Im 19 years old and share rent with someone. I make $2,320 a month before tax. My rent is $750 a month and i don't pay for anything else. Would it be a good idea or will i go into crippling debt if i buy a $45k 2014 ford mustang shelby gt500? I am in no rush to buy it. Tax returns will be in sometime soon ish and i can just save for a while. Im thinking about a 10%-15% down payment and a 60 month term. I have no credit at all so idk if i can even get the car. My mother has good credit and can probably co sign. I also understand my insurance would be quite high. Should i go through with it in the next say 6 months or so?

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    In general the answer on this SE is "No". Jan 30 '20 at 10:09
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    Does this answer your question? By 18 years of age, I want a brand new car that's $43,668 Jan 30 '20 at 10:56
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    If you're not paying anything except rent, who is paying the rest of your expenses, and are they OK with you spending that much money on a car instead of supporting yourself?
    – chepner
    Jan 30 '20 at 14:12
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    Insurance for a 19 year old mail driving a Mustang may be as expensive as the car.
    – ceejayoz
    Jan 30 '20 at 20:31
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    The price of the car is not the only thing to consider. How many miles does this car have? You also have to pay for maintenance; oil changes, tires, alignments, etc Jan 30 '20 at 21:58

Should i go through with it in the next say 6 months or so?

In the end, it is your decision, but it would not be wise financially.

First, it is wrong to start with your "pre-tax" income; better start with "after tax". As you write, you get $1900 here. After your rent, you have $1150 left.

Now let's say you have a downpayment of 15% = $6750. Then you have to take a loan of $37500. At 8% (of which I don't know if it is realistic for your area and risk profile), you'd initially pay $266.67 interest per month.

If you want to be done in 60 months, you'd have a monthly rate of about $760. This leaves you with $390, from which you have to pay insurance and gas. And, sooner or later, your car will need inspection, repairs etc.

In other words, your car alone eats up nearly half of your after-tax earnings. If this is what you want, go with it.

The usual advice on this site is: Never borrow money for a car, better pay it with cash.

I'd advise you to save $500 per month (which will be hard enough) and in a year or so buy a decent car for $5000 or $6000.

Or if you still absolutely want to have this car, I give you the advice I already gave to someone else with changed numbers:

Continue working and save $750 a month until you have the $45000. If you do so (which you won't), you will have $45000 in five years. But, to be realistic: you won't save more than, say, $250 for this purpose, so the time will be 3 times as long, i. e. 15 years. Better advice: Learn that you can't have everything you want.

  • I would estimate monthly after-tax income around $1900, not $1500. The income here is low and progressive rates are likewise low.
    – nanoman
    Jan 30 '20 at 12:33
  • @nanoman I updated my answer according to your numbers.
    – glglgl
    Jan 30 '20 at 12:39

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