Does the salary to car value ratio actually mean anything?
Discussion
Z064life said:
Has anyone paid 90-100% of their yearly salary on a car and not regretted it or struggled with finances?
I did and don't regret it, I think the comment above assume all cars to be depreciating assets which isn't always the case. I bought a 996 GT3 which would have been somewhere around my annual salary at the time, now worth 175% of what I paid for it, had I had bough a mid spec Mercedes / BMW / Audi etc which had devalued significantly I'd have almost definitely had a different opinion.
I've always bought good examples of desirable older cars and not ever ended up with much depreciation.
I think a better comparison would be depreciation to annual salary as that's what would bother me
In some respects buying a car of any price/running cost isn't by default related to your salary.
Obviously it has an impact but if you're 25 and live at home with parents, if you earn £25k a year you could afford to finance a fairly expensive car compared to your salary. Predominantly because you have disposable income and minimal living costs. If you're 30 years old, have a mortgage of £1k a month and earn £40k a year the likelihood of having the spare income to buy an expensive car is, I would imagine, lessened.
Very much dependent on the living situation a person has as well as their income.
As we know there is more of a trend nowadays for people to be driving cars that if they had to buy, would be well out of range but with the popularity of leasing and the like, means people can 'own' more expensive vehicles.
Obviously it has an impact but if you're 25 and live at home with parents, if you earn £25k a year you could afford to finance a fairly expensive car compared to your salary. Predominantly because you have disposable income and minimal living costs. If you're 30 years old, have a mortgage of £1k a month and earn £40k a year the likelihood of having the spare income to buy an expensive car is, I would imagine, lessened.
Very much dependent on the living situation a person has as well as their income.
As we know there is more of a trend nowadays for people to be driving cars that if they had to buy, would be well out of range but with the popularity of leasing and the like, means people can 'own' more expensive vehicles.
Zoobeef said:
No, I had about £45k in the bank so it was only a portion of it. Also its gone up in value considerably so it was a good investment.
Your salary never came into it. I have a friend who has a 1M, paid cash out of inheritance but is a grad on under £30k per year. What's he got to worry about per month other than maybe chucking £200 every pay cheque to cover maintenance? Turns out he lucked out on the investment front like you, or at least will suffer little depreciation/damage to savings if he needs to get out of it.Swole said:
Zoobeef said:
No, I had about £45k in the bank so it was only a portion of it. Also its gone up in value considerably so it was a good investment.
Your salary never came into it. I have a friend who has a 1M, paid cash out of inheritance but is a grad on under £30k per year. What's he got to worry about per month other than maybe chucking £200 every pay cheque to cover maintenance? Turns out he lucked out on the investment front like you, or at least will suffer little depreciation/damage to savings if he needs to get out of it.Edit: Salery does sort of come into it as its where the money came from. I was living with my ex in a new house at the time.
Edited by Zoobeef on Monday 26th June 14:46
Most of my cars cost me between 20% and 50% of my yearly earnings, always paying cash and keeping them for a while as I like to modify. Did test drive something last week to see what it was like and out of curiosity worked out the PCP. With £5k down plus some dealer contributions it was around £400/mth. The thought of PCP has never sat well with me unless I was doing mega mileages with work. I was doing 30k/yr but now I've got it down to 12k/yr
As others have said it's down to personal circumstances.
If you're buying it straight up from cash then you can afford it. How much cash you have is a function of your earnings & spendings.
My car cost me nearly 2 years net salary. However I'm debt free, own my own house, have no dependants and have enough left in savings as a contingency if I get fired or more likely finally have enough of my job and quit.
It's a matter of priorities. I have a friend who's on more than twice my salary, is married (spouse also earning a nice wedge) has two kids that he takes to Florida every year, yet he's constantly moaning about the ancient diesel Zafira he has that costs him an arm and a leg to maintain and he can't afford anything to replace it.
Some people are just not interested in cars and hence spend as little as possible to get from A to B. Some people like me are interested in cars, want to spend a little more on something a bit nicer, look after it and plan to keep it fro a decade or more.
If you're buying it straight up from cash then you can afford it. How much cash you have is a function of your earnings & spendings.
My car cost me nearly 2 years net salary. However I'm debt free, own my own house, have no dependants and have enough left in savings as a contingency if I get fired or more likely finally have enough of my job and quit.
It's a matter of priorities. I have a friend who's on more than twice my salary, is married (spouse also earning a nice wedge) has two kids that he takes to Florida every year, yet he's constantly moaning about the ancient diesel Zafira he has that costs him an arm and a leg to maintain and he can't afford anything to replace it.
Some people are just not interested in cars and hence spend as little as possible to get from A to B. Some people like me are interested in cars, want to spend a little more on something a bit nicer, look after it and plan to keep it fro a decade or more.
Zoobeef said:
I had a fair few frinds at the time that bought new BMWs and Audis for similar or more and i was the "mad" one. Look at what theis are worth now nearly 6 years later!
Edit: Salery does sort of come into it as its where the money came from. I was living with my ex in a new house at the time.
The thing with BMW, AMG etc is you've really got to aim for the limited runs or those with a following. The 1M is a good example, the C63 Black Series another or most 6.2 C63s in general don't move much. Anything Audi RS in the current lineup, BMW M or AMG is suicide right now; I can't believe the first year hit M4's took.Edit: Salery does sort of come into it as its where the money came from. I was living with my ex in a new house at the time.
