markfromaurora

This is such a wierd question. But in all of your opinions, what yearly salary would be acceptable to get the new Challengers? I know its different person to person, but if you are dropping around 10-15k as a down payment, would somebody at 40k a year be able to catch up an R/T or so for around 350/month AND afford it while paying a rent or a new home. See the thing is , I love this new challenger coming out. I am almost 22 and dragging out my college plan to be an engineer. I will probably be finished with school in about 2-3 years. Expecting around at leats 45 start due to my experience in the field, I was wondering , is it a good idea to get a brand new Challenger R/T? I am currently driving a car that will probably be nearing its end within a year or two and when the time comes, it will be good to get a solid replacement. The Challenger is a car unlike any other and I am totally in love with all things about it. I thought the old ones were awesome. Granted, i will have a 10-15k down payment and the time of release, will it be a good idea to get one for 32k? An r't model. I mean, I live at home, but about two years after school is done I plan to move out, but who knows then,i may be engaged by that time and have a partner to pay for the place. I mean when i have to get a new car i will have to , and i prefer a new car. There is nothing that appeals to me as much as this. I want to hear from an adult what their true opinion is of me gettign this when i need a new car.

So in my situation- 45k a year, with 15k down on a 32k Challenger R/T- show i worry, or is it possible to easily make it financially

GTO JUDGE

Is there any way to disguise part of a car loan and incorporate it into a student loan? ::wink:: The University of Challenger.

GTO JUDGE

In the "olden" days when people went for mortgages. Lenders based a lot of peoples ability to handle the mortgage payments by figuring 1 week salary for the mortgage payment, 3 weeks of salary for everything else. Of course lots of changed since that way of figuring was done.. but... an easy way of doing that for a car loan could be applied the same. In your situation living at home you could go a bit further maybe 1-1/2 weeks salary= car payment.

Worse thing to do is work for a car or make everything center around a car loan. What I mean by this is, don't over extend yourself where you cannot buy anything because you are held captive to a car loan. Be able to put money away after all your bills are paid. I know many who rely on overtime to make payments. When overtime is pulled they struggle and have to seek 2nd jobs. It's not wise to get yourself into a situation like this. I think if you apply the method I mentioned you should be ok. The trick is to stay disciplined in your payments. There may be a time you will want to move out and you'll need money to do that. If you pour a huge chunk of change into a car loan you'll end up screwing yourself out of things down the road. Hope this brief synopsis helps.

markfromaurora

ya i just would like to have this as my next car but ill have to be buying something new within two years and iwant to get what i really like not pour money into something i dont. but i also need to live a normal life and notr blow everything on my car

BootCamp

Sorry, but there is no "cut and dry" answer for your question. As a former Auto Loan Underwriter for a bank, I can tell you that every situation is different. Here's a little "inside information" you can use before going to a financial institution for your loan.

Normally, banks use "ratios" for calculating whether someone qualifies for a loan or not. Typically, the "ratios" are "28 / 36". That means 28% of your gross income is allowed for your housing cost (mortgage/rent), and 36% of your gross income is allowed for your total loan liability (ALL loans, credit cards, indebtedness - INCLUDING your housing costs - AND the loan being applied for). The rest of your income is considered necessary for living expenses, taxes, insurance(s), and personal expenses. Any loans that are written when the numbers fall outside of these ratios are called "exceptions".

"Exception Loans" are reviewed by the bank's Board (usually monthly) to see if an underwriter is in the habit of making "risky" loans. However, there are solid reasons for an underwriter to make "exception loans". Some of the reasons include "excellent credit history", an unusually high income (someone who makes $100K/year can much more afford a 40% - 45% total income to debt ratio than someone making $25K/year - they have much more "disposable income"), an unusually high down payment percentage (having a lot of money down makes the applicant less likely to let the loan go into default), and additional collateral (backing the loan with collateral value that far exceeds the amount being lent - security interest in a house or commodity).

