What % of NET monthly salary do you spend on your car
Discussion
gizlaroc said:
Yeah, your missing the fact I had added that in already. 
To be fair, I think the actual figures were £7450 purchase, sold for £3150 and he had the car for 33 months.
But he said it was roughly £130 a month in depreciation.
sorry. I am missing something ! To be fair, I think the actual figures were £7450 purchase, sold for £3150 and he had the car for 33 months.
But he said it was roughly £130 a month in depreciation.
Edited by gizlaroc on Wednesday 4th May 11:45
better get back to browsing the web. cant wait to see the OP's cars though. could it be CC or TT in disguise ? or maybe Stinkotanko ? has that sort of ring to it.
Most cars halve in value every 3 years or so. People going for leases do so because they know exactly what it's going to cost and if you know that an £18k car is worth £9 after 3 years then that's £3kpa or £250 a month. Any sums near this as a lease make very good sense. My folks have just done this, signed up to a 48 month deal on a used 520D that's about 3yrs/35k. My Dad has done the sums on the thing and it stacks up. They are driving a very nice car, no worries about what they can get for it when it's time to sell, no haggling on the driveway, no hidden repair bills, they can afford it. For people who are very risk averse, and this generally increases with age, a lease plan makes a good solution. Is it the cheapest? No. Neither is it the most expensive way to have a similar car.
We'd all like to luck out with the kind of deal that's talked of here, recently there was a chap who snagged a new, just-off-the-ship MX5 for £16k. A year later he traded it for £16.5k. Well, if you offered me that I'd take it, funnily enough. However those deals don't grow on trees. For those who don't want to be trawling PH classifieds and the local traders every week, there are lease deals.
We'd all like to luck out with the kind of deal that's talked of here, recently there was a chap who snagged a new, just-off-the-ship MX5 for £16k. A year later he traded it for £16.5k. Well, if you offered me that I'd take it, funnily enough. However those deals don't grow on trees. For those who don't want to be trawling PH classifieds and the local traders every week, there are lease deals.
How about some real numbers?
If the average salary is about £30K, that turns into about £2000 a month take home.
What is the average car these days? BMW 320 seems about right, and you can get one on a lease for £250 a month.
So for the average person to have a less than 3 year old average car costs about 15 - 20% of take home, depending on spec and deal.
Not unsustainable.
My own position? I've only once spent more than 10 grand on a car (and technically that was for the wife). Normal purchase price is about 1 - 2K - so some very small % of monthly salary when spread over the duration of ownership. I'll cheerfully spend far bigger sums than that on parts and tools, so the overall spend on my petrol "problem" is probably closer to 20% of take home....
If the average salary is about £30K, that turns into about £2000 a month take home.
What is the average car these days? BMW 320 seems about right, and you can get one on a lease for £250 a month.
So for the average person to have a less than 3 year old average car costs about 15 - 20% of take home, depending on spec and deal.
Not unsustainable.
My own position? I've only once spent more than 10 grand on a car (and technically that was for the wife). Normal purchase price is about 1 - 2K - so some very small % of monthly salary when spread over the duration of ownership. I'll cheerfully spend far bigger sums than that on parts and tools, so the overall spend on my petrol "problem" is probably closer to 20% of take home....
The average transaction price for new cars in the UK last year was 22k.
The top ten cars were;
1) Ford Fiesta 133,434
2) Vauxhall Corsa 92,077
3) Ford Focus 83,816
4) Volkswagen Golf 73,409
5) Nissan Qashqai 60,814
6) Volkswagen Polo 54,900
7) Vauxhall Astra 52,703
8) Audi A3 47,653
9) Mini 47,076
10) Vauxhall Mokka 45,399
http://www.carmagazine.co.uk/car-news/industry-new...
The top ten cars were;
1) Ford Fiesta 133,434
2) Vauxhall Corsa 92,077
3) Ford Focus 83,816
4) Volkswagen Golf 73,409
5) Nissan Qashqai 60,814
6) Volkswagen Polo 54,900
7) Vauxhall Astra 52,703
8) Audi A3 47,653
9) Mini 47,076
10) Vauxhall Mokka 45,399
http://www.carmagazine.co.uk/car-news/industry-new...
otolith said:
Artey said:
otolith said:
Interesting that people think that whether a car is financed or saved for makes a meaningful difference to affordability, when it reality with current interest rates it's largely irrelevant when compared to the impact of variations in depreciation.
