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Buying first new car, advice on my perspective

So I am itching to buy my first ever new car. But here’s something I am struggling with: the price tag.

I don’t make a lot of money (about 30-35 k) per year, and I’m a single person so I don’t have a lot of financial obligations other than for myself. But I’m eyeing some cars that I really like and they are price tagged at around 40-55k. Now, obviously, I know that I am shopping out of my range. I should probably be aiming for cars that sell at around 20-30k. But is this a reasonable perspective to have: If I buy a car that costs me 50K, I’m not really spending 50K because when I resell it later, I’ll be expecting at least 50% of it back in the resale value because I may not own it for longer than 3 or 4 years OR it will have very low mileage on it
(about 50,000 km or less). So in the end, I’m really only spending around 25k.

I don’t know, but that’s how I reason it to myself to make me feel better that I’m not actually going to spend 50k on a car because I’ll get at least half it back when I resell it.

Is this correct in thinking like this? (of course there are other expenses like gas, insurance, maintenance, taxes) but I mean just from the price tag cost to when I resell it, the difference should only be about 25k in actual money spent to buy this car. I am also aware that cars are not investments but liabilities and value of cars go down a lot. The cars in this
range that I am looking at however are not cheap cars and usually do maintain their value pretty well even after 3 or 4 years.

Please confirm or correct my way of thinking.

There is a great recent thread on this site titled “Upside Down”, that is written just for your line of thinking:

The approach you’re considering always looks innocent and innocuous up front, but leads many into financial problems.

Read that thread first and then come back with specific questions.


All cars lose 1-1.5% each month. Depreciation. Or look at any lease payment with zero down. A accord lease is $280. A Mercedes e350 is $550. That is your cost to own. Or rent. Or whatever u think. Can u come up with that?

What is your available monthly dollars? IE, take home pay minus all expenses? That will give you a clue to how much you can spend on a car.

on a $50k car, figure $320 for car payment for 4 years.
Car insurance varies with age and area, but I’d start at $200 per month. Now include $100 for maintenance. Can you afford $600 per month, or $7000 per year?

Edit, make that $1200 for the car payment, sorry, my mistake.
Total $1500 per month, or $18k per year. That is most of your take home pay…

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I would not recommend buying a car that costs more than you make in a year.


You should be looking at a good used car in the $15,000 range. What you are planning is financially irresponsible and as others point out fraught with danger.

A good rule of thumb, don’t spend more than 5 months of gross income on buying a car!


$320 per month car payment? More like $1,000 per month for four years on a $50,000 car, right?

To the OP: I recommend you figure out the amount of car you can afford by taking your affordable monthly payment, multiply it be 36, and add your down payment. Get a loan for 36 months.

Forget the expensive cars. Remember, every $ you spend on your car is one more $ you aren’t able to spend on actually doing things.

What are you wanting? I bet we can recommend something nearly as good for much less $$.

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correct, my mistake

My initial reaction is to the comment that you might not keep it for more than three or four years. With your salary, changing cars that often is a luxury that you can’t afford, to be honest. Buy a cheaper new car or preferably a good late-model used car that you can pay off in three years or so, then keep the car for a few more years while you put the same payment in your savings account in preparation for purchasing your next car.

If you’re a younger person surrounded by friends driving nice cars that they really can’t afford (which unfortunately is a common situation today), the advice that you’re getting here will probably be hard to accept, but I hope you believe us anyway.


Don’t buy new, buy used. The path you want to travel is the MOST expensive way to own a car. Depreciation is the greatest in the first 2 years.

Many cars are leased these days and come off lease at 2, 3 or 4 years. Those cars are low miles and usually very nice since the lessor doesn’t want “excessive wear” charges. That allows you to buy a 3 year old car for 60% of the price new, own it for 3 years and likely sell it for 40% of the price when new. That math works FAR better.

I agree with the previous posts here, you really don’t make enough to afford a $50K car no matter how sharp your pencil is unless you are living in your parents basement and have no rent or food expenses.

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I recommend that, before you venture into the new car market for the first time, you read the following books (they’re not very long):

Should I Buy, Lease or Steal My Next Car? How to Save Tens of Thousands of Dollars on your Cars over the Next 20 Years by Tom and Ray Magliozzi

How to Buy a Great Used Car: Secrets Only Your Mechanic Knows by Tom and Ray Magliozzi

…and although this book doesn’t relate to your question, I also recommend it:

Ten Ways You May Be Ruining You Car Without Even Knowing It by Tom and Ray Magliozzi

These books used to be available from this website, both individually and sold together in a collection, and although I was able to find them on Amazon, the prices they charge for these books are outrageous. However, they can be bought at a reasonable price ($4.75 each) here.

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I recommend buying at the bottom end of what you can afford rather than the high end of what you dream about. As the price of the car goes up, so does the depreciation and the other costs of ownership. Don’t be “car poor”.

When I was still working at the college I retired from, I knew a young fella that had always wanted a huge, 4X$ crew cab fully loaded. He asked my opinion and I told him the same thing I told you. He went ahead and bought his dream monster anyway. A few months later, it was for sale. I asked him why and he simply said “I had no idea how much this was actually going to cost me to own. It’s quickly bankrupting me.” Too many people learn this lesson the hard way. The dream is free. Fulfilling it… not so much. :grin:

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I should add some of my own advice here, because looking deeper into the question, I am becoming more concerned.

You say you make about $30,000-$35,000 year. Why is that a range and not a specific number? Is your source of income uncertain because you get paid commission for a job in sales? Buying a $50,000 vehicle when you don’t have a job that delivers a steady income is a huge gamble.

