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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)
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.
@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.
@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.
My DTI is around 20%-22%
Paying off my debts monthly I still have 600 remaining including my wife's help on the mortgage.
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.
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.