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Mine is worth .008% of my income!16yr old Octavia and it's worth £180 trade-in according to Autotrader (in good condition, which it isn't!).
@the-muffin-man - so you make £2.25 million pa ? nice.
My car's value is around 1.75% of my gross yearly income.
I just can't bring myself to spend vast amounts of money on a car (rule 25 don't forget)
cheers_drive - Member
It looks like most of STW has a similar attitude to car buying as me then. It's just the rest of the demographic that have new cars. I'm glad they do as someone needs to buy the new cars for the rest of us to buy off them 3 years later.
Precisely this. Just add a few years to the last statement.
I just pay cash. I've one 13 month and one 7 year old car. Both being Audis they possess an almost unimaginable potential to generate bills of a biblical proportion. I just live with it. Choosing to face a large bill when I have to, rather than seeing a DD coming out of the bank each month.
Judging by the number of newish cars I currently see on the road and by what I hear in the office. Many of those cars are leased.
Leasing a car seems like madness to me, but ho-hey, each to their own.
I'm starting to think it's time for a new (to me) car as the current one is 10 years old and starting to have issues. Every other car on the road appears to be less than 3 years old so obviously lots of people can make the sums work so how can I with a good wage in a two person, no kids household struggle to justify it.
I try and buy outright with savings. Just sold a 12 year old Octavia, replaced with a 5 year old Octavia. Probably do 6k a year now.
The mortgage is a stinger enough on its own - I don't need and can't / won't justify spending half of that again just to run a newer or flashier motor that's going to depreciate like a stone.
@the-muffin-man - so you make £2.25 million pa ? nice.
arse! I did fail CSE maths - which is probably why I drive a knackered car!
Justifying something and affording something are two different things, there's not magic formula, you spend what you want on transport. I worked in asset finance for years and some people are frankly insane, they spend a huge lump of their income on a mortgage/rent, an equally stupid amount leasing a car, have a house full of shiny things on 0% or credit cards and almost zero actual cash each month - to my mind their possessions own them - not the other way around, but they want to have a certain 'lifestyle' and that lifestyle is based around shiny things they hope others envy - that's what it all boils down too, they never seem to enjoy these things really.
I want a certain 'lifestyle' too, my outgoings are tiny, I get to keep 70% of my income every month, that's after everything right down to food and petrol - I want to go on holiday 3 times a year, some new bike bits after a few years of 'getting by' for a few years but most of all I just don't want to have to worry about money and the best way for me to do that is to have a nice big gap between income and expenditure and shortly some savings.
As for the OPs question - my car costs me nothing, it's a company car, I don't even pay BIK, well I do but my employer increased my salary to cover it when they gave it to me. I love it, it's an 2011 car, it works perfectly every single time, it's safe for the kids, does 50mpg if I want to, it's not very flash but I don't care - it say absolutely nothing about me, which suits me fine.
If I had to give that up for whatever reason I'd probably lease something, I think you could get a Panda Trekking for about £180 a month, which is what it would cost you to borrow £5000 over 3 years if you wanted to buy something and didn't have the cash. less than 10% of my income.
One car was bought new from savings, and was around 7% of our combined annual income (it is a very small car though).
Other car was bought at 1 year old/20k miles, and was around 20% of our combined annual income. Paid for half with savings/trade-in, and half with a three year loan. Loan is covered by car allowance from work. Normally I buy another 1 year old car at the end of the three years, but am debating keeping the current one for much longer.
@ on and on, fancy a job swap?
I've gone from having 3 cars to one
I'm into cars, older ones, but priced out of the classic market at the moment
it say absolutely nothing about me, which suits me fine
Disagree there. It says a lot about you. It tells me that you like a car which "works perfectly every single time, [is] safe for the kids, does 50mpg" and consequently you're not bothered by the status that owning a particular car gives you, but like to have a tool that does the job effectively and without fuss. 😉
If you speak to BMW, they'll say about 80% of all cars oing through the showroom are on some sort of Finance, very few get bought with cash.
