Acceptable % net annual salary on car

scooby77

I'd find it hard to justify spending more than 50% of my net annual salary, on top of trade in, on a car. And i like my cars and do 20k miles per year.Yet, especially this year, colleagues, neighbours and friends seem to have no problem buying cars which I know are nearer 100% (Or more). Sales of new audi saloons and q series at my local dealer, by not particularly well off people, are well above normal.
I'm sure pcp is a factor.
so what do people think, what should one's limit be?

ianobrien

Personally I don't care. Once I can afford it and buy with cash (I'm not paying to borrow money if I can avoid it). I don't give a fig what you are driving or what's the first digits on the plate. I know what's in my drive is mine, not on PCP or bought thanks to the bank or credit union.



Oh ya, I only change my daily driver when its uneconomic to repair, never to keep up with the Joneses

Drummerboy08

Why are we obsessed with owning our cars in this country?

CiniO

Drummerboy08 wrote: »

Why are we obsessed with owning our cars in this country?

What do you mean by that?

CiniO

scooby77 wrote: »

I'd find it hard to justify spending more than 50% of my net annual salary, on top of trade in, on a car. And i like my cars and do 20k miles per year.Yet, especially this year, colleagues, neighbours and friends seem to have no problem buying cars which I know are nearer 100% (Or more). Sales of new audi saloons and q series at my local dealer, by not particularly well off people, are well above normal.
I'm sure pcp is a factor.
so what do people think, what should one's limit be?

I suppose it's all dependent on circumstances.
One person might afford to buy a car worth 200% his annual salary for cash.
And other person might struggle to get something worth 5% of his salary.

It all depends what your salary is and how much of this you are spending on other stuff.

challengemaster

CiniO wrote: »

What do you mean by that?

If I was to take a guess - He may be contrasting it with US culture where a significant proportion of the population at any time do not actually own their vehicles, they're all on finance - and more than that, there's a significant attitude to maintain having cars on finance. Americans tend to upgrade every 2-4 years by extending the contract/ period of finance.

Drummerboy08

CiniO wrote: »

What do you mean by that?

I don't understand why people insist on owning an asset that depreciates like a stone - I'm talking about new or nearly new cars here, not €1,000 bargain basement machines.

OSI wrote: »

Same reason we're obsessed with owning houses.

Which is why exactly (not being smart, genuinely don't understand it)

Celly Smunt

The roads are sniffing Celtic tiger territory lately and fair play! More Big beautiful cars for me to buy 2 years later with cash. It's been a hard slug dodging all the tdi audi's for the past few years.

Saw a nice jag today which might be mine in 2017.

ironclaw

There is no %, its what you can reasonably afford. The issue we has is no one has grasped the concept of affordability. Personally I enjoy a chuckle at people buying most 'new cars' here. They are the lowest of low spec with the poor box trim level. Was in Audi North recently and it was depressing the selection on show. I also love seeing the newer stuff as when the depreciation hits in 3 to 4 years, I can swoop in and take it

Celly Smunt

ironclaw wrote: »

There is no %, its what you can reasonably afford. The issue we has is no one has grasped the concept of affordability. Personally I enjoy a chuckle at people buying most 'new cars' here. They are the lowest of low spec with the poor box trim level. Was in Audi North recently and it was depressing the selection on show.

Sure who needs electric windows?

alias no.9

My current motor cost less than 3% of annual net salary, I've had it for nearly 18 months and it hasn't missed a beat. It is necessary however for others to spend disproportionately high amounts relative to their salary in order for the bangernomics end of the market to exist many years down the line

HandsomeDan

My rule of thumb is impact on lifestyle.

Will this puchase cost me to the point it impacts on my lifestyle, i.e meals with herself, family holidays, etc.. If so I don't get it..

Unless it's a awesome car. Then it's OK.

Valetta

Its a bit of a nonsensical question.

All depends on how long you keep the car.

A more realistic question would be:
"What % of your net annual income would you spend on the overall cost of owning and running a car?

I estimate mine at approx. 13% and am happy enough with that.

CiniO

Drummerboy08 wrote: »

I don't understand why people insist on owning an asset that depreciates like a stone - I'm talking about new or nearly new cars here, not €1,000 bargain basement machines.

Simple logic seems to tell us that owning those goods is the cheapest form.
If you lease a car from leasing company, their profit must come from somewhere so effectively you pay more for the car, don't you?

HandsomeDan

Valetta wrote: »

Its a bit of a nonsensical question.

All depends on how long you keep the car.

A more realistic question would be:
"What % of your net annual income would you spend on the overall cost of owning and running a car?

I estimate mine at approx. 13% and am happy enough with that.

