CLS550

I'm looking to purchase a 09 or 10 C63 soon and this will be my first car I purchased myself. I just graduated college and am starting working. I was driving a hand me down for the past 6 years or so.

My question is, what is considered a normal amount for a downpayment? I hear people telling me that financing a car is stupid, then when I'm on a test drive, the sales rep is telling me to put zero down and just pay the 4% interest rate.

Any thoughts?

Also, if I go with a private seller, how do I arrange a financing thing? Do I have to find the exact car I want, tell the guy I'm gonna talk to bank, then get it approved? Or do I get a ballpark price range approved, then start looking?

CLS550

no one?

Zondar

Generally, you must put down enough that the lender is convinced that the depreciated value of the car is not and will not fall below the amount you owe. In other words, that you will not be "upside down" on the loan. Therefore, it will depend on the car and the price. It could be 10%, or it could be 50%. There will be other standard conditions.

Do you have much of a credit history? Do you belong to a credit union? A credit union is the best place to get a car loan. Right now my credit union offers 2.5% loans, computed using "simple interest" (the most fair way to compute it). Even so, you should realize that a decent C63 could easily cost $1,000 per month for 4 or 5 years. Join one and talk to them. Whatever you do, don't finance through a used car dealership. Usually, a credit union would pre-approve you, and once you have located a car, they give you a certified check.

But here's my real opinion: If you have just graduated and are just starting working, do without an expensive car, whether new or used, for a while longer. I know this isn't what you want to do or hear, but it's the best advice of all.

You have been living like a student for a while. Just continue to do so for another year or two or three. It won't be that hard. Save up a solid emergency fund, say at least $25,000; enough to get you through 6 or 9 months of unemployment. Then, don't touch that, and start saving so you can buy a car via cash. With that head start, you will be miles ahead of your cohort. They will all be paying half their income in interest, and you will be smiling, debt-free.

It's a crucial moment for you! If you can establish financial discipline early in life, and avoid debt except for buying a house, you will be rich forever, because being "rich" mostly means earning and having more than you spend. Do this, and later in life you will be genuinely rich by almost any measure.

Best of luck.

CLS550

Thanks for the detailed reply.

I have a pretty decent credit history but its not very diverse. I have 3 CC which have always been paid full. One of them is my parents AMEX which is around 15 years old. My score is in the low 700s. One of my cards is through Bank of America if that is a credit union.

I know I really should wait, but I don't drink or party or anything and I don't really spend money on much except food and rent. I"m already going to be working crazy hours of the week as an engineer and want to enjoy the small amount of time I have to myself, which I think the amg would do a great job.

I'm hoping once the 2012s launch, I can find a decent preowned for around 40-45k. I already have a small amount saved up.

_AMG_

It all depends, the more down payment you put the lower your monthly payments are going to be.

sinister55

Well how long do you plan on financing for? and the more you put down the better, cause monthlys will be lower, 4% isn't too bad, but do some math, calculate the monthly with zero down including state and other taxes, and per a month add 4%,it could get costly.
When I got my C55 I put down 10K and finance the rest.

VCA_AMG

I'm not trying to be a jerk but if you're asking basic finance questions like this and are a new college grad, chances are you may not be financially where you should be to own an expensive car that drinks gasoline like water and burns through tires every 10k miles. AMGs are very expensive to own and are best enjoyed IMO when you're not sweating a $5k repair if needed.

I'm sure several members here will post after me, saying they're your age and own a C63, or you only live once, or mind my own business, etc...but I'm trying to help. My suggestion--pause a bit, get your finances in order, put a substantial amount of $$$ away into the bank, buy a house if you don't own one already while the market is down and home loans are at an all time low...and THEN in a few years get your AMG when you can really enjoy it.

My $0.02.

sinister55

Very true, don't forget insurance!

VCA_AMG

Umm yeah.

DaCeptak0n

I agree with the others' sage advice/comments that if you're asking these very basic financing questions, it's a sure sign that you're not quite ready to take on the responsibility of an expensive car. Save some, live some and by then, you'll be ready to drive some...

