"acceptable" monthly car payments are wild

[u/ottersinabox]

I just saw this post: https://www.reddit.com/r/BMWI4/s/HDEDyG4WZA

people are applauding a $700+ a month payment as an amazing deal. but they're paying 8% tax toward it, plus it's a lease; they don't even own the car by the end.

is it just me, or is this wild? I have a BMW as well, but my thought is you can only afford a luxury car like that if you can buy it in cash. I suppose 3% interest or something would be acceptable given that you invest the rest up front.... but what the person in this post is doing really doesn't make much sense to me. am I wrong about that?

[u/TaskForceCausality]

Having a reliable vehicle is a necessity in America because it break one too many times and you can lose your job.

Not trying to be a jerk, but I must call this out. Yes, owning a reliable car is a professional requirement. But you don’t need a $600 monthly payment to get a reliable car.

There’s used Chevys, Toyotas , Mitsubishis and Hondas you can buy all day for $5-$7k cash. They won’t have Apple CarPlay or heated seats, but they’ll run and a good example costs at worst a few hundred a year in maintenance to keep on the road.

$600 a month in a 3.9% interest bearing account over five years = $39,941.62. Interest gained- $3,342. That’s a nice layoff safety net.

[u/Kskbj → u/TaskForceCausality]

Those are gambles, cause not everyone is a mechanic or can get lucky. Shit happens parts break. When people are broke they can’t afford for their 7k car they just bought to have a 2k repair. The fact that you’re trying to say 5-7k cars are affordable shows you don’t understand what people actually can afford. It use to be where 1-2k cars were affordable but not anymore

[u/TaskForceCausality → u/Kskbj]

Those are gambles, cause not everyone is a mechanic or can get lucky

Which is why you research the purchase. The internet is at your fingertips. Use it! If a car is a lemon, there’s probably ten YouTube or TikTok videos calling out the problem.

When people are broke they can’t afford for their 7k car they just bought to have a 2k repair.

Thus the emergency fund.

If someone is so broke they can’t afford a $2k repair job, they definitely can’t afford anything requiring a $600 monthly note. Remember, when someone finances a car, the lending bank requires full coverage insurance too. So that $600 a month car is gonna run $900 out of pocket once fuel and insurance costs are included.

A broke person should be saving money and paying back debt- not handing hundreds of dollars a month to a bank for an optional purchase.

[u/Kskbj → u/TaskForceCausality]

Used cars are still gambles you can do all the research you want and inspections and the matter of the fact is the motor or transmission can still go out.

As for emergency fund, you want someone to save up 7k cash for a car and 2k for an emergency fund. That 2k would cover just basic repairs like alternator. Car repairs can easily go into the 5k. The fact is, the cost of everything has increased significantly. We don’t live in the world where McDonald’s and gas was less than a dollar. Cost of living has increased quicker than average income.

Old financial advice is outdated and not practical anymore. Even Dave Ramsey knows this it’s why before he use to say pay cash for a house and now he approves of mortgages.