I realise the occupants of this place may have a predictable response to this question but what would you consider is an acceptable amount, as a proportion of gross income, to spend on a car.
A car that I've lusted after for a while has recently fallen in value enough so that my gross income and its cost are at a ratio of 1:1 I.E one year's gross income could buy me a decent example of car X not taking into account cost of finance etc.
I can't quite convince myself either way.
There's no answer to this. It's just what's acceptable to you, basically.
Lol mine is worth 1% of my salary. If I upgrade it it may be 4%
The most expensive car I have ever had was 33% of my income. Don't think I could ever bring myself to spend more than that.
I don't think I've ever gone over 1/3rd.
My current car was free 🙂
Nothing is 'unacceptable' its up to you to decide whether its money well spent. Although there are other people to consider if it means your wife leaves your or your kids go hungry. Whats paying the bills and keeping a roof over your head if you've spent 100% of your income on a car?
0.33 - 0.5 would be about all I'm willing to pay, and that would be the total price before any sort of PCP deal.
There's no way I'd spend a year's gross salary in cash on a car
My first car (as a teenager, loved cars so had been saving for some years) sold for more than I bought it for
Second car (prior to first graduate job): 1 month gross salary
Third and current car: 3 months gross salary
Wasn't there a thread a few months back about expensive cars outside average houses?
I'm sure it didn't end well.
Mine is 1.8% of my salary
It’s irrelevant, what matters is whether you can afford it.
If you’re on (say) 30k and you can afford 30k on a car (whether it’s full or part finance/ or cash) what matters is whether you can afford to lay it out, or the monthly repayment.
There’s no point having a really nice car that you can’t afford to drive for example, or one that you don’t drive because replacing a punctured tyre would cause financial worry.
Be realistic about it.
About 33% is the max I’ve done, but i had it in cash so no repayment to make.
Our current car was 1/12th of our annual income (we’re a 1 car family). The one before that was 1/4 of just my income.
As you can likely guess, I either earn shed loads or I don’t spend money on cars, and I sure as hell don’t earn much.
But as above, it’s up to you how much you slender but 1:1 wouldn’t sit well with me.
Good question, no right answer. Got me thinking though, when I was younger, my first car - s/h - would have been maybe 1/3 of my salary (can't recall details). Worked up through the ranks at work and in cars until ended up with one that must have been closer to the 1:1 ratio. Once that got stolen I worked my way back down the s/h car rankings again, now with a firmly s/h Skoda although with much less earnings than before.
26%
Personally, I think your mental to consider that kind of financial situation.
However, is it likely to go back up in value? How often would you drive it? How much is servicing and parts?
If you can afford it then absolutely go for it, but looking at your first post 1:1 puts the absolute frighteners up me as it is just a tool (irrespective of what it actually is).
I'd say it depends on many factors.
Single or part of a couple. Living at home? Saving for a deposit for a house, paying a mortgage? Are you lower income with a need for a reliable car to get to work? Are you risk averse to running costs?
And most importantly are you 'into' cars? Would owning/running/driving a car be a thing/hobby for you or a status symbol only? I could we imagine a nice car that you took to track days, took to car meets, went on driving holidays making sense if it was work a little more.
For me in a middle aged house with 2 professional incomes and embarrassingly low bills but a desire to change lifestyle sooner rather than later and more than a eye to saving but still likes cars I would say about a third of the gross of one of us would be the max I would pay. Can't imagine ever wanting to spend 1:1. There would always be better things to spend on. When I was younger on a smaller income I suspect the fraction might creep up more by necessity than desire.
How modest is your house?
Most I've spent (apart from the time I cashed in a share bonus) was 30% - but taking into account the trade-in of the old car, about 25%.
Would I buy one for equivalent of a year's gross? Hell no.
A years wages on a car....I wouldnt but then I dont like cars much!
Most have been a week or two's pay, current one is by far the most expensive I've ever had, three months pay! Really struggled to justify that.
Most on a bike was nine months...
Good question, tricky to pinpoint an agreeable answer.
If you are talking about %financed (loan or pcp or lease) that’s pretty easy to quantify... if it’s total value then I don’t really consider that at all.
1.45% of monthly income
My last car (not new) was 25% of my salary at the time of purchase and I got 65% back when it got written off 4 years and 60K miles later. My current car (also not new) was 33% of my salary at the time of purchase. Both were financed with bank loans rather than bought out right. I'm hoping my current car will last until I can afford to go full electric.
