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I love cars and view them as an experience. Some ppl choose to spend on boats, trips, season tickets to games, bottle service, whatever. We work hard, have a little fun! Life is short and moments can be fleeting.
I bought my first $80k Tesla when I was making $200k. Payments were $800 after my down pmt. I sold it two years later for $60k. I bought my current Tesla for $100k when I was making $250k. Payments are $900.
Just do what you're comfortable with. Ppl are right that it's a depreciating asset but it's not like $100k just disappears when you buy one. You can also look at leasing. BTW, the Tesla has been a phenomenal experience with autopilot, instant torque, and ZERO maintenance.
Buying an expensive car or any new car is obviously a bad financial decision but if you enjoy life more bc of it and can afford it then have some fun!
Interest rates are so low these days I'd recommend financing and investing the money instead.
This is a fair point. If your car is a primary driver of happiness, I see no difference in losing $10k/year as going on 10k vacations if it gives you the same pleasure
Basic (smart) rule: Car is no more than 10% of your yearly income. $100k car = $1m income.
*All cars depreciate, regardless of price point. So it’s not relevant to answering your original question.
The real question is do you want a $100k car? There is almost no circumstance where a 100k car is a practical choice, but not everything in your life needs to be practical. If this is really your thing and you aren’t hurting yourself too terribly elsewhere, go for it. Just make sure you’re doing it for you. Think of this like joining a country club. It will never make financial sense. It’s a passion/lifestyle play.
It depends, if cars are your thing then go ahead and save up for one and buy a $100k car at $100k salary. You shouldn’t feel bad spending money on something you legitimately enjoy. It’s personal preference whether you want to spend that money on travel, a boat, retiring early, starting a family, etc.
Buy a boat instead
None unless you’re a boomer in his mid-life crisis
Even making 150-200k is sufficient if 1. You manage other finance well and not paying too much for bills and 2. You truly enjoy cars
Tbh I hope I never need to own a car again in my life. Probably not totally realistic, but it’s the goal :)
This conversation goes a lot different in the car bowl. I assume most people who cite depreciation as a reason this is never smart aren’t car people. If you could get an allocation for a GTR, Porsche GT2/GT3/GT3rs, Supra, mid engine vette you would pay and flip. The Porsches in particular flip well where people pay huge premiums to get a car now rather than wait. Some makers have started adding first right of refusal clauses in purchasing agreements to try to stop flipping and to better control/take advantage of the premiums.
True KPMG1 but I would contend most people asking this question are also not car enthusiasts. They are looking for something sexy, turn heads or they want the fully loaded SUV
I could be wrong in my assumption of those posting these comments but collecting is a niche not the norm
Income to major depreciating asset purchase ratio of 20:1. So $160k income lets me buy a $48k car once every 6 years (as long as that’s my only depreciable expense). If you really want a $100k car and you won’t have major depeciable asset expenses for another 5 years, then you can reasonably buy it on a $320k salary.
Note: this also assumes income stability
A2: Not if you buy a car that has no depreciation left. This isn’t relevant to the question posed, but there are some vehicles that can actually be investment, well, vehicles. Case in point, my Uncle sold his 69 Camero, netting a 120% return (inflation adjusted) 15 years after initial purchase. He drove it occasionally for pleasure so he got what he wanted out of it.
Have 60k car. But have 7 figure savings. Would have been happy in used Toyota Corolla but wanted Tesla to see self driving evolve. Worth it.
Well, I wouldn’t invest on an expensive but depreciating asset. However, I also was tempted to drive a Luxury car and scored a deal to get a preowned car for 40k which would’ve costed me 90k if I had bought it new.
3 years old and less than 20k miles on it, if it helps. Also was certified pre owned with 2 years warranty. Popular German luxury brand.
I bought a £45k car (Mercedes) leased over three years which’ll cost me £9k total over three years, not including petrol, insurance etc. The depreciation isn’t worth buying and over those three years (assuming I keep my job) - I’ll make £450k (pre-tax) from my primary income source... no need to buy imo
Bought a $50k corvette on $35k income when I was in the army in 2009. Fully paid for in 5 years and still in my garage. Love her to tears, will never sell. Lived on Ramen noodles for two years though
Depends if that 100k is your daily driver
Yes
Our HHI is close to $500K and I’d probably be comfortable with buying one now with a 50K down payment. Have no need for one now but if I moved to a place where it was necessary I can see myself getting close to $100K for a car.
Check credit unions. My credit union offers very low rates.
Why not just lease it
OP, not sure if you want everyone's advice or folks that enjoy cars and relate it to expensive vacations and/or lavish wining and dining, etc. Understanding it is a depreciable assets, you can still have a lot of fun and make a lot of memories with a car. Hell, if you commute 2-3hours a day you will be spending ~20% of your awake time in the car. 30% of income (333k) will be reasonable amount to spend if your debt load is light, else consider 15% (666). You could also consider a lease, need to align approach to your end goals and budget.
If you commute 2-3 hours a day the car depreciates hella fast and it’s even more reason to not buy it.
Salary is irrelevant. Depends on a lot of factors. Here are a few examples to consider:
1) If you're talking about a 3/4 ton truck that has some other utility (pulls other toys). $100k is high end, but seemingly not far off $70k.
2) Do you have a good budget in place that includes saving for retirement, rainy day, etc. w/ 6+ months emergency fund.
3) No, and I mean NO credit card debt. $0 or paid in full every month.
4) Is it a collectable and you know what you're getting into? No "I'm hoping" type stuff.
Never. C’mon man..
Please clarify: spend’s $100K or but a $100k car? Because it is possible to buy a car that was $100K a year ago for much less
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Until 100k becomes leisure spending levels, i would not buy one.
The $100k price tag is not the end - maintenance and insurance costs are the real killer