One of the biggest mistake I have made in my life was being car obsessed.
By Age 19-20 I already had 3 new cars.
The first 2 maybe made sense as I was moving across country and it might not have paid to take my car then.
The 3rd was a big mistake. I was in college and made OK money working as a waiter and traded in m y 1985 Mustang GT for a 1987 Mustang GT. This was so stupid with money burning a hole in my pocket.
I am sure you have thought about things and can afford the car but please do yourself a favor and consider a few more things.
- It will take a very long time until you have so much disposable income again since you are able to live with family now and don't pay rent.
- What is it about the 40,000 car that makes it worth it to you vs a cheaper one?
- What car are you looking at? Many manufacturers have first time buyer programs or recent college grad programs
- Check out a credit union and get pre-approved before you head to the dealer. For example DCU pulls your Equifax Mortgage score. Know the score and if it's above 660 maybe let them do the hard pull and have a solid pre-approval so you know where you stand.
- Capital One Auto navigator will give you an idea but may not be the best rate.
- Carvana will also prequalify you but typically very high rates (was 12% versus 5% or less for 7 years with my local credit union when I looked last)
- Figure out a budget and stick to it. If you can pay $500 a month for the car and an extra $100 a month for the insurance prove it. Save $600 a month for at least 3-4 months then you have both proved you can afford the payment and saved a little more for the down payment.
- Think about your short and mid term goals - do you want to move out in the next 2 years? Can you afford rent plus the car? What if you got a car that was half the price and put the other half in savings to come up with 5% down on a small condo?
- Do not settle for a high interest rate thinking you can always refinance. If you are indeed putting down $10K then maybe that is a possability but with a higher rate it's very hard to stay right side up and if you are not right side up you cannot refinance without paying it down until you are right side up.
Learn from m y mistakes and think things through but if I could go back to my 20 year old self I would have kicked my butt for trading a perfectly good 1985 Mustang GT for a 1987 one because it was faster and nicer looking.
