Max loan amount

[Anonymous]

I’m currently saving up for a decent luxury/sport sedan. My current score is 685, but only because I regularly max out my cards and pay them off. My limits are about 50% as of my last statements, but when they are at 0% usage, my score is in the 720 range. I was wondering if I could get an estimate on my max loan amount. I am looking to pay around 550 a month. I make about 4000/month between two jobs and have been employed for over a year in both. I plan to put between 7000 and 10,000 down. The only thing I’m worried about is that I’m only 20 and because of that, my credit history is only two years old. I was declined about eight months ago for a $27,000 loan with 1000 down and that hurt my credit for a while (680 to 625)

[Anonymous]

It is not what you can do , it is what you feel  comfortable doing based on your written budget. Are you currently saving at least  400 / month for retirement ? Do you have at least a $750-1k cash "oh s*#t" fund ? Once you do - I would not go any more than 20-23K at that income level  and 5 years is the absolute max loan length I would consider. This is not going to put you in a luxury sedan ( unless you buy used)  but if you save 5 k you will have 20 % down and be in a good position to get a better interest rate so you are not signifigantly upside down on the loan.

[iced]

---

@Anonymous wrote:

It is not what you can do , it is what you feel  comfortable doing based on your written budget. Are you currently saving at least  400 / month for retirement ? Do you have at least a $750-1k cash "oh s*#t" fund ? Once you do - I would not go any more than 20-23K at that income level  and 5 years is the absolute max loan length I would consider. This is not going to put you in a luxury sedan ( unless you buy used)  but if you save 5 k you will have 20 % down and be in a good position to get a better interest rate so you are not signifigantly upside down on the loan.

---

This.

Also keep in mind luxury cars come with luxury costs. It's not uncommon for a set of tires to be over $1,000 (this is especially important if you're buying a car with summer tires in a place that needs winter tires in the cold months). If you decide to stretch your budget to do this, you're also likely looking at a 60-84 month loan - at your age, that means you'll be paying for this car for what amounts to a quarter of your life.

It's ultimately your decision, but make sure you fully recognize what you're signing up for.

[Anonymous]

You could probably get a 10-20k loan, but just use a debit card for like 3 months straight so your score can get into the 700s. It will also help you get credit limit increases to keep your utilization low.

It sounds like you have $10k in cash. Personally, I recommend you get a new car but not a sports or luxury car. Keep it at $20k or lower. If you can afford to wait another 6-12 months, you could buy the car without a loan. It will last 10-15 years and you will pay off the loan in 3 years and save a bucket of more money towards retirement, rent, and possibly college loans. Trust me, a sports car is fun for a month or two, and then it turns into a normal car with a sticker shock every time you take it to service/repair.