Appropriate salary to buy a Supercar

[mickyh7]

Isn't this the kind of question where the answer is always
'If you have to ask how much it costs, you can't afford it' ?

[dimots]

mickyh7 said:

Isn't this the kind of question where the answer is always
'If you have to ask how much it costs, you can't afford it' ?

I think the issue is that cars are such an obvious status symbol, and generate such envy in other people, that they fall into their own category of ostentatious displays of wealth.

I accept that if you REALLY love cars then maybe buying a supercar is worth it. However, I would say that many people with significant wealth decide that broadcasting that fact to the world with a brightly coloured noisy personal pollution factory isn't in their best interests.

[Jules Sunley]

Interesting thread, and I agree with those that say it is all about priorities.

I could buy a supercar (additional rate taxpayer) but I haven't and won't as I prefer to maximise my pension and ISA contributions so I can get clear the mortgage and retire earlier than planned if I want to.

I have 2 cars and 2 bikes, and the Mrs has 2 cars, but the total value of all 6 vehicles now is maybe 95k so why sink all that into 1 toy when we can enjoy multiple toys.

I have no interest in having a car to show off to others, but have a huge interest in having toys to make me smile to myself. Also, I think one very high value vehicle combined with UK roads and potholes would make me very nervous.

In an ideal world I'd emulate Harry Metcalfe's approach of a number of interesting older cars that can be driven without fear of depreciation but without land or a barn we don't have any more space.

To buy a supercar really I think you need to be able to afford to buy 2 of them as then clearly you are not tying up all/most of your available capital in one usually depreciating asset.

[rustyuk]

I bought an Elise in my 20's rather than a house. The landlord paid 28k for the house I rented, the Elise was 19k.

The house is now worth 130k the Elise maybe 19k on a good day.

What an idiot

[Rick101]

There are plenty of cars most people would consider sports or flashy that are considerably less than 200k.
I'd probably say you could have the curtains twitching with something from 40k on the drive.

If it's about perception, and how someone can afford a 'sports car' many would see it as a sign of having a few quid but in reality, certainly at that price point it's easily achievable. People just have different priorities. Lots will drive around in a normal car but happily drop 5k on a holiday for the family.

[mickyh7]

Jules Sunley said:

Interesting thread, and I agree with those that say it is all about priorities.

I could buy a supercar (additional rate taxpayer) but I haven't and won't as I prefer to maximise my pension and ISA contributions so I can get clear the mortgage and retire earlier than planned if I want to.

I have 2 cars and 2 bikes, and the Mrs has 2 cars, but the total value of all 6 vehicles now is maybe 95k so why sink all that into 1 toy when we can enjoy multiple toys.

I have no interest in having a car to show off to others, but have a huge interest in having toys to make me smile to myself. Also, I think one very high value vehicle combined with UK roads and potholes would make me very nervous.

In an ideal world I'd emulate Harry Metcalfe's approach of a number of interesting older cars that can be driven without fear of depreciation but without land or a barn we don't have any more space.

To buy a supercar really I think you need to be able to afford to buy 2 of them as then clearly you are not tying up all/most of your available capital in one usually depreciating asset.

Good Post.
Food for thought!

Edited by mickyh7 on Thursday 22 October 10:30

[crofty1984]

I had an air cooled 911 (Carrera 3.2) when I was 22 and earning 18k a year. Still live with my parents and you could pick up a decent one for less than £15k at the time though.

[Jules Sunley]

mickyh7 said:

Good Post.
Food for thought!

Edited by mickyh7 on Thursday 22 October 10:30

Thank you.

I should add that multiple vehicles do of course come with multiple insurances/tax/servicing, but I'd still rather that than one expensive toy and being 46 with multiple no-claims built up over the years most are at maximum discount so still quite reasonable (I prefer separate insurances per vehicles rather than a multicar plan).

[anonymous-user]

gangzoom said:

Kent Border Kenny said:

but are there people buying them on £100k per year

Unless you have no sense of money a salary of £100k is no where near enough to give you a disposal income to waste on a super car post tax/living costs.

