Financial Question for people around 23 y.o

**Polyal** · 12-12-2005, 03:40 PM

Hey,

I am at the stage where I want a new car, and it must be a newish one as I have just about had enough of "older" ones. But my falc is doing alright at the moment I must say.

My question for the younger people (but ALL opinions welcome), how do you guys work out your finances while at uni and working a part-time job?

I also pay rent so this limits how much money I will be able to borrow. The car I want is a Mondeo ST24. Its good on fuel, has enough power and is priced well. Only issue could be parts but I know someone who works for Ford so they can get me discounted parts anyway.

So I would be looking at a loan of $12-13000. I would obviously sell my car and transfer what ever I get for straight into the loan.

What kind of weekly repayments would I be looking at?

Ive noticed that there is quite alot of younger people with fiesta's/focus', and I was just wondering how you sorted it all out.

Also, do you regret being locked into a 5 year deal?

Any information/experiences would be fantastic.

Do you think its a good idea or should I just buy a $5-6000 car staright out (like a 405 Mi16)?

Thanks! :baby bott

12-12-2005, 03:50 PM

Quote:

Originally Posted by Polyal

Hey,

I am at the stage where I want a new car, and it must be a newish one as I have just about had enough of "older" ones. But my falc is doing alright at the moment I must say.

My question for the younger people (but ALL opinions welcome), how do you guys work out your finances while at uni and working a part-time job?

I also pay rent so this limits how much money I will be able to borrow. The car I want is a Mondeo ST24. Its good on fuel, has enough power and is priced well. Only issue could be parts but I know someone who works for Ford so they can get me discounted parts anyway.

So I would be looking at a loan of $12-13000. I would obviously sell my car and transfer what ever I get for straight into the loan.

What kind of weekly repayments would I be looking at?

Ive noticed that there is quite alot of younger people with fiesta's/focus', and I was just wondering how you sorted it all out.

Also, do you regret being locked into a 5 year deal?

Any information/experiences would be fantastic.

Do you think its a good idea or should I just buy a $5-6000 car staright out (like a 405 Mi16)?

Thanks! :baby bott

I'm a younger (18) yo driving a Focus, and paying for it working full time 45hours per week plus 2-3 hours travel every day. Also paying 3100 insurance premium.

I have the payments coming directly out my account. It is a bit hard when your trying to save, but living at home helps a lot. I wanted something that will last me for the next 7-10 years at least so I made that investment, conscidering petrol price rises, reliablility, moderness and resale.

Some advice I got when getting a loan. Your weeks repayment should equal half or less of your left over wage after expenses.

Dark Horse · 12-12-2005, 03:53 PM

I just sent you a PM Polyal.

Paxton · 12-12-2005, 03:53 PM

I would go for what you can afford. I wouldn't look at getting a loan for a car, until you are employed fulltime, and you know that you can afford the repayments. I didn't borrow money for a car until I was 29 (this year), and I knew when I was going into the car that I was going to have it for 4 years, and that I was not going to be able to afford to sell the car and buy a new one until the lease was up.

In your case, go for the Peugeot. It is a safe, newish car (and if you can, get a Diesel). They are great cars that will go forever. If you have an attatchent to the Falcons, see if you can get a AU Fairmont Ghia. They are cheap, and have enough goodies to keep any Falcon drive happy for a long time. They are also reliable, and if you take out the loan, you could almost get into a BA Ghia.

Good luck.

dansedgli · 12-12-2005, 04:00 PM

Loans suck the big one. The bank will likely give it to you without much hassle but paying off a big loan is a downer. It isnt fun seeing that you owe $15+K when you log onto netbank. I got a loan to get the AU, the repayments were made easily but it was depressing seeing how much I owed.

I paid the majority of the loan off when I sold the car and felt good owing only $5k afterwards, I couldnt help myself and got a massive headstart on my project using the left over cash.

I wouldnt get a loan like that again. Especially if you dont do many K's. Being debt free is more satisfying than driving a shiny car.

b0son · 12-12-2005, 04:06 PM

Quote:

Originally Posted by Polyal

My question for the younger people (but ALL opinions welcome), how do you guys work out your finances while at uni and working a part-time job?

