Are you thinking of buying a Porsche?
If so, you need to figure out how much your earning should be to buy a Porsche. Once you estimate that, you won’t overstretch yourself financially.
I will today answer this question.
How much do I have to make to afford a Porsche?
When you’re looking to buy a Porsche, you have to decide whether you want to get it with financing or without financing. Only, in that case, you can know the income which you need for the same.
• With financing:
For example, when you opt for financing, a Porsche 718 will cost you approximately $ 12,000 annually with five-year financing. Depending on the interest rate, the yearly payment might reduce or increase a bit.
As a rule of thumb, the payment of your car should not exceed 20% of your net income. That is why, after taxes, you should earn at least $ 60,000.
When you buy it with financing, it is a good idea to opt for a 20% down payment. Only when you have that ready, and you meet the income criteria can you afford a Porsche.
• Without financing:
Of course, when you want to buy it without financing, you will have to shell out the entire amount.
However, spending more than 10% of your net worth on a Porsche car is not sensible. That is why, in this case, you have to look at your finances and net worth.
Only when the amount is less than 10% of your Net worth can you go ahead and afford a Porsche.
A Porsche 718 will cost you around $ 110,000. It means that your net worth should be more than $ 1.1 million. Only then can you go ahead and get it without financing.
This is for the upfront cost of Porsche. However, you have to take into account the maintenance cost.
Only when you have an idea regarding the maintenance and fuel can you truly decide whether you can afford a Porsche or not.
How much does the maintenance of Porsche cost?
Generally speaking, the car’s operational cost and the vehicle’s maintenance cost will depend on the overall price.
If I extend the above example of Porsche 718, the cost of $ 110,000 means that you can safely assume a monthly operating cost of $ 550.
If you drive less, the monthly cost will be less, but it is good to be prepared for a 2% monthly cost. Only, in that case, you can afford a Porsche.
How much will the fuel of Porsche cost?
The efficiency of Porsche cars is such that on a gallon, they can drive around 10 miles. If you go for the hybrid ones, it can drive 50 miles on a single gallon as well.
Currently, the price of a gallon is $ 3.5.
You have to take into account your daily driving distance. You have to assume that you will drive 20% extra once you buy the Porsche.
Accordingly, you have to take into account the fuel consumption of the Porsche. After that, you will know how much you will need for fuel.
Only if you can afford that comfortably, you have to go ahead and get a Porsche.
There are a few other factors on which it will depend whether you can afford a Porsche or not. I will highlight these factors below.
4 things to consider if you can afford a Porsche:
The 4 factors which will truly help you understand whether you can afford a Porsche or not include:
1. Take your net income into account:
Many prospective car owners make the mistake of taking their gross income into account. You will have to pay taxes on it and various other charges. You might have investments getting deducted from that amount as well.
Instead of making this mistake, it is a good idea to take your net income into account. Once you do so, you can determine whether you can afford a Porsche or not.
The numbers I have highlighted above should be considered concerning your net income and not your gross income.
2. Consider other monthly payments:
Other than your car, you will have mortgage payments as well as credit card loans. It is common practice to have these other monthly payments as well.
Once you include the monthly payments of Porsche, your cumulative monthly payments should not increase more than 40% of your net monthly income.
Ideally, this figure should be around 25%.
Only when you can meet this criterion can you go ahead and get a Porsche.
3. Stability of income:
How stable is your income?
When you’re buying a Porsche, you’re taking up a financial commitment of 5 years when it comes to the auto loan.
Besides that, the insurance cost, as well as the maintenance cost of Porsche, will keep on going up even after 5 years.
Only when you have a completely stable income, it makes perfect sense to go with a Porsche.
If you want to be entirely financially safe, it is a good idea to have diversified income sources. In that case, you will not have to worry about making the monthly payments.
The stability of the income matters a lot when you’re planning to buy a Porsche.
4. Future expenses:
Most prospective Porsche owners take into account their current income and their current expenses. The problem is that in the future, you might have higher expenses.
It can be the College of your kids or buying a new property, or some other such expense.
You have to constantly keep leeway of 10% to 15% for future expenses. In that case, even if you encounter unexpected expenses in the future, you can make your payments on time.
That is why you have to take this factor into account.
Only after considering these 4 factors will it become easier for you to decide whether you can afford a Porsche or not.
So, depending on whether you’re buying a Porsche with financing or not, the affordability criteria will vary. In the case of financing, your net income should be upwards of $ 60,000. This is assuming that in both cases, you buy a Porsche 718. In case of buying a Porsche without financing, your net worth should be at least 10 times the cost of the car.
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