As others have said I highly doubt anyone without an account who is very good at tax efficiency strategies is even considering let alone own a super car.

I suspect even most additional rate tax payers will not be wasting their hard earned cash on a super car. If you are an employee you have to work for your salary, and the higher your salary the harder you have to work for each £ due to increasing tax rates, which means when it comes to spending that extra money which you worked for it needs to be really worthwhile.

Edited by gangzoom on Thursday 22 October 05:00

That’s absolute nonsense.

£100k is about £5.5k per month, assuming no deductions, obviously with that sort of salaried role you will have a pension to deduct.

Not living in the SE a 4/5 bed house, detached, can be had for £350k, with a half decent deposit that’s say a £250k mortgage, 25 years, £1,000 p/m.

Living costs, £1,500, invest £1,000, super car £1,000, spare £1,000.

I spend about £800 a month on 3 cars / 1 bike (averaged out, running costs, etc), I’m not on £100k, another bike on order too.

Still plenty of money for saving, fun, house renovations, etc.

A mate of mine pays £750 for a M2, another lad I know pays £1,100 for a R8 V10, neither earn £100k.

ETA; obviously if you want to have kids and send them to private schools then it impacts that, but I don’t and I wouldn’t.

Edited by Lord.Vader on Thursday 22 October 11:05

[Jules Sunley]

Comments about £1,000pm for this car or £800pm for that car depress me slightly. Whatever happened to saving up for something? I mean finance a portion of a car if you want but it's when you see deals advertised with little money down on new/newish cars that I shake my head as there is no security in that and it could be never ending just paying for depreciation.

The problem is that some may feel it's all well and good paying £1,000pm for car finance and they can 'afford it' on their salary but then they get a blowout and have to find another £250/£300 maybe for a tyre (or maybe two across the axle if a driven wheel), and then their insurance and tax renewal come around etc etc. I have used personal loans on 2 occasions due to timing of moving money around for other reasons (and then repaid early, and at much lower APRs than a typical dealer) but only for a small percentage and I would never buy a car I couldn't usually afford to buy outright as then the disposable monthly income I allocate to cars can be used for running costs and saving up for the next one to counter depreciation on the current one so equity is maintained.

It seems the vast majority of new supercars are financed (having read other threads including comment from those supposedly in the trade) and I get it that some with their own businesses may want their capital left within work projects but could if they want liquidate assets and repay the loan, but for those that finance them as they couldn't afford one even if they liquidated savings etc I just don't understand the mentality of spending money you don't have on depreciation and interest. If you can't afford a new one then buy a used one and smile at the depreciation the first owner has endured and also know you won't lose as much when you come to sell. If I were to buy a supercar it would be one at least 2 or 3 years old.

[Shnozz]

Jules Sunley said:

I just don't understand the mentality of spending money you don't have on depreciation and interest. If you can't afford a new one then buy a used one and smile at the depreciation the first owner has endured and also know you won't lose as much when you come to sell. If I were to buy a supercar it would be one at least 2 or 3 years old.

Part of the problem is that the finance offered on new cars is wrapped up to look more affordable. As Bennno (long time no speak mate) points out on his McLaren deal. He was sensible to look at overall cost, but many are fixated on what the monthly cost is and have no regard to the term, residuals, overall costs etc, just whether they can carry whatever that monthly cost is.

[Jules Sunley]

Shnozz said:

Part of the problem is that the finance offered on new cars is wrapped up to look more affordable. As Bennno (long time no speak mate) points out on his McLaren deal. He was sensible to look at overall cost, but many are fixated on what the monthly cost is and have no regard to the term, residuals, overall costs etc, just whether they can carry whatever that monthly cost is.

I totally agree, and it has to be total cost looked at to get any idea of what the real cost it. The 'how much a month is it, I can cover that, I want it so I will have it' brigade just end up in a perpetual cycle of payments with no equity.

Sadly finance is clearly seen as the norm' now by many as I have on a number of occasions and for differing nice cars been asked 'how much a month is that costing you' with surprise shown when I say 'nothing as I bought it outright'.