Go the cheapest you can without it costing you in maintenance. A newer/better car is nice, but in your situation, a luxury. There's plenty to choose from at the lower end of the market, and it needn't be a bomb given how many people are still getting into new cars at the moment.

Minimise your debt at this point. Your capacity to repay is poor having only a part-time job and rent to budget for, so it will tie up a chunk of your finances for the near future. Also, housing prices are hitting the brakes, so it will be good to save for a deposit for the next 2-3 years before the market starts to pick up again. And I doubt there'd be many people that would disagree when I tell you you're always better off putting money aside for property rather than a car. Numerous friends have commented that they wished they had put money into a house earlier rather than wasting it on a car.

Pilch · 12-12-2005, 04:15 PM

Quote:

Originally Posted by dansedgli

Being debt free is more satisfying than driving a shiny car.

I agree 100% I would not go back into debt just to buy a new(ish) car. A house on the other hand......

Why not stick with the Falcon until you've been in full-time work and put some $$$'s away?

**Polyal** · 12-12-2005, 04:22 PM

Because I look at my falcon and I know all the mods I could do and I get depressed because I dont particularly want to spend the money on it.

Off the top of my head to be completely happy with my car it would need:
paint fixed, a few stratches and chips that sh|t me to tears when I clean it
Suspension could do with an overhaul
Engine is getting old
etc etc

I must admit though the falcon is getting atleast 500k's to a tank with combined driving, and most of the time its spirited.

Im just a little tried of having niggiling issues.

Paxton · 12-12-2005, 04:28 PM

Quote:

Originally Posted by Polyal

Because I look at my falcon and I know all the mods I could do and I get depressed because I dont particularly want to spend the money on it.

Off the top of my head to be completely happy with my car it would need:
paint fixed, a few stratches and chips that sh|t me to tears when I clean it
Suspension could do with an overhaul
Engine is getting old
etc etc

I must admit though the falcon is getting atleast 500k's to a tank with combined driving, and most of the time its spirited.

Im just a little tried of having niggiling issues.

As I see it, you need a new suspension setup, an engine overhaul, and a respray. That would cost about $4,000, using quality parts, and a newish AU Engine. If that is all you need, go for it. I see your car is a Manual, so I won't suggest a manual conversion, however, whilst your engine is getting looked at, get the Transmission and Clutch looked at, and it should outlast your ownership of the car.

To be VERY happy with an E Series, for that money, is a good outlay, however, depending on the model (is yours an EA, or ED?), it may be worth more than the car, and not add any real value to the car.

**Polyal** · 12-12-2005, 04:30 PM

ah the word value and EA should never be used in the same sentence...lol

I do like my car...but there is just so much I am going to have to do to keep me happy.

And by the time I lay out all that cash perhaps I should have brought a new car.

Walkinshaw · 12-12-2005, 04:31 PM

Quote:

Originally Posted by Pilch

I agree 100% I would not go back into debt just to buy a new(ish) car.

BINGO

parawolf · 12-12-2005, 04:58 PM

If you want to forecast payments, ANZ web page www.anz.com.au has some of the best calculators and forecasters that are freely available. You can even simulate two events side by side, eg putting a lump some in 12 months into the loan.

Very useful if you ask me.

Disclaimer, i'm an ANZ customer.

4.9 EF Futura · 12-12-2005, 05:05 PM

Well I think i fit into your demographic polyal - 24 yo guy, fair old chunk of debt outstanding on the car and few other things. My first word of advice - debt is NOT a dirty word. Debt is a valuable tool when used wisely.

Have a play around with this:

http://ray.met.fsu.edu/~bret/amortize.html

It's an ammortisation calculator and shows you the balance of the loan. Get in touch with some institutions, find out the rates, fees etc. and start plugging some numbers in. Its a good tool for seeing how nasty/nice the balance of a loan can be. I think it only really works for fixed rates - you never know how personal variable rates are going to react to RBA target cash rates.

