New answers tagged

-1

Owning a new Q5 when you make a "whole" 30k £ a year in the UK, would be a fatuous as someone from silicon valley writing that they are making a "whole" 73k $ a year and want to buy a base model Ferrari. One wouldn't be able to wash a Q5 on 30k a year in the UK, unfortunately.


-1

I think you should go ahead and do it. If you buy something else, you will yearn for the car you didn't buy, and be waiting until the the car you do buy wears out so you can finally get the Q5 (and maybe be too old to enjoy it). Paying a third to a half of your income on a car is a terrible idea, but if you're willing to pay it, maybe you should just go ...


1

A lot of answers already, but I think something is missing still: Total cost of ownership. Most of the posts go over this in some degree of detail but I would advise you to play around with different options and see for yourself what exactly you are looking at. You can find some helpful online-calculators like this one for the uk but keep in mind some costs ...


2

I'm surprised nobody else has mentioned the open secret to buying a luxury car: certified pre-owned (US terminology) or approved used (UK/European). Audi UK has such a program. Lots of people don't want to own a new luxury car, they merely want to drive a new luxury car, so they lease a brand new one for a year or two (I am not recommending you lease a car, ...


3

You already got good answers, but I'll add mine as well to convince you that buying a new car is a bad idea, because you already suspect it. I understand you, I'm 23 and just recently bought an Audi TT mk2 and I'm loving it, but I bought it for £6k so it's a lot more manageable than let's say 30k. My advice for you is: find a good used car that you would ...


1

Pretty common budget advice involves the 50-30-20 rule, where only 50% of your post-tax take home pay is spent on needs, which once you've signed for a loan will become mandatory to pay on. Include insurance and fuel, and this leaves you not much for food/rent/bills. (The other 30 is for wants, and 20 for savings.)


54

Personal experience- I did the math. I had enough. I bought the car. I LOVED that car. I had FUN. Nothing went wrong. I paid everything I had to as it was due. Luck was on my side. At the end of 5 years it was paid off. I had a 5 year old car. My buddy had a similar job paying about 10% less. He didn't buy the car. Instead, he bought a cheap ...


7

From a personal perspective, learn from my mistakes. I'm 26, I bought a new car 3 years ago, in a very, very similar situation to yours. But 3 years later I'm making almost twice the money, live several thousand miles away, and regret nothing more than this car payment. My cost of living has more than tripled in the same time my income almost doubled. I ...


1

You might want to talk to my grandson, who did buy an Audi for lots of money when he was quite young, and while the car itself was fast, it was a millstone round his neck for many years. He enjoyed it for six months and regretted it ever after. If you want to buy in February, you can get a decent used Audi for say £10,000. Not a Q5, that will be more like £...


0

I agree with the other posters that this is a bad idea and you know it. But one option that hasn't been pointed out if you are absolutely dead set on this car is to just lease it year to year? (new or preferably used) your monthly payment will likely cost much less and you wont have to worry about long term upkeep once it inevitably needs additional work ...


5

From a psychological point of view, the fact that the title of your question ends in an exclamation point tells me that you already know this is a bad idea... From a financial point of view, as a very general rule of thumb you shouldn't spend more than a third of your annual salary on a vehicle. So without thinking about anything else, I'd advise you to ...


18

There is similar question By 18 years of age, I want a brand new car that's $43,668 But because of the deposit and young age I think it deserve new answer so more people can use it. Your whole plan is based on two assumptions: you're not spending a lot of money on bills your work situation is stable. So let's go through basic calculations. You're ...


112

You are talking about spending about a third of all your money on a car and committing to do so for the next 4 years. As an 18 year-old you have a tidy disposable income and few expenses. But the one thing that is certain is that your circumstances will change, even over the next 4 years. It is a terrible idea. As a simple example, you could: a) buy ...


8

For an objective answer, look at two things: How much interest you'll be paying over the life of the loan How much the car will be worth after 4 years when your contract expires (look at current 4-year-old Audis as examples). My guess is that you will be paying much more in interest that you realize, and that you will be underwater after 4 years, which ...


37

The answer, of course, is "no" to the Audi. But you already knew that. I applaud your willingness to ask the question. Here is a decent article: Opinion: The road to riches is this simple: Drive a crappy car


0

Such a product does not exist in the insurance industry because the product you describe is not insurance, you are describing an option. Effectively, you want to purchase the right to sell your house at the price you paid or greater. To simplify, insurance is protection against scenarios in which there is downside only, such as someone stealing something ...


0

Investors in Europe may be looking for more yield and that can be found in emerging-market government bonds. Then if the bonds are issued in euros instead of dollars then that is more convenient. Also the emerging-market issuer of the bond in euros pays a lower interest rate than in dollars. However, there is still an interest rate spread between the euro ...


0

Because by insuring yourself against currency fluctuations, EUR debt costs exactly as much as USD debt. If you live in US, you obtain your salary as USD. Thus, by borrowing any other currency, you should ideally insure yourself against currency fluctuations. Guess what? If EUR debt rate is 1% and USD debt rate is 4%, the cost of the insurance is 3% per ...


2

It almost always makes the most sense to borrow in your home currency. The reason that there are different interest rates is because there are different inflation expectations. In this case, a lower EUR interest rate means that inflation is expected to be lower in Europe over time than the US. So let's look at it from a US homeowner's perspective. They are ...