I'm not saying finance should never be used if wealth is tied up elsewhere, but I dislike it being used to get into cars people otherwise wouldn't be able to as it just perpetuates a debt/depreciation cycle.

[Rick101]

Jules Sunley said:

The problem is that some may feel it's all well and good paying £1,000pm for car finance and they can 'afford it' on their salary but then they get a blowout and have to find another £250/£300 maybe for a tyre (or maybe two across the axle if a driven wheel), and then their insurance and tax renewal come around etc etc.

The same argument could be used for 'saving'.
There will always be something to save for so that £1000pm will need to continue regardless. You still have to find the money for a tyre, tax or whatever else.

In the example above of a 200K supercar you would have had to 'save' your £1000pm for what? 17 years? I suspect cars in 2047 will be very different to what is on offer now.

The reality is, even those that are financed to the hilt will have had to put a considerable deposit down so will have had to save or accrue that deposit from somewhere. It's not just a months disposable.

I absolutely agree on the last point, TOTAL OWNERSHIP cost is very different to monthlies or even running costs.

Edited by Rick101 on Thursday 22 October 11:56

[Jules Sunley]

Rick101 said:

The same argument could be used for 'saving'.
There will always be something to save for so that £1000pm will need to continue regardless. You still have to find the money for a tyre, tax or whatever else.

In the example above of a 200K supercar you would have had to 'save' your £1000pm for what? 17 years? I suspect cars in 2047 will be very different to what is on offer now.

The reality is, even those that are financed to the hilt will have had to put a considerable deposit down so will have had to save or accrue that deposit from somewhere. It's not just a months disposable.

I absolutely agree on the last point, TOTAL OWNERSHIP cost is very different to monthlies or even running costs.

Edited by Rick101 on Thursday 22 October 11:56

Yes for a £200k car your point is a good one. If I was going to spend £200k on a car I'd want a say £3kpm car savings budget so over say 3 years I could save up £100k+ to put 50% down and maybe finance the other half over the next 3 years etc if I didn't want to save for 6 years flat - at least that way you know you have equity in the car and preferably it wouldn't be a new £200k one but maybe a £250k one lightly used with initial depreciation already done through the first owner. None of this is going to happen in my world as I don't commit £3kpm to cars and certainly wouldn't spend that much on one single vehicle but that's the position I feel I would need to be in to feel comfortable spending that much. The 6 years saving would be more likely the route I would take if I really wanted to do something like that.

[Darth Paul]

Jules Sunley said:

Shnozz said:

Part of the problem is that the finance offered on new cars is wrapped up to look more affordable. As Bennno (long time no speak mate) points out on his McLaren deal. He was sensible to look at overall cost, but many are fixated on what the monthly cost is and have no regard to the term, residuals, overall costs etc, just whether they can carry whatever that monthly cost is.

I totally agree, and it has to be total cost looked at to get any idea of what the real cost it. The 'how much a month is it, I can cover that, I want it so I will have it' brigade just end up in a perpetual cycle of payments with no equity.

Sadly finance is clearly seen as the norm' now by many as I have on a number of occasions and for differing nice cars been asked 'how much a month is that costing you' with surprise shown when I say 'nothing as I bought it outright'.

I'm not saying finance should never be used if wealth is tied up elsewhere, but I dislike it being used to get into cars people otherwise wouldn't be able to as it just perpetuates a debt/depreciation cycle.

I was always in the own it outright camp with cars. Was always happy to buy at 4-5 years old with most of the depreciation done and run it for another 4-5 years. I went down the pcp route with my current car as it was starting to look like the better way for a simpler life more than anything. No mot, no maintenance worries, something goes wrong, just throw it back at them till it’s sorted. The idea of owning the car I’ve got now at 5 years old with the potential bills it could accrue with no warranty is scary! Cars seem to be like iPhones now, built to last to a certain age. My dad was always the same as me, and my old boss too. Dad says his next one will be pcp, and my boss is already on the pcp train now too. If you were to pick a brand to summarise it say Ferrari, I’d want to own a 355, it won’t depreciate much if anything will appreciate, but an F8 would be on the never never. Old adage, own what appreciates, rent what depreciates.

