topic Re: 2010 AUDI A4 Finance Advise? in Auto Loans

2010 AUDI A4 Finance Advise?

Anonymous — Wed, 29 Dec 2010 22:14:27 GMT

Hi guys

This is my first post here, but I have been reading posts from other users for weeks now, I really have learnt alot on these forums even though I am a canadian citizen I still find some of the information really usefull. I need some advise.

MY SITUATION:

I am in Canada, my FICO as of December is 670 and I just started a new job making 55,1K a year, my salary has been the same since January 2010.

I am 26, not married, my rent is about 1300.

I was interested in financing an AUDI, and I found the car I like, it will cost $50,000, PRE-OWNED, 13% taxes

2.9% financing 60 MONTHS through AUDI Finance or

3.9% financing 72 MONTHS through AUDI Finance. AUDI has a reputation for beeing strict with approving their financing :-(

The last time I had a hard credit check reported was in June, so it has been atleast 6 months. I am not sure whether I should go ahead and just give the application a shot perhaps I might be lucky and get approved? If I dont get approved how much do you think this will affect my chances when I try again in 3 months after paying off a mastercard (that I am co-signed to) with 1000 on it ?

if i clear the 1000 on the mastercard by how much would my score go up?

Also is a 50,000 car too expensive for a single guy that is early in his career and making atleast 55K plus ocassionaly freelance gigs through the year?

Thank you

Re: 2010 AUDI A4 Finance Advise?

Anonymous — Wed, 29 Dec 2010 22:19:10 GMT

Additional info:

I have a total of 10 enquiries starting from december 2007 and ending in june 2010

Re: 2010 AUDI A4 Finance Advise?

Anonymous — Wed, 29 Dec 2010 23:46:24 GMT

I'll be completely honest $50k for a car with an income that is only $55k is way too much. Your income isn't going to help you at all in the financing for this car. What kind of deposit are you planning or are you financing 100%?

I don't know if its just higher in Canada but a brand new Audi A4 Quattro in the states is no where near $50k, but even at $35k (which is what it costs here brand new) still seems like a lot to take on with your income. It's great to have something to reach for, but realistically a $30k budget seems much more reasonable. What you really need to figure out is what kind of payment you can afford and then back into the price you can spend on a car.

Re: 2010 AUDI A4 Finance Advise?

Anonymous — Thu, 30 Dec 2010 00:40:56 GMT

Your rent is 1300.

your car payment will be 1100 (unless you are putting a deposit down)

thats 28800 a year from your gross of 55K.

Its too expensive of a car.

Assuming 20% for taxes and retirement you are left with less then $1000 a month for expenses

Re: 2010 AUDI A4 Finance Advise?

Anonymous — Thu, 30 Dec 2010 00:46:13 GMT

@Anonymous wrote:
I'll be completely honest $50k for a car with an income that is only $55k is way too much. Your income isn't going to help you at all in the financing for this car. What kind of deposit are you planning or are you financing 100%?

I don't know if its just higher in Canada but a brand new Audi A4 Quattro in the states is no where near $50k, but even at $35k (which is what it costs here brand new) still seems like a lot to take on with your income. It's great to have something to reach for, but realistically a $30k budget seems much more reasonable. What you really need to figure out is what kind of payment you can afford and then back into the price you can spend on a car.

Well yes I make 55K, but if you consider my income will be slowly increasing over the years and I am not married, no kids etc I really dont see any drastic changes in my finances for the next 3 - 4 years, unless I end up with a kid or in some kind of emergency. For a 50K car I see the amount beeing spread over a period of 6 years as not so much of a bad thing. My expenses are not as much since I am not full household, and I pretty much already have all the items I need in my apartment. I will still be able to save about 500 a month, I only hve 1 credit card with 1000 limit, and a mortgage is something I am looking to pursure a little later for personal reasons so I thought why not atleast enjoy something of my own before I get married and its a whole different story from then on lol. no more nice toys ...

Thanks for your advise though, I will consider it.

Re: 2010 AUDI A4 Finance Advise?

Anonymous — Thu, 30 Dec 2010 00:43:58 GMT

@Anonymous wrote:
Your rent is 1300.
your car payment will be 1100 (unless you are putting a deposit down)

thats 28800 a year from your gross of 55K.

