How Much Car You Can ACTUALLY Afford (By Salary)
Published: 2023-06-26
Status:
Available
|
Analyzed
Published: 2023-06-26
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
New cars lose significant value quickly: 11% immediately, 25% in year one, 46% in three years, and 63% in five years.
"a new car will depreciate 11% the moment you drive it off the lot within a year it's lost 25% of its value after 3 years it's lost 46% and within 5 years the average car is worth 63% less than it would cost new"
Pending
Recommended car buying strategy: 20% down, 36-month loan, and spend no more than 8% of pre-tax income on transportation.
"first you should put 20% down this means that you'll pay 20% of the car's value up front... the second you should o pay off the car in 3 years or 36 months... third you should spend no more than 8% of your pre-tax income on Transportation costs"
Pending
An individual earning $45,000 annually could afford an $8,000 car with a $1,600 down payment, resulting in a monthly payment under $200.
"if you make $45,000 a year this means that you would be able to afford a car worth about $8,000 because with $1600 down your monthly payment will come in to just under $200 a month"
Pending
An individual earning $75,000 annually could spend $500 a month on transportation, allowing for a $116,000 car with $3,200 down.
"if you have an income of $75,000 a year you'd be able to comfortably spend about $500 a month in transportation which works out to a $116,000 car like this with $3,200 down"
Pending
An individual earning $225,000 annually could afford a car in the $26,000 range, assuming 20% down and a 3-year loan.
"at an income of $225,000 a year you'd be able to comfortably afford a car in the $26,000 bracket"
Pending
An individual earning $200,000 annually could afford a $40,000 car, assuming 20% down and a 3-year loan.
"at $200,000 a year you could pay for a $40,000 car again assuming 20% down and a three-year loan"
Pending
Alternative car buying strategy: 20% down, maximum 4-year loan term, and spend no more than 10% of gross income.
"you should put 20% down on a term of no more than 4 years spending no more than 10% of your gross income"
Pending
An individual earning $50,000 annually could afford up to a $116,000 car under the 2410 rule, with a $300 monthly payment.
"on a $50,000 a year salary the 2410 rule would allow you to spend up to $116,000 on a car which would result in a $300 car payment"
Pending
An individual earning $80,000 annually could afford a car around $288,000 under the 2410 rule.
"at $80,000 a year you'd be able to buy something around the $288,000 range"
Pending
An individual earning $125,000 annually could afford a car between $45,000 and $50,000 under the 2410 rule.
"with $125,000 a year you could buy something between $45 and $50,000"
Pending
An individual earning $200,000 annually could afford a car in the $70,000 to $75,000 range under the 2410 rule.
"at $200,000 a year that's a car in the $ 7 to $75,000 range"
Pending
Dave Ramsey's rule: a car's cost should not exceed 50% of your take-home pay.
"the cost of your car should never exceed half of your take-home salary"
Pending
Based on Dave Ramsey's rule, a person earning $50,000 annually should not own a car valued over $25,000.
"if you make $50,000 a year your total cars value should not exceed $25,000"
Pending
Survey of millionaires shows the average drives a 4-year-old car with 41,000 miles and 80% buy cars debt-free.
"the average millionaire drives a 4-year-old car with 41,000 M on it and 8 out of 10 millionaire car buyers drive it away debt free"
Pending
Financial Samurai's recommendation: spend no more than 10% of gross income on a car to be kept for at least 10 years.
"you should spend no more than 10% of your gross income on a car that you intend to keep for at least 10 years"
Pending
Following the Financial Samurai rule, an individual earning $100,000 annually should spend $10,000 on a car.
"if you make $100,000 a year spend $10,000 on a car"
Pending
Following the Financial Samurai rule, an individual earning $50,000 annually should spend $5,000 on a car.
"if you make $50,000 spend $55,000"
Pending
Car dealerships typically approve loans if the debt-to-income ratio is below 45%.
"most car dealerships will qualify you with a debt to income below 45%"
Pending
Lenders prioritize monthly payments over affordability, allowing financing for a wide range of car costs if terms are met.
"lenders just care about the cost of the car every single month and because of that they'll Finance pretty much whatever they could give you if the terms are right"
Pending
Extending a car loan to 72 months can significantly reduce the monthly payment.
"if you instead opt for a 72-month loan all of a sudden your monthly payment drops to about $1,100 a month"
Pending
With a $500 monthly budget, a 36-month loan allows for a $116,000 car, while a 72-month loan allows for a $30,000 car.
"if your monthly budget is $500 you could buy a standard $116,000 car over 36 months or you could buy a $30,000 car over 72 months"
Pending
Loan terms up to 996 months are available, allowing for a $37,000 car purchase on a $500 monthly budget.
"other places even offer terms of up to 996 months which could extend your purchase price all the way up to $37,000 again all with the exact same $500 a month budget"
Pending
A 2005 Ford GT is predicted to increase in value by approximately 25% from its purchase price.
