Advice Needed: 2020 Taycan 4S

[TaycanIncoming]

Hi all,
Just need some advice on whether it's a good idea to purchase a 2020 Taycan 4S. I am 27 years old and the cost of ownership would come out to approximately $2200 per month (including payments, insurance, and depreciation). The $2200 is approximately 35% of my monthly income and I have no other loans / expenses. Should I wait for the 2024 model refresh? Is it not worth spending that much on a car right now or in this economy? The price of the 2020 4S is $110k and is a great spec. Thank you.

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[whan]

Is the 35% of your gross or net income? And if net, are you contributing at the minimum to your 401k matched by your employer, HSA maxed out, etc? Also, how are you calculating depreciation into the $2200? If its a % of gross, absolutely not. I'd say if its 35% of your net income, and you are pretty set up for your retirement and HSA, you might be able to swing the Taycan at 27 without kids. That being said, I do think it will cut into your ability to save for larger expenses in the future like a home downpayment.

Overall my recommendation would be no, even if its a % of net, and that's from someone who did buy a more expensive car in his late 20s. When I bought my used Audi R8 V10 (~$125k), I was making about $275k gross, and put $50k down on the car. On a net basis, and this was after good 401k/hsa contributions, the loan payments + insurance were ~20% of my monthly income

One other thing to note is that the Taycan is going to depreciate heavily. I was reasonably comfortable with the R8 because I knew it being a relatively iconic supercar with a V10 (and was also used, with original MSRP of $190k), it was going to hold its value ok over the next years. Big luxury sedans historically do horribly with depreciation, so a lot of the money you're paying in really just gets lost to depreciation.

For reference, I sold/traded my R8 after 4 years for ~$100k, which factored into only 20% depreciation in 4 years (I traded it pre-COVID so no benefit from the crazy car market). There's no way a Taycan will do that well in 4 years once the market returns to normal

 

[xyeahtony]

Go for it. I bought a Tesla at age 26. You just have to manage your expenses and lifestyle. I for one had no kids, and the only debt was a $1100/month mortgage. Now i'm in my 30s and make double what i did then, so i figured why not jump for a porsche, still no kids lol. Having dependents will drastically reduce whatever usable income you have so hold off on that.

 

[Tooney]

Is the 35% of your gross or net income? And if net, are you contributing at the minimum to your 401k matched by your employer, HSA maxed out, etc? Also, how are you calculating depreciation into the $2200? If its a % of gross, absolutely not. I'd say if its 35% of your net income, and you are pretty set up for your retirement and HSA, you might be able to swing the Taycan at 27 without kids. That being said, I do think it will cut into your ability to save for larger expenses in the future like a home downpayment.

+1.
Also take a look at posts in the Issues categories and others in the forum. Find out what the costs are for maintenance once your 2020 is out of warranty. For example: no cabin heat, windshield replacement, diagnose/fix electrical system errors, tires, etc. Include those in your cost of Taycan ownership.

 

[TaycanIncoming]

Is the 35% of your gross or net income? And if net, are you contributing at the minimum to your 401k matched by your employer, HSA maxed out, etc? Also, how are you calculating depreciation into the $2200? If its a % of gross, absolutely not. I'd say if its 35% of your net income, and you are pretty set up for your retirement and HSA, you might be able to swing the Taycan at 27 without kids. That being said, I do think it will cut into your ability to save for larger expenses in the future like a home downpayment.

Overall my recommendation would be no, even if its a % of net, and that's from someone who did buy a more expensive car in his late 20s. When I bought my used Audi R8 V10 (~$125k), I was making about $275k gross, and put $50k down on the car. On a net basis, and this was after good 401k/hsa contributions, the loan payments + insurance were ~20% of my monthly income

One other thing to note is that the Taycan is going to depreciate heavily. I was reasonably comfortable with the R8 because I knew it being a relatively iconic supercar with a V10 (and was also used, with original MSRP of $190k), it was going to hold its value ok over the next years. Big luxury sedans historically do horribly with depreciation, so a lot of the money you're paying in really just gets lost to depreciation.

For reference, I sold/traded my R8 after 4 years for ~$100k, which factored into only 20% depreciation in 4 years (I traded it pre-COVID so no benefit from the crazy car market). There's no way a Taycan will do that well in 4 years once the market returns to normal

Thanks for the response. 35% of net income. For depreciation, I set it to 10k per year (~$800 per month). I am contributing the minimum matched and I am single, no kids, no other financial expenses. If I take out depreciation it costs ~$1500 for the monthly payment and insurance.

