What % of annual income would you spend on a car?

JohnCleary

Leaving aside servicing costs, what's a sensible figure (in your opinion) of the actual purchase price.

Considering a 2 year old CAR which equate to about 60% of annual income. This is coming out of savings, not a loan etc.. - Once purchased, the money is a write-off to me. Anything I get in re-sale is a bonus (it'll depreciate like a lead balloon, hence writing it off)

Only toying with the idea, as the OH would lean towards an ANOTHER MODEL Estate, which to be honest, would be more practical.... would also be cheaper to purchase and maintain... but that's not an issue.



-EDIT- After actually looking at it, would be approx. 60% of annual income, not 80% as initially mentioned.

canonball5

JohnCleary wrote: »

Leaving aside servicing costs, what's a sensible figure (in your opinion) of the actual purchase price.

Considering a 2 year old S-Class which equate to about 80% of annual income.

Only toying with the idea, as the OH would lean towards an E-Class Estate, which to be honest, would be more practical.... would also be cheaper to purchase and maintain... but that's not an issue.

(I'm decided on a Merc, having had a C220 Avantgarde 'AMG' for the past 6 years and not a days bother apart from changing the rear brake pipes)

I'm not sure if you're joking or not but 80% of your annual income spent on a vehicle that will diminish in value on a daily basis is utter madness.

listermint

This post feels very familiar,


and just as idiotic as the last time.

CiniO

I never spent more than 40% of my annual income on a car purchase. (Except from my first car which my granny bought to me when I was 19 and I had no income then so it can't be measured).

But around 1997 my parents (both working as teachers in Poland) bought brand new 0.7 litre fiat cinquecento. I estimate they must have spend about 100% of their annual salaries each. (200% of the individual salary).

So all depends on circumstances.

Del2005

You could spend 200% of your annual income on a car with no issues if you have savings. Someone else could struggle with 1% if they are living pay day to pay day.

So spend what you can afford.

JohnCleary

Just to be clear, this is coming out of savings, so to be honest the purchase of it won't make a blind bit of difference.

Once it's bought, the money is a write-off. Anything I get come re-sale is a bonus (it's going to depreciate like a lead balloon).

I'm not looking for advise, i'm looking for opinions on what % of your annual income you'd spend on a car.

It's my money lads, i'll spend how I please

J.pilkington

What a strange post (almost yet another failed effort at boasting about money / savings).

Anyways if you are serious (doubt you are) Tesla would be where my money and it’s almost free money if you can route it via your employment as there ya zero BIK for the moment. The x% if salary thing is pointless as there are so many other factors outside purchase price.

JohnCleary

Wow. I guess some.people can't have nice things.

I don't care about BIK. I am buying this for myself.

Why would I boast about money / savings to a bunch if people on an internet forum who I don't know?

I tried asking a simple question and people's experiences and I get is begrudging answers, wow. Althpugh thanks to thise who replied with actual statistics.

With a sizable purchase, I assumed % of income would indeed be important. Ring a bell with 3.5x income for mortgage, anyone?

I'll post a pic to the "pics of your car" thread when I make my mind up, I love viewing that thread.

J - why would you think someone would not be serious about an S or an E? They're not supercars ffs, they're all over the place.

MojoMaker

You're some t*sser in fairness JC. Get over yourself.

Why don't you just publish the last line of your payslip and be done? :pac:

J.pilkington

JohnCleary wrote: »

Wow. I guess some.people can't have nice things.

I don't care about BIK. I am buying this for myself.

Why would I boast about money / savings to a bunch if people on an internet forum who I don't know?

I tried asking a simple question and people's experiences and I get is begrudging answers, wow. Althpugh thanks to thise who replied with actual statistics.

With a sizable purchase, I assumed % of income would indeed be important. Ring a bell with 3.5x income for mortgage, anyone?

I'll post a pic to the "pics of your car" thread when I make my mind up, I love viewing that thread.

J - why would you think someone would not be serious about an S or an E? They're not supercars ffs, they're all over the place.