Edited by Zoobeef on Monday 26th June 14:46
Fair play to you for saving. I was like that until 2015, when I cleaned everything out to buy my first house. I somehow clung onto a C63 though, which has sat steady value wise due to low mileage. They slipped a bit and now have risen again. I do wonder whether to get out (I own it outright) but then again I love it so I suppose whatever the market does, it shouldn't matter.
Different folks - different strokes. I totally get why people spend £X every month on a new car - they get the joy and use from a new car - even if it amounts to a huge chunk of their salary the car can be sold at any time. Likewise I get why a multi-directorship PH'er likes to run an old barge even though he could afford a couple of new cars - they like the familiarity/reliability of a long-term car. I want a TTR RS or even a little S1 but hate spending even £20k on a new'ish car - rather spend £s on repairs and tweaking and I barely managed to get 2k miles a year out of my 2 cars.
Edited by fido on Monday 26th June 15:09
It depends on your personal circumstances. I suspect I earn less than many of the posters in this thread, but because I am young and don’t have a mortgage, kids nor wife, I likely have more disposable income than most and thus can spend a disproportionate amount of money on cars and other luxuries.
Once I have saved enough for a deposit on a house this will quickly change – unfortunately this is fast approaching.
Once I have saved enough for a deposit on a house this will quickly change – unfortunately this is fast approaching.
Z064life said:
I'd have more than half the value of the car left in my account if I do buy so I won't be stretching, but struggle to justify the purchase! (But not financially, just a lot of people say not a wise move but for no real reason). Running costs are fine.
Sod what other people think or say! Only you truly know your financial status and whether you can comfortably afford the car in question or not. If you can and it won’t affect other aspects of your life, then go for it.Rawwr said:
I thought the 'buying twice' thing was anecdotally from purchasing a Diablo? I don't know who the quote should be attributed to but I believe it was; "If you can't afford two Diablos, you can't afford a Diablo."
Now there's a post that needs a lot of filling.
I recall being told it about buying a Sierra RS Cosworth as well.Now there's a post that needs a lot of filling.
Re the cost of cars, I think the most I have spent is around 40% of my yearly earnings. My current car cost me just over 25%. If you can afford it, it shouldn't matter.
My car is 16 years old, I'd like something newer. Leasing seems attractive but then I do maybe 600 miles a month at the most, usually less, so it would be a huge waste of money having a £500 a month lease car sat on my drive. So I'll either buy something newer for £15k to £20k, or put some money into my current car.
MorganP104 said:
Tucker1 said:
There is a lot of very wealthy people out there with zero interest in cars so they don't feel the need to sink money into them, Plenty of millionaires driving bangers that just "do the job" Its not compulsory to spend as much as you possibly can on a vehicle.
Nothing screams "old money" more than a ropey old LR Disco V8 and a Volvo 244DL parked outside a 35 bedroom castle. 
Bloody huge 10 (at a guess) bedroom house set in so much land you couldn't see the boundaries from the house. Their drive from the gated entrance, to the house, was at least a mile. Every time I went there with mum to pick up my sister (must be about 4 years ago), there was either a L322 Range Rover (an early version, possibly '04) parked outside which had a dent in every panel, or a Mk5 Golf of '06 vintage, which was decidedly ropey. Always made me laugh to see this beautiful house with those two cars outside that would have embarrassed even a scrapyard.
Mum also often meets another person of the well bred/old money variety around my village who drives this gross crusty old yellow Citroen Saxo which has most of the fabric, and foam, missing from the drivers seat.
They just could not give a s
t about their cars, and for that, I genuinely admire them.Personally, with the finance deals around at the moment, I think you'd have to be a fool to buy a new car for cash.
Even a 12mth old car may well work out more expensive than a new financed one.
Once you get older, value becomes easier to find....but the running costs are not related to current value (a £20k 911 will still have the running costs of a £70k 911, not a £20k car)
Even a 12mth old car may well work out more expensive than a new financed one.
Once you get older, value becomes easier to find....but the running costs are not related to current value (a £20k 911 will still have the running costs of a £70k 911, not a £20k car)
Tucker1 said:
There is a lot of very wealthy people out there with zero interest in cars so they don't feel the need to sink money into them, Plenty of millionaires driving bangers that just "do the job" Its not compulsory to spend as much as you possibly can on a vehicle.
Ahhh, the old PH cliches are getting trotted out I see. Yes there are no doubt a handful of millionaires out there driving bangers, but I'd wager it's several orders of magnitude less than the number of millionaires driving moderately expensive to very expensive vehicles.NickCQ said:
Where's Audemars when you need him to condemn those who drive cars that cost more than one month's net salary...
Or Granfondo saying about how they must all be 'debt monkeys' 
FWIW I spent less than 5% of my income on my own car 3 years ago. But I've spent a bit more than that on it since
There's sometimes an element of truth in if you can't afford to run it new you can't afford to run it secondhand. Look at one year old non-maintenance deal cars to see Ditchfinder tyres on and brakes being ignored when they find out that a set of discs, pads and fitting on a 300bhp car is £1,200 instead of the £200 they were expecting on a 116i.
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