How much you need to earn to afford a new BMW 2 Series

[Gtx Gaming]

My house and car is R9300 a month, I feel poor now

 

[R13...]

14k on a car per month, wow I'm at under 5500 for 2 cars. People have way too much money

YOLO

 

[Lupus]

My house and car is R9300 a month, I feel poor now

Depends on when you bought your house .

 

[ronz91]

3 years and then you hand back the keys...

If you wish to keep the car you need to structure a new deal.

so its a lease type of thing

 

[*SynergyX*]

well if the joneses are going to be purchasing.... i gotta start making a plan. cant be seen slacking

 

[Dan C]

so its a lease type of thing

yes, with the option to buy, extend etc.

Actually a lot of folk will go for this as they are willing to pay an installment for the rest of their existence and basically drive a new Merc every 3 years

 

[PhireSide]

yes, with the option to buy, extend etc.

Actually a lot of folk will go for this as they are willing to pay an installment for the rest of their existence and basically drive a new Merc every 3 years

I want to do the math of leasing and getting a new car every three years, vs buying outright (with VAF), keeping for ten years (a conservative figure) and then selling and buying new again, repeating the process.

I think you'd save quite a bit doing it that way

 

[6spdmanual]

Let them buy. Us poverty people would love a few options in the second hand market in a few years.

 

[ronz91]

I want to do the math of leasing and getting a new car every three years, vs buying outright (with VAF), keeping for ten years (a conservative figure) and then selling and buying new again, repeating the process.

I think you'd save quite a bit doing it that way

hows that math coming?

 

[PhireSide]

hows that math coming?

Not good.

My Maths Lit is showing

 

[PhireSide]

Here's what I have so far. I used ten years for the sake of the argument, but will try do it for a shorter period as well (Maybe 3 years)

Let's say, for argument's sake, the purchase price is R750'000.00

Let's assume a car loses 10% value YOY. It probably loses more in the first year or two but let's use 10% as an average.

After ten years, the car is worth (750'000 - 10% compounded yearly = 261'508.83)

If financed for 72 months at a conservative rate of 9% interest, that gives us a total cost of 979'914.15 including the admin fees applicable to finance deals.

So you sit with a nett loss of (979'914.15 - 261'508.83) = 718'405.92

Let's be optimistic and say you bought this car when you were 25, and sold at 35 to buy another car, then sold at 45 and bought another, etc. until you reach 75. So, you would have made a total of five car deals over that span. Let's also, for the sake of the argument, pin inflation at 5% YOY and adjust car prices by the same amount:

Car 1 - Age 25 - 750'000.00 (Total cost of finance = 979'914.15)
Car 2 - Age 35 - 1'221'670.97 (Total cost of finance = 1'592'065.72)
Car 3 - Age 45 - 1'989'973.28 (Total cost of finance = 2'589'199.06)
Car 4 - Age 55 - 3'241'456.78 (Total cost of finance = 4'213'422.10)
Car 5 - Age 65 - 5'279'991.53 (Total cost of finance = 6'859'111.67)

Giving us a total of R16'233'712,70.

Now, let's also assume you sold the previous vehicles:

Car 1: 261'508.83
Car 2: 425'970.33
Car 3: 693'860.78
Car 4: 1'130'226.09
Car 5: 1'841'019.21

That gives us a total retail value of R4'352'584,74. Less 10% to get the estimate trade value, which puts us at R3'917'326,26.

So of our total input of just over R16m, our total outlay is (16'233'712.70 - 3'917'326.26) R12'316'386,44.

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I'll do the calcs for agility finance/GFV for a similarly priced vehicle soon

 

[ronz91]

Here's what I have so far. I used ten years for the sake of the argument, but will try do it for a shorter period as well (Maybe 3 years)

yoh maths lit standards have risen dramatically

 

[TedLasso]

Such disparity when you look at other countries.

I'm on a few car-related subreddits and it's not uncommon to see people straight out of school working their first entry-level job and being able to afford cars that would cost R750k and up over here.

And what will be more crazy for those young folk, is that their insurance premium will be like double the cost of their car payment , for their first years of driving!!

