[Closed] How do people afford cars? Straw poll - car price versus income

FunkyDunc

My point was [b][i][u]I[/u][/i][/b] don't understand how someone, anyone, [b][i][u]YOU[/u][/i][/b] can rationally spend that sort of money. I don't hold the same value in driving around in a new car as you do. To me it's a tool, it gets me to work and back in comfort, gets the family were it needs to go, etc.

How you rationalise it is up to you. You like to have the car you have, and are obivously happy to pay for that. I would rather spend my money on experiences with my family that will last a lifetime, the destination and the experience rather that the journey. 😉

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.

But are you quite happy to pay £24000 on a car loan including interest for the same depreciating asset?

Pal at work had a really nice car, loved driving around on a Friday night. Later in life I found out the reason he wasn't in the pub having a few beers was that he could just about afford spare cash to put some petrol in his fancy car, but nothing else.

It's just what you are comfortable paying for, I don't think you can apply a hard and fast 10% max income level for a car - if you're tooled up with a mortage, kids at private school and that middle management post doesn't mean you've got anymore 'spare cash' than the guy flipping burger at MacDonalds for a car.

Just did some Google'ing and apparently the average price of a new car is about the same as the average yearly gross salary, ie about 26-27K. I realise that that doesn't mean that everyone spends all their money on cars, but still ... can't get my head around it.

My point was I don't understand how someone, anyone, YOU can rationally spend that sort of money

I would rather spend my money on experiences with my family that will last a lifetime, the destination and the experience rather that the journey

...and this is where it is all about how much disposable income you have to spend on things. In the past I havent been able to afford a car, now I can afford a fairly nice one. Some people can afford a nicer one than me, probably because they earn more than me.

It comes down to priorities...i have a crappy car because i spend my money on bicycles, other sports and i change my motorcycle every 2-3 years...the other half and i also enjoy eating out quite a bit....and we have two dogs which are over indulged i reckon!

If you dont have any hobbies and spend most evenings sat on the sofa watching TV then somebody else with my same salary will probably drive a far nicer car than i do!

Personally i couldnt give a toss about my car, i love watching TopGear and like hearing fast cars and bikes on the road but i cant bring myself to spend good money on cars as driving them doesnt bring me any pleasure whereas cocking about on two wheels does give me a buzz....and thats what it comes down to, i dont like spending money on stuff that i dont enjoy and i've got no interest in playing 'keeping up with the Joneses' over something that ultimately loses value.

8.8 year old C-max, serviced myself, paid for with cash 4 years ago, will probably do another 3 years before I even think about changing it, probably for something similar.

Would I like a A6 estate on finance, yup, it'd be a much nicer car, but a the minute this one's fine.

Relative to all the other costs of owning it* £200 a month to drive arround in something that was actualy nice wouldn't be too bad.

£2k/year in fuel, £400 insurance, £200 tax, £50 MOT, £75 service, £150 tyres + sundries like sceenwash, de-icer, air freshner, washing etc is already north of £240 a month before you look at depreciation which even on my car is probably £70 a month. So if you're already paying all that, why not pay a bit more and do it in something nice.

Bought my current car as an ex demo 9 years ago and at that time it cost me (after trade in) approximately 20% of my annual salary. Used a bank loan to pay for it over 3 years so for the last 6 years it's cost next to nowt. No need or desire to sell it for the foreseeable future.

I do love these threads. They're all about personal values, judgement of others and a certain self righteousness in our own insecurities.

If we want to get down to the hard facts, it might be easier to do a calculation of the annual cost of owning and running a car against annual take home income. Expressed as a percentage.

Using the following categories (apols if I've missed anything obvious)

Depreciation (mine's paid for, so there's no additional purchase cost)
Servicing
Tax
Insurance
Fuel
Tyres
Misc

Back of a fag packet - my car this year will cost 11% of my annual net income. Which I consider to be rather high. The biggest single cost (over 50%) is fuel....

(Of course, that's not truly accurate as it should really be worked out across the life of the car and include purchase costs.)

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.

A reason for that shift might be lot of the other things people spend money on, that were traditionally quite big-ticket investments have gotten cheaper. I don't think its even possible to rent a TV these days, let alone a VCR. Things like your sofa, washing machine and so on would often be big investments and have to be on HP too. So the idea of effectively renting a car that would otherwise be beyond your means is perhaps a result of having fewer of those monthly bills to meet and one big commitment being easier to organise than lots of small ones.

Did not read all the threads ...

I bought my 2005 Toyota Corolla 1.6 auto gear 24k on the clock, for £5k about 5 years ago. Road tax is £260 per year. Insurance after 5 years is £495 coming down from nearly £2K plus in the first year. Normally, MOT is around £30 for me. Car has full service once so cost me £670. The only thing I would "modify" is to change the coil spring to something harder and get my mate, impossible as he is other part of the world, to tune it for me.

