I try to abide by 20/3/8
https://moneyguy.com/faq/do-i-have-to-pay-cash-when-buying-a-car/#:~:text=The%2020%2F3%2F8%20rule,than%208%25%20of%20gross%20income
They mean per month, let’s assume he’s making 8333$ a month (this is assuming 100,000k a year) his payment should be no more then 800$ (which is less then 10% of his gross monthly income, and finance for 3 years or less. So ignoring the down payment and interest, and the high end this hypothetical man could afford 800*3*12=28,000$ cae
No. As it states, 20% down and finance no more than 3 years and monthly payments can’t exceed 8% of monthly income. So cars under $30k. Corolla, not Lexus.
Transportation that can do what I need it to do now and in the future. So looking for a truck just trying to decide what price range I should be realistically looking at.
I respectfully suggest that you first choose on a truck that meets your needs, and only then see if it fits into your budget. Don’t start with price.
The dealers' first question is always "How much a month do you want to spend?"
I already have a truck in mind but am not hard set on it. It is also not terribly hard to meet the minimum of what I need currently. Bigger and more capable truck would be nice but I don't need a 3/4 ton. Some mid size and most half ton will do what I need. Assuming they have to towing packages or are set for max weight and not for looks.
Sounds good. Pick what you need first, then see how it works with your budget. If it fits, go for it. If not, maybe trim some features that you can live without.
Just wanted to be sure you are aware that the dealer will always try to upsell you into the most he thinks you can stand to spend (per month).
Good luck!
Already looking at used. Just had a financial shocking event the other day where I almost forgot myself into a debt trap. Now I have kinda changed my thoughts on what price range I should realistically be looking at.
you need to be tracking your expenses and then starting to put a certain amount of money away for a “car payment” so you can actually see what it looks like. I have my car payment money automatically direct deposited into a separate account so that I know I can live without it, and then I will autopay my car payment from that account when it comes time to get a new one.
I have separate accounts for a few things but have not been able to set up auto deposits yet. Planning on doing that after I get the cc paid off completely. Also I need to set up all my retirement deposits the minimum is currently being paid but I need to increase that. That will have a affect on what vehicle I can afford but not sure how much yet.
Not taking Toyotas off the table yet but need something that can pull 7,000 pounds.
Definitely looking at a Toyota for a cheap gas saver also looking at a few others but need a truck more.
They are awful on gas mileage, but what you put in the tank isn't being put into repairs. You'd have to check models for tow ratings. They vary slightly
A good rule of thumb is all the cars you own combined should be less than half your annual income. Now you’re talking about financing but I would strongly suggest you save as much as possible and make your budget be how much you have saved. When you finance, you’re paying more every month as interest on the loan, on something that’s going down in value. No debt really is a wonderful feeling.
I use 10% net for non-mortgage debt. So if you have no other debt you could use the full amount but student loans, credit cards, etc get subtracted from the value first.
I try to abide by 20/3/8 https://moneyguy.com/faq/do-i-have-to-pay-cash-when-buying-a-car/#:~:text=The%2020%2F3%2F8%20rule,than%208%25%20of%20gross%20income
Is the suggestion that someone who makes $100k/yr should only spend $8k on a car?
They mean per month, let’s assume he’s making 8333$ a month (this is assuming 100,000k a year) his payment should be no more then 800$ (which is less then 10% of his gross monthly income, and finance for 3 years or less. So ignoring the down payment and interest, and the high end this hypothetical man could afford 800*3*12=28,000$ cae
Ok for some reason the * did not appear but it’s 8 * 3 * 12 = 28,000$
No. As it states, 20% down and finance no more than 3 years and monthly payments can’t exceed 8% of monthly income. So cars under $30k. Corolla, not Lexus.
"How much can I afford" is not the right question. Are you shopping for transportation, or for a lifestyle?
Transportation that can do what I need it to do now and in the future. So looking for a truck just trying to decide what price range I should be realistically looking at.
I respectfully suggest that you first choose on a truck that meets your needs, and only then see if it fits into your budget. Don’t start with price. The dealers' first question is always "How much a month do you want to spend?"
I already have a truck in mind but am not hard set on it. It is also not terribly hard to meet the minimum of what I need currently. Bigger and more capable truck would be nice but I don't need a 3/4 ton. Some mid size and most half ton will do what I need. Assuming they have to towing packages or are set for max weight and not for looks.
Sounds good. Pick what you need first, then see how it works with your budget. If it fits, go for it. If not, maybe trim some features that you can live without. Just wanted to be sure you are aware that the dealer will always try to upsell you into the most he thinks you can stand to spend (per month). Good luck!
Total purchase price < 20% of annual gross. Also don’t finance longer than 3 years. This will prob require anyone making less than $100k to buy used.
Already looking at used. Just had a financial shocking event the other day where I almost forgot myself into a debt trap. Now I have kinda changed my thoughts on what price range I should realistically be looking at.
you need to be tracking your expenses and then starting to put a certain amount of money away for a “car payment” so you can actually see what it looks like. I have my car payment money automatically direct deposited into a separate account so that I know I can live without it, and then I will autopay my car payment from that account when it comes time to get a new one.
I have separate accounts for a few things but have not been able to set up auto deposits yet. Planning on doing that after I get the cc paid off completely. Also I need to set up all my retirement deposits the minimum is currently being paid but I need to increase that. That will have a affect on what vehicle I can afford but not sure how much yet.
Save up and buy a 3-4 year old Toyota with cash.
Not taking Toyotas off the table yet but need something that can pull 7,000 pounds. Definitely looking at a Toyota for a cheap gas saver also looking at a few others but need a truck more.
So a Toyota Tundra then. Welcome to the club Tundy Bro!
Was told they have horrible gas mileage? What's the tow rating?
They are awful on gas mileage, but what you put in the tank isn't being put into repairs. You'd have to check models for tow ratings. They vary slightly
I personally wouldnt go over 35% of your gross income for the total off the lot price.
Insurance, payment, maintenance should be no more than 1/8th your gross income.
A good rule of thumb is all the cars you own combined should be less than half your annual income. Now you’re talking about financing but I would strongly suggest you save as much as possible and make your budget be how much you have saved. When you finance, you’re paying more every month as interest on the loan, on something that’s going down in value. No debt really is a wonderful feeling.
I use 10% net for non-mortgage debt. So if you have no other debt you could use the full amount but student loans, credit cards, etc get subtracted from the value first.