#CarPayment #LivingAtHome #CarLoan
Is it a smart financial decision?
So, you’re considering taking on a car payment while living at home. It’s a big decision, especially as a recent college graduate. Let’s break down some key factors to consider before making your choice.
Monthly Budget Breakdown
– Monthly take-home pay: ~$2700
– Proposed car payment: $375
– APR: 5.5%
– Loan term: 72 months
Considering your monthly income and the proposed car payment amount, it’s important to evaluate how this will fit into your overall budget. Make sure to factor in other expenses such as rent, utilities, and groceries to see if you can comfortably afford the car payment without sacrificing other essential needs.
Cost of Ownership
– 2017 Subaru Outback 2.5i premium
– Mileage: 69k miles
When looking at the cost of ownership for the car you’re considering, it’s essential to factor in not only the monthly payment but also potential maintenance and repair costs. With a used car and over 60k miles, there may be additional expenses down the line. Consider setting aside a portion of your income for any unexpected repairs that may arise.
Long-Term Financial Goals
Before committing to a car payment, think about your long-term financial goals. Are you planning to move out of your parents’ house soon? Will you be pursuing higher education or saving for a down payment on a house? It’s crucial to align your financial decisions, including taking on a car payment, with your future plans and aspirations.
Conclusion
Taking on a car payment while living at home can be a smart move if it fits within your budget and aligns with your long-term financial goals. However, it’s essential to carefully evaluate the costs, including the monthly payment, maintenance expenses, and potential impact on your future plans. Consider speaking with a financial advisor to assess the best course of action for your individual situation.
should you take on a car payment…..maybe……should you take on a 72 month loan? Absolutely not. If you are gonna buy a car buy a used compact sedan made in japan….ie Mazda, Toyota, or Honda get it for under 15k and close to 10k if you can.
You are living at home, you should be able to easily save up enough money to purchase a vehicle in cash.
My advice is figure out what is wrong with the vehicle, more than likely its less to fix than it is to take on a $375 payment. Fix the vehicle and adjust your budget to start saving for a car…..along with your retirement and investing goals.
edit: Living at home in your early 20’s is the best time to start building long term wealth for your future. I would hope that you are maxing your IRA’s, taking advantage of a 401k and building a taxable brokerage account not sending the bulk of your money towards a depreciating assets that will make the shareholders of Subaru financing richer while keeping you poor.
Future you called: they’re begging you not to take out a 72 month loan. You simply cannot afford that!
Also check with your insurance on how much it would cost to insure
What does your career trajectory look like? No one is gonna say a 72 month car loan is smart. I’d try to keep the current vehicle until it just won’t serve you anymore, and work on boosting that income. I went a little over budget on a car when I was only a couple years into my career but by the time the loan was paid off my salary had almost tripled. Turned out to be a good investment in my case because I’ve been payment-free for years and the vehicle has been trouble-free (4Runner).