 

[Ecko_1]

These things will be everywhere.
I'd wager a high percentage of people who'll be driving these do not earn circa R75k a month.
They'll be on some stupid GFV finance package.
Posers gonna pose

One of my employees who earns 500-600k pa has the previous 240i. On a 5 year gfv. I'm his manager and I drive a Polo vivo

 

[Quicks]

Vehicle prices is way out of line. Who besides ANC minister earn R72000K P/M. Forgot the minister get housing and vehicles for FREE!

 

[azbob]

Vehicle prices is way out of line. Who besides ANC minister earn R72000K P/M. Forgot the minister get housing and vehicles for FREE!

Going by the salary articles (and job classifieds) , almost everyone on this forum earns well beyond that.

 

[justplain]

Let them buy. Us poverty people would love a few options in the second hand market in a few years.

Hehe, you say that....though my car's insured replacement value went UP by R30k in the last year.
PreOwned vehicles are equally stupid expensive, especially models from the last 5 years.

 

[ronz91]

Hehe, you say that....though my car's insured replacement value went UP by R30k in the last year.
PreOwned vehicles are equally stupid expensive, especially models from the last 5 years.

then we wait 6 years!

 

[GhostSixFour]

Vehicle prices is way out of line. Who besides ANC minister earn R72000K P/M. Forgot the minister get housing and vehicles for FREE!

How do you expect a ANC minister to survive on a paltry R72k p/m?

Ramaphosa on MPs' salaries, benefits: 'They struggle to make ends meet' | News24

President Cyril Ramaphosa said MPs have been "cut to the bone because they have had no meaningful increase for quite a while".

www.news24.com

 

[Saba'a]

so its a lease type of thing

Balloon payment: Dangerous or heaven-sent?



2-3 min read (or seeing an outrageous price on a car and pretending you're still considering it)


If you’ve ever inquired about buying a new car, the salesperson might have offered you the option of a ‘balloon payment’. It sounds like such fun – a party! But what is a balloon payment? And is it a good idea when you’re financing the car of your dreams? Let’s jump in.

What is it?

Put simply, it’s a lump sum due at the end of a loan term. To illustrate the concept, let’s compare two car loans for R350,000 – one with a balloon payment and one without.

With no deposit and no balloon payment, and assuming an interest rate of 10.5%, the monthly instalment on the full amount would be about R7,600 over 60 months (five years).

Now, let’s say you choose a balloon payment of 20% instead. R70,000 of the initial R350,000 is immediately removed, and your monthly instalment is calculated on a reduced total of R280,000 – about R6,500 over 60 months.

But what happens to that R70k? You still have to pay it back at the end of the loan term, and you have to pay it back as a lump sum…

Why is it dangerous?

A balloon payment is a way to delay your debt and puts you at risk of a cash crunch in the future. People who choose this option often can’t afford the full monthly repayment, which means they’re actually buying a car that’s beyond their means.

Using the example above, most of us would love to believe that although we don’t have R70k now, we’ll definitely have it in five years’ time… Sadly, that’s not always the case. If you can’t come up with the balloon payment at the end of the loan term, you’ll be forced to take out another loan or sell the car you’ve just spent years paying off.

What if you plan to sell your car in five years, settle the balloon payment and get a new car? Fair enough, but say your car gets stolen or written-off in a crash? Or you don’t manage to sell it for the right price? Or the bank doesn’t approve the finance for your next car? There are no guarantees! That balloon payment could end up putting you in a bad debt cycle that will be hard to escape from.

Are there any benefits?

There are some advantages to a balloon payment, but only if you’re financially savvy and you know exactly what you’re doing. A balloon payment obviously makes it easier to finance a car, and it might make sense if you want to trade in your car every five years – as long as you’re aware of the dangers mentioned above.

A balloon payment can also be a good idea if you're 100% sure that you’ll be able to afford the lump sum payment. For example, if you already have the lump sum amount saved up, you could invest that money for five years and make some moola, instead of giving it all back to the bank on a monthly basis.

I have a loan with a balloon payment – help!

There’s no point stressing about where you’ll find the money. Rather be proactive: contribute a little more to your monthly instalments to reduce the size of the end payment; or use any spare money – like your December bonus or a tax rebate – to save towards the lump sum.

Good luck, and remember: the sooner you can be debt-free, the happier you’ll be.