Its too expensive of a car.

Assuming 20% for taxes and retirement you are left with less then $1000 a month for expenses

Very well put usmc. Most of us work hard to not be poor - it's a pity to buy yourself into poverty.

Re: 2010 AUDI A4 Finance Advise?

Anonymous — Thu, 30 Dec 2010 01:00:51 GMT

As another poster already pointed out you're looking at a payment of over $1000 a month for a car that will immediately depreciate in value. I think you may be overestimating your income growth. I've been working in my field for over 10 years and only recently crossed the 6 figure mark, and that was only after completing my grad degree and getting additional certifications. You should expect your income to rise by an average of 3-5% per year which will not help you pay a large car note for the majority of the note. I really think you should determine what you can afford by figuring out what payment you can handle. If your current rent is $1300, using a car loan payment estimator of $50k with 10% sales tax, assuming you qualify for a super low rate of 1.5% your car payment will be $952.04. Assuming you net $3000 monthly income, that means just rent and your car payment will consume 75% of your take home income. That's before budgeting for insurance, groceries, utilities, gas, etc.. You will be completely car poor. I'm really not trying to burst your bubble but you would really be stretching yourself for a car that you can't really afford. I know you may love it, but maybe it's better to wait until your income is in a better place before reaching for a luxury brand.

Re: 2010 AUDI A4 Finance Advise?

Anonymous — Thu, 30 Dec 2010 02:01:39 GMT

@Anonymous wrote:

Well yes I make 55K, but if you consider my income will be slowly increasing over the years and I am not married, no kids etc I really dont see any drastic changes in my finances for the next 3 - 4 years, unless I end up with a kid or in some kind of emergency. For a 50K car I see the amount beeing spread over a period of 6 years as not so much of a bad thing. My expenses are not as much since I am not full household, and I pretty much already have all the items I need in my apartment. I will still be able to save about 500 a month, I only hve 1 credit card with 1000 limit, and a mortgage is something I am looking to pursure a little later for personal reasons so I thought why not atleast enjoy something of my own before I get married and its a whole different story from then on lol. no more nice toys ...

Thanks for your advise though, I will consider it.

Unless (and granted my perspective is from the USA) you are in a health care field you have no guarantee of income/growth or even a job for the next 7 years.

You need to change your thinking right NOW to putting retirement money away each month (believe me the earlier you start the better) long term savings away each month(house down payment and or/emergencey fund), and just general savings each month.

Unless you live in an area where you rent is considered average or low 1300 is not rent its a house payment. You are probably liveing about 400 a month past the point where someone your age and income should be living, you are never going to save a house down payment blowing through $1300 a month in rent.

You are looking at 7 years of a near $1000 a month for a car, neglecting insurance, and gas and maintenance.

You make a lil joke about unexpected circumstances. Believe me thats all life is. I am not trying to be your dad/mom/ or a kill joy but you need to buy a cheaper car or just keep driving what you have.

If you have so much free income each month, well keep driving your current POS and next year when you have $24,000 saved (in addition to your long and short term savings goals) as a downpayment, OK put it down and buy that car.

But right now you do not need that kind of headache.

ETA:

Just some life lesson circumstances that may make you see a bit into not counting your chickens before they hatch.

In March of 2006 I took a job selling cars. I was carefull- I looked at the pay plan and bonus plans and asked around other people about pay and figured that if I sold 8 cars a month i would make about 30-35K a year.

And they all sold me on the profit Sharing that the dealership had done for 80 years every year at Christmas.

In May, 2006, new pay plan came out, if you did not agree to it have your desks cleaned out by 5:00. I took a $15,000 a year pay cut, lost the car allowance and other sure pays. Now if I sold 8 cars a month i was somewhere near minimum wage for the hours worked.

In October,2006, Corporate finally says that the profit sharing we have had for years, the terms of the contract they signed when they purchased the dealership in 1998 they are finally able to discontinue it.

My sister is a VP in her job. She has a co worker/subordinate named Kim. My sister was talking to me over the holidays and was telling me how she and another VP were gunning hard for Kim to get a prestigious job award/review so she would get the highest level pay increase of 6% this year.

