# How much car can I afford?



## smashhell (Nov 18, 2011)

Chris90 said:


> Your math is wrong there somewhere. Leasing a 328i for 5 years should be in the ballpark of $33k, while purchasing it a little less.


It's correct.
Cost of owning a 328i over 5 years according to Edmunds.com:
Car cost $40k (with basic options)
Fuel $12.5k
Insurance $10.5k
Maintenance $4.5k
Tax $4k
Finance $3.5k
Repair $3k
= $78k total

If you sell the car, you can get $15k back at best. So total cost would be around $63k.


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## Chris90 (Apr 7, 2003)

smashhell said:


> It's correct.
> Cost of owning a 328i over 5 years according to Edmunds.com:
> Car cost $40k (with basic options)
> Fuel $12.5k
> ...


Jeez, $7.5k on maintenance for the 1 year the car will not have free maintenance? Those numbers are total crap. My insurance would be like half that too. \

Anyway, didn't realize anyone was talking about total cost of ownership.


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## brkf (May 26, 2003)

smashhell said:


> It's correct.
> Cost of owning a 328i over 5 years according to Edmunds.com:
> Car cost $40k (with basic options)
> Fuel $12.5k
> ...


No, there's something wildly off. Edmunds TCO is laughably awful for things like insurance. My 2013 328i runs me $600 a year for full coverage in San Diego through Wawanesa. Over 5 years that's about 3k.

And this car will cost 7k for 1 year out of warranty? Geez! I've had 4 BMWs and while they're poorly made, they're not Audi-bad!


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## krash (Nov 26, 2005)

Affordability needs to be addressed on a case-by-case basis. There are a ton of different factors. Here are just some:


How much do you make? 
How stable is your employment?
How much do you have saved?
Are you single or married?
Do you have kids?
Do you have kids with special needs?
What about college for your kids?
How much is your rent or mortgage payment?
Is your house paid for?
How much credit card debt do you have?
Do you like to go on expensive vacations?

But generally speaking, I always follow the 10% rule. Monthly payment should be < 10% of your monthly take home pay.

If you have $100k in the bank, and you plan on spending half that ($50k) on a car, then that doesn't sound like a good idea at all to me. You really should be looking at a cheaper car, and you should finance some of it. For example, target a $35k car, pay $20k in cash and finance $15k. It's always good to have money in the bank; even if you have a stable job and guranteed income.

Paying cash for a car is nice, but we're talking about a depreciating asset. So even though finance charges add to the cost, cash is still king, and having money in the bank is even better...That's why when paying cash, it isn't really a bad idea to finance about 35% to 40% of it...You just never know when you'll have to tap into your bank account. Now if you have millions and millions, that's totally different, and then paying cash makes sense.


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## brkf (May 26, 2003)

krash - yeah with some places (Pentagon Federal) offering 1.49% for 60 months it definitely makes sense to keep the cash somewhere liquid. I say if he's got 50k he's itching to drop, buy the car on credit and then drop that 50k into a mix of roths, money market, stocks, property.

Locally, 50k on a 240k house in San Diego would mean...1200 payment, rent for 1600. That's 19k in, 14.4k in payments, 7500 in depreciation, 6k in interest, 2500 in property tax, 600 insurance. Can't get a 5-6% ROI much more easily. Rentals not for all people. So in that case, market, etc.


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