Because your first post reads like you are looking for advice when all you are really doing is telling a “bunch of people on an Internet forum” that you are “buying” an a class from savings. That’s what I find odd. At least be open about it

My comment about BIK savings is lost on you. Go look it up, for those looking to buy a car like an s class then it’s very appealing.

kermitpwee

There is no arbitrary % in general. The yanks have % for everything. At the end of the day from a financial point of view what your doing makes no sense.
Life isn't always about financial goals so ask your self 4 questions in no particular order.
1. Can i afford it?
2. Do i really want it?
3. If i buy it will i leave myself short of money if an emergency/rainy day happens in the future?
4. Is there a better car out there for the same/less money that will satisfy my desires/needs i.e have i done my research to rule out impulse buying.
If you can answer these questions to yourself in a satisfactory manner you should purchase the car and enjoy it.
Good luck with it.

MisterAnarchy

I knew a guy and his motto was he'd never spend more on a car than a good night out .

JohnCleary

J.pilkington wrote: »

Because your first post reads like you are looking for advice when all you are really doing is telling a “bunch of people on an Internet forum” that you are “buying” an a class from savings. That’s what I find odd. At least be open about it

My comment about BIK savings is lost on you. Go look it up, for those looking to buy a car like an s class then it’s very appealing.

There, I edited the OP so now it just says CAR, happy now?

I'm well aware of BIK. Just because I don't want to receive BIK does not mean lack of knowledge.

I'd be more interested in hearing what % of annual income people would be happy spending on a car... doesn't matter what make / model or earnings... it's all relative.

JohnCleary

MojoMaker wrote: »

You're some t*sser in fairness JC. Get over yourself.

Why don't you just publish the last line of your payslip and be done? :pac:

You're some begrudger, but this is commonplace in Ireland... you fit right in :P

I seem to have hit a nerve with you. Instead of being a green eyed monster, spend that time working harder, and you too will be able to have nice things.

JohnCleary

kermitpwee wrote: »

There is no arbitrary % in general. The yanks have % for everything. At the end of the day from a financial point of view what your doing makes no sense.
Life isn't always about financial goals so ask your self 4 questions in no particular order.
1. Can i afford it?
2. Do i really want it?
3. If i buy it will i leave myself short of money if an emergency/rainy day happens in the future?
4. Is there a better car out there for the same/less money that will satisfy my desires/needs i.e have i done my research to rule out impulse buying.
If you can answer these questions to yourself in a satisfactory manner you should purchase the car and enjoy it.
Good luck with it.

Point 2 and 4 really stand out.

2: Yeah, I want it, but do I *really* want it?

4: This is a mega point. As I mentioned, for cheaper, I can get a newer estate with the majority of the same comforts (a lot of features of the other car, I won't use). The estate would also be much more practical.

The original Saloon I mentioned would indeed be an impulse purchase as it's just out the road and just in. Regarding the estate, I would do far more research / shopping around.

kermitpwee

JohnCleary wrote: »

Point 2 and 4 really stand out.

2: Yeah, I want it, but do I *really* want it?

4: This is a mega point. As I mentioned, for cheaper, I can get a newer estate with the majority of the same comforts (a lot of features of the other car, I won't use). The estate would also be much more practical.


The original Saloon I mentioned would indeed be an impulse purchase as it's just out the road and just in. Regarding the estate, I would do far more research / shopping around.

The old advice i was told but then again there isn't much fun in this was!
If your not sure leave it 30 days, if you still want it then buy it!
The estate are a beautiful car.
I get the feeling your are not buying it for practicality reasons. If it's truly practicality that wins you may even buy something else.
There is nothing better than sitting/driving a car you really like. Even approaching it to get in can be exciting.
People say it rubs off when you start paying the loan. That wont happen in your case which is a good thing.
Practicality is for people on a budget or that are frugal by nature.
If you want that saloon buy it is my advice!

JohnCleary

kermitpwee wrote: »

The old advice i was told but then again there isn't much fun in this was!
If your not sure leave it 30 days, if you still want it then buy it!
The estate are a beautiful car.
I get the feeling your are not buying it for practicality reasons. If it's truly practicality that wins you may even buy something else.
There is nothing better than sitting/driving a car you really like. Even approaching it to get in can be exciting.
People say it rubs off when you start paying the loan. That wont happen in your case which is a good thing.
Practicality is for people on a budget or that are frugal by nature.
If you want that saloon buy it is my advice!

The heart says the Saloon, the head says the Estate. This is from always having a Saloon, and always wishing I had just that bit more space for hobbies (lots of boating gear, SCUBA etc...) - Every weekend it's a case of 'if we just had that bit more space'.

