Financing a Car

[Energy]

Originally Posted by belaud

I regret nothing.

That might be true for now.

But good on you for doing what you want.

[Araaadi]

Originally Posted by belaud

I'm 21 and I drive an STI.

lease -> own is my plan.

90% of my income goes straight to the car for monthly/insurance and to buy shit for it, I regret nothing.

I'm pretty much in the same situation besides the fact that I'm financing. I don't have much leftover money and but once I hop in my car and go for a cruise, it's all worth it.

[freakshow]

Originally Posted by belaud

90% of my income goes straight to the car for monthly/insurance and to buy shit for it, I regret nothing yet.

fixed..

Everyone can do whatever makes them happy, but most of the time, putting 90% of your income towards a car isn't the best choice for your future..

OP, you have plenty of time to enjoy fun fast cars. Your parents spent 20K on a car for you, I would keep it and spend 2K+ on a vacation for them.

Even if you buy a new car, what will your budget really allow anyways? a newer civic? If you really want a change, sell the civic for an S2K. spend the rest of the money on track days, you'll have way more fun.

[belaud]

If I decided to not buy anything for the car, I'd be down to 25% of my income towards the car. I am not in an irreversible state of debt (not in any really, besides the usual CC every month), I'm lucky and taking advantage of the fact that I still live at home, I pay very little "rent" towards it, because my parents allow me to do so, I don't see how this would degrade me as a person at all.

I may be 21, but I am not a $16 dolla baller, I chose to do this because I've been saving for it, living frugally from beginning of highschool -> 2nd year out of high school, the most I ever bought myself was two computers. I was wearing hand me downs from two brother's, while everyone was decking themselves out in Ed Hardy and True Religion. Ask anyone that knows me, I still dress like a ragged hobo with shorts/sweatpants and sandals, simply because it's comfortable, I'm not impressing anyone with Le Alligator (Or whatever) or Bench jackets. While everyone was busy partying and getting puking drunk, I was busy honing my skills with electronics, audio and computers. if I ever went out with friends, I looked for the bread & butter, while everyone else decided on the prawns and steak. I had the choice between a newer 2010 Impreza vs '03Echo Hatchback, I insisted on the echo so I can save even more money, pay less insurance, get 800kms to a tank as opposed to 400 on the Impreza, fill 40L instead of 62L.

Here I am now, 2 years into a job I love, and a car I dreamt of on the race tracks of Gran Turismo/Forza. I went from a computer assembler earning next to minimum wage, to having my own office building system proto types, getting my hands on engineering samples of Haswell's, and I'll be travelling for the company starting this year, because I work hard for what I love.

The STI is my dream car, always has been since my brother's '06 WRX hawkeye, I plan to keep this for my life's time, I plan to dump a fuckload of money into it, I would be lying if I said I didn't look at my bank account sometimes and cringe, but once I get into my car, once I get under my car, once I start turning the wrench, it's all worth it.

You may think this is dumb of me, you're right, I could spend the 65% on real estate, RRSP, TFSA, stocks, google, vacation, hookers & blow. It's been an entire year's worth of fuckery and I still don't fully regret dumping money into it, simply because I love it. I don't care what you think what will happen in 10 years from now, I'll contact you then when I'm poor and living out of my STI, I'll still be happy that I built a car out of mechanical love.

I am happy on the current status of my life, I do regret a little on not putting a lot more into savings, but shit, race car ain't gunna pay itself off.

[Drow]

Originally Posted by freakshow

fixed..

Everyone can do whatever makes them happy, but most of the time, putting 90% of your income towards a car isn't the best choice for your future..

OP, you have plenty of time to enjoy fun fast cars. Your parents spent 20K on a car for you, I would keep it and spend 2K+ on a vacation for them.

