M5 as the next car!

[BavariaExclusive]

Can someone who makes 7k/mo w/ 2k/mo expenses afford this beast?

[M6-Coupe]

Of Course you can... you can lease an M5 with less than $1000 per month!
http://f10.m5post.com/forums/showthread.php?t=1091470

[Bönz]

I agree. However, that deal is exceptional. But still, shouldn't be an issue. Of course insurance could kick your butt if you have points, but seems like you have the funds. I am assuming this is after tax income.

[PatrickC23]

$7k after taxes?

[mark824]

I would expect 1100-1200 as a reasonable lease amount depending on the equipment in the car. Budget out your monthly income and expenses and see what the numbers say.

[secretariat]

We don't know what your monthly budget is. How can anyone give you advice when we don't know. Mortgage, rent, social activities, married, children, loans outstanding?

Sorry I see 2k expenses, still I guess single, no children, what if something comes up?

[Ex_Stig]

Originally Posted by BavariaExclusive

Can someone who makes 7k/mo w/ 2k/mo expenses afford this beast?

Can they? Probably.

Should they? Probably not. But, that is an entirely different conversation.

[stealth.pilot]

Sounds like a very high percentage of your income to spend on cars. I spend closer to 5-7% and that covers both my cars.

I think spending up to 10% on cars is okay, but above that and I would really be concerned about saving enough money, investing, opportunity cost, wrong balance between house and car, etc.

Also - contrary to those above - my perspective is that if you have to budget it out to figure out the answer then the answer should be no.

[Ninong]

Originally Posted by BavariaExclusive

Can someone who makes 7k/mo w/ 2k/mo expenses afford this beast?

I don't know how loose BMWFS is right now. I know what their guidelines used to be but I retired years ago and they might have changed since then.

Here's a good rule of thumb: your total fixed monthly payments should not exceed 40% of your gross monthly income or 50% of your net monthly income. Usually they work with gross monthly income. That's because you need the balance for food, clothing, medical expenses, entertainment, vacations, etc.

So if your net monthly income is $7,000 and your current total of rent or mortgage payment plus all credit cards, etc., equals $2000/mo, then you might qualify to lease a new M5, provided you keep the payment below $1,200/mo. The rule of thumb is (or at least was) 15% to 18% of net monthly income for the car payment and car insurance. That's the maximum considered reasonable, not the preferred or recommended amount. Different lenders have different guidelines for car payments.

If they're using a maximum of 18% for a car payment, then you would qualify for up to $1,260/mo. If they're going with 15%, that would be $1,050/mo.

A lot depends on your previous credit history, especially previous car loans or leases. That's extremely important. If you have at least one previous 36 months, or more, car loan or lease with payments made as agreed, then that's a big plus.

Another big factor that comes into play -- if worked properly by the person trying to get you approved -- is proof of assets in your financial accounts: savings or brokerage accounts. You don't have to have a ton of money in the bank but having more than three months of salary on hand for emergencies makes it easier to get approved.

It all depends on the individual applicant, his FICO or Vantage credit score and other individual factors, such as job stability, etc.

P.S. -- My personal recommendation is that anything more than 15% of your net monthly income for car expense makes no sense regardless of what BMWFS is willing to approve. So if your net monthly income is $7,000, then you should not use more than $1,050/month for your monthly car payment and insurance combined.

[rocky]

you can,count on paying between 1100 - 1200 dollars a month for a lease on an M5 w a few options, probably not cp.... i pay for 36 month lease.... $1150 on a 2015 M5 with Non cp, exec package B&O, 20 inch 343 wheels, MCB. I drove off with 2500 out of pocket. then you have insurance to deal with... that will vary depending on the coverage amounts.... If you net $7000 you can probably swing it.... may be a squeeze if you have family, kids, tuition, mortgage, health insurance,etc.... most of the M5 owners i know in the area net six figures a year. if you gross $7000 a month.....ur net may be around $5500 after taxe (maybe 60k), depending on your tax bracket..... if your married....maybe your wifes income will help.... close call here.

[BavariaExclusive]

Yes that would be the net accumulation.