It is relevant on macro scale, if everyone spent their money before they earned it (as they do now) we would be in deep s
t as a country, continent, world. And this is exactly what is happening at the moment. I'm looking forward to the future.Get real.
Excess debt was the cause of the current financial difficulties the world is in.
There was a time before PCPs and leasing where cars were bought from savings and not with finance. Funnily enough they were times when global economies were quite buoyant.
lostkiwi said:
Get real.
Excess debt was the cause of the current financial difficulties the world is in.
There was a time before PCPs and leasing where cars were bought from savings and not with finance. Funnily enough they were times when global economies were quite buoyant.
Come off it. People have borrowed money for cars for decades. Companies have leased cars for years. The only change is that money is dirt cheap at the moment so a dealer borrowing money to lease me or you a car for £x a months is a very viable business model. It makes personal sense too, for the likes of my parents it means "we don't have to keep £15 -20k tied up in a car, bacause at our time of life we don't want that money tied up in case we need it". Excess debt was the cause of the current financial difficulties the world is in.
There was a time before PCPs and leasing where cars were bought from savings and not with finance. Funnily enough they were times when global economies were quite buoyant.
Leasing is indeed good for the economy. I know at least 1 BMW dealer is getting £200+ a month of my parents' pension for the next 4 years, and I'm very sure that BMW UK aren't crying about that.
lostkiwi said:
otolith said:
Artey said:
otolith said:
Interesting that people think that whether a car is financed or saved for makes a meaningful difference to affordability, when it reality with current interest rates it's largely irrelevant when compared to the impact of variations in depreciation.
It is relevant on macro scale, if everyone spent their money before they earned it (as they do now) we would be in deep st as a country, continent, world. And this is exactly what is happening at the moment. I'm looking forward to the future.Get real.
Excess debt was the cause of the current financial difficulties the world is in.
There was a time before PCPs and leasing where cars were bought from savings and not with finance. Funnily enough they were times when global economies were quite buoyant.
lostkiwi said:
otolith said:
Artey said:
otolith said:
Interesting that people think that whether a car is financed or saved for makes a meaningful difference to affordability, when it reality with current interest rates it's largely irrelevant when compared to the impact of variations in depreciation.
It is relevant on macro scale, if everyone spent their money before they earned it (as they do now) we would be in deep st as a country, continent, world. And this is exactly what is happening at the moment. I'm looking forward to the future.Get real.
Excess debt was the cause of the current financial difficulties the world is in.
There was a time before PCPs and leasing where cars were bought from savings and not with finance. Funnily enough they were times when global economies were quite buoyant.
stongle said:
And if these people owned their home, no desire to move (good school catchment area, say)?
Or lived in London where the 2 bed terrace is worth a million?
Yep, all absolutely true, of course. Or lived in London where the 2 bed terrace is worth a million?
I guess it is just my own perspective that if I can put more towards my home, I would do so before committing to a car that would prevent me from doing so.
And yes, London property is grossly inflated - my own home too, in that respect albeit outside of London - but I'm not talking about size of the home, merely its inherent value and upkeep.
So if I see an expensive car outside a house that clearly could do with a bit of care and maintenance, I obviously have to draw the conclusion that the Owner doesn't really care about their home's appearance and just wants a place to squat in while taking great pride in their automotive desires.
Nowt wrong with that either! Just not for me
lostkiwi said:
Yep. Leasing and PCPs were the great saving grace to the global economy.
Get real.
Excess debt was the cause of the current financial difficulties the world is in.
There was a time before PCPs and leasing where cars were bought from savings and not with finance. Funnily enough they were times when global economies were quite buoyant.
With my cash ISA offering 1.4%, there's not much of an incentive to save to buy outright, is there? No coincidence that leasing / PCP has come to real prominence in the UK over a period in which the banks offer derisory savings rates.Get real.
Excess debt was the cause of the current financial difficulties the world is in.
