If you like cars, what is a reasonable car price based on income

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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Anonymous wrote:OP here. We cars for transportation but we like to drive nice cars not clunkers.
Our current cars are 8 years old and it is time for a replacement.
Our HHI is $300k and we have no debt.
We are looking to replace both cars. We would pay up to $50k for each.
DH thinks that this is reasonable for people in our income range.
Based on most answers here, that doesn’t sound crazy. That’s only 33% of our annual income.

Please point to the answer that told you 33% of your annual income on cars wasn't crazy. I'll wait.

The correct answer is to stagger your replacements so you don't buy 2 new cars in one year and get cheaper cars -- or at least one fun car/ one reliable unexciting transport car as a compromise.

See Dave Ramsey link. He’s pretty clear about the value if your cars bot exceeding 50% of your income.
This is a good default rule of thumb for starters.

The same link states the car should be purchased in CASH and should never be brand new until assets exceed $1M. Does that describe you OP? You want to spend $100k IN CASH on these two new cars and have at least $1M in assets?

We could pay cash for one car. But we will put $25k down on each.
Cars won’t be brand new. DH likes to buy 1 yo used cars that have already taken the depreciation hit.
Maybe it will make sense to stagger the purchase as others have suggested.

This is a terrible strategy for some brands. Which ones are you looking at?

Why is it a bad strategy? Please explain. A 1 year old used car is almost new.
We are looking at a Porsche and Mercedes.

They really don't give you much of a discount at Mercedes. They are trying to sell used 2018s for not much under MSRP. No thanks, rather just have a new one. They are going to lose $1k a month in "value" anyway.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I’m not a car person, but DH is and he convinced me to get a used E350. I used to think, like many on this thread, that it didn’t matter what I drove and there was no descernable difference between a Honda and a Mercedes. And the truth is, when I commuted in rush hour traffic with average speed of <20 mph, it pretty much didn’t make a difference. But when I switched jobs and got a 70 mile round trip highway commute that was against traffic so I could go full speed... I definitely felt the difference.

70 mile round trip means you either live in or commute to the hinterlands. Which is it?

Presumably the latter if it's a reverse commute. Lucky to live in an area where reverse commutes still exist--they're all but gone where we live.

^Yes, my job is in the deep exurbia.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. We cars for transportation but we like to drive nice cars not clunkers.
Our current cars are 8 years old and it is time for a replacement.
Our HHI is $300k and we have no debt.
We are looking to replace both cars. We would pay up to $50k for each.
DH thinks that this is reasonable for people in our income range.
Based on most answers here, that doesn’t sound crazy. That’s only 33% of our annual income.

Please point to the answer that told you 33% of your annual income on cars wasn't crazy. I'll wait.

The correct answer is to stagger your replacements so you don't buy 2 new cars in one year and get cheaper cars -- or at least one fun car/ one reliable unexciting transport car as a compromise.

See Dave Ramsey link. He’s pretty clear about the value if your cars bot exceeding 50% of your income.
This is a good default rule of thumb for starters.

The same link states the car should be purchased in CASH and should never be brand new until assets exceed $1M. Does that describe you OP? You want to spend $100k IN CASH on these two new cars and have at least $1M in assets?

We could pay cash for one car. But we will put $25k down on each.
Cars won’t be brand new. DH likes to buy 1 yo used cars that have already taken the depreciation hit.
Maybe it will make sense to stagger the purchase as others have suggested.

This is a terrible strategy for some brands. Which ones are you looking at?

Why is it a bad strategy? Please explain. A 1 year old used car is almost new.
We are looking at a Porsche and Mercedes.

It may make sense for a Porsche or Mercedes but you still have to be careful. Most people think the depreciation from a car is the difference between sticker and the now-slightly-used price, but this is not true. The depreciation is what you could have bought the new car for and the now-slightly-used price. For example, the 2016 C300 my wife bought had a sticker of $48k but she bought it new for $41k - brand new car with less than 20 miles, bought in October 2015 so it was not late in the model year. A similarly equipped 2016 C300 with 27k miles (what she has) is around 33k asking, which I'll assume can be gotten down to 31k, so lets call the depreciation 10k for the 2 years 10 months that she's had it. This represents a 25% depreciation over just shy of 3 years. If we regard the useful life of a Mercedes to be 10 years, and I see that a 2008 C300 is about $8000 on average, that means the 10-year depreciation my wife's car can look forward to is $33,000, or about $3300 a year. In the first 3 years of my wife's car, this is nearly exactly the amount of depreciation that has occurred. Now think to yourself, if the car is going to depreciate $3300 a year on average, wouldn't it make sense to take that depreciation and enjoy the car new, rather than buy it used?

