[CnoteMD]

Originally Posted by Ghunger

Everyone's situation is different though. Personally, I'm taking the pay cash for a 330 then save for a downpayment on a house approach. That way I won't have to worry about car payments while I'm paying for my house. Also using the car as collateral for a small new car loan is an easy way to get a great credit history so you can get better loan offers. Like I said, everyone's different.

I don't really understand the logic in paying cash for a car before saving for a downpayment. That money would be much better spent on the home first. After you move into your home, then you can better judge if the car is within your budget. I waited 6 months after moving into my home before buying my E90.

I don't know what real estate prices are like in your area, but I had to place buying a home at the highest priority. Prices were rising so fast that another buyer offered me $50k to back out of deal for the home I was about to purchase (my offer had already been accepted and I was set to close in 20 days). In the past year, average prices in this building have gone up almost $200k.

I probably waited longer than some to buy a BMW (I'm 31), but it will pay off in my long term financial plan. In my line of work, you get used to delayed gratification.

[E90-4life]

what do you do?

I say you followed an excellent plan CNoteMD

[CnoteMD]

Sorry, I just realized I left that part out. I'm a physician.

[Ghunger]

Well CnoteMD, I'm not saying the way you did it was bad, but I don't see what's so bad about the path I'm taking. Being able to buy a car with cash but taking out a small loan on part of it lets me start my credit history. The car, which I need anyway, provides a good source of colateral for a small (~5% of total cost) loan. The price of a house is mostly the type of rate you can get and the amount you can afford in payments so paying cash for a car doesn't really hurt my house buying potential except for the amount of down payment I can make and the loan will give me credit history which will help on the rate. Maybe that's TMI but I thought I'd explain myself and hopefully show that everyones situation is different and you can't always make generalizations.

[E90-4life]

Originally Posted by Ghunger

The car, which I need anyway, provides a good source of colateral for a small (~5% of total cost) loan. .

No one needs a BMW bro.

[Ghunger]

So just because I need a car I should have bought a Kia?

[E90-4life]

Originally Posted by Ghunger

So just because I need a car I should have bought a Kia?

exactly!!!

I'm messing iw/ you dude, relax.

[Ghunger]

I was being sarcastic also, hard to tell with typing
When I said need though, It's not like I meant it was purely a utilitarian decision. I do love driving.

[E90-4life]

Originally Posted by Ghunger

I was being sarcastic also, hard to tell with typing
When I said need though, It's not like I meant it was purely a utilitarian decision. I do love driving.

So do I. After the car I have now I probably won't buy anything else but either a BMW or Porsche. After driving a BMW for the first time a while ago, somehow another car managed to turn me against my own. Kinda happend an even longer time before that when I drove a 996TT a few years ago... but that's an even longer ways off... for the immediate future.

[CnoteMD]

Originally Posted by Ghunger

Well CnoteMD, I'm not saying the way you did it was bad, but I don't see what's so bad about the path I'm taking. Being able to buy a car with cash but taking out a small loan on part of it lets me start my credit history. The car, which I need anyway, provides a good source of colateral for a small (~5% of total cost) loan. The price of a house is mostly the type of rate you can get and the amount you can afford in payments so paying cash for a car doesn't really hurt my house buying potential except for the amount of down payment I can make and the loan will give me credit history which will help on the rate. Maybe that's TMI but I thought I'd explain myself and hopefully show that everyones situation is different and you can't always make generalizations.

I would highly recommend speaking to a mortgage specialist about your planned scenario. I don't know your specifics in terms of age, length of credit history, etc. Surprisingly, the credit score requirements for mortgages are often lower than for a car. Most low interest auto financing or leases require at least a score of 720 or higher, but a score of 650 can get you a top tier mortgage with no money down! In fact, if you plan on putting a significant amount of money down on your home, you could even consider a low-doc or no-doc mortgages.

Most mortgages companies will have higher regard for $40k sitting in the bank compared to $40k sunk into a car. Also, taking out the small loan won't too much for your credit history unless you have made a significant number of payments prior to purchasing your home. And even then, the payment will work against you in terms of debt to income ratios. Typically, when you want to buy a home it's better to eliminate as many other payments as possible and while maintaining as much money in cash reserves (i.e bank, investment, and retirement accounts) as possible.

