Your income to car ratio

[Manhattan]

Just wondering what people here spend on a car relative to their incomes. There are of course lots of things to consider and many different preferences and situations. There's people who are willing to take out a huge line of credit to get the nicest car possible and the high earners content to drive around in their 94 corolla. But I think as a general rule of thumb the amount of a car purchase should be no more than half of their gross annual income. Thoughts?

[Kloubek]

I'd say that sounds about right - but like you said, it all depends on your situation.

I personally don't put any vehicles on credit at all anymore. I've bought and sold some 40 vehicles, and over that time I built up enough equity and profit to own my vehicle outright. But then, I *hate* having debt and I think others would be more open to it.

In my case, my current vehicle cost me about 30% of my annual income - but before that, I had 3 sports cars totalling about 70% of my annual income... but again, they were paid outright which makes a huge difference when you're not paying interest....

[KappaSigma]

Originally posted by Kloubek
I'd say that sounds about right - but like you said, it all depends on your situation.

I personally don't put any vehicles on credit at all anymore. I've bought and sold some 40 vehicles, and over that time I built up enough equity and profit to own my vehicle outright. But then, I *hate* having debt and I think others would be more open to it.

In my case, my current vehicle cost me about 30% of my annual income - but before that, I had 3 sports cars totalling about 70% of my annual income... but again, they were paid outright which makes a huge difference when you're not paying interest....

Depends on the situation. Many makers are offering 2% or less for financing. Id rather pay a car monthly and use my equity or cash to put down on a higher debt such as a mortgage then pay off a car.

[Tik-Tok]

Originally posted by Manhattan
Just wondering what people here spend on a car relative to their incomes. There are of course lots of things to consider and many different preferences and situations.

Well, we have a paid off '03 Audi Allroad, a '12 Civic on a lease ($185/month, so about $4500 owing on it until return), and a '72 GTO that we are restoring and has $XXg owing on a LOC for it.

So including the lease and GTO balances, our ratio is about 26% of income. If you include the buyout on the Civic (which is likely to happen), and the estimated cost to finish the GTO, it's more like 42%.

[Twin_Cam_Turbo]

I'm just slightly over 50% right now but next time I think I will look closer to 35% unless my girlfriends starts making a lot more.

[supe]

When I bought my first new car in 2007 my ratio was 0.65 which was ok because I was still living at home.

Our latest purchase, our ratio is 0.2 but there is a lot of things tempting me right now... must hold out.

[l/l/rX]

Originally posted by Kloubek

I personally don't put any vehicles on credit at all anymore. I've bought and sold some 40 vehicles, and over that time I built up enough equity and profit to own my vehicle outright. But then, I *hate* having debt and I think others would be more open to it.


I'm sorry, I'm not understanding how you're using the term equity here. Equity as in you're leveraging your car (depreciating asset) against your home? That's still putting you into more debt...?

[Disoblige]

Originally posted by Twin_Cam_Turbo
I'm just slightly over 50% right now but next time I think I will look closer to 35% unless my girlfriends starts making a lot more.
Wow pimp. Girlfriends to help pay for your car. :bigpimp: :rofl:

[Tik-Tok]

Originally posted by l/l/rX


I'm sorry, I'm not understanding how you're using the term equity here. Equity as in you're leveraging your car (depreciating asset) against your home? That's still putting you into more debt...?

Pretty sure he meant he just saved up enough money through flipping cars to buy his current one outright.

[My_name_is_Rob]

My cars are all paid off, so 10% of my net income goes into a 'turbo fund'.

[Euro_Trash]

0% since I own both outright. Starting to look at trucks though, so that could change. If/when I buy a new vehicle, I would keep the payments to less than 5% of our gross income though.

[msommers]

Spent ~30% gross income on my vehicle. Didn't want to spend that much on a personal + work vehicle but got a deal I couldn't pass up. Spent more as well on the hope it would be the vehicle I keep until it dies. Given my turnover of vehicles, this one is looking pretty darn good and more than likely will be driven into the ground.