The situation is far worse for Honda/Toyotas, where it makes little practical sense if any to buy slightly used, and always better to buy new.

[Anonymous]

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Anonymous wrote:

Anonymous wrote:

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Anonymous wrote:One of the weird things about uber fancy/expensive cars is they are most valuable when parked so someone can tell it is yours. It is not much different from any other luxury brand like a handbag -- the value is in the status not the performance or quality overall. But as others have said, it is mostly a priority issue, and yes, people with fancy cars will find a way to justify it financially. They generally do not last longer, which would be one way to justify them.

Are you serious? If you don’t feel the difference between a standard and a luxury car, you must be very ignorant or you have never driven one.
Can you see and feel the difference between a $200 couch made of fake leather and a $1000 couch made of premium leather?
Can you see the difference between a table made of cheap particleboard and one made of premium solid wood?
Which ones would you buy to furnish your home?
Luxury brands use top premium materials in their interior cabins and offer a lot of premium features. We pay for these bells and whistles.

+1. I can totally see and feel the difference between faux leather and premium leather. There is no comparison and I am willing to pay for that difference. And the suspension/ride in our Mercedes SUV noticeably smoother than our Honda Pilot was. If these types of things don't matter to you that's fine but for some (clearly many in the DC area) they are worth the premium price tag.

There's a third category, I think.

There's the people to whom they matter a great deal, who appreciate the performance and ride aspects (like you). There's the people to whom they don't matter at all, for any number of reasons (like me - my round trip commute is 11 miles and 34 minutes on not well maintained roads, and if I get above 35 mph I get a speed camera ticket). And then there are the people for whom the label and status *are* the most important things. I understand that isn't you, or your more aggressive fellow traveler above, but there are a lot of those people out there. And the DC area has more than its fair share.

Group 1: mid level cars

Group 2: luxury cars that actually have luxury in them - heated seats, leather, etc. Big difference between group 1 and group 2.

Group 3: crap cars that pretend to be luxury and it’s all about status. Maserati is one of these. Case in point - the Ghibli uses parts from a Dodge DART. Literally identical.

https://m.youtube.com/watch?v=nOZnqnB6xDo

Not gonna lie, I'm a Ghibli owner. This is a frequently jab leveled at the Ghibli by others and I understand the point. However, I would invite those people to go sit in a Maserati designed before the FCA era. I'll take those Dodge Dart switch gear thank you very much! I don't think the Ghibli has much status these days, most people know that it's rather affordable while falling short on technology and features compared to the 5-series and E-class. I enjoy driving it, it handles well, makes the right noises, and looks great to my eyes. I really don't know what to replace it with - so I'm in a position where I've held on to a car for what is now the fifth year, after a string of cars that lasted me 2-3 years each. The E63 S is calling out my name, but not loudly enough as of yet.

[Anonymous]

My last car I bought was a brand new 2015 Toyota Camry. It’s my first ever car purchase. It cost $22k total and my salary was $52k at the time. My salary has since increased over $20k. I feel I bought within my means and have no regrets. Love the car and will own it many years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. We cars for transportation but we like to drive nice cars not clunkers.
Our current cars are 8 years old and it is time for a replacement.
Our HHI is $300k and we have no debt.
We are looking to replace both cars. We would pay up to $50k for each.
DH thinks that this is reasonable for people in our income range.
Based on most answers here, that doesn’t sound crazy. That’s only 33% of our annual income.

Please point to the answer that told you 33% of your annual income on cars wasn't crazy. I'll wait.

The correct answer is to stagger your replacements so you don't buy 2 new cars in one year and get cheaper cars -- or at least one fun car/ one reliable unexciting transport car as a compromise.

See Dave Ramsey link. He’s pretty clear about the value if your cars bot exceeding 50% of your income.
This is a good default rule of thumb for starters.

