work made it more than worth it.

That being said, I can't fathom the idea of driving a car that cost 50% of my current salary. There are just too many better places to spend (or invest) that much money.
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findependent
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5/3/2016
findependent
Posts: 53
I forgot to mention. This car is the replacement for the first car I bought 10 years ago when I started tracking my Networth on nwiq... If I can make this one last 10 years maybe I will finally splurge for a nicer car... Maybe not... wink
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findependent
Posts: 53

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5/3/2016
findependent
Posts: 53
I read somewhere you should spend no more than 10% of your annual income for a car...

We just bought a used car... Got a good deal on it

The folks at the dealership are used to writing up financing... They looked at me weird when I said not to run my credit and that I would be paying in cash...

I couldn't help but think... The finance depts at these dealerships are allowing people to buy cars beyond the 10% rule... It's kind of like subprime mortgages for cars... This is one of the largest volume dealer in the world... Meaning they are moving lots of cars to people that can't afford it...
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