 

[tomtom901]

Go for it, I ordered my Taycan at 28, got it at 29 . Super happy with it!

 

[whan]

Are you putting a pretty significant downpayment or long loan term? Otherwise $1,500 for monthly payment and insurance seems a bit on the low side for a $110k car (~$1,300 monthly loan payments in a 5 year term only repays $78k, excluding cost of interest)

If your scenario is as you stated above, I'd say you can swing it but it will limit your ability to save for other things going forward. If you have good visibility that your income will continue to increase meaningfully in the coming years, I think its easier to handle since it will impact you less and less

 

[TaycanIncoming]

Are you putting a pretty significant downpayment or long loan term? Otherwise $1,500 for monthly payment and insurance seems a bit on the low side for a $110k car (~$1,300 monthly loan payments in a 5 year term only repays $78k, excluding cost of interest)

If your scenario is as you stated above, I'd say you can swing it but it will limit your ability to save for other things going forward. If you have good visibility that your income will continue to increase meaningfully in the coming years, I think its easier to handle since it will impact you less and less

Yeah, putting 40k down. I see a good career trajectory but you never know in this market. Might go for it, but not sure if a 2020 is worth it.

 

[whan]

Yeah, putting 40k down. I see a good career trajectory but you never know in this market. Might go for it, but not sure if a 2020 is worth it.

I see - that makes sense. Honestly if you have $40k to be able to put down now, and keep the car for 4 years, at $10k per year depreciation you're essentially just losing the downpayment. If you feel comfortable with that coming out in 4 years, I think you can make it work.

I think from a financial perspective, it does make more sense getting a used 2020 vs. waiting for a new 2024, as the depreciation curve is steepest in the first few years. Your $10k a year estimate is probably reasonably close for a MY2020, but probably low for a brand new Taycan

I can't speak as much to issues for the first year cars. It seems lemons / issues were more likely, but there are also plenty of people who had no problems with their 2020s

 

[Redhot2474]

Debt to income is way to high. Do you plan on not having any future overhead ? Buying a house, investing in business, etc? There will be a point in time you won’t even have to ask this question, that’s the right time to buy one …..

PS if your net worth is not more than the car you’re buying , you know the answer - although you probably really know the answer anyway ….

PPS pic up a used model 3 performance for 35k and call it a day

 

[RAHRCR]

Simple answer is no. Taycan is a toy. All toys should be cash and carry. If you need a car and must finance, buy something you can pay off quickly (2-3 years).

Best to get this financial discipline early. Your 47 or 57 year old self will thank you.

 

[Archimedes]

You’re asking for opinions so…no. Your income is nowhere near enough to drive a six figure car (unless you’re sitting on $5mil+ in cash/investments). Bad decision.

 

[Ranman]

Figure out the value of that $110k if invested 20 years from now would be. At 8%, that's more than $500k. At 10%, it's $750k. Would a 47 year old TaycanIncoming be happy with 27 year old self for not having that cash? IMO, your net worth should be at least 5-10x the purchase of unnecessary luxury goods before I would consider it (total investments minus total debts). Looking at current year income isnt enough.

If you ask me, you should be heavily investing - maxing out your 401k and all other investment options and paying down debts (do you have college loans). You're future is way too unknown to make that type of commitment. Wife, kids, career issues, home, vacation plans, family issues, lifestyle changes, etc.

 

[Archimedes]

So, I’ve been drinking tonight, so I’m gonna chime in again and give you some real advice. You’re not gonna like it. I wouldn’t have wanted it at 27, but…

Don’t buy a six figure car. Not just because investing it makes way more sense at your age, but because it’s just not worth it. IMO, expensive cars just aren’t worth the money in terms of enjoyment, and only make sense when it’s couch cushion money.

Love my Taycan 4S. Was it worth $150,000?! No fucking way. But I’m at a point in my life where I have more money than time, so the money isn’t much of an issue. If I were 30 and had less than a couple mil saved, no way would I think buying a high end car was worth the money.

 

[TaycanIncoming]

Debt to income is way to high. Do you plan on not having any future overhead ? Buying a house, investing in business, etc? There will be a point in time you won’t even have to ask this question, that’s the right time to buy one …..

PS if your net worth is not more than the car you’re buying , you know the answer - although you probably really know the answer anyway ….

PPS pic up a used model 3 performance for 35k and call it a day

I have 0 debt, so I'm unsure how you are calculating debt to income, but I see your point.

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