Hmm it's what your comfortable with, I know people who have cars that are close to their annual. Just check current car is 1.6% of gross annual. So not much, but only drive to work in it.
I like cars, but at the min like having no debt more.
One Min I want a Nissan leaf next something load and daft.
My car I use for work which I get allowance for is about 25% of my income but it’s on lease so not really applicable. The one I own for family use is 10% of my income and the wife’s is prob 33% of hers.
No rules if you want a nice car get one but not sure what it’ll do better than a cheaper one ?
My 3 series Touring was about 90% of my income when I bought it (cash) for £22k back in 2005. It was 14 months old. I still have it.
Mine is currently 39% and is the most expensive car I’ve ever had. Nothing special mind, I just don’t get paid very much.
I would buy a Transporter camper though, which would be 100%+ but I’d never pay in full for one, it would have to be some kind of pcp deal.
Generally less than 20% and the one before my current car lasted me 14 years so just over 1% per annum.
Impossible to answer really but it depends on what you are comfortable with really and what is financially prudent. How much debt you have, how much expendable income you have etc...
Personally I wouldn't spend a large proportion of my income on a car (or cars). No more than 10% for me.
Mine's apparently 16% of my gross annual salary. But I plan to keep it at least 4 years so 4% per year and it's paid for.
It's up to you though how much you want to spend, if you can afford it go for it.
And total value isn't really the factor, it's depreciation over the time you expect to keep it for i.e. how much will it cost you per year to own it.
Even though it's how I make a living I spend as little as I can on cars but still have something that does the job.
But I know some people who to them their car is everything. They often live in modest houses and have a car thats worth nearly as much, it's not for me but it's their choice, nothing right or wrong about it.
I would go with whatever you want.
Mine, brought outright, was about 15% of income. Already had it for four years and may well keep it for several more although having to weigh it up against one with a decent roof rack for kayak.
For me driving is purely convenient transport though and I often throw wet/muddy/things with sharp bits in the boot/backseat so I would be too paranoid to buy anything nicer.
I had the last car for ages and only binned it off when I decided the gamble of the yearly repairs wasnt worth it. Easier to throw cash down on a three year old car which had already nicely depreciated but not fallen to bits and then forget about it for a while.
When I was earning good money and it was needed for work I spent 10% of my take home (after tax).
Current one is 14%, new one will be 45%, planning on keeping it for ages though.
However, the monthly cost with fuel/tax/loan is only £120 more between the 2 cars...
Hmmm, my last proper vehicle purchase was 3 times my taxable income. Being a 10 year old van this reflects more on how little I earn* than how much it cost 🙂
Saying that, I did buy a car in between that I have been running for 2 years now for local trips and that cost less than a days wages when I work off the farm. In fact probably less than some STW members earn in an hour.
*And how sensible it is to pay an accountant to do your tax returns
My current bangernoms has seen me hit the heady heights of 5%
Currently, 2.4%.
At least 2 previous cars 0.00000000%.
Highest at 15%
1st car 7%
Edit. Of annual gross.
Mine was 1.5% of annual gross. Mind you, it was a VERY cheap car, and it’s about to cost some money to keep going; fifth gear appears to have disappeared today 🙄, and it’s got a cracked windscreen which between them is going to cost over half the original purchase price. Have decided to stick rather than twist though because it had four new tyres and an exhaust a few months ago. Will do the clutch whilst the gearbox is off.
Mine is about 75% of gross but its a company car so doesn't really count. If I was paying 25% max
About 15 to 20% of income for me at the mo.
Might be more like 50 to 70% next time though.
the question is wrong. The value of the car is irrelevant - within reason. there are so many different ways you can finance cars these day's the car you drive doesn't bear any resemblance to what you earn or your financial status. What mugs actually buy cars these days? They're depreciating assets...why would you put actual money into a depreciating asset? The overwhelmingly majority of new cars on the road these days are leased or company cars or are under some form of finance arrangement. I read a while back that over 90% of mercs are leased.
So the question you should be asking is how much per month can you afford to attribute to the cost of a car. I reckon I could affordably finance a car that was worth as much as my annual salary. No problem. I wouldn't stand a chance of purchasing it..I couldn't afford the deposit for the loan or HP agreement for it...but via other financial mechanism's I could drive off in one without laying down a penny, or at lease a very modest amount of hundreds of pounds.
If you're comfortable with the concept of paying an amount per month for access to a car rather than the outdated concept of car ownership then you unlock a whole new level.
What is the car in question?
It’s a 1992 Fiat Tipo
The OP has worked all year on his paper round to buy it.
