How much to spend monthly on a vehicle? (LA)
I know that a lot of you live in NYC/don't need to own a vehicle so disregard if that is you.
Starting as a Corporate IB analyst this summer in LA and am in need of a new vehicle to commute from Orange County to Downtown (approx. 35 miles and only 2-3 days a week in office). I currently drive a shitbox that might have a trade in value of ~$2k if I'm lucky.
Car market is pretty tough right now (especially used) with many of the lots near empty or only having the most expensive trims available.
How much of my monthly post-tax income (%) should I realistically be spending on a car payment in this market? All-in pre-tax comp for the year should be $110k-$120k and I will only be paying ~$1k a month for rent.
Looking to buy a new car that will retain its value relatively well for the next 3-5 years and something that I actually look forward to driving. Let me know if you have vehicle any suggestions as well!
I just bought a new car, Overall, I followed the 20/3/8 rule - Which is 20% down - must pay off in 3 years - and no more than 8% of take home goes to a car (I bent this rule a bit to get something that will be more beneficial to me). I plan to pay of a good chunck of the loan with my bonus coming up.
Generally - I was driving a Subaru with 215k+ miles on it and things were just starting to fall apart. Bought a new midsize truck and love it. it fits my life style very well and when I was looking at the market it was actually the same / cheaper to go new - but I had to wait 8 months to get an allocations for the vehicle.
Is this 8% annually to car payments?
Yes. 8% of take-home pay can go to a car.
$80 per thousand - I extended this to closer to 12% - but I also save 30% of my take home and live debt free otherwise. Like I said my truck suites my lifestyle much better than a smaller 4 door would - so I was willing to stretch as my vehicle is also part of my "fun" budget per month.
I think it generally depends on what you want and value. IMO, don't go luxury - but rather buy something that suites you. Sounds like you are going to get something more for commuting so I would just get a good 4 door sedan. May I recommend the Subaru Crosstrek? Seems to hold their value well.
Wait.. why? Are you sure you want to drive THAT much? 35 miles can be utterly brutal down here in Southern California. Have you looked at living in Pasadena/ Arcadia area if you don't want to live in DTLA? Orange County is quite far, your life will suck for those days you commute into the office.
Yeah that seems like a long way. 35mi could take a long time in that area.
Yeah, I know that the commuting days will be brutal, but I'm not a big fan of LA and rent there would be substantially higher, even with 2-3 roommates. I got a good deal on rent with by staying in OC so that's what led me to my decision to stay here for at least my first year.
Yeah OC is a pretty cool area. My sister lives in San Clemente. It’s nice you only need to drive 2-3 times per week. It could be 3hrs behind a wheel per day. Maybe you should consider a car with self driving like a Tesla. Let us know how the drive works out for you. I’ve been stuck in LA traffic before and it’s brutal.
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