Vehicle vs Money

[ykX]

I think a  short discussion in Random Thoughts requires a separate thread.

Now the questions is: how much an auto enthusiast  should spend on a vehicle?

Now I am not talking in hard numbers but in percentage of ones income.  The financial wisdom (on all these fancy financial advice websites) states that a vehicle loan payment should not be more than 10% of ones take home income, and total auto expenses (payment, insurance, gas, etc) should not be more than 20% of the take home income.

This is a common financial advice for general public.  The question is, as an auto enthusiasts should we spend more on vehicles since for us it is more than just an appliance that takes us to work and to for errands?

Lets talk in percentage because for someone a 100k vehicle can be just a small percentage of his/her income and for someone a 20k vehicle is half of their income.

 

[David]

As an auto enthusiast, I would say it is not about the financial. For me, I saved for 5yrs and then bought my Escalade ESV Platinum. I CHOOSE to not have auto payments and as such have no problem buying a new auto that I know I will have for 10 plus years.

I think when it comes to auto enthusiasts, it really is about what they want long term.

Is it a new $100,000 auto or is it a classic in mint condition or a classic that needs a complete restore project?

I know that I fall into two camps, auto project and new. That is just my preference.

So for me, I agree with the financial sites that one should not spend more than 10% of their yearly income on an auto payment, but the exception is when it comes to being an Enthusiast and where you find yourself. 

Classic

Classic restore project

Classic rat project

CPO Luxury

CPO Performance

New Luxury

New Performance

There really is many different areas of where one falls into for Vehicle and the money it will cost as an Auto Enthusiast. 

I do not think this is a Money vs Vehicle question. IMHO

[balthazar]

Traditionally, we've put down as much down payment necessary to get the payment to no more than 2.5% of monthly income. That's just where we're comfortable being.
Which means by financial guidance methods - I should be fine at 4 times that payment.

Hmmmm...

 

[balthazar]

11 minutes ago, David said:

As an auto enthusiast, I would say it is not about the financial. For me, I saved for 5yrs and then bought my Escalade ESV Platinum.

What did you buy it with; bottle caps?

[balthazar]

Money = 'the financial', no?

[David]

1 hour ago, balthazar said:

What did you buy it with; bottle caps?

 

5 minutes ago, balthazar said:

Money = 'the financial', no?

Financial in my mind of thinking is when someone finances said purchase for X amount of years. As one who does not like payments, I save and purchase outright.

So yes, money for a purchase with no payments. Saving to buy what I want rather than just an appliance.

[balthazar]

Most auto loans don't end up costing you much at all in interest- you stand to save untold 10s of thousands on one's mortgage tho. I did just that, but when I looked at the amortization schedule for a car loan, it just wasn't worth waiting X number of years to save the relatively piddling amount of interest.

[balthazar]

You'd save MORE money dropping 1 tier on the trim level ladder and financing it.

[David]

43 minutes ago, balthazar said:

You'd save MORE money dropping 1 tier on the trim level ladder and financing it.

Unless there are certain features that are only available on the upper tier. Sadly, GM has not figured out how to make an auto profitable in an Ala-Cart mode of building.

[balthazar]

^ That's not a 'GM thing'; it's an industry thing.
And GM certainly could be profitable on many models doing ala cart, but they're MORE profitable doing packages.

[ccap41]

I'd say it's a "mainstream/non-luxury" thing. The only brands that truly have ala carte optioning are the Mercedes, BMW, Audi, Porsche, etc. of the world. 

American trucks get kind of close with it but definitely not like the above luxury brands. 

[ccap41]

3 minutes ago, balthazar said:

^ That's not a 'GM thing'; it's an industry thing.
And GM certainly could be profitable on many models doing ala cart, but they're MORE profitable doing packages.

 

debatable, example...https://www.autoblog.com/2018/03/21/2019-ford-fusion-complexity-build-combinations/

[balthazar]

^

When it hits showrooms in late summer, the 2019

Fusion will be offered in 36 available configurations. That's down from nearly 2,000 for the 2018 model year.

...Take the high-volume Fusion SE as an example. It previously was offered with three different gas engines, front- or all-wheel drive, with or without the Sync3 touchscreen, leather or cloth interior, and around 10 options.

3 engines, F or AWD, Synch3 or not, leather or not, 10 options = 2,000 configurations????

[ccap41]

3 minutes ago, balthazar said:

^

 

3 engines, F or AWD, Synch3 or not, leather or not, 10 options = 2,000 configurations????

That's JUST for the "SE". Add in the other trims and their respective configurations and you get 2000. 

Do the math for just the SE configurations and see what you come up with...