The new estates (2017 up) look amazing from the front. But at the end of the day, it's an estate. However, now that i'm in my early 30's, i'm not *all* that bothered about just looks, but I still have to like the look of what I drive.

Either way, this won't be happening for a few weeks, so by then, I think the impulse in me will have settled and I will think practically. And I am dead set on that German brand starting with M, no argument. I've loved my current (and first) one for the past few years, so nothing will change there.

Wishbone Ash

Del2005 wrote: »

...So spend what you can afford.

Do you mean spend as much as you can afford? I don't really get that. I don't think I've ever spent more than €20k on a car. I could afford to spend more than twice that but they don't mean enough to me as such so I'd consider it a waste.

(That said, I probably spend on other things that many people wouldn't.)

Heres Johnny

Yeah it's a bit silly asking what % of income to spend on a car and omit some items like servicing.
At the moment I've worked out my car costs me about 100 euro a week or 5000 a year.

20 tax (2.5 petrol 2006 car)
30 fuel ( sub 30 mpg)
20 depreciation (1000 a year at this stage)
20 servicing and repairs (1000 a year)
10 insurance (500 a year)

That's an amount I'm happy with paying for a car. I'm not saying what proportion of income it is, who cares?
However it also shows how a big older car (e60 5 series sport) can be owned and run for cheap enough compared to any new car you can mention really. Only today had someone gasp when I mentioned it's petrol.

ironclaw

Put it another way, the rich don't buy depreciating assets. Anyone with serious cash won't invest in something that's ultimately going to diminish in value. I didn't really get this until I started spending time with some of the drivers from the exotic rallys (Bullrun, Gumball etc) The cars are either wholly leased in the very short term or owned by their companies, not a single soul owned one save for the ultra rare or appreciating models. And it makes perfect sense as you can make the car work for you and write off the leasing terms if done right.

As an 'ordinary' individual, if you want a nice car, you are far better off leasing it or going on PCP in my view. Even if you only use your lump savings to make the payment each month. At least then you retain the cash asset as opposed to giving it all to someone else in one go. The time value of money is important to consider here. Imagine you suddenly needed a large wad of cash, it's easier to hand back a car than it is to try sell it.

Alternatively, buy a super nice car that's a couple of years old. I'd happily land €10k into an older Porsche Boxster / Caymen because it's hit rock bottom in terms of depreciation, will be fun to drive and I can use the lump sum to pay for any expenses. A Porsche is still a Porsche.

Another way to look at it is, do you want a nice car or do you want a new car? Very different in some cases. Anyone can drop 30k on a new 2018 Hyundai, but I'd consider the 30k on an older 911 Porsche a better investment as in the same time period, say 3 years, you'll lose half on the Hyundai but maybe 5k on the Porsche. Assuming you put all your money down in one go.

Ultimately, in my view, there is no answer. It's down to yourself as it's your money but I'd strongly advise against using cash to buy a new car outright.

DriveSkill

I think a better % to look at would be what is the % of your savings you are spending ?


If you have 500K+ in the bank then spending 10% or so on a car that you are going to enjoy might make sense - no loan interest payments etc.


However if you only have 60K in the bank and you spend 90% of it on a car that does not really make sense from a financial point of view but then it is your money so if it makes you happy and you are comfortable with the remaining savings then go for it!

Voodoomelon

ironclaw wrote: »

Put it another way, the rich don't buy depreciating assets. Anyone with serious cash won't invest in something that's ultimately going to diminish in value. I didn't really get this until I started spending time with some of the drivers from the exotic rallys (Bullrun, Gumball etc) The cars are either wholly leased in the very short term or owned by their companies, not a single soul owned one save for the ultra rare or appreciating models. And it makes perfect sense as you can make the car work for you and write off the leasing terms if done right.

As an 'ordinary' individual, if you want a nice car, you are far better off leasing it or going on PCP in my view. Even if you only use your lump savings to make the payment each month. At least then you retain the cash asset as opposed to giving it all to someone else in one go. The time value of money is important to consider here. Imagine you suddenly needed a large wad of cash, it's easier to hand back a car than it is to try sell it.

Alternatively, buy a super nice car that's a couple of years old. I'd happily land €10k into an older Porsche Boxster / Caymen because it's hit rock bottom in terms of depreciation, will be fun to drive and I can use the lump sum to pay for any expenses. A Porsche is still a Porsche.

