How much to spend on car? % of income?

BarleyGB

Hi,

Im looking to replace my car and just wondering how much is common / reasonable to spend on a car and how much others tend to spend.

My question is, if youre replacing a car or have done recently, what is a reasonable percentage of annual income to spend?

Obviously peoples circumstances will differ, as will their view on whether theyre happy with a cheaper get me from A2B car or prefer a nicer newer car. Im just looking for comparative views and what others think or have spent as a % of their annual income.

worried_jim

I spent less than 2% on my last car. Don't see any other need to spend more. 12 years old, a full leather and air with a years MOT. Job done.

Herzlos

If you're paying it up, then you want to go for something with payments you find easily affordable whilst still leaving plenty of room for maintenance.

As a percentage it's impossible to tell because everyone has different outgoings and disposable income independent of salary (i.e. huge mortage Vs no mortgage).

So pick a sum you think you can easily afford for the duration of the repayments, or a lump sum you can happily pay in cash, or a combination of the 2.

BarleyGB

For clarification, im in fortunate position that I have savings to cover the purchase cost, enough even to stretch to something nice.

Just wondering if buying a car for say the equivilent of 10%, 20%, 50%, 75% of annual income is reasonable? I know people cant answer for me but im just trying to get a feel for what others feel is a reasonable amount to spend on a car?

I guess there will be a broad range of opinions, some people are happy to borrow a large amount to buy a new car whilst others are content with a reliable old car (im currently driving a 8 year old Ford Ka)

Ultrasonic

I really don't think you should be using what other people spend on cars to decide what is right for you. How much it's worth spending on a car will depend on many factors including:

1) Do you view a car as purely a tool or something more?
2) Do you drive for pleasure, such that sporty performance and handling are important.
3) How much driving do you do? I'd want a better car if I drove 50,000 miles a year than if I drove 5,000.
4) How easy is it for you to cope without a car if it has a fault that needs fixing?
5) How big a car do you need?
6) What else could you be doing with the extra money you might be spending on a more expensive car?
7) How likely are your financial circumstances likely to change?


But for the practically nothing it's worth, when I bought my current car it cost me about 20% of my salary at the time. And I bought it out of saving as you will be doing.

Idiophreak

I spend 9% of my take home on car leasing.
The list price of the car's around 32% of my gross annual wage.

Don't know how that can possibly help you make any kind of decision, but there we go

forgotmyname

What can you afford?

How much do you save each month? Half of that maximum if your getting a loan.

gilbert_and_sullivan

Never thought about it in percentage of income terms, but now you ask my old Benz cost me 20% and i've had her 11 years.

Our other car cost us less than 10% last year and is expected to last 5 years.

Don't do borrowing and don't believe in paying interest to already rich people.

motorguy

I've been to both extremes.

I've bought cars equivalent to 100% of my income in the past, but my current 'steed' represents 1.5% of my yearly income.

Happy not spending more than £1000 on my daily driver nowadays though.

RuthnJasper

motorguy wrote: »

I've been to both extremes.

I've bought cars equivalent to 100% of my income in the past, but my current 'steed' represents 1.5% of my yearly income.

Happy not spending more than £1000 on my daily driver nowadays though.

Me too. As forgotmyname says, it ultimately boils down to what you can realistically afford - and don't forget to factor-in how much it will cost to insure, which tax bracket it falls into, how economical it is regarding fuel, etc...

I have had to get a new car very recently (collected it this Monday past). I went on the Auto Trader website, entered my requirements and what I could afford, and lots of options (some dubious, most were reliable) came up. In the end, I went for a 10 year-old Vauxhall Corsa in EXCELLENT condition at £975. I'm really pleased with it. Don't know what the percentage works out at; I'm in an IVA and can't afford to think that way (my parents lent me the money for the car and I'm paying them back bit by bit; I'm extremely lucky that they were able to do this).

Best wishes OP. x

forgotmyname

Been there and got the shock. I was off work sick for a while and the bills still need paying.

Made me sort my act out. No good having a new car on the drive if it puts you at risk of not being able to pay for it when the unexpected happens.

I now spend about £2000 on a car and its done me well. I have now saved enough to be able to buy a new car.
Saving previously was a hit and miss affair. Save for a few months then take it out repeat all too often.

Car was just over £2000 in 2009. All MOT's, Repairs, Tyres, Servicing and some upgrades. have cost about £700.

I feel like a change but, No rush its running well.