The same link states the car should be purchased in CASH and should never be brand new until assets exceed $1M. Does that describe you OP? You want to spend $100k IN CASH on these two new cars and have at least $1M in assets?

We could pay cash for one car. But we will put $25k down on each.
Cars won’t be brand new. DH likes to buy 1 yo used cars that have already taken the depreciation hit.
Maybe it will make sense to stagger the purchase as others have suggested.

This is a terrible strategy for some brands. Which ones are you looking at?

Why is it a bad strategy? Please explain. A 1 year old used car is almost new.
We are looking at a Porsche and Mercedes.

NP. We planned on getting a used car but when we looked at models that were 1-3 years old they were only $2-3,000 less and we wouldn’t qualify for the super low interest rate.

This is why we bought new too. That, and the fact that all of the used cars within the three-year span we were looking at were higher end models, with features we wouldn't otherwise opt for, so we were literally choosing between two-year-old cars with more features and new cars of the same model without the extra features for the same price. Decided it made sense to get the better financing and the warranty.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:One of the weird things about uber fancy/expensive cars is they are most valuable when parked so someone can tell it is yours. It is not much different from any other luxury brand like a handbag -- the value is in the status not the performance or quality overall. But as others have said, it is mostly a priority issue, and yes, people with fancy cars will find a way to justify it financially. They generally do not last longer, which would be one way to justify them.

Are you serious? If you don’t feel the difference between a standard and a luxury car, you must be very ignorant or you have never driven one.
Can you see and feel the difference between a $200 couch made of fake leather and a $1000 couch made of premium leather?
Can you see the difference between a table made of cheap particleboard and one made of premium solid wood?
Which ones would you buy to furnish your home?
Luxury brands use top premium materials in their interior cabins and offer a lot of premium features. We pay for these bells and whistles.

+1. I can totally see and feel the difference between faux leather and premium leather. There is no comparison and I am willing to pay for that difference. And the suspension/ride in our Mercedes SUV noticeably smoother than our Honda Pilot was. If these types of things don't matter to you that's fine but for some (clearly many in the DC area) they are worth the premium price tag.

There's a third category, I think.

There's the people to whom they matter a great deal, who appreciate the performance and ride aspects (like you). There's the people to whom they don't matter at all, for any number of reasons (like me - my round trip commute is 11 miles and 34 minutes on not well maintained roads, and if I get above 35 mph I get a speed camera ticket). And then there are the people for whom the label and status *are* the most important things. I understand that isn't you, or your more aggressive fellow traveler above, but there are a lot of those people out there. And the DC area has more than its fair share.

Group 1: mid level cars

Group 2: luxury cars that actually have luxury in them - heated seats, leather, etc. Big difference between group 1 and group 2.

Group 3: crap cars that pretend to be luxury and it’s all about status. Maserati is one of these. Case in point - the Ghibli uses parts from a Dodge DART. Literally identical.

https://m.youtube.com/watch?v=nOZnqnB6xDo

We're talking about different things. You're talking about three categories of cars - mid level, luxury, and crap cars that pretend to be luxury.

I'm talking about three kinds of car *owners* - people who know and appreciate the features of true luxury cars, people who don't, and don't pretend to, and people who crave the status of a luxury car but really don't know the first thing about them, or ever drive in a place/way where it makes a difference. Many people in the third category buy a Ghibli (which I confess I'd never heard of), but many of them buy a Mercedes, even though the real benefit of that car is lost on them. (It may be obvious, but I think people in the third category are particularly silly.)

As an example, I love food, and eating, and cooking, and reading about food. I have no problem spending obscene amounts of money at restaurants, or traveling for hours to try a $5 whatever, because it's supposed to be awesome. Many people don't feel like that, and that's fine too. But then there are some people who spend a ridiculous amount of money in a restaurant and don't appreciate it at all. One friend would only go to the Capital Grille, but ordered his steak extra well-done. I was completely indistinguishable from a similarly cooked steak from Outback, but he wouldn't dream of that - he wanted the status, so paid 3 times what he had to for a burned, flavorless piece of meat.

In any event, I need to buy a new car, and my wife wants me to get somethign nicer, and was thinking of an Acura - but I'm not now. So this thread has been helpful!