How much money should men and women spend on cars?

Jezz Bezos' drove a Honda Accord DX back when he was worth $9,000,000,000-$10,000,000,000

(go to 5:00 mark)

1. The purchase price should not exceed 1/4 of your salary.

2. It should be purchased in cash

3. You should drive it until the car is at least 10 years old. So if you buy a used car that's 2 years old, you would drive it for 8 years. A new car you would keep and drive for 10 years minimum.

Other minor considerations: buy base model, shop around, and if you drive under 5,000 miles a year, you may not need a car especially if a spouse/family member has a car.

Warren Buffet also known to drive around a beater car. The low IQ sheep would judge him as a brokie.

I agree with your first two paragraphs. But then, your reference of buying 6 year old BMW is not very smart financially. Even though you bought your used BMW heavily depreciated, it will continue to depreciate heavily. Also, you now have to drive that car around with possibility of expensive repair bills as it’s a 9 year old BMW now.

Sorta this. I buy while it's got some warranty left and the run it as long as it makes economic sense. Last car I bought at 18months old and drove for 12 years. Replaced it in November with a 2.5 year old and will keep it a similar time.

Compare that with the new cost, the cost of leasing or the cost of more regular switching and its easily the cheapest way.

My salary is $150k. My wife stays home and we have 4 children. We have about $3M saved. Our 2 vehicles are worth about $125k. We paid cash.

Congrats, impressive to amass $3mil in semi-liquid savings on $150k salary with 4 kids.

These rules obviously can be adjusted once you reach a certain level of wealth if you like or want better cars. I would say always keep the purchase in cash rule, but the other two you can change once you reach $1mil in savings aka $1mil net worth not including home and retirement.

I don't really care about cars so I am not sure I will ever deviate too far from my rules, but if you have the money and a passion for it, that's totally acceptable.

As little as possible and still get a fuel efficient, safe (for you as well as others on the road), sensible car. It's just a car. And I live by this philosophy though I could buy much more expensive cars.

If you have good credit, buying a car with cash is a bad idea. First, there is no GAP insurance for when you pay cash. If you get hit and the insurance company totals it, you could end up losing a lot of money. Insurers are much more inclined to total vehicles these days as collision repair costs have gone way up. So, you pay $50k in cash for a vehicle. It gets hit. Your insurer pays you ACV of $30k. You are effectively out $20k. If you were financing, GAP would cover some or all of that. Second, inflation is your friend when you take on debt. I bought a car in 2019 and the payments are $450. Inflation has made those payments smaller over the past 5 years. And inflation has been higher than my interest rate. While interest rates have been higher for auto loans, the market is starting to come back to normal and manufacturers are coming out with subvented rates that are very low. And finally, people just don't have the ability to save up that kind of cash. So, financing is just the way to go for most everyone.

I will say that of all the things you can spend your money on, a car is by far one of the biggest money pits. Many years back, you would get more bang for your buck if you bought an import or a higher end vehicle. I remember my dad's Buick Century had an AM radio and no AC. When we went to the mountains in NH, the engine would all but be redlining on steep grades. Today, just about every vehicle on the road has a nice entertainment system, all the acceleration you would ever need and AC. And a lot of safety features are becoming standard. So, when you buy something fancy, you are just getting a bunch of junk that no one really needs and will probably require expensive repairs at some point. So, people effectively throw money down the drain to have a giant Suburban when a minivan at almost half the price will fit your little Cayden, Carson, Caswell, Cassidy, and Corinthia just as well. Same for the overly engineered transmission on a BMW versus a more dependable transmission on a Toyota. And the list goes on of expensive upgrades that really do nothing.

But the worst part of auto financing is subprime lending. The people who can least afford an auto payment have a monthly payment on a 2014 Buick Enclave that someone with good credit has for a 2024 Lexus. Most states allow lenders an "add on" interest rate that lets them go above the 18% usury max. With a 24% interest rate, a loan of $25,000 ends up with a monthly payment that is the same as someone who buys a vehicle for almost $40k at 2.9%.

I have a credit score over 800 and my APR was almost 8%. I only did it to get a $1,000 rebate and paid it off in 3 months. My other car is financed at 1.9% (from 2021) so no rush to pay that one off as I’m earning much more on my cash.

I find driving a real sports car to be one of life’s great pleasures. I don’t golf (regularly), and I don’t own a boat. My “expensive” car was about 1/3 of my salary.

My uncle shares the passion for cars that I do, and now that he’s retired and fairly well off, he can afford practically any production car. However, he is 74 and can barely get in and out of his Porsche. Life is short, drive a great car while you can, if cars are your thing.

I agree that trading in and out every 2 years is a bad idea, but getting a nice car that you really want and keeping it 10 years can be a very satisfying proposition.

If you aren’t into cars, buy a used Toyota.

Guys, pay attention to trim levels. This is how it usually goes:

No one should ever buy a base model. You get cloth seats and an awful sound system. One up you usually get leatheratte/vinyl seats (no thanks, I am not vegan) and a bit upgraded speakers.

Then you have the premium trim where we get basic leather seats and brand sound system. This is usually the one to get.

The top trim more often then not introduces luxury features that seem nice to have, but aren't: moon roof (it will leak at some point), perforated napa leather with ventilated seats (it won't last), etc.

2nd from the top is usually the best buy.

In 2017 I bought a 2002 Honda CRV with 122K on it from my mechanic for $3500 cash. It was my "back up" car but I drove it a lot. I drove it for 6.5 years and put another 100K on it until I sold it for $1500. I always called it my "crappy car" but I sure did love it. It's the car I would drive to the trailhead and leave for all day hikes, when transporting my bicycle to go on group rides, and parking in the downtown area. I also drove it to work which is where the miles racked up. Never had an issue with it. No one ever broke into it because it was an older car. I also didn't leave anything of value in plain sight. I sure miss that car.

How much did you spend on oil changes or brakes or tires or shocks or coolant or other maintenance?

Just typical routine maintenance at average prices. Never needed to replace the shocks.

for real, it makes no sense... "its embarrassing that others buy expensive cars as status symbols, so i bought a slightly used expensive car from a luxury brand that's expensive to maintain"

Honey, but before I became a content creator on OnlyFans, all we could afford on your salary was the ‘94 Chevy Lumina your grandma gave us.

No. I am an engineer. I counted the amount in my 401k and our Roth IRAs.

You can't afford a super expensive car.

Honey, you know that we weren’t able to put much into the Roth IRA until Flagpole showed me the back door trick for my OnlyFans earnings.