Buying isn't a mugs game if you plan on keeping it. We tend to keep them many years. The Yaris was bought new and we sold it at 17 years old for something bigger. My car bought nearly new (saved £8k on list for a 10 month old car) and it's now 17 years old. So long as the car is reliable that's what matters to me.
You should think more about the opportunity cost. If you weren't spending on the car what would you spend it on? And actually would you prefer to spend it on that instead?
Pension/investments? Retire a few years earlier?
Holidays? See the world, ski, bike, scuba?
School/university fees for junior or potential future junior?
House redecoration/extension? Add value to an investment and get some enjoyment from it too?
Mine cost 50% of my annual salary, which makes me twitchy, but I love it.
It’s on a PCP though and I added a service agreement so it costs me less than 10% of my monthly, I can just about stomach that.
But really it’s entirety personal, if you earn it, it’s up to you how you spend it.
My first car was a 1.5TD Corsa at £8300 and I think I earnt about £16k at the time, so roughly 50% ish. I vaguely remember £1700 deposit and then 48x £170/month HP.
the question is wrong. The value of the car is irrelevant – within reason. there are so many different ways you can finance cars these day’s the car you drive doesn’t bear any resemblance to what you earn or your financial status. What mugs actually buy cars these days? They’re depreciating assets…why would you put actual money into a depreciating asset? The overwhelmingly majority of new cars on the road these days are leased or company cars or are under some form of finance arrangement. I read a while back that over 90% of mercs are leased.
So the question you should be asking is how much per month can you afford to attribute to the cost of a car. I reckon I could affordably finance a car that was worth as much as my annual salary. No problem. I wouldn’t stand a chance of purchasing it..I couldn’t afford the deposit for the loan or HP agreement for it…but via other financial mechanism’s I could drive off in one without laying down a penny, or at lease a very modest amount of hundreds of pounds.
If you’re comfortable with the concept of paying an amount per month for access to a car rather than the outdated concept of car ownership then you unlock a whole new level.
I would suggest from the OP's post that we are talking about a 2nd hand car that was once bought (I say bought, I mean leased by one of you pcp types) for lots of money but has now depreciated to an 'affordable' mere 100% of their gross annual income.
You thought process might work if you must have a new car of a vanilla flavour - I sense the OP's 'lust' machine is something quite different.
Cars as a multiple of income – what is acceptable?
Doesn't matter so long as it makes you happy grinning from ear to ear without causing harm to anyone around you.
Being honest, the roads are so clogged now, there isn't much point in spending loads. I'm on of those that does polish and look after cars, so it does hiss me off if they get damaged.
My neighbour has asked if I'm getting a new car (she has a motability lease) and I say, it works, looks OK, and unless it breaks, no. What's the point in £300-£500 on a PCP or loan and add in depreciation. Don't need it, and the money is getting our lives on track and paying for other 'stuff'. We have a static caravan, so that's a big spend in ground rent.
We've just got my son a car - was from baby bond monies that matured recently. He's just started an apprenticeship, so it's equivalent to 70% of his wage, but it's paid for. It's a very nice current shape Fabia Monte Carlo, but it allows him to get to work, and he takes a colleague. He also volunteers for St Johns Ambulance, and did about 350 miles over Manchester Pride weekend ferrying stuff about...
His insurance is 15% of his monthly wage though in year 1.
Most I ever spent was 4%, currently under 1%, and I share the pos with my wife. 16 years of bangernomics has saved me over 50k compared with running something a couple of years old the whole time
Current bangernomics car @ 3.84% of annual
Next car planned will be 22%
About a third. Sometimes that seems good value and other times it seems crazy. Have always bought with cash so the affordability question was pretty straightforward... unlike the opportunity cost question, now I think about it!
Paid 20% gross of salary in cash for my last car. New the car would have been more like 90%! I’ll keep it 5 years or so.
So the question you should be asking is how much per month can you afford to attribute to the cost of a car. I reckon I could affordably finance a car that was worth as much as my annual salary. No problem. I wouldn’t stand a chance of purchasing it..I couldn’t afford the deposit for the loan or HP agreement for it…but via other financial mechanism’s I could drive off in one without laying down a penny, or at lease a very modest amount of hundreds of pounds.
Well someone's drunk the car salesman's coolaid and regurgitated it.
I call it the mobile phone purchase plan.
It's a mugs game to buy a car you can't afford just because you can finance it if you ask me.
Do you not realize that cars are worse than the Khmer Rouge, and nearly as bad as Hitler, so 33% tops.
