Can I afford a ~$30,000 car on $105,000 salary
Mid-to-late 20s male, currently renting.
Current finances:
$57k in an investment account
$42k in a 401(k), contributing up to company match
$22k in savings
My current car was paid for in cash, but it has started developing issues. I would prefer to get ahead of any major repairs and either sell or trade it in while it still has reasonable value.
I was offered approximately $8,000 on trade-in, and I would put an additional $10,000 down. That would bring the payment on a 36-month loan into the low $500/month range. This is something I am comfortable with.
Part of me feels that taking on a car payment could negatively impact my finances, especially since I have avoided debt up to this point. On the other hand, I would genuinely enjoy owning a nicer car, and it is something I have wanted for a long time.
I have been shopping within this price range, and based on everything I have researched, the purchase appears to be within my financial limits. I do not plan on purchasing property for at least another four years, and I do not believe this decision would materially damage my long-term financial position. That said, I do understand the importance of compounding wealth and opportunity cost.
I’m looking for objective input on whether this seems financially reasonable or if I am overlooking something important.