[BavariaExclusive]

That is exactly what I am looking for. I don't want to spend over 15% of my net just on a car. I'm sure you guys have more of a reasonable approach than I do since you own one.

Originally Posted by stealth.pilot

Sounds like a very high percentage of your income to spend on cars. I spend closer to 5-7% and that covers both my cars.

I think spending up to 10% on cars is okay, but above that and I would really be concerned about saving enough money, investing, opportunity cost, wrong balance between house and car, etc.

Also - contrary to those above - my perspective is that if you have to budget it out to figure out the answer then the answer should be no.

[PunjabiM3]

If you make $7k and you net $5k, I see no reason why you cannot afford a M5. But I would suggest buying a used 2013 or 2014 CPO one.

[BwoodBMW]

If you don't have a nice savings account you should buy an E92 M3 and save the difference....

[PhilT3]

I would also throw something in to consider... What's your life goal(s)??
Retire early? Retire at age xx? Live fast, die young...? Family? Single? Do you want to leave anything behind when you die? Etc.....
At $7k total income per month and $2k of expenses... you COULD afford an M5. BUT...with a $1000/month for your car, can you achieve your life goal(s) otherwise?
I have a question though...how the heck do you only have $2k in monthly expenses? I spend close to that in food alone! And I'm single!

[mjr24]

Why do you want the M5 over, say, a 550i? How old are you, what do you have saved, these are all factors.

Someone who makes $85k per year but has no money saved and lives in a small apartment probably wouldn't be best advised spending $1200 on a car per month. However, someone with a good savings, an IRA, etc....might get away with it a little better.

GNALUZU hit it on the head....sure, you can afford it...you can probably buy a Lambo...but should you? Probably not. I don't think it's entirely worth it to spend double of what you might pay for a 535i..which is also a great car....when you can take the other $500 and save it. You'll thank yourself in 20 years. Don't get an M5 just because it's an M5. So many people when they are younger (and I was one of them) think if they have a really nice car that they must automatically be doing really well....that they've achieved financial success. It's true to a point....but financial success is a marathon, not a sprint most of the time. I'm in my early 30's now....and I've matured a lot when it comes to finances.

I will tell you this, if you do get one, leasing is probably the best option. You are locked in to a max amount you will spend with the exception of mileage overage...which is much cheaper on a lease than having to pay it in depreciation on a car you own.

[Bönz]

Originally Posted by PhilT3

I have a question though...how the heck do you only have $2k in monthly expenses? I spend close to that in food alone! And I'm single!

[critical_mass]

Build net worth before buying depreciative assets. When I purchased my 3-series, I had enough in liquid assets to buy the car flat out before purchasing it. I'm doing the same with my next purchase (P-car).

Good luck.

[ARKONE]

Can you? Yes. Should you? Probably not.

If you're netting $5k after taxes and everything, a lease is going to eat up around $1200-$1500 of that. Let's assume your insurance goes up by $600 for the year or $50 a month. Extra fuel costs and etc...

$1600/mo. That is >20% of your $7k income or nearly 33% of your 5k after expenses.... I really think you should reconsider.

[AT LAW]

Originally Posted by Bönz

That is exactly what I was going to ask? $2k a month total living expenses?

Does someone live at home with their parents by chance?

[Jay-K]

Originally Posted by neurotichamster

Build net worth before buying depreciative assets. When I purchased my 3-series, I had enough in liquid assets to buy the car flat out before purchasing it. I'm doing the same with my next purchase (P-car).

Good luck.

+1
hard thing to do,
will be worth something in the future.

[ARKONE]

Originally Posted by AT LAW

That is exactly what I was going to ask? $2k a month total living expenses?

Does someone live at home with their parents by chance?

Depends on where he is. My monthy expenses don't even hit $2000 here in Omaha, NE.

Rent: $650 (brand new 2-br apartment that I split with my roommate)
Utilities: $100
Food: $500 (I eat out every other day and on the weekends)
Booze: $100 (College kid....)
Insurance: $130 ($800/6 months for my car and bike)
Clothes: $200

Total: ~$1700