Am I okay to purchase this car?

Submitted by Conscious-Meal-6149 t3_10q4u6d in personalfinance

I am currently netting $2900 a month.

I do not own a home. I live with my mother and help her with mortgage and give her $250 a month for “rent”.

My only other bills are phone $65 and car insurance $113. Health and dental are taken out of my paycheck.

I’m driving 60 miles a day to get to and back from work. I currently am driving a 2013 Chevy with 250k miles.

I don’t want to put anymore money into it so I have been looking for cars. I found one I like which would come out to $25,000 after all fees and taxes. Total payment on it would be a little under $400 a month.

Am I buying too much car? I want something reliable. Any advice would be awesome.

Edit : the car I am looking at is a 2021 Mazda6. My interest rate is 5.4

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sonnyfab t1_j6ntm4i wrote

You're buying way too much car. You should be looking for a ~10 year old sedan with around 100k miles on it in the 8k to 10k range maximum. And you should only buy it after you save up and pay cash for it.

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TywinShitsGold t1_j6nufjf wrote

Part of the rules of thumb in car affordability is “future proofing” your car purchase.

Can you afford market rate rent with that $400/mo car payment? If for some reason mum can no longer provide a well under market roof?

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Conscious-Meal-6149 OP t1_j6nvadz wrote

I think I would be able to. Once the time comes where I move out, I would be moving in with my SO(yet to work out the details with her but she would be helping)

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Liquidretro t1_j6o1eqq wrote

A $25k car on a net income of $35k is a ton of car overall. The monthly payment amount works because it's a 5+ year loan. Most of us around here suggest you should stick to a 3 year loan or less to "afford" a car.

Do you want to plan to live with mom for the next 5+ years while you pay off this car?

A car in the $10-15k (pushing it) range would be a lot more appropriate long term. Many experts recommend your total transportation cost should be 10-15% of your income. It's guidance, not perfect in all situations but should give you a better idea of where you should be https://www.investopedia.com/how-much-should-i-spend-on-a-car-5187853

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CircaSixty8 t1_j6nzbfb wrote

You probably can afford it, but consider finding something cheaper and saving the rest. I'm currently leasing a 2021 Mazda 3, my payments are $350 a month. I would consider paying more but it would have to be for better car.

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Liquidretro t1_j6o1dmg wrote

A $25k car on a net income of $35k is a ton of car overall. The monthly payment amount works because it's a 5+ year loan. Most of us around here suggest you should stick to a 3 year loan or less to "afford" a car.

Do you want to plan to live with mom for the next 5+ years while you pay off this car?

A car in the $10-15k (pushing it) range would be a lot more appropriate long term. Many experts recommend your total transportation cost should be 10-15% of your income. It's guidance, not perfect in all situations but should give you a better idea of where you should be https://www.investopedia.com/how-much-should-i-spend-on-a-car-5187853

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The_Blue_Tears t1_j6o1ec9 wrote

at 2900 monthly income, you have 428 in monthly expenses, bringing your discretionary down to 2472. are you planning on keeping your chevy or trading it in?

If you're keeping it, you'll have to pay for insurance on both cars. There's usually a discount with car insurance companies when you have multiple cars, but it will still eat at your finances. If you're trading it in, or even doing a pick and pull thing, you'll be able to put that as a part of a down-payment on your Mazda, which will your reduce monthly minimum.

Mazdas are really fuel efficient cars, so I think you picked a good make and model especially since you have a bit of a commute. I'm not so sure about the year. You could shop around for a 2014 give or take and go for a less expensive car.

Is there a reason you and your mom aren't on the same phone plan? There's usually a family discount for adding another line to an existing account.

If you really really want a newer model, I think you need to save quite a bit to bring your monthly down to a manageable level. If you saved 10k, you'd have a 15k loan, at 5.4%. If it's a 60 month term, you're looking at 285.83 monthly.

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Triscuitmeniscus t1_j6o407n wrote

A good rule of thumb is to keep your car payment below 10% of your take home income. $290/month comes out to about a $15k loan at your interest rates. Also keep in mind that a newer vehicle will be more expensive to insure.

I would spend a few months saving up until you have ~$5k or so to put down, then look at cars in the $15k neighborhood. Then you’ll have a car that you can easily afford, not just one that you can theoretically afford.

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BezniaAtWork t1_j6nuadx wrote

Yes, you can afford it. Just like anyone else on here would say, I'd recommend stocking up your IRA and getting that 401k match right now while you're in a position where you can afford to do those things and get that sweet, sweet compound interest, but that car payment isn't going to kill you. Make sure you are getting the best interest rate you can and are buying a reliable vehicle, but that price range is in your budget when including fees and taxes.

For reference, I pull in about $2700/mo net ($5800 gross but I save a LOT because I am luckily in a position where I can) and my car payment is $295/mo. It was $28k and I put $14k down though (the trade-in for my previous vehicle.)

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