Even if you buy a new car, what will your budget really allow anyways? a newer civic? If you really want a change, sell the civic for an S2K. spend the rest of the money on track days, you'll have way more fun.

tbh i had my eyes on a 2nd hand c coupe hahah... i did the math and should still live comfortably due to paying no rent but my savings rate would be taking a hit during the 2-3 year financing

o wells ill jus wait till i can buy it out or at least pay over 75% of it

[mos_skeeto]

op, are you living at home for the next 5-10 years?

[Drow]

^^^

i would think so yea. unless my parents decide to move back to HK then I would be living at their pad.

All my older colleagues around 27-30 are still currently living at home. I have 1 colleague that moved out but thats because he recently got married. I guess it does make sense to live at home unless i'm ceo 10k/day

[dared3vil0]

Originally Posted by Drow

^^^

i would think so yea. unless my parents decide to move back to HK then I would be living at their pad.

All my older colleagues around 27-30 are still currently living at home. I have 1 colleague that moved out but thats because he recently got married. I guess it does make sense to live at home unless i'm ceo 10k/day

One thing i forgot that i should mention, Affording the car payments, and affording the car are two TOTALLY different things. Have you factored in repair costs? An oil change, Trans fluid change, and brakes are easily $1000. Just remember to look at the whole thing, NOT just the payments.

[flagella]

This whole idea just bothers me. Fresh graduate with a job should be independent and stop living under his/her parents' roof.

Fine, you say Vancouver is tough and buying a house is extremely difficult with such stratospheric prices, so you want to live with your parents in order to save up for a down payment for a house more quickly.

Then you go ahead and buy a new car, which would set you back in terms of savings.

No offense, but I always get a crack out of kids with nice cars but still getting fed from their parents. I have way more respect for those who are driving beaters but are living independently.

[supafamous]

I got a new car on 0% financing 10 years ago when I was living at home while paying off student loans. At the time I had a decent paying job so the payments ($560/mo) were pretty manageable since I paid very little to my parents but when it came time to buy a place I needed help from my parents to make it happen. In retrospect, I should have bought a little old used thing till I had more money but I also enjoyed the heck out of the car (Protege5).

Today, I make nearly 4 times what I did 10 years ago and agonize over financing $25k for a car not because I don't have the money but I don't want to spend it.

I can't criticize as I did what you are considering and I enjoyed it and can't say I regretted it even though I could have made a better choice. My advice is to leave yourself some healthy margin in your budget if you decide to finance a car as little things crop up quickly and that car will start looking like a bank machine (quick cash) when you are desperate.

Re: owning a home, investing in RRSPs...

Owning isn't worth it in Vancouver (I own but bought in 7 yrs ago), you're better off renting cheap and investing it elsewhere right now (My current plan). And unless you make more than $40-45k a RRSP isn't worth it either, use a TFSA.

[skiiipi]

OP

speaking from experience....I started working when i was 15, worked A LOT and had a decent paying job (~$20/hr...it was commission sales, and i was good at it), when i was 16, my parents gave me their old 1998 corolla....later that year, I traded in that car and put my savings (almost all of it) into a 2003 RSX-S......first mistake....this move costed me almost 2 years of hard earned savings, and at the time, i was getting 5%+ interest in a GIC account on that money. (Which is far better than any GIC will get me today)
Then, i started dumping every paycheque into the car....modding it, buying wheels, tires for auto x....and I even paid a stupid amount of $ to paint the car from 1 shade of white (PWP) to another shade of white (GPW). 2nd mistake (this "phase" of mine, ment that the next 2 years, I lived with no savings....I had no expenses..parents paid for housing and even my insurance...this was a perfect time for me to save $....instead I blew it on car mods).
When I was 18, i out grew the car mod phase......and ended up trading in the RSX-S for a fraction of what I paid for (and put in) towards a new Subaru Legacy......took on a $450/month car payment (48 month) and thought I could afford it since I worked full time...lived at home and had no other debt. (3rd mistake....should've traded the RSX-S for something used, practical and something that I shouldn't of financed) Because what happened was 6 month after I bought the Subaru...i ended up moving out...and started paying rent along with my GF at the time.......all of a sudden I couldnt afford rent and car payments. I ended up uninsuring my car and took transit for almost 6 month.