[balthazar]

^ Autoblog did the math- said Ford reduced 2,000 combos to 36. Of course, Autoblog failed to define what makes 1 combo different from another. Note the article stated that prior to having 2000 combinations, the Fusion has 35,000. Try and tell me no one has screamed about Ford reducing the configurability of the Fusion to 1/1000th of what it was. I haven't heard a whisper of that.
Wonder what constitutes a 'combination'.

[Robert Hall]

15 minutes ago, balthazar said:

Wonder what constitutes a 'combination'.

Probably as fine-grained as a white appliance w/ gray interior and the optional deluxe floor mats is one combination,  a white appliance with gray interior without the deluxe floor mats is another combination  (trim level and other options being equal). It's all in permutations of options, and to reduce the number of those we see more option packages or bundles and fewer standalone options in many vehicles, fewer color choices, etc.

Edited September 17, 2020 by Robert Hall

[balthazar]

^ Yeah, maybe, but then -being consistent- there's no way the '20 is down to only 36. As soon as you do the engines / screen/ upholstery/ trim levels/ colors, you're way over 36. There's 8 exterior colors and 5 trim levels on the '20 Fusion as it is. That alone is 40, I believe.

I suspect the 'research' on this is sloppy, as usual.

[ykX]

Guys, can we get back to the discussion on hand?  I mean the packages do influence our decisions to buy but the bottom line is how much we are willing to actually spend.

Anyone else wants to voice an opinion?  Usually there is no shortage here of people with very strong opinions

[balthazar]

$50K annual net = $4166/month. 10% of that is a payment of $416. To me, that sounds high vs. the monthly, enthusiast or not.
https://www.cars.com/car-loan-calculator/

The above link is handy. A vehicle sold with 6% sales tax, no trade in, $3500 down at 3% interest would have to sticker at $29,000 to get the 72-month payment to $414/mnth.

So apparently, via the financial standard, that 10% doesn't even get you to the median new car sticker (at $50K income). The average U.S. annual median income was $33,700 in 2018.

Personally, I don't like a 72-mnth plan but might consider it. I would never go higher (84 or more), even tho I have been keeping my daily drivers way longer than I expected to (14 yrs, and 12 yrs).

What tempers the question ["what percentage of one's income should an enthusiast spend?"] is that income and assets aren't the same thing. Some folk have liquid assets which may boost their ability to spend more than their recommended 10% monthly income. Whether they put in a larger down payment, or swing a larger monthly...

After all of the above rambling... I don't know if there's a hard answer to the question.

[ccap41]

15 hours ago, balthazar said:

^ Autoblog did the math- said Ford reduced 2,000 combos to 36. Of course, Autoblog failed to define what makes 1 combo different from another. Note the article stated that prior to having 2000 combinations, the Fusion has 35,000. Try and tell me no one has screamed about Ford reducing the configurability of the Fusion to 1/1000th of what it was. I haven't heard a whisper of that.
Wonder what constitutes a 'combination'.

Then why did you question it? 

It's pretty simple to figure out what a combination is.

FWD, Engine A, Cloth, No Sync, Option 1

FWD, Engine A, Cloth, No Sync, Option 2

FWD, Engine A, Cloth, No Sync, Option 3

FWD, Engine A, Cloth, No Sync, Option 4

FWD, Engine A, Cloth, No Sync, Option 5

FWD, Engine A, Cloth, No Sync, Option 6

FWD, Engine A, Cloth, No Sync, Option 7

FWD, Engine A, Cloth, No Sync, Option 8

FWD, Engine A, Cloth, No Sync, Option 9

FWD, Engine A, Cloth, No Sync, Option 10

FWD, Engine A, Cloth, No Sync, Option 1 & 2

FWD, Engine A, Cloth, No Sync, Option 1 & 3

Etc. 

[balthazar]

I understand 'combinations', but there's no way the definition of it here (how detailed it gets) can build 35,000 combos in '18, and 36 combos in '20. Maybe if everything was made standard in '20 except the brief list above... but the 'at a glance' math doesn't come close to being feasible.

[ccap41]

The only thing not mentioned was paint so I doubt that was considered as a combination. 

[ykX]

2 hours ago, balthazar said:

After all of the above rambling... I don't know if there's a hard answer to the question.

You are right, I don't think there is a hard answer for this question.  I just expect people that are passionate about automotive world to invest more into their passion.  It doesn't have to be something very fancy or very fast.  People can get a cheap off-road vehicle or cheap older sporty car or classic car, and do off-road, autocross, track days, weekend cruises, whatever more inline with their tastes.  I just expect people who call themselves auto enthusiast to show some kind of effort, otherwise they are just an average, maybe slightly more informed consumers.

For example, you might not be able to buy a $50+k truck of your dreams but your are spending your time and money building the car of your dream.  It might be awhile before you finish it but nevertheless you put your time and money into it. 