BTW, Bank of America is not a credit union. If that was a joke, good one but if not, take another finance course :-)

Zondar

Just a few more comments.

First, you don't spend much except on food and rent? Perfect! Keep it up and turn your "small amount" of savings into a good safety net, and then into a down-payment on a house, etc. It's money to keep you independent and housed and eating healthy in the event that you lose your job, and money to build your financial future, which would eventually include plenty of toys too.

Next, if you feel you don't have enough of a life, believe me, you aren't going to get one by spending money on a car. It's a cliche, but it's true: the best things in life aren't things. Sure, a car like that would be awesome fun for a while, but you would have $1000 monthly expenses tearing a huge hole in your paycheck for the next four years, and that will suck. A nice (expensive) car is something smart people buy only after buying it isn't a burden, because otherwise it is a burden.

Finally, the thought that you deserve to spend money on an expensive car because you lead a clean life is false logic. The two have nothing to do with each other. You deserve to save money for your future, to learn about investing, to have the discipline to stay debt-free (except for a house), and hence to become genuinely well off over time.

Look for a book called "The Elements of Investing" by Malkiel and Ellis. It costs about $12 or $13 at Amazon, can be read in two or three hours, and it's the perfect introduction to setting yourself up for a successful financial life.

Cheers.

C63newdude

This is a very subjective topic, it all depends. Why putting a down payment in the first place? there are car dealers aqnd promotions that finance zero percent interest thus there is no savings by putting a downpayment.

On the other side of the spectrum you might save money by putting a downpayment but who is to say that the same money could be use else where to generate more money (Bank CD or any other investment).

The thing is that you don't have to put a downpayment at all and contrary to what someone said above YOU DON'T HAVE TO SATISFY NO LENDER.

Remember, you are the sole person in charge of paying your car at your own pace based on your specific terms. If you eel comfortable paying your C63 in 2 years then go nuts. I personally purchased mine with $1000 down payment but ater paying for over a year I dropped $23000 cash towards the car payment and refinanced. It is all about how well and comfortable you can pay your own car.

Just take opinions but pay it at your convenience.

rory breaker

Why do you say "stay debt free, except for a house" out of curiosity?

Zondar

Being debt-free means getting a "discount" on everything you buy, relative to others who are carrying debt. Credit card debt is the most common yet the worst of all, since it's the most expensive. If you are carrying credit card debt, then everything you buy costs say 12 to 21% more. Everything, even if you don't put it on your card! That's because you would save that interest if you paid down the card instead.

Almost all debt that most people incur is for the consumption of depreciating assets. Cars are one of the worst depreciating assets of all. Hence, going into debt for a car should be limited to that which is necessary (e.g., a basic used car) in order to get to work, etc.

However, buying a house is a staggering hurdle for most young people. Very few can save up enough to buy a house entirely with cash. Furthermore, mortgage debt is subsidized by the government with huge and almost singular tax advantages. Finally, it's usually the case that home values keep up with inflation (the recent crash is an exception). So, mortgage debt is usually considered both inevitable and acceptable.


Cheers.

CLS550

Yeah but in this case, isn't any decent car gonna put you in debt? Is it actually wiser to pay 40k lump sum at once rather than pay 1000 or so plus the 4% interest over a few years if you can do something else with that money?

Quadcammer

sorry, but this is a hideously bad idea. The economic situation in this country is far from stable, and as a new employee, you may be the first to go.

According to autotrader, the absolute cheapest 09 C63 is about $44k, and thats with about 50k miles.

Add lets say 5% tax, so you are at $46,500 after registration fees, etc. Plan for about $2k a year for insurance.

So, lets say you put $5k down, and finance $41,500. At 4% for 4 years, you are at $937.

So $937 plus $165 for insurance. Then assuming you have a 500 mile a month habit, gas is about $80 per tank, so 2 tanks give or take. So we'll add $150 for gas. Finally, I'd assume for atleast $1,500 in maintenance costs a year, so lets say $125 per month in maintenance.