As an example, $13k @ 14% fixed for 7 years (this is what you can expect at a major bank). That's unsecured personal loan, reduce the interest rate if you want to offer the car as security and get a true car loan.

Payments of $243 per month. Back in the old days, a bank would have wanted to see about $800/month income before tax - it's still a good (very rough) rule of thumb but the assessment is all done by computers these days. The rule of thumb is that loan payments should not exceed 30% of gross income.

Of course depends if you pay rent, have credit cards, child support payments etc etc

Here's the brutal part:

Total repayments: $20464.
Total interest paid as percentage of capital: 57%.

No matter what advice you receive here or elsewhere - it will come down to one factor and one factor only:

Can you handle servicing a loan in return for having a shiny new car? How badly do you want that car?

*please note that this is not financial advice. you should obtain and consider the financial institution's prodcut disclosure statement prior to taking and/or holding the financial product* (just in case anyone from ASIC is on here, lol).

Good luck.

Fryday · 12-12-2005, 05:10 PM

As long as you're confidenet there's no major expenses coming up with the car soon (head, gearbox failure, etc) I'd wait until you finish uni.... you might struggle to get a loan on your own with a part time job unless you've had a loan before. I looked at getting a new (second hand) car when I was at uni and I couldn't get anyone to lend me money - without my parents going guarantor. As soon as I was working full time they'd let me borrow what seemed at the time to be as much as I wanted.

Paying off the car sucks... While you're paying interest on the loan, the car is depreciating - it's a lose/lose.

If you did go ahead, payments for your car would be around $60 - 70 a week.

**Polyal** · 12-12-2005, 06:06 PM

geez lots of advice thats great.

Thats just the thing..if I keep my car any longer than another 4 months or so I know its going to need some work (engine, brakes, suspension).

I have a full time job now, and will have until around the end of next jan, so I want to apply for a loan now, I know I can handle ~100 per week, so when I am working part-time I can still pay it off.

I have no kids or anything like that, all I pay is rent, food, car and then doing what I want.

I have a credit card but I owe nothing, and have no other loans.

4.9 EF Futura · 12-12-2005, 06:11 PM

Quote:

Originally Posted by Polyal

I have a credit card but I owe nothing,

As a rule, most financial institutions will assume 3% to 5% of the credit card limit is used for repayments, regardless of wether you've got anything on there or not (i.e. you could get loan approved, walk out the door and go max out the Visa).

So for a $1500 CC limit, they will assume a $45 - $75/month repayment. Just something to consider as you work through the numbers.

Drive XR7 · 12-12-2005, 06:17 PM

I will graduate from college next week. If my job deal goes through, I intend to buy a Ford Contour SVT for around USD$6000 for a daily driver.

XLS99 Ute man · 12-12-2005, 06:45 PM

Im 20 and i am working a fulltime job and have been for the past two years
i saved up 15 Grand and got a loan for 5000 just to cover me for insurnace and all that rego n
i was only gunna spend 15 grand on the car but ended up spending 18,000 on the ute
it was worth it though, theres such a difference between EL & AU
so yeah if your gunna spend over 10 grand you may aswell do it right the first time and try and get something you really want (within reason)

Aeron · 12-12-2005, 06:56 PM

You need to be smart with your money, and a loan will not be a problem. I was 20 when i got my loan for my XR6T. I borrowed $20,000 from the bank, but had saved the other $18,000 and sold my VL for $7500 to get the $45,000 i needed to buy it. I've had the loan for 20months and only have $3000 left to pay off. I'd have it payed off if i didnt just buy an air ticket to go to England next year.

I dont earn a lot of cash either ($500/week) and my insurance is $253/month. BUT, I dont drink or smoke, i dont have a life, i just about never go out at all. You have to be smart with your money or be a tight **** like me

Gabbs · 12-12-2005, 07:14 PM

Working part time id say don't do it. Save your cash for when you finish uni and have a full time job then get a new car.

awsome4.0 · 12-12-2005, 07:27 PM

If you want a mondeo i have one 4 sale let me know if you are interested it has a full body kit,16s in alloys and 74500 klms if you want pics i can email them to you

**GasoLane** · 12-12-2005, 07:40 PM

Quote:

Originally Posted by paxtonandrew

As I see it, you need a new suspension setup, an engine overhaul, and a respray. That would cost about $4,000, using quality parts, and a newish AU Engine. If that is all you need, go for it. I see your car is a Manual, so I won't suggest a manual conversion, however, whilst your engine is getting looked at, get the Transmission and Clutch looked at, and it should outlast your ownership of the car.