There was a time before PCPs and leasing where cars were bought from savings and not with finance. Funnily enough they were times when global economies were quite buoyant.
In the past 3 years I have spent (2 * Net Monthly Salary) on 2 cars, one daily one weekend both > 10 years old. I have higher priorities than cars in my life, but I don't buy cars to show off and I take very little notice of what anyone else drives unless its an enthusiasts/interesting choice. Different cars suit different people at different stages of life, who am I to judge.
I think the general public give relatively little thought to car purchases (compared to the average PH buyer) the main thing for most seems to be that its newer than their old one and that it looks ok to others, very few pore over the reviews and figures, finance vs outright purchase the way we do.
I think the general public give relatively little thought to car purchases (compared to the average PH buyer) the main thing for most seems to be that its newer than their old one and that it looks ok to others, very few pore over the reviews and figures, finance vs outright purchase the way we do.
lostkiwi said:
There was a time before PCPs and leasing where cars were bought from savings and not with finance. Funnily enough they were times when global economies were quite buoyant.
Yes thats completely right. Before PCPs and leasing became popular in this century, there were absolutely no UK recessions recorded in any decade in the 20th century.Oh, except of course in
The 1990s (1990-1991)
The 1980s (1980-1981)
The 1970s (1973 & 1975)
The 1960s (1961)
The 1950s (1956)
The 1930s (1930-1931)
The 1920s (1920-1921)
Edited by daemon on Wednesday 4th May 13:05
rxe said:
How about some real numbers?
If the average salary is about £30K, that turns into about £2000 a month take home.
What is the average car these days? BMW 320 seems about right, and you can get one on a lease for £250 a month.
So for the average person to have a less than 3 year old average car costs about 15 - 20% of take home, depending on spec and deal.
Not unsustainable.
My own position? I've only once spent more than 10 grand on a car (and technically that was for the wife). Normal purchase price is about 1 - 2K - so some very small % of monthly salary when spread over the duration of ownership. I'll cheerfully spend far bigger sums than that on parts and tools, so the overall spend on my petrol "problem" is probably closer to 20% of take home....
Whilst its not undoable, i dont think too many people on less than £30K lease a brand new BMW 320....If the average salary is about £30K, that turns into about £2000 a month take home.
What is the average car these days? BMW 320 seems about right, and you can get one on a lease for £250 a month.
So for the average person to have a less than 3 year old average car costs about 15 - 20% of take home, depending on spec and deal.
Not unsustainable.
My own position? I've only once spent more than 10 grand on a car (and technically that was for the wife). Normal purchase price is about 1 - 2K - so some very small % of monthly salary when spread over the duration of ownership. I'll cheerfully spend far bigger sums than that on parts and tools, so the overall spend on my petrol "problem" is probably closer to 20% of take home....
And thats one of the problems with the original post - hes working on the notion that "average wage is £30K, most new cars in the UK are leased or finances so how can someone on £30K afford to lease?" Two completely unrelated facts. Its a bit like "the most popular drink in the UK is tea, most serial drinkers drink tea, therefore all tea drinkers are serial killers"
battered said:
Come off it. People have borrowed money for cars for decades. Companies have leased cars for years. The only change is that money is dirt cheap at the moment so a dealer borrowing money to lease me or you a car for £x a months is a very viable business model. It makes personal sense too, for the likes of my parents it means "we don't have to keep £15 -20k tied up in a car, bacause at our time of life we don't want that money tied up in case we need it".
Leasing is indeed good for the economy. I know at least 1 BMW dealer is getting £200+ a month of my parents' pension for the next 4 years, and I'm very sure that BMW UK aren't crying about that.
It may have escaped your notice but BMW are not the economy.Leasing is indeed good for the economy. I know at least 1 BMW dealer is getting £200+ a month of my parents' pension for the next 4 years, and I'm very sure that BMW UK aren't crying about that.
What is good for corporations is not necessarily good for the economy.
Whilst vehicle finance has been around for years the levels of vehicle finance at present are probably amongst the highest ever.
What proportion of new cars on the road are currently financed by leases? Very few people these days actually save money to buy a car preferring instead to take the 'easy' option of leasing. I mean why wait to have something new and shiny?