I'm debating what i do with my next car, currently own my 5 series (58 plate), but i'm putting big miles on it every year so i'm not sure an outright purchase is going to be very effective anymore, especially as people keep on scratching/hitting it.
I bought it apprx 20 months ago for 9K, mechanically it's in great nick, just the motorway miles vs stones vs old people vs little people trying to wash the car with stones have had a toll on the paintwork, it's probably worth around £6.5-£7K now with 107K miles on the clock.
i may hit the savings for about £20K to get an ex-demo/second hand, but not buy new outright, the depreciation is far too much, i'd only do it if i got an astronomically good deal.. I need the car for work, so the outlay over 3-4 years for me is part of the parcel.
edit to add, in terms of what it's worth vs salary etc, the car itself on RRP will work out more than 50% of salary, but i'd never look at spending more than 10% monthly over the amortised costs of ownership (purchase/lease/finance + insurance etc...)
In fairness I said that, my Seat just says "I'm proper dirty me" most of the time - (it's minicab black and covered in Road Salt) 😉
Like quite a few on here I don't like buying things on credit (House excepted) I bought my present car in 2007 it was 8 months old & I saved for it, previous car was 13 years old by then.
I don't do high mileages though so it won't wear out so quickly.
Bank loan is the way to go if you don't have the dosh and don't plan on swapping it once the deal is over. Better rates than going on finance for 5 years. Once we finished Uni and got proper jobs we got a flash car as we thought it would make us happy. After about 2 weeks it's just your car and you think nothing of it.
Now I want a van for the bikes!
[i]it say absolutely nothing about me, which suits me fine.[/i]
Good point. I never understood the whole thing about you being what you drive. I choose my cars on the technical merit. Top of the list is being able to stow a bike in the trunk.
Also agree about folk who seem to see 90% of their monthly, evaporate in payments for their possessions, which results in them walking/driving around with 50p in their pockets.
It aint for me.
It's a bit more complex than just % of income. Disposable income is more relevant. The sticker price on my current car was about a third of annual gross income but my general cost of living is only about 18% of gross, so I can save a fair bit each year.
My car was given to me 6 years ago when my step dad was insulted by the PX value 😀
It's now 16! years old and, although a bit ropey on the inside still runs like a dream. Biggest cost in the 6 years i've owned it was a cam belt change when it snapped. It's quite thirsty as an old 2.0 petrol but costs me <2% of my monthly income in fuel/servicing (not a lot/none at all unless something breaks)
I've said for the last 3 years, if it fails the MOT it's going and i'm getting a 5 series estate, I could probably have saved up and paid cash for one by now if i'd started saving when I said that.
I went GoKarting last night and was parked up next to the directors Porsche GT3, I beat him on the track, of course 😀
Our car's worth about 16% of our household take home. I expect to have it 3 years then sell for 40% what we paid, meaning it's COST comes down to 3% of our take home pay per year. I#m happy spending 3% of our income on a car purchase, 0% on a mortgage, and 10% on biking! 😉
Last car (which was also my first car!) was about 1.5 weeks wages.
After doing about 20k+ miles a year in it for a few years (which I didn't expect I would be), I recently decided to get something new and bought a nice 61 plate car which was more expensive but probably still only a couple of months wages. That said, I chose to finance most of it because I'm desperately trying to come up with a lump of cash at the moment. The finance payment is about 1/3 of my net monthly car allowance from work and around 3% of my net monthly wage overall.
I'm a bit confused why we're comparing income vs asset value.
The question is about affordability. How do people appear to afford nice cars?
As usual, the details of disposable income vs outgoings vs priorities are not as clear cut as we'd all like to think. Add into the mix the various ways of paying for car ownership/use (including people whose salaries aren't all that but get company car allowances) and its never clear cut.
Bought mine new (ouch) on scrappage. Was the cheapest estate car I could get, but was still 50% of gross salary.
Now, 100,000+ miles later it's probably worth about 10% of salary (which hasn't changed in the intervening years!). Scarey depreciation, but then I've also spent about £10k on fuel in the same period...