Another way to look at it is, do you want a nice car or do you want a new car? Very different in some cases. Anyone can drop 30k on a new 2018 Hyundai, but I'd consider the 30k on an older 911 Porsche a better investment as in the same time period, say 3 years, you'll lose half on the Hyundai but maybe 5k on the Porsche. Assuming you put all your money down in one go.

Ultimately, in my view, there is no answer. It's down to yourself as it's your money but I'd strongly advise against using cash to buy a new car outright.

All very wise words. Nice car or a new car, like you say are two very different things. A new E220d Mercedes will lose you €25,000 in 3 years.

Pick up a used Bentley Continental for €35,000 and in 3 years sell it for... €35,000. A mega difference in running costs, but one will lose you FAR more money and its not the Bentley.

MarkN

Lumping savings into paying for a car is utter lunacy. Pay for the length of time you want to use the car not the price of the car.

Heres Johnny

It all depends on your lifestyle too. Keep a motoring budget you are happy with.
I love cars and would love a newer 5 series than the e60 I have or even a 6 series GC in the 20-25k range and I could afford them, but I also love buying stuff for my house, weekends away, eating out, going for pints, treating the GF, so the motoring budget is what it is.
100 euro a week. Happy with what I have. Could probably get into f10 530d pretty soon for same budget.

DaveyDave

I looked this up recently actually. All articles were the same. 10% of your salary if it's purely for A to B, 20% of your salary if you want it to be reliable and 50% if you like cars. Not a very in depth article. I believe 30% of your income should be for rent/mortgage so 50% would be an awful lot on a car.

I think my car costs are maybe 25% for the year, before tax. This includes 1/3 of the deposit, fuel, tax and insurance along with the monthly payments.

ShadowHearth

When you talking about buying car out pf savings, then anual % is redundant, or am I wrong?
I always assumed when people talk about anual % one car, is when they mean monthly payments.

I never did this percentage thing, I would just check how much I can afford on a car payments without compromising my day to day life.
For example I am paying 272eu car payments and 240eu per month in to separate account to be able fully cover pcp baloon. Over a year in and all is stable.

CiniO

ShadowHearth wrote: »

When you talking about buying car out pf savings, then anual % is redundant, or am I wrong?
I always assumed when people talk about anual % one car, is when they mean monthly payments.

I never did this percentage thing, I would just check how much I can afford on a car payments without compromising my day to day life.
For example I am paying 272eu car payments and 240eu per month in to separate account to be able fully cover pcp baloon. Over a year in and all is stable.

I thought that what op was asking was what percentage of your annual income was the car price. Nothing to do with monthly repayments or cost of keeping it on the road.

Fe someone's on 50k a year and buys a car for 25k, that's 50%

mikeecho

MarkN wrote: »

Lumping savings into paying for a car is utter lunacy. Pay for the length of time you want to use the car not the price of the car.

No..
I pay cash, the car is mine, no interest to pay, not gonna be stuck at the end of a month for payments.

I can save towards my next car.

If I have a month with unexpected bills.. my savings will cover that.

Cash is King.

mikeecho

mikeecho wrote: »

No..
I pay cash, the car is mine, no interest to pay, not gonna be stuck at the end of a month for payments.

I can save towards my next car.

If I have a month with unexpected bills.. my savings will cover that.

Cash is King.

Not much good if you want something other than a good few years old used car though. That doesn’t cut it for a lot of people who want new or nearly new cars or who want something that isn’t your run of the mill car.

In any case finance is the best way to pay for a car, even millionaires buy cars on finance.

Charles Babbage

This thread is a bit silly. If you buy a €30,000 car, keep it a couple of years and get €20,000 for it, is that any different than having a €25,000 car which ends up being worth €15,000?

mossym

mikeecho wrote: »

No..
I pay cash, the car is mine, no interest to pay, not gonna be stuck at the end of a month for payments.

Buying a car on finance and being stuck at the end of the month for payments are not mutually inclusive . You may not have been saying that, but the overall tone on boards always seem to be that people who buy on finance, loan or pcp, are stretched. Lots buy cars on finance and could quite comfortably afford more if they wanted.

DaveyDave

mikeecho wrote: »

No..
I pay cash, the car is mine, no interest to pay, not gonna be stuck at the end of a month for payments.

I can save towards my next car.