Apart from the above I just pump in petrol and drive ... checking everything before that. i.e. tyres, tyre pressure, water, coolant, engine oil, brake oil etc ...

I drive it once in a while and so far managed about 3k miles every year as I don't have the time to drive around too often. Fuel is not a problem for me as a full tank will last me several months ... I need to drive more ... arrgghh ...

😀

I see a car as an expense rather than an asset.

I personally quite like cars and I choose them based on what I can afford (and want to spend) monthly - I always use PCP type deals and prefer new for a hassle free life.

Currently pay about 7% of my gross towards a car payments.

I am not saying it is the cheapest way to do it, but it is my approach.

What's the point of a really nice flash new car, if when you climb out of it your an obese bag of sh*te. I prefer my own bodywork to look good.

In cash terms, my current car cost me about ¼ of my monthly take home pay.

It was slightly more complicated than that as it was a part-exchange and the two cars were very close in value (I wanted something bigger so traded in a supermini for a Berlingo). But the old car was bought for “part cash/part loan” (cost would have been between ¼ - 1/5 of my annual income that year) and the loan had been paid off by a couple of years by then. So that’s all I’ve paid in the last 4 years or so other than running costs. And those aren’t bad considering I don’t drive it much and it’s sailed through the last 2 MOTs needing nothing more than a new bulb or two.

Even if you take what I paid for the first car plus what I paid for the second car and divide it by the time since I bought the first car I’m down to about £125 per month, and that assumes that my current car has no value whatsoever. And that’s with the first car being bought new so suffering heavier depreciation. My next car will almost certainly be a second hand car bought with cash. Probably another Berlingo. I have enough cash in the bank to cover that and I can’t see it being worth much more than 10% of my annual income.

I really don’t get cars as a status symbol. Fine, if you like driving or like cars I can understand spending money on your hobby. But just to show off how much money you have? I remember one of my trainees hating the job but still being desperate to qualify so she could buy a BMW. I’m not sure I even had a car at the time (I spent a year or so experimenting with living without a car). It struck me as quite sad that she was so obsessed by material things rather than finding a job she actually enjoyed.

I don’t really drive enough to want something “nice to drive around in”. To be honest, I don’t like car culture and given I’m trying to cut down on driving miles in favour of other forms of transport it would be counter-productive to have a nice car that I wanted to drive! I eventually decided that a car was useful enough to have one, but not to spend stupid amounts of money on or get obsessed about. I think today is the first time I’ve used the car since last Tuesday.Having something that looks out of place in the office car park encourages me to cycle to work more often 😉 Similarly, something cheap stops me thinking “I’m paying so much for it that I may as well use it”.

This means that I would be without a car for 8.5 years whilst saving, and therefore would be unable to do my job.

Or you buy a cheaper car and still do your job...?

I want to go on holiday 3 times a year,

aside from the fact that I don't get enough time off work to do that, that sounds to me like the same kind of madness that most of the posters on here think is involved in having a car 😉

I'm 50 next week and I can count my foreign holidays on the fingers of both hands, not including the thumbs. lot of money for something you quickly forget (well, that I quickly forget, anyway).

I bought a brand new car with cash (debit card) from a BMW dealer last year it was >50% of my gross salary! Was an odd feeling typing my pin in for that one. I like fast cars and have always been a bit of a petrol head really.

I'm sure I will be judged for both of these statements now!

Never pay more than £500 quid for a car, keep it small and economical, and never claim on the insurance for anything. Try to do most work on it myself, but if it seriously breaks or gets pinched: repeat.

Im awaiting my brand new Octavia vRS, petrol of course :D, and Im getting it on PCP.
Im a bit of a petrol head and Im looking forward to having a bit of poke about it rather than my rather tired 135k miles V70 D5 Ive had for the past 8 years. Mortgage will be paid off in a couple of months so Im looking forward to spending some cash on a nice motor and see something for my money (divorce got me the mortgage, I`d already paid one off!)

I've got a Mercedes C Class that I bought brand new in 2007. It cost £38k so about 75% of my annual salary, I paid cash for it. I've driven just under 100k miles and it has been faultless and totally reliable. I like cars and enjoy driving them and it's reasuring to know that I can jump in it and drive to the south of France and not have to be worried about it breaking down like I would in an old beater.

Looking to sell it soon and spend about £40k in cash on my next car. Depretiation doesn't bother me, it's just a cost of ownership.

why does my font change all the time!!

I've just bought a brand new Toyota MPV (well, deposit paid, balance sat waiting for delivery). I got 20% off the list price, and used some savings plus a low interest personal loan for the balance. This will cost me less per month than leasing would have, and once the loan is paid off I'll have it for £0 per month for the second half of its life. (My current cars are a 11yr old Fiesta, owned since new, and a 10yr old Zafira, owned since 4yrs old, both on 125,000 miles, so I would hope that the Toyota should last at least ten years too - if a Ford and a Vauxhall can it bloody well better). I'm sure bangernomics could work out cheaper, but assuming it lasts at least ten years then that averages out at costing me about 4% of our net income, 8% if I only keep it for five, but I won't. I can live with that.