Car cost me £3250 3 years ago, bought from a mates Dad. At the time loan was taken from my wife's father to pay for it and he was repaid over the course of the first 12 months.
It costs a bit to run (EP3 Civic type R) but at 125k ish it doesn't feel old and battered, being a Honda the engine is sound and the bodywork is still in really good nick.
I often wonder about how people afford cars, but many people I know either have loans, or are on lease deals or have company vehicles. Others also save then trade in and set a £5k or lower cap on any car they buy, my best mate currently has a 3 series compact he bought for under £5k which at the time was 8 years old and had only done 40k in that time.
[i]It looks like most of STW has a similar attitude to car buying as me then. It's just the rest of the demographic that have new cars. I'm glad they do as someone needs to buy the new cars for the rest of us to buy off them 3 years later. [/i]
I've never spent more than £5k (and most far less) on a car and run them until they die whereas we buy my OH car's either brand new or ex-demo, and she then runs them until they become unreliable.
Both currently on finance (renovating a house so conserving cash), but low-rate - mine costs me less than 1/2 day's wages per month and hers in 2 days wages. So 2.5% and 10%.
We buy a car at 2-3 years old so someone else suffers the depreciation, then keep it a long time. We've got a 55 reg Focus estate. I've added a rowbar and cruise control and its fine. It's still low miles for its age (84,000) and its mechanically spot on. It gets serviced and if something goes wrong it gets fixed. It's not worth much but if I was looking for a good secondhand car I'd rip someone's arm off for this one, so what's the point in selling it?
We've had it 6 years now. I can see us owning it another 4 or 5 quite easily.
When we bought it it was about 10% of our joint salary. Now it's worth about 2.5%
she then runs them until they become unreliable
How do you define this?
'98 Polo that cost 2000 quid 10(ish) years ago.
If I bought a nice new car, like my relatives and colleagues have, it would cost me really many months (net) salary. I just can't bring myself to do that, or to understand how it is worth it to them.
The question is, are people relating the cost of the car to their gross or net income?
she then runs them until they become unreliable
How do you define this?
It's like when the reliableness runs out, innit.
Bought my car in 2006 and seem to remember it being 25% of my annual income. Not really relevant though, as I paid for it cash from my savings.
I've put over 225k miles on it, so it's now worth pretty much nothing.
If I was to look to getting something half decent on finance like a Leon/Civic estate, with the miles I do it would cost me around 10% of my annual salary, before deductions.
Which I think jumps to around 17% of my monthly take home pay.
No way I could justify that.
my t4 - 2.5% of household income, wifes old volvo 1%
i could spend hundreds a month on finance or whatever but i can't bring myself to do it. it is nice, however, to have a nice car, and new ones have all sorts of lovely toys in them and are safer and all the rest, but a car that i would actually be interested in spending proper money on would cost about 20-25k, and i defo couldn't bring myself to spend that. as a previous poster mentioned, how some people cough up huge amounts for 'boring' cars. still, whatever floats your boat, personal choice and all that, it's all good. keeps me in a job no less.
Current car is about 1.5% of annual income. Have had it for a couple of years and will sell it soon; it's 11 years old and I'd rather move it on before it starts being a hassle.. Wife's car is probably 3%. That's a big 11 year old 4x4 which shows no signs of stopping anytime soon.
On the cusp of buying a 5 year old fast estate (bikes, boards etc) for about 8-10% of gross annual.
I do lots of mileage on awful roads 20-30k per year so having somewhere comfortable and reliable is important. Fast is good as I don't like hanging around (within the law at all times....)
Nearly spanked a bit more on a nice new one yesterday but doesn't have the ponies for serious progress.
We have 2 cars at the moment - my '14 reg Passat Estate, and my wifes 09 Skoda Fabia.
My Passat is a company car - yes it costs a lot in tax/lease/etc, but we hammer the personal milage (I do 25k per year - 15k of which is my weekly commute) and it is nice to have trouble-free motoring.