I made a few more bad decisions after that....but all in all.....had I not been so immature back when I was young, and just drove the Corolla until I moved out.....I probably would have had enough savings to put into a down payment on a place....or at the very least, bought that Subaru without having to finance.......

you are still young, your chance to drive a nice car will come.....take the opportunity while u are living at home to save and invest your money.

I'm 25 yrs old now....living pay cheque to pay cheuqe (albeit its a decent pay cheque)....paying rent monthly...and not much to show for......a lot of that could have changed had I just stuck w/ the corolla when I was in high school.

[dared3vil0]

Originally Posted by skiiipi

OP

speaking from experience....I started working when i was 15, worked A LOT and had a decent paying job (~$20/hr...it was commission sales, and i was good at it), when i was 16, my parents gave me their old 1998 corolla....later that year, I traded in that car and put my savings (almost all of it) into a 2003 RSX-S......first mistake....this move costed me almost 2 years of hard earned savings, and at the time, i was getting 5%+ interest in a GIC account on that money. (Which is far better than any GIC will get me today)
Then, i started dumping every paycheque into the car....modding it, buying wheels, tires for auto x....and I even paid a stupid amount of $ to paint the car from 1 shade of white (PWP) to another shade of white (GPW). 2nd mistake (this "phase" of mine, ment that the next 2 years, I lived with no savings....I had no expenses..parents paid for housing and even my insurance...this was a perfect time for me to save $....instead I blew it on car mods).
When I was 18, i out grew the car mod phase......and ended up trading in the RSX-S for a fraction of what I paid for (and put in) towards a new Subaru Legacy......took on a $450/month car payment (48 month) and thought I could afford it since I worked full time...lived at home and had no other debt. (3rd mistake....should've traded the RSX-S for something used, practical and something that I shouldn't of financed) Because what happened was 6 month after I bought the Subaru...i ended up moving out...and started paying rent along with my GF at the time.......all of a sudden I couldnt afford rent and car payments. I ended up uninsuring my car and took transit for almost 6 month.

I made a few more bad decisions after that....but all in all.....had I not been so immature back when I was young, and just drove the Corolla until I moved out.....I probably would have had enough savings to put into a down payment on a place....or at the very least, bought that Subaru without having to finance.......

you are still young, your chance to drive a nice car will come.....take the opportunity while u are living at home to save and invest your money.

I'm 25 yrs old now....living pay cheque to pay cheuqe (albeit its a decent pay cheque)....paying rent monthly...and not much to show for......a lot of that could have changed had I just stuck w/ the corolla when I was in high school.

I don't get why you would trade in the perfectly good rsx on a subaru for no reason when you already weren't very financially stable...?

[skiiipi]

Originally Posted by dared3vil0

I don't get why you would trade in the perfectly good rsx on a subaru for no reason when you already weren't very financially stable...?

I modded the RSX to much to a point that it was way too heaty to drive...i got 3 VIs in over a period of like 1 month...and got fed up of "paying my way out of VIs".

again...i was young...i think 18 or 19 at the time.....bad financial decision

[mr_chin]

If you're not thinking about modding, how about leasing a car? Benefit of leasing is, you're not tied down and MUST pay it off. If you ever run into financial problems, you can simply return the car with a fee if the car has scratches or is damaged.

Another benefit of leasing is, lower monthly payments. You pay for half the car in payments for 2 - 3 years, if you like the car, buy it out. Buying it out doesn't necessarily mean you have to pay the amount in full. You can finance through the dealership or you can get your bank to borrow you money to pay it off and pay your bank monthly.

Benefit of leasing is, you are paying for the car in two parts, the lease part, and the buy out part, so monthly payments are calculated in two parts. Whereas, when you're financing, payments are calculated on the whole car value, which equals high monthly payments. Also, leasing is easier to approve then financing.

