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Old 12-12-2010, 12:02 PM #1
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Monthly payments

What do you guys/gals figure is a common/safe % of your monthly net income to use for a monthly payment on a new 4runner?
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Old 12-12-2010, 12:15 PM #2
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It's hard to say without knowing your other expenses. That's a very vague question

Mine is about 11% and I'm comfortable. I have irresponsible friends who spend on cars what I spend on my mortgage.

You just have to make sure whatever it is, you're comfortable spending it. And if not save up a bigger down payment. Don't forget to factor in insurance and fuel.

Heres something I do that maybe you can try. Add up all monthly expenses, everything including any savings. Divide that number by 4. Take that number and remove it from your paycheck every week to a separate bill paying account. Then you can't mess up that way. If that number divided by 4 is more than you make, you're in bad shape and probably can't afford a new truck.
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Old 12-12-2010, 12:17 PM #3
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That's going to be different for everyone...For myself, I maintain a budget and have goals for saving, and consider any additional cash left over after fixed costs (rent, utilities, other loans/debt) to be my day-to-day and play money. I consider any vehicle expensive/new enough to finance to be a purely discretionary expense, and part of the "play" money. With that said, my truck payment is about 10% of my monthly take-home.
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Old 12-12-2010, 01:35 PM #4
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7.6% here and I also pay for an X6M , '11. Love It !!!!!

"To each his/her own."
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Old 12-12-2010, 01:41 PM #5
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"Pay cash or do without" is my motto. The only debt we are holding is the mortgage.
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Old 12-12-2010, 02:42 PM #6
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Quote:
Originally Posted by SeattleMike View Post
"Pay cash or do without" is my motto. The only debt we are holding is the mortgage.
Good for you but not everybody can do what you can, I think it will be safe if your car payment is 10% of total income max, more than that you may run a risk of......
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Old 12-12-2010, 03:38 PM #7
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6% of my monthly take-home income. My wife and I never carry more than one car loan at a time.
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Old 12-12-2010, 04:48 PM #8
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If you plan on keeping the truck for well beyond the term of a 5 year loan and never trading it in, you don't really to worry about its depreciation. Its very hard to say without knowing your in your cash flow. A conservative affordability rule for a vehicle purchase is that if you can't pay it off over 36 months, then you shouldn't be looking at such a costly vehicle. I think if that was the case though, there would be NO nice cars on the road at all. When I took my cost analysis/financing class, the real-life problems almost always made it appear you were way better off from a cost standpoint in purchasing a used car vs. new, but reliability and the feeling you experience in purchasing a new car were always excluded from the equation. Google vertex42 car loan spreadsheet and use it to figure out how much you'll be spending on interest over the life of the loan. Play around with the loan term to figure out how much extra you'll spending for a 3 yr vs. 5 yr loan with TTL, and etc. Spy some of the VINs from a dealership, and call up your insurance company to figure out how much your ins will cost. For fuel, figure out how much your spending now on your current vehicle and realistically estimate how much your fillups in the 4runner will cost with the 23 gallon gas tank.

Personally for me, had I known I would be looking at another car within a year of buying my wife's RAV4 at 0%, I wouldn't have put as much money down on it and used it on my 4runner, which I'm tentatively going to buy AFTER this winter. If you really like the 4runner, save up for the downpayment and bring your monthly payment down.
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Old 12-12-2010, 05:13 PM #9
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Quote:
Originally Posted by Snowfox View Post
Good for you but not everybody can do what you can, I think it will be safe if your car payment is 10% of total income max, more than that you may run a risk of......
I'm not trying to be "holier than thou" here, I'm just pointing out that saving is cheaper than financing. Socking away that same car payment will eventually result in a new vehicle, but without paying interest, without finance charges, and without further concern about "affording the payment" should something happen like losing a job or sudden illness. If you are saving up, you can delay the purchase. If you are making payments, you end up hiding from the repo man.

And everyone can do what I did, it's just that most people want it right now and choose debt slavery over delayed gratification. It's not that they can't, it's that they won't.
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Old 12-12-2010, 06:24 PM #10
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Quote:
Originally Posted by SeattleMike View Post
I'm not trying to be "holier than thou" here, I'm just pointing out that saving is cheaper than financing. Socking away that same car payment will eventually result in a new vehicle, but without paying interest, without finance charges, and without further concern about "affording the payment" should something happen like losing a job or sudden illness. If you are saving up, you can delay the purchase. If you are making payments, you end up hiding from the repo man.
I do agree with what you are saying to a point, and if you can save up that cash great, but as you know a lot of people have a hard time doing that. Also if you do manage to save 35k for a new 4R and drop it ALL that leaves no 'wiggle room' with finances if something would arise shortly after purchase. If I had 35k that I saved up for the 4R I probably would pay half cash and finance the rest, 'saving' it and using it towards the other half of the payments, but also keeping it in reserve in case an emergency came up where I needed the funds. Sure you are paying interest on that other half but to me that almost is like paying 'insurance' because I have the extra cash on had if for some reason I really needed it. (I did personally put 15k cash down and finance the rest)
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Old 12-12-2010, 06:45 PM #11
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Put as little down as you can. No point in putting down $20K when you can put down $4K and get a similar interest rate. Two reasons:

1. Your credit will look better paying off $36K instead of $20K.

2. God forbid an illness or loss of income leads to a repo, because now you lost that down.

My philosophy is to be able to pay cash but take a loan and repay quickly to boost credit without much if any risk. Plus you tend to not buy as much.

I do agree that it is not always the best idea to only buy cash or only when you have the ability to do so. For instance, when you currently drive an unsafe or unreliable car. Regardless, you should still only buy what you can responsibly pay for.

Last edited by LongBallLarry; 12-12-2010 at 07:17 PM.
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Old 12-12-2010, 08:24 PM #12
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Cash unless you can earn better on your money.
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Old 12-13-2010, 04:35 AM #13
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Quote:
Originally Posted by SeattleMike View Post
I'm not trying to be "holier than thou" here, I'm just pointing out that saving is cheaper than financing. Socking away that same car payment will eventually result in a new vehicle, but without paying interest, without finance charges, and without further concern about "affording the payment" should something happen like losing a job or sudden illness. If you are saving up, you can delay the purchase. If you are making payments, you end up hiding from the repo man.

And everyone can do what I did, it's just that most people want it right now and choose debt slavery over delayed gratification. It's not that they can't, it's that they won't.

Amen brother, as stated when you owe someone cash you are their bltch till it's paid off. Save and buy is better than instant warm fuzzies, plus you sleep better.
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