I'm not saying that your plan won't work. But there are better ways of going about buying a home.

[BMW786]

Originally Posted by ward

if you're living with your parents 2 years out of college to "save money" why are you buying a new car?

everyone's situation is different, maybe you're needed at home to help with elderly parents or something and I'd commend you for that. Outside of that, I think most would rather have their own place and an 04 Audi, than still be at home with an 06 BMW

I think it depends where you are in your life. I also just graduated from college last year and started a well-paying job. I would rather buy a new BMW than invest that money in a house. It may not be the most "practical" thing to do, but buying a car is an emotional buy - it can't be quantified in just dollars and cents.

I'm still living at home, but I contribute to the household expenses every month...I mean, if you're getting married, want to start a family, then yes I would see the need to buy a house and move out, but I'm still young and single. If I went the other route, who knows when I would be able to afford a BMW....

[Ghunger]

Trust me, I understand what you're saying Cnote but creditors just don't like seeing length of credit history = 0. No matter how much you have in savings or how much you make in a year. While I'm building credit I'll be saving for the down payment and I figure it'll work out just about right. By the time I buy the house I won't have any debt again.

[geeslice]

Yeah I have no reason to buy a house. One bedroom condos where i live is in the 500's and if I wanted anything that was actually nice I'd have to spend more. I don't see any point to moving out when my options are to buy a condo at a ridiculous price when the housing market is finally calming down or paying 1500 a month in rent. I'd rather stay with my rents until my friends have saved enough and split a two bedroom...

As for the car in cash issue I don't really care how smart it is to do. It was worth if for me knowing that I don't have a car payment each month and am not in debt.

[CnoteMD]

Length of credit history = 0? I guess that would be a problem for making a major purchase like a home. There are two scenarios that come to mind. Either you were the one of the few college students that didn't get caught up in credit cards once you arrived on campus, or you just moved to the US.

In either case, starting with a car loan may be the way to go. Because your credit report will report the original loan amount, in order to establish credit, consider taking out a loan for say 80% of the price of the car and pay it off early. I would also get a credit card and use that for all your purchases. Just pay in full each month to avoid interest. Within a year or so, you should have reasonably established credit.

Best of luck.

[Neil]

I am 27 and have been very good at saving money. Retirement is a priority for me because I have learned about compounding interest. Now I could be driving a Porsche, M6, with my savings but like was said it is about priorities and the car is taking a backseat right now to a house, retirement, and business. When I am satisfied that I am in good shape with all three of those I will move to the car.

[E90-4life]

Originally Posted by BMW786

I think it depends where you are in your life. I also just graduated from college last year and started a well-paying job. I would rather buy a new BMW than invest that money in a house. It may not be the most "practical" thing to do, but buying a car is an emotional buy - it can't be quantified in just dollars and cents.

I'm still living at home, but I contribute to the household expenses every month...I mean, if you're getting married, want to start a family, then yes I would see the need to buy a house and move out, but I'm still young and single. If I went the other route, who knows when I would be able to afford a BMW....

Not knocking you, but you're very much in a youthful state of mind.

[SoCaLNaTiVe]

It was hard enough for me to get a car loan. Id get laughed at if I tryed to get a loan on a house. Even with a great credit score. I am young, and one thing told to me about buying a house in the future is to have a good set of continued payment on something. Like my BMW that I make my payments on. The credit union even told me they didnt care what I made a month I didnt have enough proof I could continually pay monthly payment. Just my .02 and thats why I bought a BMW first before my house. Plus I dont plan on even thinking about a house untill I am 27 or so.

[Enroutte]

Originally Posted by CnoteMD

I don't really understand the logic in paying cash for a car before saving for a downpayment. That money would be much better spent on the home first. After you move into your home, then you can better judge if the car is within your budget. I waited 6 months after moving into my home before buying my E90.

I don't know what real estate prices are like in your area, but I had to place buying a home at the highest priority. Prices were rising so fast that another buyer offered me $50k to back out of deal for the home I was about to purchase (my offer had already been accepted and I was set to close in 20 days). In the past year, average prices in this building have gone up almost $200k.