As personal debt increase the risk to the economy also increases. Personal debt cannot continue to increase indefinitely as eventually the household income is insufficient to service the debt and when that happens defaults occur. Enough defaults and there is no longer as much cash in the economy and everything grinds to a halt.
You may want to read comments by experts:
http://equitablegrowth.org/heres-how-high-levels-o...
http://www.money-zine.com/financial-planning/debt-...
http://positivemoney.org/2011/08/the-consequences-...
Its exactly the same as the concept of 'sustainable growth'. There's no such thing. The planet is a finite ecosystem and eventually growth becomes impossible as the number of consumers can no longer be supported by the resources available. Basic economics dictates that price is a function of supply and demand. As supply dwindles and demand increases prices will go up. When those prices are related to the essentials of life (food, housing, water, power) they become the top priority for the households. Luxury items (on which the current consumerist economy is built) become harder to afford hence people need to decide between not having them or increasing personal debt. Human nature and society being what it is inevitably personal debt increases. But the fundamental resources we need are still increasing in cost so eventually personal debt becomes unmanageable. Then the economy collapses as the fuel of of consumerism runs out.
Personal debt is a very dangerous thing for the economy.
daemon said:
lostkiwi said:
There was a time before PCPs and leasing where cars were bought from savings and not with finance. Funnily enough they were times when global economies were quite buoyant.
Yes thats completely right. Before PCPs and leasing became popular in this century, there were absolutely no UK recessions recorded in any decade in the 20th century.Oh, except of course in
The 1990s (1990-1991)
The 1980s (1980-1981)
The 1970s (1973 & 1975)
The 1960s (1961)
The 1950s (1956)
The 1930s (1930-1931)
The 1920s (1920-1921)
Edited by daemon on Wednesday 4th May 13:05
The recessions we are seeing over the past 20 years are getting longer and longer in duration and are becoming more and more frequent amongst individual nations.
In 'The Great Recession' of the late 2000s the hardest hit countries were those with consumer based economies.
lostkiwi said:
It may have escaped your notice but BMW are not the economy.
What is good for corporations is not necessarily good for the economy.
Whilst vehicle finance has been around for years the levels of vehicle finance at present are probably amongst the highest ever.
What proportion of new cars on the road are currently financed by leases? Very few people these days actually save money to buy a car preferring instead to take the 'easy' option of leasing. I mean why wait to have something new and shiny?
As personal debt increase the risk to the economy also increases. Personal debt cannot continue to increase indefinitely as eventually the household income is insufficient to service the debt and when that happens defaults occur. Enough defaults and there is no longer as much cash in the economy and everything grinds to a halt.
You may want to read comments by experts:
http://equitablegrowth.org/heres-how-high-levels-o...
http://www.money-zine.com/financial-planning/debt-...
http://positivemoney.org/2011/08/the-consequences-...
Its exactly the same as the concept of 'sustainable growth'. There's no such thing. The planet is a finite ecosystem and eventually growth becomes impossible as the number of consumers can no longer be supported by the resources available. Basic economics dictates that price is a function of supply and demand. As supply dwindles and demand increases prices will go up. When those prices are related to the essentials of life (food, housing, water, power) they become the top priority for the households. Luxury items (on which the current consumerist economy is built) become harder to afford hence people need to decide between not having them or increasing personal debt. Human nature and society being what it is inevitably personal debt increases. But the fundamental resources we need are still increasing in cost so eventually personal debt becomes unmanageable. Then the economy collapses as the fuel of of consumerism runs out.
Personal debt is a very dangerous thing for the economy.
I agree with everything you have put above, however.....What is good for corporations is not necessarily good for the economy.
Whilst vehicle finance has been around for years the levels of vehicle finance at present are probably amongst the highest ever.
What proportion of new cars on the road are currently financed by leases? Very few people these days actually save money to buy a car preferring instead to take the 'easy' option of leasing. I mean why wait to have something new and shiny?
As personal debt increase the risk to the economy also increases. Personal debt cannot continue to increase indefinitely as eventually the household income is insufficient to service the debt and when that happens defaults occur. Enough defaults and there is no longer as much cash in the economy and everything grinds to a halt.