Brought my 99 pug 306 estate 10 years ago for 4k. 120000 miles later and it's still going strong albeit a bit louder that it used to.

[quote=biglee1 ]why does my font change all the time!!
You're using the wrong symbol between I and m for I'm

I changed from an older car (7 year old Audi) that was worryingly close to landing me a big bill to a brand new Octavia on a PCP deal. The cost of the repayments on the personal loan for the Audi are the same as the payments on the Skoda. I like the fact I have peace of mind on one of the family cars. It came with 3 years free servicing, it is covered by a warranty, the road tax is £200 a year less than the Audi and it is a lot more frugal.

The payments would be around 7% of my net monthly salary. At the end of the deal I will probably hand it back and get something similar.

I've got a 10 year old subaru, which does everything very well (including drinking petrol) and is worth about the same as one terms school fees

My last car was £300 a month inc full servicing (2 year PCP - would have been cheaper over 3 or 4), £0 road tax,cheap to insurance (relative for me <400 a year), did 62mpg over the time I had it. £1000 down at the start.

Faultless pain free quality motoring. That is the cost of new BMW ownership.

I've done the bangernomics and the new car route, depends on what suits at the time! Both options have their plus and minuses.

Ignoring student cars, the first time I had the option of new or cheap I bought my dad's old '96 Corsa off him as I knew the history of it and he was happy with a few more quid than the pathetic trade-in price he was offered. £1500 for a car that lasted 3 years and did 40k rattling round all over the place with bikes, mates and random stuff. I only got rid of it as I had changed jobs to working in a bank and it was made clear that my car was not exactly the right image they wanted to portray (Compomotive alloys, the odd bit of rust and 50 shades of Vauxhall's finest red 8) )so I sold it on for £560 (spent it on bike bits) and bought a pre-reg Ka for £5k on a straight loan. Was paranoid about it not lasting enough for me to pay for it so for the winter months I bought an Audi 80 for £52.12 and used that. Wound the boss up by saying I was bringing the Audi tomorrow, his face was priceless when I turned up in a scabby '84 silver box with rally spots 😆 That thing lasted me 2 winters without spending anything more than MOT and tax on it before it blew the radiator so it was scrapped.
Traded the Ka in for a Fiesta as it was getting on a bit and wish I never had. Hated that car! The trouble was I was stuck with it due to the finance so it stayed with me for 9 years! Once the loan was paid off it had entered into bangernomics so I just kept it going without really caring for it (I'd changed jobs by now so image was no longer a problem). Got rid of it last year as the suspension all needed replacing for the MOT so looked around for a replacement. Was going to go for a cheap car (~£2k) but a timely PPI refund arrived so I was able to treat myself to a new Fabia whilst only taking £3k on finance which will be paid off in two years, the car should still have plenty of life in it by then hopefully! I'll be keeping it for a good 8-10 years so it made sense. After that it will be cheap cars unless I have the cash to buy outright for something special. I see too many of my friends struggle to afford their mortgage and car payments while bringing up a family to put myself in that position!

2001 audi tdi bought 5 yrs ago for £2000 just coming up to 100k on the clock gets serviced once a year will keep it until something catastrophic happens to it!!

[i]ericemel - Member
I see a car as an expense rather than an asset.

I personally quite like cars and I choose them based on what I can afford (and want to spend) monthly - I always use PCP type deals and prefer new for a hassle free life.

Currently pay about 7% of my gross towards a car payments.

I am not saying it is the cheapest way to do it, but it is my approach.[/i]

This ^^.

So can someone tell me if I'm being an idiot or not with this decision:

Currently earn around 25k, and I'm 25 years old.

I save a minimum of £500 a month into ISA, and a maximum to date of £1000. Usually it's around £700. Depends on how much I party and treat myself, but I'm getting more and more over material things so generally the trend is upwards.

I'm considering buying a VW Scirocco for around £10k. 2.0L GT diesel variant if I can, 2010 latest. I intend to keep it minimum 5 years.

Is this absolutely nuts? That's almost 50% of my annual, but I have the cash. Or rather I will do in about 3 months or so, depending on how good I am + my current cars estimated £1k part ex.

This will, of course, empty my savings. But I live at home and no kids. So yeah. Insane or?

Would I be better off financing and keeping 5ish grand toward a mortgage?

My Volvo now 2% of my income (bought at 20% of mine)

Wifes Volvo 20% of wifes income (bought at 30% of hers)

I am a proponent of buy and run it until the scrappy, although this may be feasible as I do a lot of maintenance and repairs myself.

