Financing a Car
 

Is anyone here financing their car?

I'm graduating soon and will have a full time job. I'll still be living at my parent's home cause i'm still young (22) and would be saving a LOT of money by doing so. Due to the money saved from paying my own rent, I would have some money available if i wanted to finance a car.

Question is, whats a reasonable % of your income to put towards car payments? Being the young guy I am of course i'd like to get a nicer newer car, but obviously that will drain more of my income. I've heard stories of people slaving away working multiple jobs in order to finance a higher end car, but that's just stupid.

I already have a car at the moment which was bought for me as a graduating present from high school (powered by parents :devil:). However I have an itch to get a new car.

I also understand that making big payments for a depreciating asset is also unwise, so i'd probably finance a second hand car if anything.

Thoughts?

Stay out of debt.

What happens 2 or 3 years from now when you decide to move out and can't afford the car payments anymore? You'll be forced to sell the car and take a big hit on it.

If you're saving a lot of money by living at home, spend a year using the car they gave you and save up as much as you can. Then decide if you want to splurge on a car. Maybe sell your current car and use some of your savings to buy a new car then.

For the majority of the finance period, you will owe more on the car than it's worth. (Not true for all cases, but most.)

Unless of course you make a big down payment and only finance for say a year or something so there will be minimal interest and you won't be held down for so long.


Just my .02

Use the money you are saving on rent and start putting away for RRSP now that you have a full time job. If the car your parents bought you is still relatively new and reliable, might as well stick with it as you don't want to start your working career in debt already like most young adults.

^^^

the debt part really scares me. I am very fortunate to graduate with 0 debt (powered by parents) and the thought of being 20-40k in debt for one purchase is upsetting.

However before financing the car I would be putting a big chunk of money as a down payment, and looking to pay off the vehicle within a span of 2-3 years max.

If i do save up enough money to just fully purchase the car, I don't think i'd pull the trigger and dump all the money for a vehicle.... i'd rather keep that saved money and use it as a down payment for an apartment purchase or something

Of course. But sooner or later i will have to be in debt due to taking out a mortgage when i'm older :(

this is very true.. especially those people that I have seen financing for 84months +

I wouldn't suggest financing a used car because you'll probably be paying a higher interest rate if you were to go through the bank or through the dealership. If you really want to finance a car, you can wait for dealerships to have promotions where they offer really low interest rates (e.g. 0% or 0.9%). Keep in mind though the huge depreciation of a new car during its first few years. When deciding on how much your willing to pay each month, factor in how much you'll be paying for insurance, gas, and maintenance. Since your young, I recommend you put aside a decent amount of your income either for spending or saving. Speaking from personal experience, it sucks penny pinching and not being able to either save money or spend money for years because it all goes towards your car.

If you get a good interest rate, it is not too bad to finance. Since you're only 22, financing a car will also help build up your credit fast if you are planning to buy a house in the near future. I'm financing one of my car right now even though I have the full amount to pay it off. I'm only paying .99% interest for the car for 36 months. With that said, financing for 2.99% or higher I won't even consider

I suggest save money towards your FIRST home/apartment. After that, cars come naturally.
If you get a nice car first, then getting your first house is a lot more harder.

this would be the best case scenario. Finding a deal with a low interest rate would make paying off the car in full more or less the same as paying it off in increments

84 months with zero down!!! how can I lose!

Take it from someone who's done this once too many times. If you were given a decent car by your parents keep it for as long as you can and buy a new car when you can truly afford it, which means also being able to afford to pay for gas/maintenance/insurance.

Car debt sucks bro.

and only 12.8% interest!! :fullofwin:

I wouldn't reccomend financing a car until you have financial stability, But if you wanted to, I wouldn't put more than 10% /year on a car. (Until house is mostly payed off etc) so lets say your car came to ~$35,000. If you financed it for 72 months on a decent interest rates, your payments would be ~550/month. If you TAKE HOME 5500/month, The imo it's a decently safe debt load. With that said, If your parents have you a decent car just drive that for for now. That $550/month is $6600 you can put towards a down payment on a house each year, Plus whatever else you can save.

since the general consensus here is to stay away from car debt..

i guess i'll put off with the new car till i make it big :okay:

What car do you currently drive? If its newer and reliable, maybe wait till you have a hefty down and keep your payments to a minimum.

I went from a 2011 civic to a 2010 tsx with a higher payment and after loosing hours at work, I regret not keeping the civic til I had more of a down for the tsx.

Unless you wanna join the 30k millionare crew!

LEASE BASE MODEL BMW 320I BRO, 0 DOWN 9% INTEREST RATE 84 MONTH TERM SHIT'S AFFORDABLE SON #YOLO

^^

I'm currently driving an 08 civic coupe. It just feels like i've been driving this car forever, so i've been itching to get a new set of wheels

buy used cars, you get to try something new without breaking the bank.
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cant go wrong with 96 months programs too!

by the time you're at the 84 month, you'd owed 7G's on the car and its only worth $300.. :troll:

WE'LL LEND YOU MONEY EVEN IF YOUR MAMA WONT LEND YOU :ilied:

Get an Si coupe. :badpokerface: wont break your bank. just as reliable, but more fun.

84 months!!?? wow...30k millionaires :troll:

Holy shit... 8 YEARS? Do these actually exist?

OP if I were you I'd keep the 08 Civic, staying out of debt is huge. You never know what the future brings, what if knock on wood, you get laid off, you get fired, company closes down and/or you get a paycut down the road? How would you survive then? If you're bored of it why not take some of your income and put some tasteful mods on your car? You can have a lot of fun with an 2008 civic.

Personally financing a car never made sense to me, you're paying full price for something thats depreciating more and more each month, and technically you don't even own the car, the dealership/bank owns it, until you pay it all off. Buy used cars that you have cash for, until you can afford a really nice one.

That's still relatively "new"

How much is your civic worth? Sell the civic and maybe get a fun car that is in the same price range or add a couple thousand cash that you have right now. Just don't go into debt for a new car when you don't need to.

You're in a good position if you can graduate with 0 debt... that's a really big blessing your parents gave you, try not to waste it.