[balthazar]

Yeah; I've built the Buick all with 'side money', IE; not paycheck money.  I never wanted to be constricted on how/when I spend on it.  I already have about -God I hate to commit this number to cyberspace, but- $20K invested so far between parts & hired labor (my time is free).  That, plus the time span, I think, ironclads my 'enthusiast level'.  Jeez- I took it off the frame / reunited it- most hobbyists never go that far.

Since it's a 'side money' project & household finances aren't involved, it technically doesn't 'count' per the discussion terms as stated, IMO.  I was more so referring to a daily driver / household budgeting purchase.  A dream vehicle should always be more important to the enthusiast than a daily driver, but not everyone can work separating finances like that.

To be honest, I can afford to buy a brand new 'household' $50K truck.... but my fiscal approach is highly resistant to letting me do so.

[ykX]

27 minutes ago, balthazar said:

A dream vehicle should always be more important to the enthusiast than a daily driver, but not everyone can work separating finances like that.

My previous vehicle while not being my " dream car" definitely was a vehicle that combined daily duties and "fun" duties.  And I think it absolutely qualified as enthusiast vehicle.  It required certain sacrifices, but I bought it used and very inexpensive, it served me well in both duties.  However, I have a very long commute and put between 25k to 30k miles a year, therefore getting a nicer vehicle was counterproductive.  I decided that next time around I will have a cheap inexpensive daily and than I will hopefully will be able to get the car of my dream, or at least something else that will be fun if I can't afford the car I want.  I have a side job and my wife agreed that the money from a side job will be my "fun" car money.  So I am saving up now.

[David]

I also think one needs to take in regional income as that plays a big part in how one spends money. Income for the region including job type. 

An example is for Washington state, Average income here is $88,005 a year. You can see a state by state break down of income, job types, etc.

I know many coworkers that plan on hitting their bonus pay and based on bonus pay will then buy the auto they want using the bonus pay as a very large down payment. Thus then financing for say 74 months to have a low monthly payment, but make larger payments to quickly pay it off but if something changes, they still have a low monthly payment.

Then I have coworkers who only see an auto as an appliance and want it as cheap as possible.

Agree with @balthazar that regardless of being an Enthusiast or appliance buyer, I do not think there is a hard answer to this either.

https://www.averagesalarysurvey.com/united-states

[A Horse With No Name]

On 9/17/2020 at 11:40 AM, balthazar said:

You'd save MORE money dropping 1 tier on the trim level ladder and financing it.

Exactly what I did with the Ranger. 

1 hour ago, ykX said:

My previous vehicle while not being my " dream car" definitely was a vehicle that combined daily duties and "fun" duties.  And I think it absolutely qualified as enthusiast vehicle.  It required certain sacrifices, but I bought it used and very inexpensive, it served me well in both duties.  However, I have a very long commute and put between 25k to 30k miles a year, therefore getting a nicer vehicle was counterproductive.  I decided that next time around I will have a cheap inexpensive daily and than I will hopefully will be able to get the car of my dream, or at least something else that will be fun if I can't afford the car I want.  I have a side job and my wife agreed that the money from a side job will be my "fun" car money.  So I am saving up now.

Be curious to see what you get, seriously. 

1 hour ago, balthazar said:

Yeah; I've built the Buick all with 'side money', IE; not paycheck money.  I never wanted to be constricted on how/when I spend on it.  I already have about -God I hate to commit this number to cyberspace, but- $20K invested so far between parts & hired labor (my time is free).  That, plus the time span, I think, ironclads my 'enthusiast level'.  Jeez- I took it off the frame / reunited it- most hobbyists never go that far.

Since it's a 'side money' project & household finances aren't involved, it technically doesn't 'count' per the discussion terms as stated, IMO.  I was more so referring to a daily driver / household budgeting purchase.  A dream vehicle should always be more important to the enthusiast than a daily driver, but not everyone can work separating finances like that.

To be honest, I can afford to buy a brand new 'household' $50K truck.... but my fiscal approach is highly resistant to letting me do so.

....and one reason your new truck will never be in repro when you buy it, unlike so many people.

[ykX]

17 minutes ago, David said:

I also think one needs to take in regional income as that plays a big part in how one spends money. Income for the region including job type. 

Yes an no.  Sure in some states salaries are higher, but usually expenses are higher also.  I know number of people who moved to a different state with same or lower salary knowing that their income will actually increase due to a substantially lower cost of living.

[David]

19 minutes ago, ykX said:

Yes an no.  Sure in some states salaries are higher, but usually expenses are higher also.  I know number of people who moved to a different state with same or lower salary knowing that their income will actually increase due to a substantially lower cost of living.

True, if you can live some place less expensive and still keep your income. Then that also is a bonus. I do hear many companies that have allowed people to change to work from home and they moved also ended up getting their income reduced due to the lower cost of living. Sucks, but that has become a very common comment on the glassdoor web site that tracks jobs / income.