Yeah, I'm gonna spend the next couple weeks obsessing about this. For a med student, what would you say the max cost per month for a lease should be?
Also, definitely interested in your signature about frequent flier miles. I will be flying home to see family and friends on breaks and stuff, so I was was hoping to learn what airlines and credit cards had good rewards stuff.
thanks!
Tough to say about the budget thing, as it's all kind of relative to your financial situation. I was just mentioning it to say that you need to argue down whatever rate they offer you. For my current car, their first offer was $268 a month plus standard down payment and my dad negotiated down to $179 a month. It's car sales, there are no straight shooters unfortunately. Do your research and simultaneously talk to other dealerships to see the clear picture on pricing.
On a med school budget with no outside help or income, you're going to be kind of limited for budget. Most authorities recommend anywhere from 10% of pre-tax income for payments/insurance to 15% of post-tax income covering all transportation expenses (so gas, oil changes, etc also). Assuming $20k living expense loans as your "post-tax" income (equates to $26k "pre-tax), that would leave you with a budget of $1666/$2166 per month "post-tax"/"pre-tax". Based on the metrics above, your guidelines would be $216/month for payment/insurance or $249/month for all travel expenses (which seems a bit low to me even for just payment/insurance/gas). There are a TON of variables with insurance, but for the sake of argument let's use the average cost of $815 per year or $68 per month. That leaves you with a budget of $148/month for your lease payment or $183 for your payment and all monthly expenses except for insurance (which again strikes me as a bit low). It's just a really crude estimate, but assuming you can get something with great fuel economy and a reliable track record I'd tentatively say that $150 should be your monthly payment target if you do not have any other financial means besides the loan money. And even that is cutting it very, very close when it comes to other expenses associated with having a vehicle. But your options will be extremely limited if we go any lower, so $150 it is for this hypothetical. If you can save money on rent or something (standard advice is 30% of pre-tax income for rent, so $650 for rent/utilities in your case), you might have some flexibility there. Also don't forget a down payment. The more you throw down the less you will pay monthly. I have put about $3k down for mine both times I think, but some do more and some do less. I did not factor a down payment into the above rough calculations, so you may need to use an outside savings account or help from family to cover it if you plan to stick to the budget we outlined here.
Working on this budget, you'll really want to try to sign the lease during a sale or promotion. That will be hard with limited time available, but look for 4th of july sales or maybe labor day sale events at dealerships in your area or nearby cities. This will help you start the negotiating at a lower price from the get-go. You may also get lucky with a salesperson who is more concerned about volume over margin due to internal competitions surrounding the dealership sale, so you can generally work a better deal under these conditions. Get your credit score in shape first too, as this will influence the bottom line lowest rate you can get. Have your parent lease the car in their name if their credit is significantly higher than yours. If you're not too concerned with loading it with features, you can probably find a decent assortment of options in the $149-$179/month range with brands such as Ford, Honda, Chevy, Jeep, etc. and even some less common ones like Fiat if you're into that. Do a google search for leases under $200 and find the most recent article. Keep in mind that prices you see are able to be negotiated and should only be used as a starting point.
As for the credit card stuff, I'll PM you.
Hope it helps man, and good luck!