We paid cash for the Skoda, it is battered (she's hard on cars + has a country lane commute which has claimed a few tyres + mirrors)
It has 40k on the clock, and we'll keep it at least another 2-3 years.
Medium term I'm hoping to get a secondhand 4x4 (10-12 year old Landrover/Nissan Patrol) I'll finance this via either bonuses from work or a small bank loan.
I'd rather buy something that's super nice, super fast and super special/unusual, but that's around 8-10 years old and at on near the bottom of it's depreciation curve.
Takes a bit of hunting round to find a good one sure, but I love the challenge of this. Current car is one of only 400 of it's type registered in the UK.
Couldn't think of anything worse than spending a shed load of cash or monthly lease just to have a new (but bland) car that you see everyday on the road.
Justifying something and affording something are two different things, there's not magic formula, you spend what you want on transport. I worked in asset finance for years and some people are frankly insane, they spend a huge lump of their income on a mortgage/rent, an equally stupid amount leasing a car, have a house full of shiny things on 0% or credit cards and almost zero actual cash each month - to my mind their possessions own them - not the other way around, but they want to have a certain 'lifestyle' and that lifestyle is based around shiny things they hope others envy - that's what it all boils down too, they never seem to enjoy these things really.
This piece of madness.
Between the ages of 20 & 30 one our our group of mates appeard to have it all - a business, 2 new Mercs on the drive every year, 50" TV, fantastic house by a marina etc. When the dream cam to an end, it turns out the lot was on credit and was based around not what money he had, but how the repayments were managed every month until he got to zero.
When he sold up - after 10 years effort - he walked away with literally nothing - no house, car TV etc and £5000 in the bank. Not a lot to show for it. He spent a year scratching around different jobs trying to pay the rent & feed the family.
As said before many new cars are either company cars (which reminds me that I should really set up a company scheme for myself!!) or on finance.
Also as said before it should be affordability vs disposable income not gross salary.
We bought our 1993 Toyota Lucida for £800 a couple of years ago. It's brill. Fetch the seats out the back and you can (just about) fit two motorcycles and trackday gear in there, plus we don't worry about it getting dirty so it's also ace for slinging manky bicycles in too 😀 We also couldn't give two hoots what other people think about us and everything we have is all old but is paid for in full. I sleep very well.
My car cost about about 7% of my annual income.
However, I have the same amount as I earn in a year in the bank in savings.
I also have no debts and own my own home and everything in it outright.
FWIW, my monthly outgoings (utilities, council tax, mobile phone etc) are about 20% of my income after tax.
I also only work 2 days a week.
I've been pondering this too of late as all of the roads near me seem full of expensive brand new shiny shiny cars of German origin.
I can understand how people can afford £200/£300 a month on PCP repayments but usually you're required to stuff a huge wedge of cash down as a deposit aren't you? I can't imagine comfortable stuffing £5k in a dealer's top pocket only to have the privilege of then making 48 monthly payments.
I earn a reasonable wage as does the wife who works part time, however I can't ever imagine being able to afford a new X5/ Audi A6 / E Class etc etc
Mine cost me about 2 months take home salary, could have spent more but I liked the car and I like the fact that it left me with enough from my budget to keep it on the road for years or to replace it in a hurry. I've no use for a new car tbh, any car I own ends up mauled by bikes and mud and trailbuilding so I bought a scabby one I didn't mind ruining.
Still, the running costs are enough that if I didn't ride bikes, I'd probably not own a car
As others have said it is about affordability. Society has changed over the last decade or so and we are becoming more inclined to rent (or pay a subscription) rather than own. We pay monthly for Netflicks, we rent Boris bikes as we use them, we rent power tools etc. The UK is the exception but in the rest of Europe people tend to rent property rather than buy it. This is what is now happening in the motor industry.
Last year there were approximately 2.3 million new cars registered in the UK. About 50% of these were Company cars and the other 50% to retail customers. 80% of people who buy a new car use somebody else's money (i.e. Mostly dealer finance but some people get personal loans). I certainly couldn't afford to walk into a dealer and handover £20,000 and if I did I certainly wouldn't want to invest it in a depreciating asset.