I asked why? She said that in the last years salary review period Kim had been not given a raise, and at some point Kim was transferred into my sisters Dept. When my sister looked in her file she found the non recommend and called the supervisor and asked why? The supervisor told my sister that she had been transferred to her position over Kim for only six weeks and Kim was very withdrawn and seemed shy so she did not recommend her. My sister thinks she is awesome and incredibly capable and is trying to fix that slight.

A very good friend of mine took a management job at Bennigans, leaving the restaurant he was working for as a manager there. in less then 6 months the comapny went suddenly BK.

Re: 2010 AUDI A4 Finance Advise?

Anonymous — Thu, 30 Dec 2010 01:39:45 GMT

@Anonymous wrote:
Unless (and granted my perspective is from the USA) you are in a health care field you have no guarantee of income/growth or even a job for the next 7 years.

You need to change your thinking right NOW to putting retirement money away each month (believe me the earlier you start the better) long term savings away each month(house down payment and or/emergencey fund), and just general savings each month.

Unless you live in an area where you rent is considered average or low 1300 is not rent its a house payment. You are probably liveing about 400 a month past the point where someone your age and income should be living, you are never going to save a house down payment blowing through $1300 a month in rent.

You are looking at 7 years of a near $1000 a month for a car, neglecting insurance, and gas and maintenance.

You make a lil joke about unexpected circumstances. Believe me thats all life is. I am not trying to be your dad/mom/ or a kill joy but you need to buy a cheaper car or just keep driving what you have.

If you have so much free income each month, well keep driving your current POS and next year when you have $24,000 saved (in addition to your long and short term savings goals) as a downpayment, OK put it down and buy that car.

But right now you do not need that kind of headache.

usmc58555 I don't mean to go off topic here, but I'm curious in what region of the U.S. do you live? Your comment about $1300/month being a house payment peaked my interest because it's hard to find a decent place to rent where I live for that much. I live in the Northeast U.S. in a major city, I don't even live in the city because I can't afford it, but even in the suburbs $1300 is not attainable! I'd love to have rent that low! The average home price in my neck of the woods is $320k, owning a home here is tough! I'm in agreement with your advice on this matter I just wasn't sure some of the comments (like rent specifically) were that realistic in today's market. Plus owning a house isn't always a goal for everyone, but I agree that having an emergency fund is an absolute necessity!

Re: 2010 AUDI A4 Finance Advise?

Anonymous — Thu, 30 Dec 2010 01:49:51 GMT

@Anonymous wrote:

usmc58555 I don't mean to go off topic here, but I'm curious in what region of the U.S. do you live? Your comment about $1300/month being a house payment peaked my interest because it's hard to find a decent place to rent where I live for that much. I live in the Northeast U.S. in a major city, I don't even live in the city because I can't afford it, but even in the suburbs $1300 is not attainable! I'd love to have rent that low! The average home price in my neck of the woods is $320k, owning a home here is tough! I'm in agreement with your advice on this matter I just wasn't sure some of the comments (like rent specifically) were that realistic in today's market. Plus owning a house isn't always a goal for everyone, but I agree that having an emergency fund is an absolute necessity!

I think places where you cannot find a 1 bedroom apartment for under 1000 are in the minority in the Unites States ie Boston, NY, DC, San Fran.

Ii understand those places exist, I also understand that Canada was not hit so hard by the housing bubble as the Unites States. I live in a Northeastern State as well, and in both our state capital and the city I live I can find one bedrooms for less then 1K.

The facts of the matter are, at 55K a year gross, and 1300 a month rent, you are not in a position to pay over 1000 a month for a car and Save money and save money on a house down payment.

Re: 2010 AUDI A4 Finance Advise?

Anonymous — Thu, 30 Dec 2010 02:05:15 GMT

Thanks for the feeback guys, I agree wth some of the points brought forward definitely

I honestly see my self cutting the budget down to 40K instead of 50K, my net income every month is about 3600, so If I can get cheaper accomodation, approx 1100 and a car in the 800 - 900 range I am still left with 1,600 a month.