To be VERY happy with an E Series, for that money, is a good outlay, however, depending on the model (is yours an EA, or ED?), it may be worth more than the car, and not add any real value to the car.

Summink not right here.
Suspension... Shockers, maybe a spring or two, and rubbers. min $1000
Engine... min $1500 fro a good job.
Respray... min $3000 for an average job.
Where do you go for your repairs, I might have to go there as well

XRated · 12-12-2005, 07:56 PM

If you're working part time, I don't think a bank is going to lend you much above $6-8k.

Why don't you set yourself a goal and save 1/3 of the cost of the loan to see how you cope with it all?

On the upside, you will come out with a good credit rating at the end of it.

YOOT · 12-12-2005, 08:01 PM

Quote:

Originally Posted by Polyal

Hey,

I am at the stage where I want a new car, and it must be a newish one as I have just about had enough of "older" ones. But my falc is doing alright at the moment I must say.

My question for the younger people (but ALL opinions welcome), how do you guys work out your finances while at uni and working a part-time job?

I also pay rent so this limits how much money I will be able to borrow. The car I want is a Mondeo ST24. Its good on fuel, has enough power and is priced well. Only issue could be parts but I know someone who works for Ford so they can get me discounted parts anyway.

So I would be looking at a loan of $12-13000. I would obviously sell my car and transfer what ever I get for straight into the loan.

What kind of weekly repayments would I be looking at?

Ive noticed that there is quite alot of younger people with fiesta's/focus', and I was just wondering how you sorted it all out.

Also, do you regret being locked into a 5 year deal?

Any information/experiences would be fantastic.

Do you think its a good idea or should I just buy a $5-6000 car staright out (like a 405 Mi16)?

Thanks! :baby bott

I can comment directly because I am 23 and I have a degree.

When I was at uni I had lectures on 4 days a week and I worked a casual job at bunnings that netted me $400 a week from weekends and 1 night shift. I also had a work experience job that I worked on my day off that made me an additional $100 a day. All up I was earning $500 a week from the age of 19-21 (3 years). I bought my first car then which was a 94 ED Fairmont (my user name was 94ED_Fairmont back then) which cost me $9000 + Insurance.

I wanted a decent car that would cost me bugger all incase I lost my job. So I factored in that I might have to survive on $100 a week or slightly more (living at home). I borrowed $6000 over seven years which worked out at $25/week repayments which was next to nothing. And I saved the remaining $3000.

This worked out great as I never lost any work and I never noticed the repayments going out. My plan was to pay the loan out in full when I graduated and was earning decent amount.

When I did finally graduate I paid the laon out ($3500 remaining) and sold teh ED for $6500 to "Miss_Fairmont". By this stage (21-22) I was earning $68K a year and living at home (paying rent but its never as dear as living on your own). So with nearly a grand a week after tax coming in I decided to buy the XR6 Turbo I now have. I borrowed $33,000 from ANZ at 7.9% p.a. over 5 years. This equated to $156/week repayments + running costs. This was a drop in the ocean compared to my income so I didn't hesitate. The rest of the money I had saved and from the sale of the ED.

I have had the car 21 months now and owe around $23,000 and never regreted a moment of owing it. I will most likely wait the full 5 years and pay it out before selling it.

I am now 23 and just finished my second year of full time work and currently saving for my first home. I'm very lucky in respect to being able to still live at home cheaply and earn large sums of money doing what I enjoy.

THe most important thing to consider is while you are at uni your lower income is only temporary so you can plan ahead a little and buy a dearer car that will last the 5 years a little longer, or just go the 7 year loan but pay it out when you graduate and turn it into a shorter loan, but with the security of low repayments if you run short on cash. Once you start work, you'll be able to shift your goal posts. If I could do it all again I would have spent more on the car but I would have paid it off faster.