2

My kids have asked me once or twice to cosign for something, and the answer is an absolute NO. Under no circumstances will I ever cosign for anyone. If you followed this site, there are plenty of questions from people who made the mistake of co-signing and suffering the consequences. Legally, there is no such thing as "co-signing". In reality, it means ...


2

We don't have enough info for this specific situation, but here's a checklist to follow: Emergency fund Depending on the difficulty of finding a job, save 3-6 months of living expenses. High-interest debt Credit cards, personal loans, anything over 10% APR needs to be reconciled immediately. Tax-advantaged accounts After high-interest debt, you should ...


3

juhist has a good answer, but it's only part of a full answer. Saving You should save a couple thousand so you don't rack up credit card or other debt due to everyday living expenses plus unexpected bills. You don't want to go broke because of car repair, health care bills, or something else you might not be able to predict or prevent. What you make after ...


25

Don't buy a condo, that would be kind of a horrible idea, even if you can qualify. If it was me, I would stick it in a boring savings account, something like Ally. Once you graduate, get settled in potentially a new location, I would use the money to pay off your student loan. Until then, the money becomes an insurance policy to make sure you have ...


31

Reduce your loan. Currently, stocks are especially in United States rather highly valued. If you subtract taxes, you probably won't exceed 6% per year over 10 years. By reducing the loan, you are having an investment that guarantees 6% return. See your situation like this: you have an investment with 6% guaranteed return. Most people don't. Now invest in ...


0

The real issue likely is whether you can trade in your car if you keep the loan, not whether you can keep the loan if you trade in the car. If you have a car loan, then they probably have a lien on the car, so when you try to sell it, the dealership will notice that you don't have a clean title. If you don't pay the loan back, then the bank can repossess the ...


0

You got the low rate most likely because you bought it from a dealer as an incentive for you to buy their car. No bank I am aware of gives 1.9% loans right now. If you buy a house, the loan uses the house as collateral. You can sell the house and in some cases the bank will let the new buyer continue paying on the existing loan. This is not what you are ...


3

The reason why you owe more than the car is worth is due to the long term of the loan. The longer the term the more likely you will be underwater. The used car price is dropping due to the age of the vehicle, not just due to the mileage of the vehicle. The lender will require you to pay off the loan completely when the vehicle is sold. The car is their ...


-1

I would just ask the provider of the loan for their policy on this.


2

You asked a slightly different version of this question on meta. For the sake of completeness, I'm going to largely answer this question by cutting and pasting material from that one. This is an interesting question because it allows for exploration of a larger topic: how do "the authorities" know the transaction had happened? Would the IRS, if they had any ...


4

Let's keep it simple: The money is a gift to the couple from the WKP. No income tax should be owed by the couple. The WKP, however, would owe gift taxes at the very least, and perhaps would face investigation over what kind of income the money was to them before they gave it away. It's possible that if the WKP has an unpaid tax bill, the IRS could go after ...


2

The question conflates loans like bonds with loans like mortgages. A bond works like the example, borrow $100,000 and pay $10,000 in interest each year. At some point, the borrower has to pay off the $100,000. A mortgage is named such because the loan dies or ends (mort = root for death in romance languages). It is designed to have a constant payment ...


0

No, the low initial repayment fee is not how typical loan works. In fact, such loan repayments scheme is a leverage tool to encourage property flipping activities for under-development property to fuel property bubbles. Using the $100k loan 10% interest 10 years loan for example, for a property that is still in development and only complete in 2 years, ...


0

What are some of the reasons a lot of loans work like this now? Very simply: Regulations. You won't find a loan where you get quoted an amount as interest. You won't find a loan where you get quoted a percentage as interest. Loans were regulated (to be more transparent) to advertise Annual Percentage Rate (APR). Further, banks were regulated on the way ...


1

In a comment, you provided the following statement - which I feel is critical to understanding where your logic is breaking down (when compared to typical modern lending practices): You can stretch the repayments over multiple years and still keep the same amount The point you're missing is that interest is presented as a rate. It has a numerator and a ...


7

For example, for a 100.000 loan with a 10% interest, basic logic would imply that you have to pay back 110.000. No. The interest rate is usually given per year, so for each year I owe you 100,000, I owe you an additional 10,000. But I don't owe you the full 100,000 all time long. If I pay you 20,000 at the end of the first year (10,000 interest and 10,000 ...


10

Criteria would be the ability for him to ... see the remaining balance. For just the two of you, a shared Google spreadsheet is far and away the simplest path to satisfying this criterion, while dwizum's answer handles the other two. EDIT: presuming you aren't charging him interest, here's an example spreadsheet.


4

One option is to talk to a local bank or credit union, and see if your plans would integrate well into their online banking tools. You may be able to kill two birds with one stone - get him on a plan to pay you back, and also get him some exposure to "real" banking tools. For instance, my credit union has a tool in our online banking platform that lets you ...


4

I think you can safely pay it off. From your comment I see your emergency fund can cover 6 months of bills, and one of those bills is a car loan that you would no longer need to include in your emergency fund if you paid it off, so once you have 6 months or less remaining, then paying it off is mathematically correct if your interest rate is greater than 0%. ...


5

In this case, it likely makes very little difference, assuming you have your emergency fund earning ~2% interest the difference between paying your car loan off now or monthly over 7 months is just a few dollars. Are you comfortable reducing your emergency fund by $3k now to save a bit of interest? If you lost your job tomorrow would that $3k reduction ...


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