Simple advice when shopping for cars is

1) Take your time and wait for promotions usually near the end of the year.
2) Negotiate like you're the cheapest person in the world. Money is in your hands, you make the call.
3) Never go above 2.99%. Financing 4 - 5 years is usually 3.99%+, negotiate! More down payment means more negotiating room.
4) Buy new cars, never get second hand. Personal preference though.
5) Try to get as much free shit as you can too (floor mats, cargo nets, etc.)
6) If financing/leasing, get pre-approved credit. That way you can negotiate. Otherwise you'll negotiate, apply for credit, gets denied, all this going back and forth won't help bargaining.

My first new car is a disaster, bought sticker price, no negotiating, no free shit, no test drive. Lesson learned.

[mos_skeeto]

edit: im escorting myself out of this thread.

brain explode.

[q0192837465]

^ no offense, but I highly advise against leasing in OP's situation. He pays less now but the the balance will accumulate more interest. In the end, he will pay more for the car. What will OP do when the lease term is over? Buy it out? Refinance? Or lease another car. In the end, it will turn into a never ending drain on OP's cash flow. The sooner the debt is paid off the better. Leasing ensures that this doesn't happen. But I do agree about the part that you can just give them the car back if something happens in OP's life that demands a relocation of his finances.

I don't understand why people argue that car debt is a good debt. Debt on a depreciating asset is never "good" unless it somehow generate income. If OP wants to finance, make sure it is no longer than 36 months. If it takes u more than 36 months to pay it off, sorry, u simply can't afford it and should find a cheaper car or a better deal.
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[hkRicer]

My advice is do not buy new car (lease or finance), - of course unless you are balling outa control or power by family.

I brought a new car and leased the other when I was a youngster and I was severely burned by it. There's always a huge depreciation for the first 3 years, like up to 50-60% for luxury cars.

It's best to buy or finance used car, like right now I will be looking into 08 or 09 vehicles. Even when you drive for like a year or two then got bored you will only lose like 5k-10k max (Luxury car) because depreciation slow down a lot after the first 3 years. Whereas let say you buy a new E93 M3 you will be losing like 30-40k+ if you decide to sell it after driving it for 2-3 years.

Also private sale = no tax

p.s. Do not lease, the money that you lease with will be enough to buy an older 08-09 model and u get to keep it right away.

[Fafine]

Originally Posted by hkRicer

Also private sale = no tax

wut? u mean gifting?

[Ronith]

cccccccccccccccccccccccccccccccccccccccccccccc

[mr_chin]

Originally Posted by q0192837465

^ no offense, but I highly advise against leasing in OP's situation. He pays less now but the the balance will accumulate more interest. In the end, he will pay more for the car. What will OP do when the lease term is over? Buy it out? Refinance? Or lease another car. In the end, it will turn into a never ending drain on OP's cash flow. The sooner the debt is paid off the better. Leasing ensures that this doesn't happen. But I do agree about the part that you can just give them the car back if something happens in OP's life that demands a relocation of his finances.

I don't understand why people argue that car debt is a good debt. Debt on a depreciating asset is never "good" unless it somehow generate income. If OP wants to finance, make sure it is no longer than 36 months. If it takes u more than 36 months to pay it off, sorry, u simply can't afford it and should find a cheaper car or a better deal.
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I'm not quite understanding what you mean the balance will accumulate more interest. Interest is calculated based on sale price already and is divided into your payment and residual value.

Only problem I see is financing the residual value because interest is already calculated for leasing, now you add another interest for financing. So if you're gonna lease, either lease to own without financing buyout, or return it and lease a new car. I go with the former, because the latter will leave you in a never ending loop of leasing.