[Manhattan]

Originally posted by Kloubek
I've bought and sold some 40 vehicles, and over that time I built up enough equity and profit to own my vehicle outright.

Wanted to do this but after considering the time and effort in selling and buying the few cars I've had in the past it wasn't worth it for me. Not as easy as I thought it would be flipping a car for profit. I also don't have the garage space to keep extra cars for sale.

[Manhattan]

Originally posted by Euro_Trash
0% since I own both outright. Starting to look at trucks though, so that could change. If/when I buy a new vehicle, I would keep the payments to less than 5% of our gross income though.

The ratio is the price of car at purchase as a percentage of your gross income at the time regardless if you're making payments or paying with cash.

[Euro_Trash]

Ah gotcha. The price range I am looking at is 18-20% then

[Mibz]

Matt spends 30% of his income on his vehicle and another 15% of his income on his wife's vehicle. Matt's wife spends 20% of her income on her vehicle.

Why did Matt get married?

[variable_x]

We got a 95 integra and a 99 camry between my wife and I, so we are sitting at about 4% of our income. The house on the other side...

[Mitsu3000gt]

I'm at around 12% now but I used to be at like 75% (with a worse job then too) :rofl:.

As much as I love cars, the extra $700/mo has let me do more things that I enjoy given that I only drive about 3000-5000 KM/year, a nice car sitting in my parkade depreciating isn't a wise investment at this stage of my life.

[jdmXSI]

the combination of my annual bike and car payments work out to 8.5% of my gross income. I don't think I will ever want exceed 10% again... The over all total is 23.5%

[BerserkerCatSplat]

0.75%, 7.5% if you include the GF's car.

Ballerrrrrrr.

[Disoblige]

I like how with some basic math skills, car value look-up and you get a very decent ball park of people's salaries on here :rofl:

[Tik-Tok]

Originally posted by Disoblige
I like how with some basic math skills, car value look-up and you get a very decent ball park of people's salaries on here :rofl:

Obviously I'm another Beyond Millionaire! Our civic may only be worth $15g, but the restoration on the Goat cost us 1/4 million, lol.

[Tomaz]

My payments are about 15% of my monthly income. The car to purchase outright brand new is 1/2 of my yearly income.

[Kloubek]

Originally posted by Tik-Tok


Pretty sure he meant he just saved up enough money through flipping cars to buy his current one outright.

Bingo.

Some people hate referring to a vehicle as an asset because it depreciates. But I was able to purchase them for good deals, sometimes fix them up, and flip them for a profit 95% of the time. At the end, I was sitting with a C5 Corvette, FD RX7 and Audi TT in my driveway and all were paid for.

...then we found out we had a baby coming.... then everything got fucked up. Now all we have is my CX9 (familymobile) and my wife's Hyundai Accent.

[XylathaneGTR]

Purchased a few years ago for about 8% of my current gross annual salary. At the time, I was a student earning a whopping $0/month and the vehicle was purchased entirely from savings, right before I started internship.

I'd like to keep her for a few more years and continue to dump money into my home, savings and other things that I actually enjoy. If my girlfriend and I end up living together or something like that, we'd probably just go into single car sharing, at which point her payments would be around 4% of our monthly income (full purchase price was around 12% our current gross annual income).

I remember when I was a stupid kid with no expenses and living at home and I was thinking "yeah...I could purchase a car for 1.5+ years of my current income" (see signature below). Oh...how things have changed.

[A790]

Payments are about 15% of my monthly income, or roughly 1/3 my annual income (to purchase outright).

[msommers]

Originally posted by Kloubek


Bingo.

Some people hate referring to a vehicle as an asset because it depreciates. But I was able to purchase them for good deals, sometimes fix them up, and flip them for a profit 95% of the time. At the end, I was sitting with a C5 Corvette, FD RX7 and Audi TT in my driveway and all were paid for.


That's impressive! I wish I had the patience for that (and probably the market know-how as well). As soon as I put something on Kijiji, the idiots seem to come out of the woodwork.

[FraserB]

0% right now but will change in a few months. Car I buy will be about 24% of annual salary. So payments would be about 7% of gross maybe.