However I know have a BA XT company car so the ute is now extremely useless and too dear to be sitting in the shed. I NEED to sell the ute and at the repayments I was paying to me savings to really increase the amount of money I will have come house buying time. Its just so hard to let go

:

Josh_XC · 12-12-2005, 08:04 PM

i applied for a loan and im 19 at uni and with a part time job which pays crap all. the bank said they can give me a 10k loan if i wanted to. so 6k-8k shouldnt b a problem.

I didnt take the loan i was just interested to see how much i can get.

smciner1 · 12-12-2005, 08:11 PM

I remember when I got my first New (tm) Car. I worked my **** off with overtime to pay cash for it, picked up a brand new EF XR6 3 weeks before my 21st birthday. had to work that Saturday to put petrol in it. After that I didn't have to worry about paying for it though.

vztrt · 13-12-2005, 02:26 AM

Quote:

Originally Posted by Polyal

Hey,

I am at the stage where I want a new car, and it must be a newish one as I have just about had enough of "older" ones. But my falc is doing alright at the moment I must say.

My question for the younger people (but ALL opinions welcome), how do you guys work out your finances while at uni and working a part-time job?

I also pay rent so this limits how much money I will be able to borrow. The car I want is a Mondeo ST24. Its good on fuel, has enough power and is priced well. Only issue could be parts but I know someone who works for Ford so they can get me discounted parts anyway.

So I would be looking at a loan of $12-13000. I would obviously sell my car and transfer what ever I get for straight into the loan.

What kind of weekly repayments would I be looking at?

Ive noticed that there is quite alot of younger people with fiesta's/focus', and I was just wondering how you sorted it all out.

Also, do you regret being locked into a 5 year deal?

Any information/experiences would be fantastic.

Do you think its a good idea or should I just buy a $5-6000 car staright out (like a 405 Mi16)?

Thanks! :baby bott

Took out the loan for the BA in January. I still had one year at Uni but I live at home.

A good rule of thumb I've found is paying about $120 a month for every $5000 you take out. But you can get better deals, but your young and considered high risk.

I did enough hours to pay my payments and haven't had problems. I plan to pay the rest of the car off by the end of next year and it will cost me an extra $100, so it's not like I'm really locked into the contract.

Also remeber if you do get finance at one place than you should easily get finance everywhere else so shop around as you can save over a thousand dollers in payments like I managed to do.

Pilch · 13-12-2005, 09:49 AM

Quote:

Originally Posted by 4.9 EF Futura

Can you handle servicing a loan in return for having a shiny new car? How badly do you want that car?

yep well said! Ask yourself this seriously.

Maybe besides just doing the numbers on a bank loan, also get out the pen and paper and right out all the pro's and cons for upgrading to a newer car.... this will help answer the above question.

Just so you know, I'm 21 and one year out of uni. I would not have taken a loan while at uni and working part-time, not worth the pressure or burden. Now that I'm full time I'd more then happily take a loan out for a new car if I wanted one.

pauljh74 · 13-12-2005, 11:00 AM

I would say save up for the car and pay cash. Otherwise when you want another newish car, or want to put money away for other goals ie a house, you'll have a car, a loan and no cash. At least if you have outright ownership any money you save you can put away to move forward, rather than spend it chasing your debt.

tquarrell · 15-12-2005, 11:07 PM

I'm 22 now, bought my first house at 19, graduated uni last year and now can pretty much buy any car I like, but am sticking with the BA XT. From my experience, you're best putting as little as possible into cars, especially to begin with. I paid cash for the car ($20k), but could have gone overboard and got a T. Problem is insurance fuel etc etc. So my advice is don't be in a rush to spend money on cars, put it into other (productive) things and you'll be better off. Also, as they say, a dollar today is worth more than a dollar tomorrow. I'd recomend getting the cash out of your car, getting a loan for the new (cheap) car, and investing the spare cash. Plenty of time for expensive cars later.