A new Lamborghini Gallardo is running around $190,000. An average Joe making $40,000/year could potentially buy this car with enough discipline, but it would take serious sacrifices in all other financial aspects of his life.
A 6 year car loan on $190,000 would have a payment of about $3,000/month. After taxes on the income, that is more than Joe is making. So clearly a traditional car loan will not work here.
There are 2 ways I can see this happening:
1) Joe can save his money like no man has saved money ever before. If he can live off of $15,000 (share a small apartment, eat lots of noodles, never eat out, never buy anything he doesn’t absolutely need) and save $15,000/year **assuming $10,000 taxes** invested wisely at 10% interest, Joe can have his $190,000 in about 9 years. Or he could probably afford to buy the car with a large downpayment and a 6 year car loan after about 5 years.
2) Joe can refinance his house to buy the car. If Joe has built up a lot equity over the years in his house, he could refinance his mortgage to buy the car and effectively pay it off over the next 20-30 years with a much higher mortgage payment. There are many people who have gained alot of equity in recent years in their house, so many average Joes today could probably pull this off.
I wouldn’t recommend either of those options, but they are doable. My own priorities put a higher standard of living and/or a younger retirement age before buying an overpriced car. But I imagine that there are many Joes out there who are car crazy and NEED the nicest car possible. How much are you willing to sacrifice to have some nice wheels?
Even an ’87 Countach will run you upwards of $40K… you’d better have bank if you want to own a lambo..
References :
A new Lamborghini Gallardo is running around $190,000. An average Joe making $40,000/year could potentially buy this car with enough discipline, but it would take serious sacrifices in all other financial aspects of his life.
A 6 year car loan on $190,000 would have a payment of about $3,000/month. After taxes on the income, that is more than Joe is making. So clearly a traditional car loan will not work here.
There are 2 ways I can see this happening:
1) Joe can save his money like no man has saved money ever before. If he can live off of $15,000 (share a small apartment, eat lots of noodles, never eat out, never buy anything he doesn’t absolutely need) and save $15,000/year **assuming $10,000 taxes** invested wisely at 10% interest, Joe can have his $190,000 in about 9 years. Or he could probably afford to buy the car with a large downpayment and a 6 year car loan after about 5 years.
2) Joe can refinance his house to buy the car. If Joe has built up a lot equity over the years in his house, he could refinance his mortgage to buy the car and effectively pay it off over the next 20-30 years with a much higher mortgage payment. There are many people who have gained alot of equity in recent years in their house, so many average Joes today could probably pull this off.
I wouldn’t recommend either of those options, but they are doable. My own priorities put a higher standard of living and/or a younger retirement age before buying an overpriced car. But I imagine that there are many Joes out there who are car crazy and NEED the nicest car possible. How much are you willing to sacrifice to have some nice wheels?
References :