Salary to car value...

[supercommuter]

Please can I have your opinion on a purchasing scenario of someone I know please?

30 years old
Home owner (mortgaged)
£85k Basic (+£15k Annual Bonus) salary

Is buying a £35k car with 5k down and £30k on a low apr bank loan (3 percent) over 5 years at approx £500pcm a stupid decision?

I appreciate a one size fits all approach cannot be taken with these but in your opinion Is owning a £35k car on an £85k salary poor? It is a huge portion of your annual salary?

What is your opinion?

Thanks

Edited by supercommuter on Tuesday 14th August 15:14

[Jimmy Recard]

Not especially. I wouldn’t call it wise and I prefer to spend much less than that on cars myself, but it’s hardly likely to cause him any problems

[Vocal Minority]

You know a lot about this 'someone you know'....

[limpsfield]

supercommuter said:

Please can I have your opinion on a purchasing scenario of someone I know please?


Is buying a £35k car with 5k down and £30k on a low apr bank loan (3 percent) over 5 years at approx £500pcm a stupid decision?


Thanks

Seems cheap enough to me.

Of course, brace yourself for the "if you can't pay cash you shouldn't buy it" brigade.

And the subtle wallet wavers.

I have little experience in buying cars on finance as all of mine are bought cash from the kitchen's petty cash biscuit tin.

[limpsfield]

supercommuter said:

I appreciate a one size fits all approach cannot be taken with these but in your opinion Is owning a £35k car on an £85k salary poor? It is a huge portion of your annual salary?

What is your opinion?

Thanks

Also, given that most people lease their cars now, and that is what, around £2-300 per month? And the average salary is £25k ish then spending £500 per month on three/four times that salary does not seem excessive to me.

[cay]

Low interest rate and easily affordable.

If things go wrong you can always sell the car to pay off the loan and buy a shed.

I would wager most people driving £35k cars on lease / pcp earn a lot less than £85k.

[limpsfield]

Jimmy Recard said:

Not especially. I wouldn’t call it wise and I prefer to spend much less than that on cars myself, but it’s hardly likely to cause him any problems

THREE Vauxhalls James?!?

[2Btoo]

cay said:

I would wager that just about everyone driving £35k cars on lease / pcp earn a lot less than £85k.

Fixed that for ya!

[Dr Jekyll]

limpsfield said:

Also, given that most people lease their cars now, and that is what, around £2-300 per month? And the average salary is £25k ish then spending £500 per month on three/four times that salary does not seem excessive to me.

Most people in first owner cars perhaps, but I suspect their average salary is well north of £25K.

[Jimmy Recard]

limpsfield said:

THREE Vauxhalls James?!?

more than that, and other brands too

ETA: M240i, nice. I really fancied one a while ago, but I’ve got a whole list of st old cars I haven’t owned yet!

Edited by Jimmy Recard on Tuesday 14th August 15:35

[btdk5]

Bad choice.

Get a bigger loan and buy a better car.

[Prohibiting]

£100k a year and wants to rent a car

[supercommuter]

zubzob said:

Salary alone doesn't mean much without expenses context.

How much disposable income to you have each month? After all expenses, tax, savings etc? What percentage is the 500?

His disposable salary after bills is around £3000 per month - (Tax and 6 percent pension contribution, £1000 mortgage and bills + £500 savings). This does not include annual bonus.

Prohibiting said:

£100k a year and wants to rent a car

He will own the car after 5 years. He is just going to be paying 3 percent interest annually over that period.

Thanks for comments so far.

[Integroo]

supercommuter said:

He will own the car after 5 years. He is just going to be paying 3 percent interest annually over that period.

Thanks for comments so far.

He will own the car straight away. Separately, he will owe the bank some money.

[RizzoTheRat]

Two and a bit years worth of bonus for a car that will presumably last longer than 2 years? Not sure why it's a questions really.

[sideways sid]

Bit of a nonsensical question given lack of info about other expenditure.

E.g. with massive mortgage, massive personal credit card debt etc, its probably not as good an idea as if OP's friend lives comfortably within his means etc.

But, on the face of it, earning £500k (or more, hopefully) over the life of a car that costs £35k (plus some interest presumably) doesn't seem especially profligate.

[z4RRSchris]

Prohibiting said:

£100k a year and wants to rent a car

im blessed to make good money.

my car(s) are a worthless pile of ste.

however if its money you enjoy wasting its not wasted money.

fire away boy.

[R8Steve]

Why is it even a question if someone with 3k disposable a month spending 500 on a car is sensible?

Most people in the UK don't even make 3k before tax/NI and mortgage/bills.

[Condi]

supercommuter said:

your opinion Is owning a £35k car on an £85k salary poor? It is a huge portion of your annual salary?

Why would it be poor?

It would be a huge proportion of my salary, less so of his. 1/6th in fact, after his essential bills are paid, leaving him 2.5k/m to spend on other things. Given that most people dont earn that pre-tax a month, he would still be able to lead a very comfortable lifestyle.

He earns enough to pay it, so Im kinda struggling to see what this thread is about? Do you not approve of his choice?

[limpsfield]

Prohibiting said:

£100k a year and wants to rent a car

He could put it all in shipping containers. That very well-known financial scam.