[Strider]

Originally posted by Disoblige
I like how with some basic math skills, car value look-up and you get a very decent ball park of people's salaries on here :rofl:

Get out of my head! Exactly what I was thinking... lol


Originally posted by variable_x
We got a 95 integra and a 99 camry between my wife and I, so we are sitting at about 4% of our income. The house on the other side...
So conservatively, using current market prices for those cars, ~$4k-$5k each, $8k/0.04 = $200k
*adds variable_x to the Beyond Ballers ... wait ... slightly above average :facepalm: list.



Not sure why everybody keeps saying 0% and payments = x% monthly... OP was asking about total purchase price/gross annual income. Otherwise you can't compare since there's different financing terms.

[black300]

0% bought all my cars outright but that will change once I get a new pickup or car on lease so I can write it off for my company.

[Manhattan]

Originally posted by Strider
Not sure why everybody keeps saying 0% and payments = x% monthly... OP was asking about total purchase price/gross annual income. Otherwise you can't compare since there's different financing terms.

:werd: It also doesn't matter much how much the current value of the car is. More concerned with the original purchase price relative to your gross income at the time. If you bought a 25K car 10 years ago while you were earning 50K but the car is worth less than 10K today and you're earning double what you used to make then the ratio drops off the radar. I'm interested in the decision process on what people think they can afford when buying a car.

[colinxx235]

Yah I don't figure how you can really say 0%.

I just bought a car that would represent a pretty large % of my yearly income.

But I'd still go through and try to calculate over a 4 year period how much it will cost me a month (depreciation/repairs) to determine its average % value against my monthly or yearly income.

I figure if I keep it 4 years personally I'm looking at about 8-10% of my current earnings. By the time 4 years hit my earnings should be quite a bit higher and reflect a lower cost.

[carson blocks]

I love cars, but don't like debt and I actually have a sick love for cheap beaters. I almost feel bad when I have to drive my junk in to the company parkade downtown.

Daily driver SUV = ~0.625%
Old truck= ~0.208%

*edit* I did marth my decimal point.

I'm not a "Beyond Baller", my vehicles are just that cheap and I love them more than cars I've had costing 50-75x that much. I'm that guy who would rather have a handful of interesting, fun beaters than one nice newer bland but sensible car.

[msommers]

Originally posted by Manhattan


:werd: It also doesn't matter much how much the current value of the car is. More concerned with the original purchase price relative to your gross income at the time. If you bought a 25K car 10 years ago while you were earning 50K but the car is worth less than 10K today and you're earning double what you used to make then the ratio drops off the radar. I'm interested in the decision process on what people think they can afford when buying a car.

Agreed. 0% to me indicates you got it for free, which may be the case but probably not what the poster intended.

[chibwack]

The cars paid off now (thank you hail claim!) and I'm gonna drive it until it dies, but when it does I'm thinking I'll just set aside 3-4% of my gross monthly income for a lease and do that from then on out. Cheaper, always have a newish vehicle, can't go wrong!

Then I can save up and buy cash a nice 60's cuda or vette or something.

When I was paying, the car pmt was ~8.5% of my gross salary, which was just a little more than I was comfortable with. Insurance brought that up to around 11% probably.

As far as value, its currently probably only worth 8% of my gross (since I'm not fixing the hail...would have been 16% before).

When I bought it, I was financed to the nines
Street bike - 22.5%
Race bike - 6.25%
Dirt bike - 8.5%
Car - 28.75%
(no house, no dependents, free rent and way too much money for 18 y/o. safe to say I hate debt now)

[pheoxs]

I own everything outright but in terms of valie

My FD + Jetta + Street bike = 35% of what I gross yearly

[Disoblige]

Originally posted by Manhattan


The ratio is the price of car at purchase as a percentage of your gross income at the time regardless if you're making payments or paying with cash.

[ExtraSlow]

I've bought vehicles that were ~30% of my annual income twice now. Guess it would be less than that if you include my wife's income.

But in terms of payment, highest I've ever been was 6% of my salary, I'm at zero now. I hate payments.