Think my Mondeo was 3% of gross 8 years ago. When I eventually come to replace it I might strech to 8%! 100% is insane.
Ditching our car in Dec 2012 was the best financial thing I ever did to date, it was costing ~£1k including fuel per year plus repairs/consumeables to drive me ~5 miles to/from work; pick up the weekly shopping; typically a family trip out per week; the very odd long distance trip per year for a holiday and see family etc.
That ~£7+ has covered all my bike related purchases since and annual holidays at least.
But our budget is a lot tighter than most of you STW middle managers types, we roughly gross the national average of a single adult between two of us.
However, my better half has been taking driving lessons for a several months now and they are a lot more than the £10 per hour I paid back in 1991... Try £40! 😮 She was ablivious to the household budget and how much a car crippled my disposable income back then when I was the only one working, even her new role and increased salary is going to leave her worse off as and when she plans to buy a car.
On the plus side, that will give her less spare cash to throw away on art projects that clutter up the flat! 😆
Can we not ask about bikes as a multiple of salary?
Cars become dull when you finally realise nobody - absolutely nobody - cares what you drive. So you may as well save the money, drive a heap, and do something. Like buy a nice bike and do one of the aspirational journeys STW is so fond of.....
It’s a mugs game to buy a car you can’t afford just because you can finance it if you ask me.
Not really depending on your situation. When I come to replace mine I'll seriously look in to PCH. £300 a month to remove all the hassle/unexpected expense of car ownership suits some people.
My previous car wasn't an extravagant purchase and cost approx £2,700 a year in depreciation (it broke beyond sensible economic repair after 2 years of ownership). Add in everything that broke on it and I bet it's not far away from that £300/month.
Not really depending on your situation. When I come to replace mine I’ll seriously look in to PCH. £300 a month to remove all the hassle/unexpected expense of car ownership suits some people.
My previous car wasn’t an extravagant purchase and cost approx £2,700 a year in depreciation (it broke beyond sensible economic repair after 2 years of ownership). Add in everything that broke on it and I bet it’s not far away from that £300/month.
£300 a month is a lot of money. £3,600 a year. What car broke completely after 2 years of ownership and cost you a fortune in other repairs?
I must be extremely lucky, I bought a s/h Lexus for £6,500 5 years ago. The only major expensive has been front disks which were about £400. It's a very comfortable car, the only downside is it's a bit thirsty but I guess it's probably worth about £3000 now. Not that it makes any difference as I have intention of changing until it really breaks.
£300 a month is a lot of money. £3,600 a year. What car broke completely after 2 years of ownership and cost you a fortune in other repairs?
I do 20k miles/year, £300 a month isn't THAT much money for something I spend nearly 2 hours a day in. I used to enjoy playing about with cars and tinkering on them, now I just want them to work.
It was an Octavia VRS, Cost me £6,500 with a plan to keep it for 3 years, ECU got wet and it had multiple electrical issues. Repairs weren't a fortune but: Air con rad, intercooler, inlet manifold, rear calipers x2, rear wheel bearings/ABS rings x2, DPF issues. I don't mean £300 / month in repairs, I mean total cost of £300/month. I'm not including servicing and consumables.
What miles does 6500 quid get you in an octy vrs.
80/90 k ....or old.
Not surprised you had issues.
80k and 6 years old. I didn't mind sorting the smaller issues, it's expected with that mileage. It would have been nice if the ECU didn't fry itself.
I spend about 2%, but my cars are cheap (Kia Cee'd estate and a Berlingo).
I used to spend a lot on cars, not because I like cars, but because I was able to. After 5 years of having low to average cars, I am getting a hankering for something nice. My car and van were paid for cash, but are pretty much not worth anything now. The Cee'd is a 12 plate with about 70k miles and the Berlingo is a 14 plate and 65k mile. Had no expense, brakes and tyres are all that has been needed. I don't do anything to them apart from service them annually - so cost of ownership for me has been low.
I love the practicality of the Berlingo, but its not really a comfortable vehicle, especially as I drive 400 miles a week in it. No idea what to replace it with - I like the thought of the MTB always being locked up in the back, as I travel a lot its good to be able to finish work early and go for a blast somewhere. No idea what I could replace it with though, apart from a higher spec similar van.
It depends on the car. If you are spending a year's salary to get something with four rings and a big engine that will cost £500 a month in depreciation alone then that is a total mugs game.