"my 2005 4 GT which is worth about 25% more than what I paid for it"
Pending
A Tesla Model 3 purchased in 2019 is expected to retain or increase its value compared to the initial price after rebates.
"my Tesla Model 3 which is still worth more than what I paid in 2019 after rebates"
Pending
Specific car models suggested to hold or increase value include Honda S2000, Mazda Miata, mid-2000s Corvettes and BMW M3s, early 2000s Porsche Boxsters, US Subaru Impreza, late 2000s Audi R8s, and used Mercedes G Wagons.
"I tend to believe that might include something like the Honda S2000 an older Mazda Miata mid-2000s Corvettes mid-2000s BMW M3s early 2000s Porsche boxers a US Subaru Impreza the Toyota FJ Cruiser late 2000s Audi R8s and of course a used Mercedes G wagon"
Pending
Expensive vehicles with potential to appreciate include the BMW Z8, manual Ferrari F430, Lamborghini, Mercedes SLS AMG, and most Dodge Vipers.
"if you've got a lot of money there's also the BMW Z8 any manual Ferrari F430 or Lamborghini a Mercedes SLS AMG or almost any Dodge Viper"
Pending
For commuting, purchase a used, reliable, fuel-efficient car that can be paid off in under 3 years, costing less than 10% of your salary, or ideally bought with cash.
"buy something that is used reliable good on gas that you could afford to pay for with less than 10% of your overall salary over 3 years if you don't buy it outright in cash"
Pending
New cars lose significant value quickly: 11% upon driving off the lot, 25% in year one, 46% in three years, and 63% in five years.
"a new car will depreciate 11% the moment you drive it off the lot within a year it's lost 25% of its value after 3 years it's lost 46% and within 5 years the average car is worth 63% less than it would cost new"
Pending
With a 20% down payment and a 3-year loan, individuals earning $225,000/year could afford a $26,000 car, and those earning $200,000/year could afford a $40,000 car.
"at an income of1 $225,000 a year you'd be able to comfortably afford a car in the $26,000 bracket and at $200,000 a year you could pay for a $40,000 car again assuming 20% down and a three-year loan"
Pending
Using the 2410 rule (20% down, 4-year loan, 10% of gross income on car), a $50,000 salary allows for up to $116,000 on a car, with a $300 monthly payment.
"on a $50,000 a year salary the 2410 rule would allow you to spend up to $116,000 on a car which would result in a $300 car payment and $100 left over for everything else"
Pending
The 2410 rule suggests that with an $80,000 salary, one could afford around a $288,000 car; with $125,000, $45-$50,000; and with $200,000, $70,000-$75,000.
"at $80,000 a year you'd be able to buy something around the $288,000 range with $125,000 a year you could buy something between $45 and $50,000 at a $200,000 income that's a car in the $ 7 to $75,000 range"
Pending
Dave Ramsey advises that a car's value should not exceed 50% of your take-home salary, meaning for a $50,000 income, the car should be worth no more than $25,000.
"the cost of your car should never exceed half of your take-home salary so if you make $50,000 a year your total cars value should not exceed $25,000 if you make $100,000 a year that's $50,000 and so on"
Pending
On average, millionaires drive 4-year-old cars with 41,000 miles, and 80% of them buy cars debt-free without a car payment.
"the average millionaire drives a 4-year-old car with 41,000 M on it and 8 out of 10 millionaire car buyers drive it away debt free without carrying a car payment behind them"
Pending
The Financial Samurai recommends spending no more than 10% of gross income on a car that will be kept for at least 10 years (e.g., $10,000 for a $100,000 income, $5,000 for a $50,000 income).
"spend no more than 10% of your gross income on a car that you intend to keep for at least 10 years so with this if you make $100,000 a year spend $10,000 on a car if you make $50,000 spend $55,000 you get the idea"
Pending
Certain car models like Honda S2000, Mazda Miata, mid-2000s Corvettes/BMW M3s/Porsche Boxsters, Subaru Impreza, Toyota FJ Cruiser, Audi R8, Mercedes G Wagon, BMW Z8, manual Ferrari F430/Lamborghini, Mercedes SLS AMG, and Dodge Viper are predicted to hold or increase in value.
"the Honda S2000 an older Mazda Miata mid-2000s Corvettes mid-2000s BMW M3s early 2000s Porsche boxers a US Subaru Impreza the Toyota FJ Cruiser late 2000s Audi R8s and of course a used Mercedes G wagon or if you've got a lot of money there's also the BMW Z8 any manual Ferrari F430 or Lamborghini a Mercedes SLS AMG or almost any Dodge Viper"
Pending
For commuting, purchase a used, reliable, fuel-efficient car that costs less than 10% of your salary over a 3-year payment plan, or preferably, buy it outright in cash.
"buy something that is used reliable good on gas that you could afford to pay for with less than 10% of your overall salary over 3 years if you don't buy it outright in cash"
Pending