The one thing that influences a loan application MOST is the "loan to value" ratio - how much is being financed (loan) compared to the value of the collateral (car being financed). The more money down on the "car", the lower the LTV, and the more appealing the deal is to the bank. Sometimes a great LTV can overcome a poor credit history.
GTO Judge refers to the olden days when banks gave away toasters and coffee makers to draw in clients with new accounts. Things were a bit different then. Banks are more "fee oriented" now, so a "long standing customer relationship" with a bank means much less that it used to. One thing he referred to that IS very pertinent is that you don't want to overburden yourself with a car payment. Banks look at automobiles as having decreasing value and are not considered long term investments as real property (real estate) is that normally goes up in (resale) value, so they're a bit more stingy when it comes to writing exceptions.
See my post here for more details.

Whatever you do, DON'T put yourself in a situation where you end up being a slave to your car payments. Nothing takes the pleasure out of having the car of your dreams faster than giving up everything else to own it.

davecpa

Boot camp... In addition to my CPA firm I own a mortgage company and i agree 100% with you. Lots of hungry loan officers will talk people into buying more than they can handle. I suggest that anyone contemplating any big purchase should do a budget first and find out what the monthly payment will be on the loan.

Jeremiah 29:11

This is a very complex answer based on your situation.

Let me make some assumptions:

1. You will start at $45K/year
2. Not married
3. no children
4. no house note yet

Action Items:

1. Tithe your money to God.
2 .Be sure you start saving at least 10% of your annual net salary for the rest of your life.
3. Start a 401K at your job immediately upon joining.
4. Always have at least 6 months of emergency cash (for things that you don't expect to happen)
5. Always make sure you have all of the insurance for medical, auto, home, etc..

I would get a 6 cylinder Challenger for fuel and insurance costs at your age.

We currently live in a fast food society. In other words, in the old days people worked for year and decades to get things we wanted and now
todays younger generation sometimes has unrealistic expectations to get things overnight.

I know economically we live in a society where finanancialy people are better off than back in the day and so sometimes you can get the things you want.
I think patience is a virtue and if you can practice in this case you will be better off in the long run.

You can start life in debt and struggle making it financially (I know of people using credit cards to payoff other credit card bill.....what a tragedy)
for the rest of their lives or they can start off on the right foot making good sound financial decisions now which will pay dividends in the future and when you retire.

I have many examples but I will give just one. When I got laid off 6 years ago, (6 months total) had I not already saved for my kids college funds over 20 years ago
I would have not been able to pay for it.

I am not here to burst any bubbles but to paint a realistic picture of what you need to do to start off financially on the right foot.

I have helped both of my sons to plan and as a result my oldest is 25 and has already paid off his 2006 Ford Mustang GT($32K).

You are young, so use time on your side to make your money grow.

Justinec101

I'm 21, I'll be 23 by the time they're out and available. I can't imagine I'll be making more than 25k at that time but I have a car worth about 8k so as long as I can get one for under 30k (whichever model that ends up being) I should be able to get one. If you have a college loan to pay off as well though it might be trickier.

awsure

I am surprised no one has suggested that you save the money & pay cash for the car. Is that concept completely lost in todays world? I sure hope not. That is the way I plan to do it so the only "payment" I have is insurance, gas, & maintenance. I would suggest you call your insurance company & ask them to ballpark a price for a car like this as I suspect you may find that your age will impact it pretty significantly.

If you want some good "old fashioned" financial advice (the kind your Grandma used to give) I would suggest you tune your radio into Dave Ramsey. I think his website is daveramsey.com

BootCamp

I'd assume that anyone who COULD pay cash for any car WOULD do so. Unfortunately, not everyone is able to do that. If markfromaurora were able to do that, he would never have asked the questions he posted.

Financing isn't always a bad thing - even for those who CAN afford to pay cash.
A friend of mine (co-worker) inherited a great deal of money many years ago. He paid cash for everything. Then the unthinkable happened - a life threatening illness wiped out all of his resources. He was left scrambling to cover his debts. The problem was he had no established credit, so no one would lend him any substantial amount of money. Talk about "riches to rags"! His sister learned from this (after she bailed him out) and always finances half of the price of any new car she buys. She pays it off in six months, but has built her credit rating to avoid the same dilemma that befell her brother.