If you've spent your life lusting after a semi classic 911 and now one is within your price range then it's a different story. Something that will hold its value or cost you very little in depreciation is less of a burden financially, although obviously still a risk as you can never take these things for granted.
Cars become dull when you finally realise nobody – almost nobody – cares what you drive.
FIFM, but it’s a very valid point and one that should be taken into consideration when purchasing a vehicle.
All those RS6 Avants that people lust after, nobody but you cares about it or what it’ll “do”
We (99% of us) don’t care about Audi RS-anywotzitz... they just look like any other car on the road.
For me it really depends on how that "asset" depreciates!
Spend £40k on a Caterham, and despite being completely useless as a car in the real world, you can sell it next year for pretty much exactly what it cost you.
Spend £40k on a top of the range diesel saloon car, and despite being a brilliant car in the real world, you can only sell it for about 13 pence next year...
My i3, bought s/h 3 years ago cost me £16k. Total running costs excluding insurance (i don't have a figure just for the insurance because it'd on a multi-car policy) but including fuel ('lecy) tyres, servicing, tax (zero) over three years and 25,00 miles have been £1267. So that's pretty much £400 a year (£33 a month) or 1.6 pence per mile driven. Today, as far as i can tell without actually selling it, the car is worth pretty much the same money as i paid for it.
Yes, i needed to have £16k in cash in the bank so to speak, but that is ridiculously cheap motoring to drive a modern, safe, pretty quick and pretty premium car around...
Ah but you should have rented it maxtorque.
Your so old fashioned buying your electric car with cash.
Just under 50% and it’s a 35 year old ford escort 😬
We lease not buy as there hasn’t seemed much point in owning a depreciating asset. We spend about 8% of take home pay. In comparison, our mortgage is about 24% - again of take home. Personally would not pay more than that and if I didn’t have 3 children and need a larger car as a result, it would be significantly less.
Hmm. 8% of Salary for the last one couple of years back currently depreciating at around 1.5% salary per annum. Reckon i’ll get 4yrs / 100k miles out of it. Seems reasonable.
Overall value of rest of my fleet circa 30% of salary and gently appreciating.
What mugs actually buy cars these days? They’re depreciating assets…why would you put actual money into a depreciating asset?
Yeah that would be me then. To lease an Octavia VRS estate would cost me £16K over 4 years and have nothing to show for it at the end of the lease, or I could buy a two year old one with 16K miles on it for £15K and actually have the car in my posession to show for it at the end.
Well, as it now works out for my current company car, it equates to 1.5% of gross including all running costs and fuel. I’ll never run a car this cheap again!
We spend 10% of income between us on two cars. Feels like the most I would ever want to spend on motoring. One is an i3 that saves on running costs, the other a poor V40 D3 that had gone from 23000 to 66000 miles in under two years!
MAR for private owned company car drivers is a great help to running your own car, but understood by few.
Am I the only one that thinks mentioning Gross income in all this "man logic" is pushing it a bit?
If your disposable income allows you to spurge on a dream then why not? I would. But for me : and I'm not alone - ball park:
What I mean is your gross disappears something like this:
tax - 30%
Mortgage / rent 30%
Alimnony / coke / addictions etc 10 %
Food / bills 10%
Pension / saving 10%.
So really - your actual available funds are maybe 20% of your gross. And you want to spend 5x times your disposable income on that interest / obsession / hobby / etc.
Our 8% is for two cars - I couldn’t justify that for one car!
Always have driven 500 quid bangers, and I earn a decent wage. Most I ever spent was 900 quid. However I'm just about to buy my first brand new car, at 1:1.
Most people spend as much on fuel than they do on annual depreciation. So it being an electric car changes the upfront sums a bit. In Scotland you can get interest free loans. It's still an expensive luxury of course, but takes the edge off. I plan to keep it 5 years or so. I am hoping it will hold it's value, but who knows. Hard to predict.
To be really boring, shouldn't this be your annual cost of motoring as a % of gross salary and not the purchase price. I.e. fuel/ depreciation/ repairs/ insurance/ VED/ maintenance/ consumables
However, comparisons are only good for your travel arrangements as others may have a higher percentage of travel costs to salary from driving more miles. (YMMV!)
I haven't done the sums in detail for a while but an EV via salary sacrifice I reckon will be one the cheapest forms, especially for something new. Even better if you get free charging in work! Or if you have children and a salary between 50 and 60k! (Not my salary I hasten to add)
My 10 year old petrol car that is fairly economical just about pips it... as long as it doesn't have any major repairs in the next 3 years! However that's my situation and I hate my car for being so boring and economical!!