You may want to read comments by experts:
http://equitablegrowth.org/heres-how-high-levels-o...
http://www.money-zine.com/financial-planning/debt-...
http://positivemoney.org/2011/08/the-consequences-...
Its exactly the same as the concept of 'sustainable growth'. There's no such thing. The planet is a finite ecosystem and eventually growth becomes impossible as the number of consumers can no longer be supported by the resources available. Basic economics dictates that price is a function of supply and demand. As supply dwindles and demand increases prices will go up. When those prices are related to the essentials of life (food, housing, water, power) they become the top priority for the households. Luxury items (on which the current consumerist economy is built) become harder to afford hence people need to decide between not having them or increasing personal debt. Human nature and society being what it is inevitably personal debt increases. But the fundamental resources we need are still increasing in cost so eventually personal debt becomes unmanageable. Then the economy collapses as the fuel of of consumerism runs out.
Personal debt is a very dangerous thing for the economy.
They have packaged the finance in a way that makes you think it would be pretty silly to do it any other way these days.
As my example earlier with my brother.
It will cost him £380 a month to run his car pretty much any way he does it, that is around 11% of his take home. That is total running costs, and that is important, just looking at what the car is costing is the wrong way of doing it!
He could drop that down to around £280 a month buying a 12 year old car with 120,000 miles on it and bring that down to around 8.5% of his take home. But he would rather be in the new car at £25 a week more.
Is that using personal debt in a dangerous way or a sensible way?
The problem is most people need a car, new cars are now financed in a way that makes buying at 5 years old, 7 years old or even 10 years old look expensive when you weigh it all up.
So yeah, lots of new cars being sold, but look at the list...
1) Ford Fiesta 133,434
2) Vauxhall Corsa 92,077
3) Ford Focus 83,816
4) Volkswagen Golf 73,409
5) Nissan Qashqai 60,814
6) Volkswagen Polo 54,900
7) Vauxhall Astra 52,703
8) Audi A3 47,653
9) Mini 47,076
10) Vauxhall Mokka 45,399
All of those are cars you can buy on lease or PCPs for £100-150 a month, which to me says people just want to be in something new with warranty for the cheapest price possible. If it was full of big Mercs, BMWs, Porsches, Range Rovers etc. then I would think you're right, but they are not, they are just reliable every day cars that fit a brief and are cheap.
Why save up?
Take something cheap. Citreon C1 Feel for example, £10k with the 1.2 engine in it.
You can lease that for £600 down and £66 a month over 3 years. £2910 over the 3 years or £80 a month.
Save up will take you 125 months, 10 years. You then buy the car, sell it after 3 years and get £5k back for it.
Even buy a 3 year old one for £6000, over 3 years it will still cost you £83 a month in depreciation.
Buy the 6 year old one and you will get it for around £4k, drive it for 3 years and get £1500 back probably? That is still £70 a month.
People just say, sod it, for £10 a moth more I will have the new one.
Whether you like it or not, that is how people think, and I don't think people are being silly doing so either, it is often the cash buyer who is the fool these days imho.
gizlaroc said:
I agree with everything you have put above, however.....
They have packaged the finance in a way that makes you think it would be pretty silly to do it any other way these days.
As my example earlier with my brother.
It will cost him £380 a month to run his car pretty much any way he does it, that is around 11% of his take home. That is total running costs, and that is important, just looking at what the car is costing is the wrong way of doing it!
He could drop that down to around £280 a month buying a 12 year old car with 120,000 miles on it and bring that down to around 8.5% of his take home. But he would rather be in the new car at £25 a week more.
Is that using personal debt in a dangerous way or a sensible way?
The problem is most people need a car, new cars are now financed in a way that makes buying at 5 years old, 7 years old or even 10 years old look expensive when you weigh it all up.
So yeah, lots of new cars being sold, but look at the list...
