How much should I spend on a new car?!?!?

Question

How much should I spend on a new car?!?! I’m looking to buy a new car and I’m trying to figure out what a reasonable payment/price would be for a new/used car for some one in my situation.

I’m 26 just sold my house, I’m not going to buy another one any time soon. I bring in about 4000 a month after taxes and my current expenses are around 1500 (rent, credit cards, insurance, student loans, utilities) and then another 500-700 for food / entertainment / misc. expenses. That leaves the rest for, savings (regular and 401K) and car payment.

Is $500 way to much for a car payment?!?! I have good credit and looking at my current budget it seems totally reasonable to me, but I can help but think spending 500 on a car is crazy. What do you think? What about leasing?
I’m looking to get a 2006-2007 BMW 3 series or a Lexus.
FYI:
I’m not going to buy a house because I will be switching to consulting/traveling role in the next year so I rent,with a roommateand can save more this way.

I’m looking to buy a new car and I’m trying to figure out what a reasonable payment/price would be for a new/used car for some one in MY situation.
I’m 26 just sold my house, I’m not going to buy another one any time soon. I bring in about 4000 a month after taxes and my current expenses are around 1500 (rent, credit cards, insurance, student loans, utilities) and then another 500-700 for food / entertain / misc. exp. That leaves the rest for, savings (reg and 401K) and car payment.

Is $500 way to much for a car payment?!?! I have good credit and looking at my current budget it seems totally reasonable to me, but I can help but think spending 500 on a car is crazy. What about leasing?
I’m looking to get a used BMW 3 series or a Lexus.
Added details to clarify: NOT going to invest real-estate! found some articles that say not pay more then 20% after tax income.. 500 = 12.5%. That still seems like a lot. Does that sound like an avg. post tax income% to pay 4 a car?

Answer 1

If you are looking at a BMW or Lexus..that's what you're going to pay. If you can settle for something more typical, you should be able to get a decent car for around $300-350 mo. Don't forget insurance will typically go up was well as registration fees. That could bring you up to $500 mo as it is.

Truthfully..a new BMW or Lexus is living beyond the means for someone earning $4k mo. Keep the extra money for your next property purchase. Invest in rental property. You will only lose money on the cars.

Answer 2

There are pro's and cons to leasing. Yes its cheaper, and depending on how long you lease the car you get a new car when the lease term is up. But you will always have a car payment and if you are unhappy with the car you cant just trade it in and get rid of it.

Yeah 500$ a month is hard to swallow. So make a bigger down payment or set your sights a little lower. Also you might want to factor in what interest is going to run ( even though you have good credit ) and there again a bigger down payment would help that. Or you may want to pursue buying something used. Most auto makers tout their pre-owned vehicles, Lexus being one.

Myself I have been looking at new cars and have been thinking the same thing, what a ridiculous car payment. I don't care what you make. My first car payment was 124$ a month for two years, and it was a nice car by early 80's standards.

Another thought for you.... You said you just sold your house, if you made any money on the deal, you might want to just pay cash for the car. No car payment and you can insure it the way you want to, anything from liability all the way up to full coverage. Also you save the interest charges.

Answer 3

Josh,
My compliments for being a young man and haven already bought and sold a house ! Impressive !!

My experience is that a Certified pre-owned BMW is a great value. The warranty (which you'll need on a Bimmer) is longer than the new car warranty AND they extend the no-cost maintenance for the original period (ie 4 yrs 48K). BMWs (and Lexus) have the best resale value, and if you get the itch in another year or 2, you won't get hurt too badly by depreciation.

The bad news is that (depending on where you live) insurance costs are higher for premium marque vehicles than for non-premium. And if you dont have a garage, then you'll be leaving a pretty nice vehicle out in the rain..or worse, at the prey of car thieves.

But life is meant to be enjoyed - especially for a 26 year old, who sounds like he has his head on straight. You can lease a 2007 328i with Steptronic and heated seats for $249 + tax and ~$5000 down. If you LOVE the car, buy it out at the end of the lease. If you HATE the car, walk away. In either case, put that extra $250 a month in a bank or mutual fund and at the end of 2 years you'll have $6,000+ to either buy out the BMW or have a down payment on something else..

Good luck with your choice

ED
I

Answer 4

$500 isn't that much for a good car if its a f150-250 or jeep rubicom limited i just bought a 2006 pontiac vibe nice car for traveling only $300-350 month with $300 insurance cause it listed as a sports car but in my books it more of a hatchback has great comfort and sweet gas milage but a bmw or lexus can have a big payment but u get a big name for the $500 month payment

Answer 5

Actually you can go for Toyota Harrier, Carmy Or Mark X. All these three cars are very power and the fuel consumtion is very good. If looking for New Car, Can look for me @ 94599091.

Answer 6

we spent 1 point 8 million Philippine pesos for a Nissan teana

Answer 7

how much do you want to spend its not how much should you spend it how ever much you want to spend i could tell you not to spend more than 15,000 but are you going to listen to me no. save your money put a big down payment so your payments will be cheaper