Volvos because I do a lot of maintenance and repairs myself - everywhere I stick my nose I find quality and nicely engineered solutions.

Well, I'm going to stick my head above the parapet and rebel against the bangernomics in the thread.

I like cars (and bikes, and motorbikes) so I want a nice motor on the drive, and I'm lucky enough to earn a decent wage.

My car is a new Merc with a list of 45% of my gross salary, and my wife's is a new Mazda with a list of 25% of my gross. I'm sole earner.

On one level, that seems like I've spent nearly all my money, but appearances are deceptive.

The Merc is a company car, so despite being a top of the range spangly one, all I pay is BIK. In two years, I'll get a new one. The Mazda is on 3 years 0% finance, because the money is better in my bank account than Mazda's. We'll be keeping it for 10 years.

So in the end, 25% of my net salary pays the mortgage, 35% of it pays all the bills. and the rest is 'disposable'. And I appear to be (am? 🙂 ) a flash git with two brand new cars on the drive.

I work hard, have a good education, and work in an industry that pays well, so I get to benefit with nice toys.

My car is about 1/40th of my salary. Its shit.

Paid £750 for mine 3 years ago. It's probably still worth that now... I reckon I'm quids in. Personally I find it a shame that old cars are scrapped so soon, but they've become disposable items to most people. I enjoy looking after and maintaining them though.

Got to factor in the running costs as well. Some very economical newer cars out there now.

I have a 435d which is part if my salary package. It's list price was a tad under my salary from my main job.
I own a 2003 celica which I bought years ago and can't bear to part with. I have a CRV I paid cash for (£5k) for transporting boxing stuff, bikes, dogs. I love cars.

For me it's all down to what you can afford and whether or not you're prepared to pay it, whether that's monthly or as a lump sum.

I just went through looking at changing my almost 5 year old A3 for a new 3 Series and although I can comfortably afford the monthly repayments on the new car, I couldn't actually bring myself to do it as something was telling me it was a waste of money and I should just live with the Audi even though I hate driving it as it's the most boring car I've ever sat behind the wheel of.

Edit: I wish I just kept my bloody Type R

plyphon - If was 25 and living at the parents I would not spend 10k on a car, i'd either be doing everything in my power to get my own place in the UK or i'd be in Canada/NZ etc. riding my bike as much as possible.

If you want a Scirocco, spend 1 to 2 k on a decent one, the badge on the back should say Corrado. 😉

Hmmm.

But surely once you have your own place the ability to buy a car is diminished by quite a fair bit?

I've already done a bit of Aus and NZ. I'm still not sure about settling in the UK - hence the car over house preference!

Any more thoughts?

I can't stomach the depreciation on newer cars, generally buy something older and well looked after.

Seems barmy to me that you'd rent a car for 3 years, being careful not to go over the mileage or get any stone chips then give it back and start again!

bought my boxter 2nd hand for cash. the money id spend on leasing instead goes into a slushfund to keep it running. £3k worth of repairs since i bought it, only done 500 miles. Luckily its all been fixed under warranty so far.

makes a nice noise though...

I'm considering buying a VW Scirocco for around £10k. 2.0L GT diesel variant if I can, 2010 latest. I intend to keep it minimum 5 years.

Nuts? Only the diesel bit, I have a nice petrol one with DSG box within your budget. 😉

My last car (bought last May) was 1/140th of my gross salary. Will probably try and flog it sometime in next couple of months and then purchase something around 1/50th of my salary. Have just bought a house (12 months ago) and would rather have cash to spend on house than worry about a car I use 2 or three times a week.

'plyphon - Member
So can someone tell me if I'm being an idiot or not with this decision:

Currently earn around 25k, and I'm 25 years old.

I save a minimum of £500 a month into ISA, and a maximum to date of £1000. Usually it's around £700. Depends on how much I party and treat myself, but I'm getting more and more over material things so generally the trend is upwards.

I'm considering buying a VW Scirocco for around £10k. 2.0L GT diesel variant if I can, 2010 latest. I intend to keep it minimum 5 years.

Is this absolutely nuts? That's almost 50% of my annual, but I have the cash. Or rather I will do in about 3 months or so, depending on how good I am + my current cars estimated £1k part ex.

This will, of course, empty my savings. But I live at home and no kids. So yeah. Insane or?

Would I be better off financing and keeping 5ish grand toward a mortgage?

I have a 435d which is part if my salary package.

That's a fairly bizarre car to be given for work purposes?

What do you do, drive small parcels around the country very quickly?

3 years ago I bought a 500 pound BMW 530i from 1989 it is still going and is the best car I have ever owned all though all I had is chryslers old BMW 5 series. I will not buy anything new now. In fact I am sticking to cars pre 1990 as I think car design got dull after that with a few exceptions.