The car manufacturers have to sell cars and clearly 80% of us couldn't buy one for cash. So they offer PCP to make the vehicle affordable. You pay say a 10% deposit, they set a Guaranteed Future Value and then you pay the difference between the deposit and future value (plus interest) back over two or three years. This works for the manufacturers because at the end of the term you either pay off the future value and keep the car or you order a new car using the equity as a deposit and you start over again. It's also great for the dealers as they sell a new car every two or three years and it gives them a steady supply to good quality used car stock.
This is so important now that the manufacturers now target the dealers on the number of customers they retain or renew, as it is clearly cheaper to keep an existing customer than it is to get a new customer. Many dealers now employ Loyalty Specialists/Managers, whose job it is, is to identify when it is the optimum time to change and then call the customer (They use equity software). When they identity that you can change for a similar monthly payment and no additional deposit (apart from the equity), the will contact the customer to tell them that they can upgrade. A bit like the mobile phone companies do.
Both our cars are on finance, and comes out about 14% of our net annual income. However that in itself doesnt mean much, its all about how much disposable income you have.
Both cars are less than 1.5 years old. If we had bought both out right it would have been about 106% of our net annual income.
To answer the OP, it's either finance or PCP that allows people to have new cars. How they can rationally spend that amount of money each month on something that they never own I'm not sure.
My current car is 15 years old. I bought it 10 years ago as a well looked after low milage old mans car. Bank loan to pay for it, which was about 25% of my then gross pay. 😯 At the time I got a low interest rate and paid back very little interest over the 5 year term. I service it myself and generally look after it. It's only worth a token amount now, but it's reliable, comfortable and has done everything I've asked it to do. This year's MOT was it's first failure. But the bill to put it back on the road was £220 including the MOT. It was something I couldn't do myself. It's been cheap motoring for 10 years, but it's now heading towards bigger bills.
In contrast my BIL bought a Polo on finance in 2004. Swapped it for another 12 months later. Paid the finance for 48 months and then re-mortaged and used some extra capital to pay off the car finance! It cost him just shy of £11 in all. Kept it 12 months and then used it as a deposit on a new Polo on PCP. They gave him £2.5k for it. He's now on the second PCP, first one handed back after 3 years, and took out another. It's about 18 months in to the term now. With the monthly payments he will have paid £22k to buy the first car, trade it in and then "rent" a car over 12 years. And still not own a car at the end. The PCP is like an unbreakable drug addiction.
P-JayIf I had to give that up for whatever reason I'd probably lease something, I think you could get a Panda Trekking for about £180 a month, which is what it would cost you to borrow £5000 over 3 years if you wanted to buy something and didn't have the cash. less than 10% of my income.
That makes no sense at all, IMO. "Rent" it for 3 years or buy something similar for the same money but then own a car that would be reasonably worth £2.5k?
How they can rationally spend that amount of money each month on something that they never own I'm not sure.
Its very easy. Ive got a BMW. If I saved the £330 per month that it costs me it would take me 8.5 years to save to go and buy the car. This means that I would be without a car for 8.5 years whilst saving, and therefore would be unable to do my job.
Also if I saved for 8.5 years, hand over the cash, I would have lost probably £10k there and then driving it from the Garage.
I currently get to drive a brand new car that I couldnt afford any other way, I have fixed out goings per month, and I can budget for the next 2 years.
All cars are money pits regardless. Its just all about how you want to budget for it.
That makes no sense at all, IMO. "Rent" it for 3 years or buy something similar for the same money but then own a car that would be reasonably worth £2.5k?
That makes no sense given my example above. Plus my £330 per month over 2 years would give me £8k, which will not buy a half decent new car. So I would have to buy 2nd hand and then have to pay for MOT's, bills etc etc, and end up driving around in an older car, all for the same money per month.
Yay, my Nissan Micra Tempest 52 plate passed it's MOT again this morning, 😀 no advisories. Another year of cheap motoring.
If it depreciates, rent it. If it appreciates but it - isn't that the general rule?