Mortgage is another story, I've been as high as 50% of my net income going to mortgage. That's not fun:cry: :cry:

[jaysas_63]

15-20% cash is where I feel comfortable (not including costs associated with the car, i.e. insurance, gas, parking, maintenance, etc)

[Strider]

Originally posted by carson blocks
I love cars, but don't like debt and I actually have a sick love for cheap beaters. I almost feel bad when I have to drive my junk in to the company parkade downtown.

Daily driver SUV = ~0.0625%
Old truck= ~0.0208%

No, I didn't get the decimal place wrong, and no I'm not a "Beyond Baller", my vehicles are just that cheap and I love them more than cars I've had costing 50-75x that much. I'm that guy who would rather have a handful of interesting, fun beaters than one nice newer bland but sensible car.

Say what you will, but I'm still inclined to believe you marthed your decimal.

0.0625% = 0.000625

Therefore, even if you have a $500 daily driver...
$500/0.000625 = $800,000. Definitely enough for entrance into the Beyond Baller club.

[Strider]

OP I'm with you on the "no more than 50% of gross".

Although I'm probably closer to about 33% for our household.

[carson blocks]

Originally posted by Strider


Say what you will, but I'm still inclined to believe you marthed your decimal.

0.0625% = 0.000625

Therefore, even if you have a $500 daily driver...
$500/0.000625 = $800,000. Definitely enough for entrance into the Beyond Baller club.

Ah shit, even after checking it like 4 times, my marth still failed me. Thanks. Yeah, it's .625% and .208%. Low six figure income with a three figure taste in vehicles.

[npham]

Am I the only guy on here who wants to drive nice cars? On a "car" forum(yes I know it's evolved) no one spends 50k on a car anymore? I can't wait to ditch my Ralliart for something German. Debt sucks but I'm still young, without kids, dual income, etc and will probably spend 50% of what I gross in a year on a car :dunno:

[JudasJimmy]

I'm at 57%

[danno]

i'll spend over 50k for a car once my house is paid off, till then i'll spend 20k + the sale of my car (15-20k).

right now i'm at 20% since i splurged and got a truck for the wife to drive. i was around 5% before.

[Kloubek]

Originally posted by npham
Am I the only guy on here who wants to drive nice cars? On a "car" forum(yes I know it's evolved) no one spends 50k on a car anymore? I can't wait to ditch my Ralliart for something German. Debt sucks but I'm still young, without kids, dual income, etc and will probably spend 50% of what I gross in a year on a car :dunno:

You can certainly do that. And it will be a wicked nice car for your age.

You'll also be the one who doesn't have money to buy a house or start his retirement so that it builds up for the longest time possible.

But I'm sure you'll enjoy that car.... along with the loss of $20k in the first 3 years of ownership.

[JordanLotoski]

My cars are all paid for, id imagine the average would range between 35-50%

[Cos]

.

[max_boost]

My total outstanding car loans > My mortgage balance.

Everything on the HELOC. :rofl: :thumbsup:

[Isaiah]

Originally posted by Mitsu3000gt
I'm at around 12% now but I used to be at like 75% (with a worse job then too) :rofl:.

As much as I love cars, the extra $700/mo has let me do more things that I enjoy given that I only drive about 3000-5000 KM/year, a nice car sitting in my parkade depreciating isn't a wise investment at this stage of my life.
Didn't realize you sold the S4. You must not have had it too long.

[Sugarphreak]

...

[Mibz]

I went 3 years without car payments, my wife went 5. Those were glorious years. We only got new cars when mortgage, RRSP and vacation funding was where we wanted it to be. Now we're hoping that we can get used to these payments and make them for the rest of our lives, haha.

[Cos]

.

[Mibz]

Yep. If you wait for the perfect car you're never gonna buy anything, hahaha.

