How much do you pay for your cars compared to income?

[KentState]

lol damn, I need a raise.

Raises are great and all, though I only get to take home 51% of the last one I got.

 

[JCH13]

Who makes up those rules? Seems rather arbitrary.

No arguments on that.

Raises are great and all, though I only get to take home 51% of the last one I got.

Boo - freakin' - hoo!

 

[Yuriman]

Paid cash for my last 2 cars. Both were used but with relatively low miles. Presently driving a Honda Insight and enjoying 70mpg city 80 hwy. Planning on doing a trip around the U.S. next summer, total cost to drive to all 4 corners and back home is about $300.

 

[jlee]

Boo - freakin' - hoo!

lol yeah, no kidding.

 

[eng2d2]

I got my first car at 14, a '73 Toyota Corolla with the agreement that "if you can get it home you can have it." I am now 44 and have never paid a single penny for any car I have ever owned. I have never had a car payment. I work on my own cars so I have spent quite a bit over the years on my "free" cars.
Keep in mind my daily driver is a '71 Chevelle with a mere 600,000 miles on it...

still have that 73?

 

[cbrsurfr]

1973 Mustang - own outright
1994 Bronco - own outright
2011 Evo - about 4% of gross. I could pay it off but the rate is so low and with 2 houses I like to keep a large savings buffer in case something happens.

 

[fleshconsumed]

still have that 73?

Didn't you see? He upgraded to a 71.

 

[repoman0]

Investment as income now rather than as savings for the future?

If so then yeah. I think I'd need pretty large investments to give me any significant income.

Typically you can make a pretty stable 5-10% with little effort, or significantly more if you're up for the risk. I do treat it as savings, but for every large purchase you make in cash, that's money that's earning nothing for you and is essentially lost in a depreciating asset. Car loans can be had for 2% if you have any sort of decent credit history. Just set up autopayments if they bother you

Granted I don't have any fancy investment properties or anything, but the cash that I'd otherwise pay outright for a car has earned 25% this year via mutual funds .. I'd call that significant even with a pretty small investment

 

[PricklyPete]

What if my cars are paid for? Do I go get a new car so I can participate in this thread? :awe:

Whether it is paid off or you make payments, the conversation is still valid. I haven't financed a car for a long time, but I still think comparing the cost of the car with my yearly salary is still an appropriate metric for whether I am being prudent with my money.

 

[jagec]

Current car value is 1.6% of household income. It's getting pretty beat up.:whiste:

But in a couple of years we'll probably get a huge upgrade by buying a slightly used car for 20% or so of HHI. We might need to buy two (I currently walk to work).

 

[buddyholly1969]

I had the '73 until a few years ago. It was a "rare" Corolla coupe.
The Chevelle was my grandmothers. I was used by my aunt to run moonshine back in the 70's to Atlanta and has 2 dents (not holes) from bullets in it, though not from the moonshining.
I know a lot of people do work on their own cars and that really has to be considered when we are comparing how much everyone is paying for their vehicles. All of mine were free but I have spent endless hours building them up to where I wanted them. A lot of people just want something fun to drive and are willing to spent a lot of money not having to worry about maintenance or repairs...

 

[Knowing]

The daily was about 1/3 of our income, but we saved for it so we financed less than a 1/4 of income.

My sports car was less than that and paid off before the new daily.

 

[Harrod]

4% per month for my Outback, if I add my wifes salary it drops to 1.9%.

 

[jagec]

4% per month for my Outback, if I add my wifes salary it drops to 1.9%.

So, 1.9% a month, times twelve months, times 5 years (average loan) = car worth more than your combined annual income?D:

 

[jlee]

So, 1.9% a month, times twelve months, times 5 years (average loan) = car worth more than your combined annual income?D:

I think you are forgetting something.

1.9% of monthly income equals more than annual income over five years..how, exactly?

 

[TridenT]

I think you are forgetting something.

1.9% of monthly income equals more than annual income over five years..how, exactly?

I think he did the math wrong...

So, 1.9% a month, times twelve months, times 5 years (average loan) = car worth more than your combined annual income?D:

Example 1:
Monthly income = 1000

1.9% * 1000 = 19
19 is the monthly payment.
12 in a year.
19*12 = 228
Over five years
5 * 228 = 1140

So, he paid 14% more than his /monthly/ income on a car over five years.

No biggie.

 

[jagec]

I think you are forgetting something.

1.9% of monthly income equals more than annual income over five years..how, exactly?

The source quote was vague, that's what I was playing around with. Could have been 1.9% of annual salary, 1.9% of monthly salary, or 1.9% of each paycheck...

 

[jlee]

The source quote was vague, that's what I was playing around with. Could have been 1.9% of annual salary, 1.9% of monthly salary, or 1.9% of each paycheck...

He said "per month."

 

[Harrod]

I used Annual_Salary/12/car_payment to get the percentage as a per month value.

 

[Demo24]

A little north of 13% of my take home monthly pay for the Mazda 3. I need a new salary :|

 

[nk215]

My three cars were about 4 years apart and paid in full so I didn't have any payment overlap. If I were to buy all the three cars again at the same time then it would come out to be around 20% before tax earned wages (vs passive income).

I know it's wise when I can finance the car (with lower interest rate than investment return) rather than pay cash, but I was never comfortable with loans/debts. There is a benefit for peace of mind.

Numbers can play tricks with the mind. The more I get from my investment, the "cheaper" I become since I keep on wanting to put more $$ into investment rather than spending on nice things. I don't think I'll ever buy a car in $60k range again

 

[OVerLoRDI]

Touching 100k household, we have a 99 camry that was gifted to us. Car rules, I love how cheap and reliable it is. Motorcycle costs a lot more, granted we do a ton more miles on the bike.

So for the car. Something like 1-3% of our income. The bike is probably 3-4%

 

[jagec]

He said "per month."

Monthly cost, not monthly income....bah, never mind, clearly my attempt at humor fell flat.:'(

 

[Tweak155]

The goal I set for myself is to save around $60k in cash a year on top of 401k and other investments. Whatever is comfortably left after expenses are budgeted can go towards a car. Right now, that's an allowance of up to $950/month for a weekend/fun car. Daily driver is paid off so it's not a necessity if something catastrophic happened.

This is what I'm aiming for too... just this year I bought my house cash and a used car still worth over $25k cash... so at this point I'm debt free and saving just over that $60k mark this year. I was aiming for $100k/yr so I could buy a better house cash in the next 5 years, but too many costs keep going up to make that feasible by next year. I'm betting I can still pass $80k.

If I didn't have a 0% credit card that I used to remodel my kitchen, redo my lawn and buy furniture with, I'd have no debt. But since it is 0% I'll keep it.

I only bought the car cash because their loan offerings were terrible. To even get it below the 3% mark it had to be a 2 year loan or something stupid. It isn't that I have bad credit, as my loan prior that was 5yrs @1.84%, it's just that I didn't feel like shopping for a loan outside of the dealer. I don't do a lot of investments right now so I had a lot saved up.

The other car we own we bought 3 years ago and I only took a loan to get the incentives, then paid it off right away because the rate was terrible. I got like $2500 to take the loan though.

 

[jlee]

Monthly cost, not monthly income....bah, never mind, clearly my attempt at humor fell flat.:'(

:beer: it's all good!