[okgo]

Lord.Vader said:

That’s absolute nonsense.

£100k is about £5.5k per month, assuming no deductions, obviously with that sort of salaried role you will have a pension to deduct.

Not living in the SE a 4/5 bed house, detached, can be had for £350k, with a half decent deposit that’s say a £250k mortgage, 25 years, £1,000 p/m.

Living costs, £1,500, invest £1,000, super car £1,000, spare £1,000.

I spend about £800 a month on 3 cars / 1 bike (averaged out, running costs, etc), I’m not on £100k, another bike on order too.

Still plenty of money for saving, fun, house renovations, etc.

A mate of mine pays £750 for a M2, another lad I know pays £1,100 for a R8 V10, neither earn £100k.

ETA; obviously if you want to have kids and send them to private schools then it impacts that, but I don’t and I wouldn’t.

Edited by Lord.Vader on Thursday 22 October 11:05

I doubt many people on 100k salaries live in 350 grand houses. Mostly as to get to a job paying that amount generally will require you to live somewhere that costs more.

In answer to the question, the only people I know (in and around London) that own expensive cars are very wealthy people, also living in houses worth a couple of million or more.

Most of my close mates earn 100-250k a year at a guess and the best car among them is probably a fairly new Merc estate.

Edited by okgo on Thursday 22 October 12:24

[BrundanBianchi]

The shift to car leasing ( where you never own the car ) is what allows the car industry to keep growing. If it didn’t grow, it wouldn’t be viable at the levels it operates at presently.It would be a huge hole in the economies of the countries which it contributes to and the knock on effects would be pretty dire as well. Super car leasing ( PCP / call it what you will ) is not really any different, except for the volumes involved. It matters not whether the people driving them can afford to actually own them, as long as they are paying for the privilege of driving them around, the ‘chain’ remains intact. Nearly all ( with not many exceptions) new cars that are acknowledged as ‘super / hyper cars’ are manufactured by companies that are part of a much larger group. The money from the leases on the Halo models help to prop up the rest of the group. For the most part, the great white chiefs of the group would much rather you lease, than buy, it helps with cash flow and financial projections. So when you see ‘Mr Smith’ who probably runs a chain of ‘cash only’ fast food outlets, or franchises, driving around in a brand new ( insert hyper car) he’s doing the economy a favour, more so if he’s leasing it.

[BrundanBianchi]

dimots said:

I accept that if you REALLY love cars then maybe buying a supercar is worth it. However, I would say that many people with significant wealth decide that broadcasting that fact to the world with a brightly coloured noisy personal pollution factory isn't in their best interests.

Quite right. A big shouty pantomime horse super car is the epitome of the difference between money and wealth. Money shouts, wealth whispers.

[okgo]

BrundanBianchi said:

Quite right. A big shouty pantomime horse super car is the epitome of the difference between money and wealth. Money shouts, wealth whispers.

That doesn't take away from the fact that many people with lots of money own shouty cars, watches, houses, etc.

[Jules Sunley]

I have a friend who apart from nice cars has a few very nice watches, but the value of them is such that he never really wears them. I think for me the question of how much to sink into any specific 'nice thing' is 'not so much that I then fear using it' so it comes down to a proportion of wealth/income.

If someone is worth a few million then they may not care if they damage a £5k watch, but for many of us a £500 watch is still a special watch but not so special that it doesn't get worn.

I feel the same about cars - the known weak point of my B5 is the supercharger and that were to go I would be looking at a £5k-£10k bill depending on what got taken with it. That would hurt a lot but is manageable (I self warranty....). If I owned a supercar and the gearbox went then I would no doubt end up crying - and that's why a warranty package is maybe a must on that sort of vehicle where you could get a £30k+ bill without too much difficulty but then the added cost of that every year needs to be factored into 'affordability'. This is why a lot of smart money goes into 911's as there is a reason they have the 'everyday supercar' tag namely that they don't need as much fussing over as a Ferrari, Lambo or McLaren. If a £30k bill doesn't scare you in the least then you definitely can afford a supercar.