What % of salary would you spend on a car?
Discussion
Most cars depreciate about 50% of their value in the first 3 years of ownership. So if you spend a year's salary on a car what you're really saying is that you're willing to spend 6 months salary on it, over 3 years (36 months). So that's actually 6/36 or about 17% of your salary.
Doesn't sound too outrageous to me, provided you have the cash. On the other hand if the car is financed it'll cost a lot more than that!
Doesn't sound too outrageous to me, provided you have the cash. On the other hand if the car is financed it'll cost a lot more than that!
There are may variables but for me, purchase price is largely immaterial as long as I can actually afford the car. My focus is more on residuals or the amount of £ notes I'm likely to lose on the car.
Would I spend 100% of my salary on a car that loses 50% in an year? Probably not (although never say never!). But would I spend it on one that'll drop 10% in a year? Yes, because if I change my car every year it has only actually cost me 10% of my salary (plus whatever is costs to run of course).
Would I spend 100% of my salary on a car that loses 50% in an year? Probably not (although never say never!). But would I spend it on one that'll drop 10% in a year? Yes, because if I change my car every year it has only actually cost me 10% of my salary (plus whatever is costs to run of course).
Purchase price means nothing - I'd happily spend many times my salary on a car that I thought was going to appreciate. 
No!For a net amount if earning under 150K per annum somewhere between 15 and 18% is a sensible amount. Any more than that and you are throwing money away even if you are a true petrol head. There is more to life than owning a car...better to drive and enjoy than just own an expensive toy!! I would rather have fun with a 12K sports car than a 40K garage queen.
belleair302 said:
For a net amount if earning under 150K per annum somewhere between 15 and 18% is a sensible amount. Any more than that and you are throwing money away even if you are a true petrol head. There is more to life than owning a car...better to drive and enjoy than just own an expensive toy!! I would rather have fun with a 12K sports car than a 40K garage queen.
I bought my car when it was 50% of annual income, was a 10k car.... I wouldn't say I have thrown money awayI was living at home so had no expenses, even so have now saved a deposit and moved out
So my life is still on track even though at one time it was 50% of my annual earnings
There is no right or wrong answer, there is only YOUR situation
funbobby said:
So if you earned 50k would you be comfortable spending that on a car either as a main or 2 nd car?
I think 25% max of income on a car is sensible! But I guess it depends on your other commitments. Some people may have a very high mortgage and less than 25% would be sensible. Some might be mortgage free and be able to sacrifice more! 
Too many variables here. Do you mean 100% of your 50K salary in one lump out of savings? Do you mean 50K over x years on finance? Do you mean as a percentage of annual gross or net salary? Do you mean as a percentage of monthly pay? I reckon 20% of monthly pay is OK, but it depends. If I only earned a grand month take home I would not want to be spending £200 of it leaving only £800 for food, mortgage fuel etc. However, £1000 out of £4-5000 a month would be OK with thousands left for a house, food, fuel, bills; indeed this is pretty much how it is. I don't think I could ever take £50K out of savings, even if I had a million quid, but I don't miss the finance payments, other people are different. Interest is higher on finance than using savings, obviously, but in the long term £50K taken from savings and then lost in depreciation on a car would lose more in potential interest in savings over say 10 years or more...maybe?
Depends on your financial position i guess.
You may have inherited a house worth a million. No mortgage, no loan.
in such a case, yes, why not spend 10-12 moths of income on a car .
Ideally, base your calculations on your net assets. when i buy a car i try to make sure that the car value is less than 15% of my net assets.
You may have inherited a house worth a million. No mortgage, no loan.
in such a case, yes, why not spend 10-12 moths of income on a car .
Ideally, base your calculations on your net assets. when i buy a car i try to make sure that the car value is less than 15% of my net assets.
well im thinking of a gt-r which would be one of the earlier ones so done the first hit of depreciation, its a fair chunk of my annual salary but my outgoings are not too bad. im not looking for a right/wrong answer there is none as said just got me thinking to what extent people go too to get a car they love to own.
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