$1,375 a month all in. Thats pretty ridiculous for someone who is just starting their professional life.

My suggestion:

A nice low mile 2005 C55 like this: http://www.autotrader.com/fyc/vdp.js...standard=false

You get about 75% of the experience at a little bit more than 50% of the price. You're still in a V8 performance benz, you still get the engine sound, and you get pretty good performance.

Now your loan is $450, same gas, same maintenance, and maybe $130 a month for insurance. Now you're at $855. Still expensive, but you can bank that $500 for savings or investments, and still have an AMG

Quadcammer

few points:

1. Can you consistently generate an investment return of over 4% after taxes and fees? At what level of risk?

2. These cars depreciate like stones. Lets say you lose your job and the financial markets are in distress (which tend to go together). Will you be able to sell your investments to cover the amount you're underwater when you need to sell your car?

I purposely put down less money on my house, because even after PMI, I can consistently return a much higher rate than my mortgage interest (which is also tax deductible).

SonnyakaPig

Great points in this thread.

Regarding your outlined plan, I would factor in the lack of warranty with the 2005 C55 as being a potential problem if engine or drivetrain needs repair.

I would jump into a new 5.0 mustang if I wanted to have lower payments but still have great performance, ugly interior notwithstanding.

Zondar

Taking a loan for consumption and investing the on-hand cash that you would have spent involves "leverage." That is, the use of debt so that you can make risky investments. Leverage can destroy you. It's gambling. Just look at all those folk who took out zero-down loans to buy houses on spec. They are now toast. And remember, the debt and risk can remain long after the consumption is finished with.

You need not go into debt over a mere car if you save and invest wisely. With some discipline, an Engineer like the O.P. ought to soon be in a position where that $40k lump sum merely means dashing off a check (for cash!).

Cheers

Exacc

I think everyone has spoken their opinion about saving and not spending...

I will contribute this though:

$45,000 loan in 5 years with 4% interest works out to about $828.74 per month (excluding and fees and taxes).

Total interest you will pay over 5 years to have your car now: $4,724.61

So to have your car today, you will have to pay close to $5,000 in interest. Plus any taxes and fees that financing entity will charge. Its your money...if you think this is worth it or not.

I would wait a 2 years, when the 2012s become 45,000 and pay the car in cash...my personal opinion.

rory breaker

This has always been my train of thought as well, however as I get older I am becoming more attracted to owing less on my house. Especially with how low 15yr fixed rates are right now, it seems like a no brainer to put some money in your house to avoid a significant amount of interest paid.

And with the way things are going that tax deduction may not be around for too much longer!

Quadcammer

I wouldn't expect many issues from the m113 5.4l or the 722.6 tranny. They are both very solid. Sure, you have some electrical issues in the 203, but nothing hateful.

The 5.0 mustang in nicer trim is nearly $40k too.

Miller30

The more you put down the better.

CLS550

Hey guys quick update.

So I've decided to wait on the C63 for now and look for a 2005ish E55.

This will almost cut my payments in half. I'll try to find one with an extended warranty or get an extended warranty myself.

I'm planning on finding one for around 25k and then I can put 5k down and my payments will be only around $500 a month vs $1000 for the C63. This will allow me to save more and have a little fund for maintenance etc.

I am Jeff

I for one am very happy to hear that you're willing to take into consideration our opinions to you. Unfortunately, a 2005ish e55 isn't exactly the right path for you to take. What we all meant when we said save your money until you can truly afford a c63 without it being too much of a burden on you financially. A 2005ish e55 for 25k will not have a warranty, nor will it be a low mileage vehicle. The maintenance costs on those things are horrific without a warranty. Do yourself a favor and drive what you're driving for another year or two, before you buy a AMG vehicle. If you're really hell bent on a E55, you might as well buy a C63. The car will be under warranty, it's pretty much a trouble free vehicle.