My monthly personal expences (groceries, cable, cellphone) = 400, additional car expences (insurance, gas, etc) = 500, I get free parking at work and my commute to work is only 10K, and I really dont have any loans or multiple credit cards etc just one card that i will pay off before i get the car. I currently put 500 in a TFSA every month so that covers my savings.

That leaves me down to about 200 for misc expenses, yup thats a bit on the tight side. I dont spend much on cloths, i shop at walmart. I am sure I can still make more trimmings to my budget some of you guys on these forums are really anal about this stuff haha, which is good, and that is the reason why I joined these forums in the first place.

I think its safe to say from the feedback, I have a fairly decent situation going on for myself so perhaps I should not let all that potential to waste. agreed! Its really a hard pill to swallow though, beeing a car enthusiast, this is going to be a test of will.

cheers!

**PS** in regards to saving for a house, while I agree thats a smarter way to go, I strongly believe I am going to wait till I am married and put money towards the house together with the wife. WHY? this might sound crazy but lets not forget how today divorce means you are easily loosing half your s##t, so i can be proactive and start working towards a house now, and when I do get married (pre-nups are not as simple as they sound) who knows where my hard earned and saved up for house might end up? I guess this topic deserves a thread of its own though lol. And to the female memebers on the forum please keep an open mind, this is not a sexist attack or slender of any sorts. Its either im incredibly smart or im incredibly off and need some more schooling in this department. hmm...

Re: 2010 AUDI A4 Finance Advise?

Anonymous — Thu, 30 Dec 2010 01:59:36 GMT

usmc58555 wrote:

I think places where you cannot find a 1 bedroom apartment for under 1000 are in the minority in the Unites States ie Boston, NY, DC, San Fran.

Ii understand those places exist, I also understand that Canada was not hit so hard by the housing bubble as the Unites States. I live in a Northeastern State as well, and in both our state capital and the city I live I can find one bedrooms for less then 1K.

The facts of the matter are, at 55K a year gross, and 1300 a month rent, you are not in a position to pay over 1000 a month for a car and Save money and save money on a house down payment.

Just for the record I live in the metro area of one of the cities you listed, however I can note that the following cities are difficult to find one bedrooms in safe areas for <$1000 (only because I've lived or traveled to one of them)

Boston, NYC, DC, Philly, LA, San Fran, Seattle, Chicago

While Canada was not hit as much by the housing bubble, Toronto in particular is quite expensive. But I do agree most of the rest of the country it is a possibility and I agree with your advice.

Re: 2010 AUDI A4 Finance Advise?

mross1080 — Fri, 31 Dec 2010 04:24:24 GMT

@Anonymous wrote:

usmc58555 wrote:

I think places where you cannot find a 1 bedroom apartment for under 1000 are in the minority in the Unites States ie Boston, NY, DC, San Fran.

Ii understand those places exist, I also understand that Canada was not hit so hard by the housing bubble as the Unites States. I live in a Northeastern State as well, and in both our state capital and the city I live I can find one bedrooms for less then 1K.

The facts of the matter are, at 55K a year gross, and 1300 a month rent, you are not in a position to pay over 1000 a month for a car and Save money and save money on a house down payment.

Just for the record I live in the metro area of one of the cities you listed, however I can note that the following cities are difficult to find one bedrooms in safe areas for <$1000 (only because I've lived or traveled to one of them)
Boston, NYC, DC, Philly, LA, San Fran, Seattle, Chicago
While Canada was not hit as much by the housing bubble, Toronto in particular is quite expensive. But I do agree most of the rest of the country it is a possibility and I agree with your advice.

Sorry to be off topic but Ive lived in NYC and Philly and you cannot find a apartment even a studio for sub 1k in a safe area. Im extremely cheap and Ive looked at dozens of places at times. If your outside of a major city though it should be easy.

Re: 2010 AUDI A4 Finance Advise?

Anonymous — Fri, 31 Dec 2010 05:07:52 GMT

NOT TO BEAT A DEAD HORSE:

BUT IF YOU READ MY ORIGINAL POST I SAID "UNLESS YOU ARE IN AN AREA WHERE THAT IS COSIDERED AVERAGE OR LOW RENT."

