Car affordability
Discussion
Just thinking aloud here and talking in general the Average Joe lets call him John.
My view is that lets say John wanted a Focus ST which with options came out at £20k brand new I would say to afford to run that car he needs to be earning double the list price in salary i.e. £40k.
If he was earning less then it needs to be 2nd hand.
Basically my assumption is that x% of his/her take home can be spent on the car x% on rent/mortgage x% food/general living costs x% savings for holiday/gifts/savings pot for next car.
Would most agree with this?
I guess those who will not might be still living at "home" with mummy but I would envisage most to agree.
Clearly you have those who spend far too much on say rent or mortgage or food etc and therefore would have to buy an older example of the Foucs ST and others same salary are much more frugal with their spending and could afford a much newer example of the Foucs ST .
Views
My view is that lets say John wanted a Focus ST which with options came out at £20k brand new I would say to afford to run that car he needs to be earning double the list price in salary i.e. £40k.
If he was earning less then it needs to be 2nd hand.
Basically my assumption is that x% of his/her take home can be spent on the car x% on rent/mortgage x% food/general living costs x% savings for holiday/gifts/savings pot for next car.
Would most agree with this?
I guess those who will not might be still living at "home" with mummy but I would envisage most to agree.
Clearly you have those who spend far too much on say rent or mortgage or food etc and therefore would have to buy an older example of the Foucs ST and others same salary are much more frugal with their spending and could afford a much newer example of the Foucs ST .
Views
Welshbeef said:
Just thinking aloud here and talking in general the Average Joe lets call him John.
My view is that lets say John wanted a Focus ST which with options came out at £20k brand new I would say to afford to run that car he needs to be earning double the list price in salary i.e. £40k.
If he was earning less then it needs to be 2nd hand.
Basically my assumption is that x% of his/her take home can be spent on the car x% on rent/mortgage x% food/general living costs x% savings for holiday/gifts/savings pot for next car.
Would most agree with this?
I guess those who will not might be still living at "home" with mummy but I would envisage most to agree.
Clearly you have those who spend far too much on say rent or mortgage or food etc and therefore would have to buy an older example of the Foucs ST and others same salary are much more frugal with their spending and could afford a much newer example of the Foucs ST .
Views
I'm not sure I agree, but you may well have a valid point.My view is that lets say John wanted a Focus ST which with options came out at £20k brand new I would say to afford to run that car he needs to be earning double the list price in salary i.e. £40k.
If he was earning less then it needs to be 2nd hand.
Basically my assumption is that x% of his/her take home can be spent on the car x% on rent/mortgage x% food/general living costs x% savings for holiday/gifts/savings pot for next car.
Would most agree with this?
I guess those who will not might be still living at "home" with mummy but I would envisage most to agree.
Clearly you have those who spend far too much on say rent or mortgage or food etc and therefore would have to buy an older example of the Foucs ST and others same salary are much more frugal with their spending and could afford a much newer example of the Foucs ST .
Views
I have a brand new Astra VXR, but earn considerably less than 40k.
walm said:
I have rarely read a more vacuous post.
If you are asking whether someone on £40k can afford a £20k car - of course he can.
Unless he lives in London, then he can't.
Unless he lives in a negative equity mansion, then he can't.
Unless he has a £40k a year coke habit, then he can't.
Exactly. Although I think he means if someone is on LESS than £40k, they can't afford a £20k car.If you are asking whether someone on £40k can afford a £20k car - of course he can.
Unless he lives in London, then he can't.
Unless he lives in a negative equity mansion, then he can't.
Unless he has a £40k a year coke habit, then he can't.
As a homeowner i would say this. 10% of joint yearly income should be the max you repay a car... that leaves another 10% for insurance, tax, fuel, repairs, track days........... I know people that live in something nastier then joan rivers gusset, but run a new Scooby.... great if your single but your going to be shagging in the car!
I know someone who earns double that and couldn't afford a new ST.
The problem is people assume to much, I also know someone who works part time and has a very expensive car, you would think he was living well beyond his means and he would be pocked with the nasty PH stick of irresponsibility...... however he lost his father, that is how it is funded, I'm sure he would love to turn the clock back a year and be back in his UNO!
People should focus more on what they can afford rather than what others have, maybe then this country would be a better place.
The problem is people assume to much, I also know someone who works part time and has a very expensive car, you would think he was living well beyond his means and he would be pocked with the nasty PH stick of irresponsibility...... however he lost his father, that is how it is funded, I'm sure he would love to turn the clock back a year and be back in his UNO!
People should focus more on what they can afford rather than what others have, maybe then this country would be a better place.
It depends upon your priorities. Some people will live in a s
t-hole and eat baked beans on toast all the time to afford the car of their dreams.
Others will have no problem at all affording some serious exotica, but choose to run around in something very cheap. (Nothing says 'Old Money' more than a middle-aged lady in a patterned headscarf driving around in a slightly tatty old W124 merc, preferably with a labrador in the boot.)
There have been a number of notable threads on here about what proportion of your salary/house-price your car represents. The answers vary widely.
Oli.
t-hole and eat baked beans on toast all the time to afford the car of their dreams. Others will have no problem at all affording some serious exotica, but choose to run around in something very cheap. (Nothing says 'Old Money' more than a middle-aged lady in a patterned headscarf driving around in a slightly tatty old W124 merc, preferably with a labrador in the boot.)
There have been a number of notable threads on here about what proportion of your salary/house-price your car represents. The answers vary widely.
Oli.
Welshbeef said:
Basically my assumption is that x% of his/her take home can be spent on the car x% on rent/mortgage x% food/general living costs x% savings for holiday/gifts/savings pot for next car.
I earn a decent wedge.I have just swapped a second hand mattress for a 14 year old Nissan Micra.
Not sure what this does for the theory?
Lets expand. This John guy does 12,000 a year so & 28mpg official combined & 1.10/ltr thats a fuel cost of £2,100, VED will be £300 & lets say Insurance for this 30 year old is £500p.a., Servicing lets say £300p.a. on average.
So far thats £3,200pa.
Next Depreciation - now lets assume the ST retains 45% after its 3 years and its a £20k car bought. Thats £11k loss over 3 years or £3,667p.a.
Running total is now £6867
Next final bit - this car has to be bought either from savings (which means lost interest) or HP, and lets say there is negligable difference between the two! So the rate is 8.8% used Alliance & Leicester calculator for the Loan and it to be paid off over 3 years. The total to be repaid is £22,728 so thats £2,273 interest over the 3 years or £760p.a.
So Annual loan repayment is £7,576
So total per annum is £14,443 .... Thats a hell of a lot of income to pay over to run a car,,remember this is Net income so gross your looking at a minimum of £19k really just to earn enough to run this car.
Of course you will still have an asset worth £9k at the end of year 3 but capital asset is one thing cashflow is problematic.
So far thats £3,200pa.
Next Depreciation - now lets assume the ST retains 45% after its 3 years and its a £20k car bought. Thats £11k loss over 3 years or £3,667p.a.
Running total is now £6867
Next final bit - this car has to be bought either from savings (which means lost interest) or HP, and lets say there is negligable difference between the two! So the rate is 8.8% used Alliance & Leicester calculator for the Loan and it to be paid off over 3 years. The total to be repaid is £22,728 so thats £2,273 interest over the 3 years or £760p.a.
So Annual loan repayment is £7,576
So total per annum is £14,443 .... Thats a hell of a lot of income to pay over to run a car,,remember this is Net income so gross your looking at a minimum of £19k really just to earn enough to run this car.
Of course you will still have an asset worth £9k at the end of year 3 but capital asset is one thing cashflow is problematic.
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