Ratio of income to car buying price?

Horseshoe600

Hi, unsure if this is the correct place to post this, mods feel free to move.

Is there a ratio between a person's salary and the amount they should/could spend on a car that someone should not go over?

For example if you're salary is say 60k, what would be the most someone should reasonably pay for car?

grogi

Horseshoe600 wrote: »

Hi, unsure if this is the correct place to post this, mods feel free to move.

Is there a ratio between a person's salary and the amount they should/could spend on a car that someone should not go over?

For example if you're salary is say 60k, what would be the most someone should reasonably pay for car?

a) I make €60k. I am a father of 4 four and non-working wife, renting in Dublin. Commuting to different part of the city.
b) I make €60k. I am single, and live in an inherited, mortgage free house. Work from home.

Do you really think both lads can afford similar vehicle?

Horseshoe600

grogi wrote: »

a) I make €60k. I am a father of 4 four and non-working wife, renting in Dublin. Commuting to different part of the city.
b) I make €60k. I am single, and live in an inherited, mortgage free house. Work from home.

Do you really think both lads can afford similar vehicle?

Cleary everyone's circumstances are different, I'm just looking to establish if there is a good rule of thumb.

ahnowbrowncow

Horseshoe600 wrote: »

Cleary everyone's circumstances are different, I'm just looking to establish if there is a good rule of thumb.

Spend less than you can afford has worked for me. No ratios involved though.

facehugger99

30% of gross salary

Phileas Frog

Where does PCP come into things?

grogi

Horseshoe600 wrote: »

Cleary everyone's circumstances are different, I'm just looking to establish if there is a good rule of thumb.

All right then - between 0% and 200% of your salary...

U_Fig

How long is a price of string, I am an advocate of living within your means. When I bought my current car it was 30% of my annual wage but I only financed 50% of that, 50% was paid upfront from my savings. So my debt on the car is 15% of my earnings. I am not saying that is right but it works for me. Each to their own really

Squeaksoutloud

I recall reading the foreword of autoexpress last year or so and they actually had a survey on this and it indicated 50 weeks salary if I recall.. Not sure of gross or net. Was shocked tbh!

Mr_Man2121

Squeaksoutloud wrote: »

I recall reading the foreword of autoexpress last year or so and they actually had a survey on this and it indicated 50 weeks salary if I recall.. Not sure of gross or net. Was shocked tbh!

It would have to be net surely. The average gross salary in Ireland is €38,000

Midnight_EG

Never spend more than 20k cash on a car and always get something you like instead of tying yourself down with PCP/HP and a boring derv-mobile

Henry Ford III

Horseshoe600 wrote:

Cleary everyone's circumstances are different, I'm just looking to establish if there is a good rule of thumb.

There isn't one.

Heres Johnny

Work out a budget based on overall running costs rather than purchase price

60k is probably somewhere between 3500-4000 a month take home.

Mortgage 1000 25%
Bills and groceries 600 15%
Savings and pension 500 12.5%
Holidays 500 12.5%
Socialising 300 7.5%
Clothing 200 5%

77.5% of income accounted for in this example

Now..... Think how much a month of what is left you want to spend on a car and work from there....

I know plenty of people in lower paying jobs with new cars and people on big money in older cars

But since you want a rule of thumb between salary and purchase price I'll give you my example and that of my girlfriend

My salary is almost twice hers. I bought a 20k 2014 BMW 530d last summer. Last month she bought a 2014 Audi A6 for the same figure more or less. On 2 drastically different salaries. But our expenses, while shared to some degree, are different. I pay the full mortgage and bills as its actually technically just my house, she buys the food and some home furnishings. She spends way more on clothes than I do and despite just buying a car has 150 a month public transport bill. I can expense my car a good bit for work which pays for most of my outlay on it. Her insurance is dearer too as she has much less driving history and no claims discount. I don't think she'll keep it it's a bit wasted having such a nice car not doing many miles at all but I switch between the 2 all the time it's actually great having the choice as they are my 2 favourite cars on the road.

So there's no answer really. It's about what you can afford.

Idbatterim

the biggest waste is depreciation in my opinion and within reason! The sheer amount some people are losing on bog standard tractor engine bm's in the first year is staggering, given what they are buying! Another thing, if you are saving to buy a house etc, I would waste as little as possible on a car!

Really depends on a number of factors!

ShadowHearth

I never understood the concept of: "percentage of your annual income on car". It all boiles down to: can you afford it or not. Do simple maths.

I make not much money, but in 2017 I was able to pick up PCP car for 24.5k. I did maths and it worked out perfectly so far. Paying for car, able to save some money and put away money in to separate account for balloon payment/change car account, live reasonably comfortable too.

As someone said perfectly: two people making 60k a year can afford very different cars. It all boiles down to other life factors.


Not sure if I will go brand new car again, because VW bank does 2.9% apr on second hand car PCP. An ex demo might be better value for me now.

Eleventy seven.

Don’t forget the towbar.

wandererz

Same as engagement ring!
3 months net salary!

Have you got 3 months net to throw away? Otherwise it will have to be less.

Squidgy Black

wandererz wrote: »

Same as engagement ring!
3 months net salary!

Have you got 3 months net to throw away? Otherwise it will have to be less.

So the average Irish person should only buy a car worth around 7k or less?

And even those on 100k a year should only buy a car worth 15k max?

fancy pigeon

I've never spent more than 750 on the purchase price of a car. Most stuff I buy is in the 100-400 bracket

So most of the time, it's usually a fraction of a percent of my take home

wandererz

Squidgy Black wrote: »

So the average Irish person should only buy a car worth around 7k or less?

And even those on 100k a year should only buy a car worth 15k max?

Totally.

So there you have it OP - 15% of annual salary.

Have that in cash saved up? Or how long will it take?

Four Phucs Ache

I make avg industrial wage.....in 10 years and 3 cars I've spent max 1000 on each purchase.

Current car is a focus 1.4 , paid 1000 3 years ago and put up 100k on it.To be repeated soon.

I love cars but,

Kids , MTG, bills etc stop me from going mad.

In 5 -7 years with MTG gone and kids older I will happily drop money on something nice.

Life stages etc play a big role in a decision.

Notch000

i earn a very good salary and only drive high end bangernomincs. I've had a great run of it. Typicaly spend 5% of my income on buying a car outright for cash & run for 2-3 years easily, F PCP & loans & cheap tax