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Contributor
jorgevazquez87
Posts: 81
Registered: ‎12-26-2012
0

A few question about car purchase

Hi everyone!

 

Next year I plan on buying a car, to be more exact a Ford Edge or Toyota Venza. I know these cars start for 28k and up. I earn 23k per year, I have a joint mortgage (wife is secondary) and I have two credit cars: Discover It and Walmart Store Card, also my credit score is around 705-730 with all three bureaus (no baddies)

 

Is it possible to have one of these cars with my current annual salary? If so, what I would have to do to have a good payment (350 or below) and low interest (2.00% or below) 

 

 

Regular Contributor
Hoya08
Posts: 125
Registered: ‎06-05-2013
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Re: A few question about car purchase

At 2.00% APR with a $350 max monthly payment, you require a 72 month term with $5,000 down payment for the 28k car.

 

What is your Debt-to-Income ratio?  That will affect how much of a loan a bank/CU will extend to you.  Keep in mind you may have to apply jointly to qualify for the loan.

Established Contributor
bahbahd
Posts: 731
Registered: ‎08-12-2011
0

Re: A few question about car purchase


jorgevazquez87 wrote:

Hi everyone!

 

Next year I plan on buying a car, to be more exact a Ford Edge or Toyota Venza. I know these cars start for 28k and up. I earn 23k per year, I have a joint mortgage (wife is secondary) and I have two credit cars: Discover It and Walmart Store Card, also my credit score is around 705-730 with all three bureaus (no baddies)

 

Is it possible to have one of these cars with my current annual salary? If so, what I would have to do to have a good payment (350 or below) and low interest (2.00% or below) 

 

 


 

You might want to spend some time reading up on the 20-4-10 rule. https://www.google.com/search?q=20+4+10+rule. I don't know what your other expenses are like or if your wife is helping with the mortgage, so I don't really know how much extra income you have each month. However, doing some quick math, your income can reasonably support a total monthly car expense (insurance + loan payment) in the range of $175-190. 

Established Contributor
bahbahd
Posts: 731
Registered: ‎08-12-2011
0

Re: A few question about car purchase


Hoya08 wrote:

At 2.00% APR with a $350 max monthly payment, you require a 72 month term with $5,000 down payment for the 28k car.

 

What is your Debt-to-Income ratio?  That will affect how much of a loan a bank/CU will extend to you.  Keep in mind you may have to apply jointly to qualify for the loan.


Above I quoted the 20-4-10 rule. A few decades ago, the average car loan was 36 months. The rule was more like 20-3-8. People expected to drive those cars on average of 7 years. That is over 50% of the time owning the vehicle without a car payment.

 

I know cars are important to current lifestyles, but are they worth paying full coverage insurance rates and being in auto loan debt for 5 years? Especially when paying nearly 20% of your gross monthly income in a car payment.

Contributor
jorgevazquez87
Posts: 81
Registered: ‎12-26-2012
0

Re: A few question about car purchase

My DTI is around 20%-22%

Contributor
jorgevazquez87
Posts: 81
Registered: ‎12-26-2012
0

Re: A few question about car purchase

Paying off my debts monthly I still have 600 remaining including my wife's help on the mortgage.

New Member
NavyNuke
Posts: 3
Registered: ‎07-01-2013
0

Re: A few question about car purchase

[ Edited ]

How much are you saving for retirement?

Rainy day?

Vacation?

 

These are all big things to take into consideration before taking out a car loan for more than your annual salary. 

Which I'm no expert but something says the only debt that should be bigger than your annual salary is a mortgage. 

All cars ever do is lose value.

 

http://www.autotrader.com/cars-for-sale/searchresults.xhtml?zip=90210&endYear=2014&modelCode1=EDGE&m...

 

Yeilds all Toyota Venza and Ford Edges for sale in the country (listed on autotrader) under $20000.

Go with a used model, a few years old, and take the loan out over a shorter period of time.

 

If you see me running. it's already too late.

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