I am completely aware that there are many areas in the USA and in Canada where that could be considered "good," "average," or "low," but seeing as those metropolitan areas are not the norm I thought it was a safe bet in stating what I did. Quite simply, as I suggested: -and to make my point even, the OP said he could get rent cheaper somewhere else.

And the essence of what I said regarding 55K gross a year and 1300 rent with 1000 in car payment not being a smart decision pretty much stands as well. I do not care if your rent is low where you are but it is still $1500 a month, if you are only making 55k you should probably rethink your needs of a car, your location to use Public Transportation, having a roommate, or simply buy something much cheaper then 50K In most cases of BIG CITY BIG RENT just having a car gets you a few hundred dollars a month on top of the car for personal parking spaces.

A friend of mine lives near Cleveland and their spouse worked for as a Regional Sales manager for a car company. Household Income of over $100k a year. To get a promotion he was offered a job in L.A. CA- but would get a pay differential of additional $20,000. The friend was talking to me about it and I had to explain to her that since LA has a sales tax of 10% and just gas averages about 20 cents a gallon more then the rest of the US and that prices/taxes/fees in general were higher, plus whatever location they were going to move to for schooling of their kids, his 100k a year in Ohio move to 120 in LA would equal about 80K a year compared to the value they get in Ohio..

When I move in with my sig other I will have to fork over $250 a month for parking as their middle of the city condo only came with one parking spot and there is no street parking.

Re: 2010 AUDI A4 Finance Advise?

marty56 — Fri, 31 Dec 2010 12:43:40 GMT

@Anonymous wrote:
And the essence of what I said regarding 55K gross a year and 1300 rent with 1000 in car payment not being a smart decision pretty much stands as well.

Back when I was around the OP's age I was well on my way to 70k of CC debt. As Dave Ramsey put it, I refused to act my wage. Altough I probably would not have listened to you back then, in retrospect I wish I did have someone who would have talked me out of all those stupid purchases I made with my credit cards.

Life is good now, real good but I guess I had to learn the hard way. Perhaps the OP will as well.

Re: 2010 AUDI A4 Finance Advise?

getmycreditright — Wed, 05 Jan 2011 09:03:26 GMT

@Anonymous wrote:

@Anonymous wrote:
I'll be completely honest $50k for a car with an income that is only $55k is way too much. Your income isn't going to help you at all in the financing for this car. What kind of deposit are you planning or are you financing 100%?

I don't know if its just higher in Canada but a brand new Audi A4 Quattro in the states is no where near $50k, but even at $35k (which is what it costs here brand new) still seems like a lot to take on with your income. It's great to have something to reach for, but realistically a $30k budget seems much more reasonable. What you really need to figure out is what kind of payment you can afford and then back into the price you can spend on a car.

Well yes I make 55K, but if you consider my income will be slowly increasing over the years and I am not married, no kids etc I really dont see any drastic changes in my finances for the next 3 - 4 years, unless I end up with a kid or in some kind of emergency. For a 50K car I see the amount beeing spread over a period of 6 years as not so much of a bad thing. My expenses are not as much since I am not full household, and I pretty much already have all the items I need in my apartment. I will still be able to save about 500 a month, I only hve 1 credit card with 1000 limit, and a mortgage is something I am looking to pursure a little later for personal reasons so I thought why not atleast enjoy something of my own before I get married and its a whole different story from then on lol. no more nice toys ...

Thanks for your advise though, I will consider it.

Seriously, you are living on the edge my friend. One emergency (trust me, it will come) and your screwed. You're stuck with an $1100 car note for six years? Please save yourself the headache and buy a car for half the price. I make around what you make and I wouldn't dream of buying a $50K car if I made $100K/year. Living within your means is a great thing, but the choice is yours.

Re: 2010 AUDI A4 Finance Advise?

Anonymous — Wed, 05 Jan 2011 19:39:57 GMT

One rule I learned about auto loans... you should only finance up to 50% of your yearly salary. For instance, if you made 50k, you should be ok to finance up to 25k. So if a car costs 50k you should make a 50% down payment and finance the rest. That at least keeps your budget in line...