1) Ford Fiesta 133,434
2) Vauxhall Corsa 92,077
3) Ford Focus 83,816
4) Volkswagen Golf 73,409
5) Nissan Qashqai 60,814
6) Volkswagen Polo 54,900
7) Vauxhall Astra 52,703
8) Audi A3 47,653
9) Mini 47,076
10) Vauxhall Mokka 45,399
All of those are cars you can buy on lease or PCPs for £100-150 a month, which to me says people just want to be in something new with warranty for the cheapest price possible. If it was full of big Mercs, BMWs, Porsches, Range Rovers etc. then I would think you're right, but they are not, they are just reliable every day cars that fit a brief and are cheap.
Why save up?
Take something cheap. Citreon C1 Feel for example, £10k with the 1.2 engine in it.
You can lease that for £600 down and £66 a month over 3 years. £2910 over the 3 years or £80 a month.
Save up will take you 125 months, 10 years. You then buy the car, sell it after 3 years and get £5k back for it.
Even buy a 3 year old one for £6000, over 3 years it will still cost you £83 a month in depreciation.
Buy the 6 year old one and you will get it for around £4k, drive it for 3 years and get £1500 back probably? That is still £70 a month.
People just say, sod it, for £10 a moth more I will have the new one.
Whether you like it or not, that is how people think, and I don't think people are being silly doing so either, it is often the cash buyer who is the fool these days imho.
Yes I can see your argument but thats looking at it from the individual standpoint. They have packaged the finance in a way that makes you think it would be pretty silly to do it any other way these days.
As my example earlier with my brother.
It will cost him £380 a month to run his car pretty much any way he does it, that is around 11% of his take home. That is total running costs, and that is important, just looking at what the car is costing is the wrong way of doing it!
He could drop that down to around £280 a month buying a 12 year old car with 120,000 miles on it and bring that down to around 8.5% of his take home. But he would rather be in the new car at £25 a week more.
Is that using personal debt in a dangerous way or a sensible way?
The problem is most people need a car, new cars are now financed in a way that makes buying at 5 years old, 7 years old or even 10 years old look expensive when you weigh it all up.
So yeah, lots of new cars being sold, but look at the list...
1) Ford Fiesta 133,434
2) Vauxhall Corsa 92,077
3) Ford Focus 83,816
4) Volkswagen Golf 73,409
5) Nissan Qashqai 60,814
6) Volkswagen Polo 54,900
7) Vauxhall Astra 52,703
8) Audi A3 47,653
9) Mini 47,076
10) Vauxhall Mokka 45,399
All of those are cars you can buy on lease or PCPs for £100-150 a month, which to me says people just want to be in something new with warranty for the cheapest price possible. If it was full of big Mercs, BMWs, Porsches, Range Rovers etc. then I would think you're right, but they are not, they are just reliable every day cars that fit a brief and are cheap.
Why save up?
Take something cheap. Citreon C1 Feel for example, £10k with the 1.2 engine in it.
You can lease that for £600 down and £66 a month over 3 years. £2910 over the 3 years or £80 a month.
Save up will take you 125 months, 10 years. You then buy the car, sell it after 3 years and get £5k back for it.
Even buy a 3 year old one for £6000, over 3 years it will still cost you £83 a month in depreciation.
Buy the 6 year old one and you will get it for around £4k, drive it for 3 years and get £1500 back probably? That is still £70 a month.
People just say, sod it, for £10 a moth more I will have the new one.
Whether you like it or not, that is how people think, and I don't think people are being silly doing so either, it is often the cash buyer who is the fool these days imho.
When there is a recession and your brother loses his job due to 'restructuring' for 'sustainable growth' what happens to his lease?
What percentage of his monthly income is now spent on his car?
This is the problem.
If governments could guarantee no more recessions ever (and of course they can't) then yes fill your boots if that's what you want.
The issue comes when we have yet another recession and all those people with leases can no longer afford them.
The car then gets repossessed, sold at auction in a declining market (the nature of recession is there is less cash available), the finance company is out of pocket so they have less cash and the whole thing collapses like a house of cards.
At least when you pay cash you own the vehicle outright. You have a saleable asset if required (ok you will lose money but its still an asset) and you are not adding to the issue in the recession.
Recessions are inevitable with the current business models in play today. A simple rumour can wipe billions off stocks and shares in a day. When that happens businesses restructure almost creating a self sustaining prophesy.
The best way to survive a recession is to have minimal debt.
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