That kind of thinking is lost on most folks. But yes, it's the annual cost of ownership that should be condconsidered.

testicle

OSI wrote: »

Same reason we're obsessed with owning houses.

Because renting cars is so expensive

Bpmull

Drummerboy08 wrote: »

I don't understand why people insist on owning an asset that depreciates like a stone - I'm talking about new or nearly new cars here, not €1,000 bargain basement machines.

But surly it makes more sense to own the depreciating asset than be paying back the money with interest. I don't really understand what other options you have without taking the bus.

Drummerboy08

CiniO wrote: »

Simple logic seems to tell us that owning those goods is the cheapest form.
If you lease a car from leasing company, their profit must come from somewhere so effectively you pay more for the car, don't you?

No, not really. There's VAT implications for a business to lease a car, there's also other benefits such as not tying up company money which can be used for other activities, balance sheet looks healthier etc etc. IMO, it's actually the best way for a business to have a vehicle from a financial point of view.

Bpmull wrote: »

But surly it makes more sense to own the depreciating asset than be paying back the money with interest. I don't really understand what other options you have without taking the bus.

There's plenty of 0% and next to 0% finance offers out there at the minute, and there always will be. Buy smart and it can work out better in the long term.

CiniO

Drummerboy08 wrote: »

No, not really. There's VAT implications for a business to lease a car, there's also other benefits such as not tying up company money which can be used for other activities, balance sheet looks healthier etc etc. IMO, it's actually the best way for a business to have a vehicle from a financial point of view.

Well, for business purposes it might be different, but to be honest I still think it just logically can hardly be cheaper to to lease than own a car.
Leasing company have to buy the car anyway, and make money.
And all tax savings you can achieve by leasing the car, could probably be made by buying a car on the loan or something.
But possibly I'm wrong here.
It's surely easier for business to lease the car, as you don't need to invest upfront, or take a loan which might not be available, so leasing might be the only option.
But in long run, it will probably end up more expensive. Otherwise leasing company would be at loss.

There's plenty of 0% and next to 0% finance offers out there at the minute, and there always will be. Buy smart and it can work out better in the long term.

I don't know. I've never purchased anything in this world for borrowed money or on any kind of finance, and this seems to work for me. No problem with worrying about repaying debts.

166man

Drummerboy08 wrote: »

Why are we obsessed with owning our cars in this country?

It's not just cars people are obsessed with owning in Ireland.

Valetta

166man wrote: »

It's not just cars people are obsessed with owning in Ireland.

That's another obtuse statement.

Care to elaborate?

myshirt

Buy appreciating assets.
Lease depreciating assets.

That's what they'd teach you on a business course.

The inability to defer self gratification is the single biggest cause of stress, debt, fights with the wife, etc.

If you can't afford it, you don't buy it. Keeping up with the Joneses has crippled people in this country. Plain and simple lads, the time for dick measuring contests has passed, if you've any sense.

There's a time to learn, and a time to earn. And people want to move too quick. I remember the guy on a certain radio station a couple years ago who said things had got so bad he was down to his last 20 grand. Will you ever go away and f#ck off.

Personally, I try to spend my money where I spend my time. So mostly that happens to be either in a good pair of shoes, on 20k+ miles in my car, and on a mattress. And beyond that I spend my money on memories; as in time with my kids, holidays, activities etc, because I feel I get more value for my money there than spending it on physical items.

Spend your money where you spend your time, wherever that may be.










Alternatively, take the view that life is too short to be driving a Focus, and just go mad :pac:

Valetta

myshirt wrote: »

Buy appreciating assets.
Lease depreciating assets.

That's what they'd teach you on a business course.

The inability to defer self gratification is the single biggest cause of stress, debt, fights with the wife, etc.

If you can't afford it, you don't buy it. Keeping up with the Joneses has crippled people in this country. Plain and simple lads, the time for dick measuring contests has passed, if you've any sense.

There's a time to learn, and a time to earn. And people want to move too quick. I remember the guy on a certain radio station a couple years ago who said things had got so bad he was down to his last 20 grand. Will you ever go away and f#ck off.

Personally, I try to spend my money where I spend my time. So mostly that happens to be either in a good pair of shoes, on 20k+ miles in my car, and on a mattress. And beyond that I spend my money on memories; as in time with my kids, holidays, activities etc, because I feel I get more value for my money there than spending it on physical items.

Spend your money where you spend your time, wherever that may be.










Alternatively, take the view that life is too short to be driving a Focus, and just go mad :pac:

I don't think the internet is big enough to cope with all the cliches in that post, and it achieved the unenviable result of making no sense .

myshirt

Valetta wrote: »

I don't think the internet is big enough to cope with all the cliches in that post, and it achieved the unenviable result of making no sense .

