Car Worth Vs. Yearly Income

[Zonda]

After some googling I find the magic number to be 36%. Which means that the car you own should be worth 36% of your yearly income.

But as we're all car nuts around here, I figure that number should be a lot higher around here?

 

[Zonda]

Obviously I'm crowd scouting here to see where I fit in.

But to get things going I'll start. I currently drive a "transition car" which is a POS, worth at the very most 1.4% of my income

 

[K-A]

100% at minimum!

 

[Giannis]

I could spend up to 60%, provided I am going to "marry" the car. 10 years of ownership is the minimum!

 

[K-A]

Let's not forget that with Leasing involved, these types of statistics aren't as accurate.

 

[LaArtist]

Im at roughly 10%..

 

[Mr. Mercedes]

Let's not forget that with Leasing involved, these types of statistics aren't as accurate.

That was my question. Should financing costs represent 36% of your income or an outright cash purchase?

 

[Sayyaaf]

My income has varied over the last 3 years that i no longer know exactly how much I get monthy, it is variable

I think 36% is a safe figure. I have seen 100% and sometimes 200% !! Those are crazy. Until recently, government and central bank had to lay new rules to strict loans in general to be MAXed at 20x the monthly salary over 48 months period for all.

 

[MikeJ]

Nope, the Saab is worth nowhere near 36 % of my annual income.

 

[Betty Swollocks]

I don't even want to think about this.

 

[Zonda]

I was thinking of going for the 100% for a multi year ownership. But that is a big commitment!

 

[DocM]

^^I wouldn't go 100%, regardless of how much I like cars, its just hard to justify, with interest rates on multiyear financing and depreciation on the car, its very hard to swallow

great topic by the way
, 36 % sounds about right, I only think in terms of financing, the leasing option makes little sense to me personally.
when I bought mine it neared 50% of my yearly income, but outside rent ( which is relatively affordable ) and car payment, I have little expenses.
So I guess this percentage varies by individual case and one must look into several factors: priorities, family, housing, other expenses and future projected income.

 

[Giannis]

Am I the only one who thinks that the only way to buy a car is cold, hard cash? If you got the money, you buy it. There's no need to have a bank over your head just for a car...

 

[chonkoa]

My brain says 10% but is more like 40% with the 3 vehicles. With that said I am only making payment on just one so that puts it below 10%.

 

[Betty Swollocks]

Am I the only one who thinks that the only way to buy a car is cold, hard cash? If you got the money, you buy it. There's no need to have a bank over your head just for a car...

I only have finance on one of my cars..............and it's not the one you think either.

Finance is not always a bad thing if the interest rate is low. Having a lot of money tied up in a depreciating asset is not ideal. It allows me flexibility too.

 

[Giannis]

Depreciation. Good point about it, but it's the only thing that I don't care when in a market for a car. I want to keep it for as long as it lasts, so anything I buy, it will be worthless in the end!

 

[Betty Swollocks]

Depreciation. Good point about it, but it's the only thing that I don't care when in a market for a car. I want to keep it for as long as it lasts, so anything I buy, it will be worthless in the end!

That's the plan with my R8. Keep it forever even. It's going to be looked after and in ten, fifteen years, a limited production NA car might be worth quite a bit still. But I can't see myself ever selling it.

 

[mini_cooper4]

120-130% of my annual income for 2011 as I've bought both my cars cash. The e21 doesn't count as it's still in build phase
In the end I have bought my cars with the money from my ex cars and ex company cars and they have nothing to do with my annual income.

 

[ateekt]

Holy smokes! I'm way off the line than. My car is worth about 50% of my current annual income & I'm desperately considering an upgrade!

 

[K-A]

I always get this itch to spend a disproportionate amount of my liquid worth on an Exotic of some sort, drive around for a little bit, insure it up the wazzoo, hope it never breaks, then sell it and chalk whatever I lose on it to an amazing experience. I have no Kids, no Wife (in a long term relationship though), barely 30, so it would be a perfect time.

Realistically, buying my first (now second) brand new Benz was me fulfilling that very dream.... hell, buying my first, highly Used W220 was that dream.... Getting a brand new one (2) was just supposed to be the supreme "just do it" moment for me.... oh how we always try and let ourselves forget in the name of rekindling that quick high.