Next, please tale a look at what an automobile’s depreciation curve looks like. Here are a couple examples:

Notice that vehicle depreciation is not a straight line. In order to buy a $50,000 car and trade it in when it reaches half its value, you would be trading it in long before it is paid off, adding to your debt each time you trade in a vehicle. The problem with that (other than piling on crushing debt) is that automobile loans are considered secured loans, because the car itself serves as equity to secure the loan, so eventually, you would discover no car dealership is willing to let you keep accumulating debt by trading in your vehicles before they’re paid off.

If you insist on buying a new vehicle and financing the purchase, I suggest your keep your purchase under $20,000. I think it would be wiser to keep the purchase price under $15,000, but that isn’t easy to do these days when buying new.

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In fairness that first graph is from the UK. Cars depreciate there much more quickly than they do in the U.S.

The silly Internet has many useful sites. The OP could just type ( Can I afford it ) in the search engine and will find charts and articles that will show good points to consider.

Edit: There are many sites that will show just what your payment might be for Vehicle loans relating to time and rates.

Buy a used Corolla.


Well, let’s break down your thinking:

You want to spend almost 2 years salary on a car.

This means if you stop eating right now, and you live in your car, it will still take you 2 years to pay for it.

You then want to keep it for a maximum of 2 more years before you sell it, and then you’ll have to stop eating and live in your car again to pay for the new one.

Additionally, depending on which $55,000 car you’re looking at, the 50% depreciation might be very optimistic. You just try getting that kind of money for a 4 year old BMW. There are 2014 BMWs that are selling for less than half of their new cost right now.

Never approach purchases with the idea that you are only spending the difference between what you pay and what you think you might be able to sell it for later.

You will pay $55,000 for a $55,000 car. You may or may not be able to sell it for half of its value later – what if the economy tanks and gas prices skyrocket again and so used gas guzzling luxury cars are impossible to get rid of again because everyone who can’t afford a new one can’t afford the gas in an old one and is looking for used Priuses?

Buy the car you can afford. Sock money away or get a higher-paying job if you really want to get a nicer car down the road.


While this little tale probably isn’t directly applicable to the OP’s situation, it can help to illustrate some sound financial planning in regard to cars:

When I got my first job, in 1969, I needed to buy a car for the daily 55 mile round-trip commute. My father didn’t want me to get myself into a financial hole by financing a car at that point in my working life, so he suggested that I use his car (the family’s only car) for a couple of years, during which time I could save my money and be able to pay cash for a new car. Because my father used public transportation to get to work, he only used the car on weekends, and I agreed to his proposal–even though I really wanted my own car at the time.

Over the ensuing 2 years, I saved every penny that I could, and as a result I was able to buy a beautiful brand-new Dodge Charger SE, for cash. Due to my careful saving habits, I have been able to buy every subsequent car for cash, and it is all due to resisting the urge to buy a car for a couple of years while I built-up my finances.

My behavior pattern has been to maintain my cars flawlessly and drive them for 9-11 years, while saving/investing my money for the cash purchase of the next car several years in the future. I bought my current car in October, 2010, and plan to keep driving it for several more years. While I will probably stick with a non-luxury car for my future car purchases, it is nice to know that I could walk into a Mercedes showroom and pay cash for one of their S-class sedans. I won’t buy one…but I could…

Having some restraint and self-control with one’s finances early in life will pay big rewards later in life, and I would strongly suggest that the OP not saddle himself/herself with the payments and related expenses for a $50k car at this point in his/her life. A used car, or a new entry-level car like a Civic or a Corolla, would be much more practical at this point for the OP.

Just something to think about…


@shadowfax raises an important issue. When I bought my Honda Civic in January 1999, the average price of gas in Florida was $1.18/gallon. People treated me like I was crazy for worrying about fuel economy. 17 years later, this car and I have made it through two spikes in fuel prices, both of which saw prices higher than $4.00/gallon where I was living at the time.

I never expected to see gas offered for less than $2.00/gallon again in my lifetime, but here we are. However, I am confident we will have fuel price spikes again in the future (likely in the next four years).

It pays to have a car you can still afford to drive when gas costs an arm and a leg. Fuel prices are notoriously volatile, so the only way to plan for this is to own a fuel efficient vehicle. It doesn’t have to be a hybrid; a small or midsize economy car that gets at least 30 MPG in city driving and 35 MPG at highway speeds is good enough, and you can likely do even better without buying a hybrid, especially while the current price of fuel is relatively inexpensive.

If you want a hybrid, and you’re not worried about the high price of replacing the hybrid batteries, it’s okay to get a hybrid, especially if you expect to put a lot of miles on it (more than the average estimate of 12,000 miles per year), but for me, I’d rather have a car with a conventional engine that isn’t over-complicated and expensive to repair, but still gets pretty decent fuel economy.

An automobile is not an investment. Tom McCahill in his book “What You Should Know About Cars” published in the early 1960s talked about.having two friends. One friend had a four year old Cadillac while the other had a four year old Volkswagen Beetle. Both cars had about the same number of miles and both cars were in top notch condition. As four year old used cars, the Cadillac and the VW had the same book value even though the Cadillac cost three times as much new. What is important is.transportation value.
What might work for you is to shop rental agencies for a Toyota Corolla, Honda Civic, Chevrolet Cruz etc. These cars have been maintained and often come with a warranty. Don’t purchase a car to keep up with the crowd. When I retired from the faculty of a university 5 years ago, I was driving a 33 year old Oldsmobile to work and.back every day. I could care less about what anyone thought.
One other suggestion:. You might elderly couple that is.selling an older big car like a Buick. The car may be in great shape and have a lot of transportation value.

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