How?

I'm plainly saying that this pressure to own your own house, own your own new car, etc, it's too much. That's it, nothing intended to be cliche.

A lot of people in debt they really don't need to be.

Asmooh

Drummerboy08 wrote: »

Why are we obsessed with owning our cars in this country?

What's up with the people want to take public transport for everything? busses and trains that are busy, shopping and taking all your bags in the bus/train? or how about if you have a baby etc?

dogmatix

Valetta wrote: »

Its a bit of a nonsensical question.

All depends on how long you keep the car.

A more realistic question would be:
"What % of your net annual income would you spend on the overall cost of owning and running a car?

I estimate mine at approx. 13% and am happy enough with that.

That got me thinking and after a few calulations, I reckon my current car is costing me 18% of my net salary to run.

Stallingrad

Valetta wrote: »

and it achieved the unenviable result of making no sense .

Couldn't disagree with you more.

Idbatterim

If you can't afford it, you don't buy it. Keeping up with the Joneses has crippled people in this country. Plain and simple lads, the time for dick measuring contests has passed, if you've any sense.

but this is a grey area, I see a lot of new 151 cars and think nothing of them, they are cheap to buy, cheap to run, fine if thats what the owners want. Should I be more impressed with that car than the several year old BMW, Audi, Merc on the road, because I personally am not, quite the opposite, I simply judge the cars on the car itself. I wouldnt be wow, there is a 151.

The keeping up with the Joneses to me would be new or newish car and a premium marque...Although I suppose keeping up with Jones is relative, I mean in less affluent area, maybe the reg alone on an avensis, mondeo is enough to do it... move somewhere else and it becomes the merc, audi, bm, in very small pockets of Dublin it might be the Porsche, Maserati, Ferrari etc...

scooby77

dogmatix wrote: »

That got me thinking and after a few calulations, I reckon my current car is costing me 18% of my net salary to run.

Over approximately 20k miles in 2014 my car cost me 11% of my net salary to run (fuel, tyres, tax, insurance, service and 1 minor repair). That doesn't include depreciation, though as it's an 08 that's less every year!
Looking at this figure is what prompted my original post, how can people justify spending a large % of their salary on buying a car when other motoring costs are so high? (yes, my mileage is above average for a private owner, but still!)

dogmatix

Aye - like yourself I have not factored in depreciation (its a 2003 model), but have factored in the likes of tyres every 12 months, 2 services per year (every 12k), nct, AA, road tax, insurance and of course fuel. I'm currently putting in 23k p/a - up from 9k last year.

I'd prefer a public transport option, as I hate commuting by car but from where I am (south wicklow - N81 side), there is no other option but the car.

Last year I had the option of the 151 bus, the 79A, a private AMC coach, a 10 minute train trip into Hueston or cycling along the grand canal to get me into work. You never realise how lucky you are until it's gone and you have to rely on an ageing car with an increasingly distressed sounding engine to get you where you want to be!

enda1

dogmatix wrote: »

Aye - like yourself I have not factored in depreciation (its a 2003 model), but have factored in the likes of tyres every 12 months, 2 services per year (every 12k), nct, AA, road tax, insurance and of course fuel. I'm currently putting in 23k p/a - up from 9k last year.

I'd prefer a public transport option, as I hate commuting by car but from where I am (south wicklow - N81 side), there is no other option but the car.

Last year I had the option of the 151 bus, the 79A, a private AMC coach, a 10 minute train trip into Hueston or cycling along the grand canal to get me into work. You never realise how lucky you are until it's gone and you have to rely on an ageing car with an increasingly distressed sounding engine to get you where you want to be!

I think I see a solution to your conundrum...

stefanovich

dogmatix wrote: »

'm currently putting in 23k p/a - up from 9k last year.

23k running cost a year? Really? What is it, a Lamborgini Diablo?

Toyotafanboi

stefanovich wrote: »

23k running cost a year? Really? What is it, a Lamborgini Diablo?

I think he's putting his commute at 23k miles

dogmatix

stefanovich wrote: »

23k running cost a year? Really? What is it, a Lamborgini Diablo?

Ahh, I see the problem. That figure refers to my milage. So I am currently putting in 23000 miles a year - up from 9000 in previous years!

Carson10

I have had my car 8 years (MK4golf) and if I sold it tomorrow I would have lost only €4000 over 8 years. No loans. No banks, NO Pcp. Have Covered 81,000 miles. tax only €385 per year. get just under 500 miles per tank. 1.4 petrol.