If OP is not buying a very expensive car, say $24,000 tax in. Lease $10,000 at 24 months, for $400 so a month, give or take $700 with insurance. In the 24 months, save up $14k - $16k to buy out the car. If he lands a $15/hr full time job, this can easily be done. He'll be out of debt in 2 years and purchased a brand new car. If you're not good with cars, brand new cars are the way to go, otherwise you'll find yourself getting ripped off like myself many times with used cars. New cars doesn't have to be $40k $50k $60k. Just get something like a civic. If you want sport, frs, accord coupe, and get it in standard.

Aside from my point, car will depreciate, but it's only a matter when you decide to resell it. I buy my car and I'm planning on keeping it until it dies. What's the point in buying a M3 for $70k and thinking about selling it hoping to lose only $10k - $15k? You'll have to sell it in like a year or two after buying it to minimize depreciation.

I'm using about 40% of my income on my car. Even though I overpaid like $10k for it, I can still save for the residual value while paying for my 3 year lease.

Yes, I live at home still, and decision you have to make is, buy what you want now or save up and get a property. I decided to go with the car because I needed to make sure I can fully commit to a debt and handle my financial situation before actually getting a place.

[bing]

Originally Posted by mr_chin

If you're not good with cars, brand new cars are the way to go, otherwise you'll find yourself getting ripped off like myself many times with used cars.

NO, you are just bad at negotiation (wait, I can't even say this because you didn't even attempt it) and too lazy to do any research. Probably an impulsive buyer too.

Aside from my point, car will depreciate, but it's only a matter when you decide to resell it. I buy my car and I'm planning on keeping it until it dies. What's the point in buying a M3 for $70k and thinking about selling it hoping to lose only $10k - $15k? You'll have to sell it in like a year or two after buying it to minimize depreciation.

If you can afford an m3 you probably aren't thinking about depreciation. For example, years ago my friend brought over a e46 m3 bought new with 7k on the odo after 6 years and every 7 series and CLS you see rolling around town loses more in depreciation in a couple years than some people's house down payments.

Just get something like a civic. If you want sport, frs, accord coupe, and get it in standard.

He already drives a civic and he wants something nice like luxury. With those two choices, I'd rather save the money and keep the civic.

Yes, I live at home still, and decision you have to make is, buy what you want now or save up and get a property. I decided to go with the car because I needed to make sure I can fully commit to a debt and handle my financial situation before actually getting a place.

Bullshit. Is this how you rationalize bad decisions after the fact?

[dared3vil0]

I think we can all argue our respective points on the bad decisions we've all made with regards to cars, Wishing we had kept out previous once etc, But at the end of they day the advice to OP is to literally sit down and work out a bunch of options with a few contingencies worked in to each. None of us can make the final decision for him, Just help point him in the right direction.

[mr_chin]

Originally Posted by bing

NO, you are just bad at negotiation (wait, I can't even say this because you didn't even attempt it) and too lazy to do any research. Probably an impulsive buyer too.

Correct.

Originally Posted by bing

If you can afford an m3 you probably aren't thinking about depreciation. For example, years ago my friend brought over a e46 m3 bought new with 7k on the odo after 6 years and every 7 series and CLS you see rolling around town loses more in depreciation in a couple years than some people's house down payments.

If you're worrying about depreciation, ride a bike.

Originally Posted by bing

He already drives a civic and he wants something nice like luxury. With those two choices, I'd rather save the money and keep the civic.

Civic DX -> Civic SI.

Originally Posted by bing

Bullshit. Is this how you rationalize bad decisions after the fact?

You know how you buy something you don't like later, and then you start making positive shit up about how good it is to make yourself feel better?

Well then, this is correct.

[Tapioca]

If the OP is bored of his Civic, just buy a cheap RWD sports sedan, like a BMW E36. Get the German thing out of your system when you're young and have time to spare to learn how to repair and maintain it in your parents' garage.

Older BMWs offer a far more interesting driving experience than 95 % of other cars today. You'll have to pay up initially to get them in good running order, but the rewards are worth it, especially when you're young. Just do your homework and test drive a lot of them until you find the right one.
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[jpark]

get a e46 330i zhp. they are so cheap now