Dewinator

Sure, but extrapolating those same average (nominal I'm guessing) returns into the future with interest rates the way they are is just not realistic.
I agree!

Dyim

Assuming you are actually consistently making 12% return. You are netting 10.25 % of that 200k which is approximately 20k a year. Should be chump change for someone that can afford a 300k toy.

Easy to make 5%, 10k a year off your 200k. Not big numbers. Might be worth it for some. Easier to pay cash IMO.

Bradley Scott

I don't believe interest rates aren't going anywhere for the foreseeable future.

Dewinator

Me neither! That's why I don't think you can look back to the 80s and use it as any kind of guide for your financial planning.

subshooter

I completely agree! It's not the gains you make that matter; it's the gain you make after tax and inflation is taken into consideration. I would be pissed off if I was in the 50% tax bracket even though I made 15% a year - if inflation was 14% a year like it was in the early 1980s. That's only about a 0.5% real rate of return.


Realistically today, a 6 - 8% annual average gain with a 2% inflation rate and 50% tax rate still gives you about a 2.5% real rate of return. That compares to a net wage growth of most Americans over the past 30 years which is zero. Compound that difference over time and it is pretty good. Hence the perception (and reality) of income inequality growth.

c_Gio

Sorry for going dark. Since I've been gone this thread has gotten weird. In my case, the payment was about the same either way (PFS or US Bank) but US Bank = lower residual & lower MF. This wouldn't matter to some folks, but in my case the idea of cheaper money and owing less at lease end--since I intend to buy the car--was a win.

TAL2GK

I'm curious what the stats would be for what percentage of a person's annual income is typically spent on a vehicle. And how that number changes per brand.

Taking a wild stab in the dark here:
Chevy might be 50%? Average income of $60k buying a $30k car.
BMW might be less. Average income of $90k buying a $60k car.
No way an average Porsche owner is pulling $440k. Several? Sure, but not average. Certainly not median.

I earn a strong living, but am financially conservative. I tend to want to pay for big purchases like this in very short time periods, if not all up front. But the points about the financial wisdom of allocating money up front in an environment where you can borrow money at <2% is questionable.

I'm curious what the forum thinks about the percentage of annual income vs. car purchase by make is. I don't know that the actual stats exist, but we can speculate.

c_Gio

Paying cash is awesome. We also don't know how long we will be around... Young people die every day and George Burns enjoyed a daily cigar.

Nothing wrong with not buying a car that will make you happy until you can pay cash. I imagine 911 + no payment would be amazing. Also nothing wrong with leasing, borrowing, doing whatever you can to drive a 911 during your short time on earth.......

golfnutintib

its also possible you may not die young, but rather, live to a ripe old age... important not to run out of money then and have a good lifestyle in those golden years too... that's the other side of the coin... so while i see your point, i think you'd agree that it's actually all in the managing of the balance/moderation

we are all products of our life experiences and of the lives and times we have witnessed... for people who go for it and take risks in spending greatly in advance of their earnings and wealth accumulation, i say good for you, i hope it all works out... but it's not for me... while we cannot predict the future, i am planning and hoping to live a long and prosperous life, and i believe a more financially conservative approach (while certainly enjoying each day and every experience, and a few nice cars ) is a wiser path... but hey that's just me...

parealtor

What happened there? Thompson only bought Holberts a year or so ago and now they took VW and left? Had my Audi there for service the other day and it was depressing. Thompson certainly seemed to have their stuff together. Sloane didnt impress. BTW.. I too am in Bucks county. Yardley area.

subshooter

This is an easy question to answer without any of us providing personal salary data and specific information.


I am sitting at a bar in Atlanta GA tonight. I ordered a beer for $8.00 and didn't think anything of it because it is such a tiny percentage of my annual income that I wouldn't notice. The guy sitting next to me probably paid 10X as much relative to his annual income even though he ordered a Bud Light. We both enjoyed our beer even though he was dressed better than me. lol (seriously)


Do you think that Warren Buffet pays the same percentage of his income for his cars as we do? No way. It's tiny for him.


The more you make, the less the necessities become or even the extravagances of a Porsche.


....and to keep this on topic, I am taking a 991.2 out on the PEC track tomorrow at 9am. I am going to hammer the crap out of the car and scare the **** out of the instructor.

Dewinator

I may not be as financially conservative as you, but there are certainly tons of people out there that take the "live for the moment" approach way too far. I dated a chick a year or two ago that drove a brand new Lexus but couldn't pay her cell phone bill. I eventually had to give up on it but omg that titty meat was fantastic.

Dewinator

I also love the good beers. I have no problem paying $30 for a Black Tuesday or Eclipse, but not because of the price relative to my income, but because it's worth it.
I get your point, but Warren Buffet pays less in absolute terms than all of us too because he drives like a Camry or something and lives in a tiny apartment.

KenTO

The average income metric can have huge variations based on personal circumstances. For example, my "personal income" is very low, because most of my earnings stay inside a professional corporation. I'm probably one of the "poorest" people to order a Porsche based on annual personal income.

As for leasing vs buying outright I contemplated both, and decided on leasing for two reasons: I change cars every 3 years and leasing is a convenient way to return a vehicle, and residuals for cars like Porsche are highly affected by any minor accident history. One minor accident can make the car almost impossible to sell without a huge discount. With a lease, it's the dealer's problem.

R_Rated

Most financing would have to give this information and a high percentage proving it for the size loans. Cash buyers likely not but in the automotive world, manufacturers market mid range and up cars to buyers with 3x to 4x income of the cost of the car.

Data suggests that someone is typically 300-400K income to buy a new 100K car.