If I have a month with unexpected bills.. my savings will cover that.

Cash is King.

I don't pay interest and can also save towards my next car. I'm also saving for a mortgage. Just because someone has monthly car payments doesn't mean they're stuck for money. I started my last job minimum wage working pay cheque to pay cheque, having 70 cent in the bank the day by the end of the month. Soon I started putting 300-400 away each month and still had plenty to work with each month. I just stopped wasting it on buying things and getting takeaways too often.

As long as someone is halfway decent with savings there isn't an issue and that's needed as proof for financing. If something comes up I have the money there.

mossym wrote: »

Buying a car on finance and being stuck at the end of the month for payments are not mutually inclusive . You may not have been saying that, but the overall tone on boards always seem to be that people who buy on finance, loan or pcp, are stretched. Lots buy cars on finance and could quite comfortably afford more if they wanted.

Everyone is different and I'm sure there is indeed people out there stretched paying for their car, but before PCP was a thing people were still financing cars. This is what annoys me the most. Claiming the bubble is going to burst etc, they make it sound like people were paying €30,000 cash to buy their cars a few years ago. People financed cars. If anything it's better now due to lower interest rates on PCP.

Nothing wrong with paying cash outright for a car but average Joe won't get a new car with that and most of us don't mind monthly payments.

James Bond Junior

DaveyDave wrote: »

I don't pay interest and can also save towards my next car. I'm also saving for a mortgage. Just because someone has monthly car payments doesn't mean they're stuck for money. I started my last job minimum wage working pay cheque to pay cheque, having 70 cent in the bank the day by the end of the month. Soon I started putting 300-400 away each month and still had plenty to work with each month. I just stopped wasting it on buying things and getting takeaways too often.

As long as someone is halfway decent with savings there isn't an issue and that's needed as proof for financing. If something comes up I have the money there.



Everyone is different and I'm sure there is indeed people out there stretched paying for their car, but before PCP was a thing people were still financing cars. This is what annoys me the most. Claiming the bubble is going to burst etc, they make it sound like people were paying €30,000 cash to buy their cars a few years ago. People financed cars. If anything it's better now due to lower interest rates on PCP.

Nothing wrong with paying cash outright for a car but average Joe won't get a new car with that and most of us don't mind monthly payments.

You’re not wrong in theory but the problem is PCP needs people to buying cars when they are 3 years old to keep the PCP wheel turning. The people buying on PCP were the buyers of those 3 year old cars, finance or not, and where they will get stung is on the next car, the monthly cost will skyrocket as the GMFV is much lower as it can’t compete with buying a new car in PCP. We have a pcp car in this house and I can’t see why it would be traded in against a new one again until the balloon payment is paid off and a new deposit saved tbh.

TheBoyConor

I spent 2.9% of my gross income on my current car. 04 Almera I have 4 years, bought for 1100, aside from tyres it doesn't get serviced and I intend to drive the fúcker into the ground until the wheels fall off. Cheaper motoring there could not be.

JohnCleary

Interesting opinions, cheers.

Having looked at both cars, i've decided it'll be a 2017 E Class Estate. However, as currently have a C220, I want to go up in power, so it'll be a trip to the UK, I suspect... ideally want an E300 (or similar).

Now the shopping begins... nightmare :pac:

tu2j2

I spent 2.8% of my meagre salary on my car.

That bought me something 11 years old, petrol, with 260hp that will never depreciate and still looks and drives good.

Only way I'd spend more than €5k on a car again (spent 6 once and didn't enjoy it ) is if it was something very special.

Really don't see the point otherwise, but thats just me. I do on occasion look at brand new golf r's and the like but the monthly repayments terrify me back to my senses. As long as you accept there is no logical justification for buying these things then its fine.

Ciaran_B

I paid 3000 euro for my current car, so about 10% of my after tax. It's 2 years old and I reckon I'll get another 4 years out of it. So by the end it will be 500 a year plus about 450 tax/insurance. That's 900 a year so about 3%.

There might be a bit of resale value in it when I come to sell it but I'm not factoring it.

Notch000

i spend 5% of my income on any car about every 3 years, cash buyer. stick you PCP.

JohnCleary

Notch000 wrote: »

i spend 5% of my income on any car about every 3 years, cash buyer. stick you PCP.

If you read the OP, you will see this is a cash purchase from savings