I probably waited longer than some to buy a BMW (I'm 31), but it will pay off in my long term financial plan. In my line of work, you get used to delayed gratification.

i totally agree with you. being in high school, i sometimes get caught up in the superficial things such as handbags, cars, etc. my parents have always told me though, that when i get out of college and i start to make money, never go for the car first. a car ISNT an investment, a house is. always buy the house first, and after u have your house, go buy a car.

my mom has coworkers are who making 6 digit figures and have just bought gorrgeouss houses by themselves, but drive an acura integra. they took tehir money and put it as a downpayment on their house, rather than put it into a car that will depreciate in value as soon as u take it off the lot.

when i get out of school and im making money, i will definitely NOT be buying a car first. house comes first, car comes after. as long as youre not left driving some 85 geo metro, i dont think buying an expensive car as your first choice is a smart move.

[Ghunger]

Originally Posted by CnoteMD

Length of credit history = 0? I guess that would be a problem for making a major purchase like a home. There are two scenarios that come to mind. Either you were the one of the few college students that didn't get caught up in credit cards once you arrived on campus, or you just moved to the US.

In either case, starting with a car loan may be the way to go. Because your credit report will report the original loan amount, in order to establish credit, consider taking out a loan for say 80% of the price of the car and pay it off early. I would also get a credit card and use that for all your purchases. Just pay in full each month to avoid interest. Within a year or so, you should have reasonably established credit.

Best of luck.

Close, I've always used debit cards and have never had to take a loan out for anything yet. I paid cash for my first two cars and had scholarships and savings for college. Trust me, it's frustrating to have a nice job and plenty of money saved up but no one will give you a line of credit for anything. I even had to get a secured credit card. It's a start though... Was buying a BMW the best financial decision I could have made? nope. But all work and no play.

[E90-4life]

Originally Posted by Enroutte

i totally agree with you. being in high school, i sometimes get caught up in the superficial things such as handbags, cars, etc. my parents have always told me though, that when i get out of college and i start to make money, never go for the car first. a car ISNT an investment, a house is. always buy the house first, and after u have your house, go buy a car.

my mom has coworkers are who making 6 digit figures and have just bought gorrgeouss houses by themselves, but drive an acura integra. they took tehir money and put it as a downpayment on their house, rather than put it into a car that will depreciate in value as soon as u take it off the lot.

when i get out of school and im making money, i will definitely NOT be buying a car first. house comes first, car comes after. as long as youre not left driving some 85 geo metro, i dont think buying an expensive car as your first choice is a smart move.

I hope you stick to that, and those are words of encouragement. Not to sound emo. LoL.

[younghov85]

Originally Posted by E90-4life

Comes a time in life where you need to asess exactly where you're at and where you wanna be in another five years(whatever you're looking at for the short term/long term, whatever.

I was flipping through an 06' 3er brochure last night, and my mom was sitting across the way staring at me as I'm page flipping. I said, "you know this is my next car right?" She goes, "I bet you had better get through college first before you start thinking about that 'next car'." No rebuttle for that one, because as always mom was reading my brain and seeing "damm, I want this car A.S.A.P." - Granted I could probably buy this car sooner than later, priorities are priorities, and I'm most certaintly not going to jump in pool w/ no water. The pain in waiting, but I think being a college graduate and established in my career will be far more satisfying than "living it up" right now. Not a jab at anyone, just speaking from a personal space.

I went through almost the same, telling my mom that I wanted an STS after my car was almost finish with its payments. She then was like I need to focus on getting good grades for med school, or that will be my last good car. Ever since I havent metioned cars to her, but instead chemistry.

[E90-4life]

Originally Posted by younghov85

I went through almost the same, telling my mom that I wanted an STS after my car was almost finish with its payments. She then was like I need to focus on getting good grades for med school, or that will be my last good car. Ever since I havent metioned cars to her, but instead chemistry.

You know I look at a lot of people in great places in life(weather they be happy w/ where they're at and what they're doing, or sucessful in terms of what they've been able to accomplish in their line of work) and all the way, these people have experienced delayed gratification, going through tough times, etc. There's no recipe for sucess, it's just recognizing the riches when they come your way, having ambition. Point is, there's a time and place for everything and longing for what you don't have doesn't get you to that place any quicker. On top of that, attaining material possesions when you've prized them as a goal has the potential to be bitter sweet when you finally get it, whatever it is. It's the experiences in life, I am learning, that I treasure more than anything, along w/ the good people that are intertwined w/ them.