[r3ccOs]

after having a car payment, its nice just not having one...

also buying a decent certified pre-own cuts down the depreciation

just bought a one year old car outright, for about 1/5 my income, and I'm fine with a car like that... (volvo T6)

i know this is a car enthusiast forum, but how can you warrant spending half a year's salary on a car?

a friend of mine, a EVP @ Husky, drives an 98' Altima... to put that in any perspective

[Mibz]

How can you warrant spending money on something that makes you happy?

Gee, I dunno.

[max_boost]

Ah eff that noise! You don't spend it here you spend it elsewhere. I can go maybe 1 month without a nicer car and that's it. The itch is too strong because a good deal will inevitably come up! lol

[Mitsu3000gt]

Originally posted by Isaiah

Didn't realize you sold the S4. You must not have had it too long.

Yeah I sold the B5 in 2009 and picked up the B6, which I sold in 2011 a year or so after I moved downtown. I only put 4,000 KM on it in 2 years.

Having a car like that sit around depreciating 99% of the time just wasn't worth it, as much as I liked that car. I only drive ~4000km/year so now I have a Civic haha. I have got over the (lack of) power, and anything else I drive feels like a rocket ship haha.

[Chandler_Racing]

Purchase price was about 15% of my annual income. Would be comfortable with 30%.

[sputnik]

Divide by zero.

[spike98]

Purchase price is about 50% of my gross income with the payment at 19% of my net.

Mortgage (+costs. ie. utilities, taxes ect) and Vehicle cost (payment, gas, insurance, ect) is at 56% of net.

[Strider]

Originally posted by r3ccOs
i know this is a car enthusiast forum, but how can you warrant spending half a year's salary on a car?

I think another factor is how long you keep the car...

If you spend 50% and sell to buy a new car every 2-3 years, it's a lot different than spending 50% and keeping the car for 5-10 years.

[chibwack]

Originally posted by spike98
Purchase price is about 50% of my gross income with the payment at 19% of my net.

Mortgage (+costs) and Vehicle cost (gas, insurance, ect) is at 56% of net.
Holy, what do you pay rent/groceries with?

[chibwack]

Originally posted by JordanLotoski
My cars are all paid for, id imagine the average would range between 35-50%

Apparantly I should have went into real estate haha.. All I want is to pay off my student loans :dunno:

[spike98]

Originally posted by chibwack

Holy, what do you pay rent/groceries with?

You may have misread my post. I edited it for a bit of clarity. I dont rent, i mortgaged a home. My total living expenses and savings account for about 70% of my net allowing me 30% of net to do whatever i wish with it.

[Isaiah]

Originally posted by Mitsu3000gt


Yeah I sold the B5 in 2009 and picked up the B6, which I sold in 2011 a year or so after I moved downtown. I only put 4,000 KM on it in 2 years.

Having a car like that sit around depreciating 99% of the time just wasn't worth it, as much as I liked that car. I only drive ~4000km/year so now I have a Civic haha. I have got over the (lack of) power, and anything else I drive feels like a rocket ship haha.
The B6 is the one I was referring to. That thing was smokin'.

[JDMsomething]

<10%

[slinkie]

All I can tell you is, financing a vehicle is for welfare recipients

[88jbody]

I went in debt for our first car a couple weeks ago, prior all had been bought cash. so now I owe 11-12% of a years income on a car, 2011 econobox. but that is also 100% of my and my wifes debt load. I was hoping to not get any debt until I got a house.

[ddduke]

I'm at about 50% right now with my m45 and f350. But I just sold my bikes and am looking for a Harley Street Gilde and a Viper before spring so I'll be at 100% or maybe 110%.

Thankfully I do what Kloubek did and purchase most of my vehicles for a good price and always turn a profit on them. I actually went through 4 bikes this year and made good profit on each one.

I also don't owe a cent on either of my vehicles and I won't on the next 2, I just save and spend wisely so I pay cash for what I want.

[themack89]

I'm surprised nobody has mentioned a leased vehicle yet.

[Cos]

.

[ddduke]

Originally posted by Cos
Well there goes the flip flop. Haha just added a Focus to the fleet. Still only about 25% of one years income though.

You have a Mustang, Lariat and new Focus. Being really conservative those 3 are worth atleast $50k, you're saying you make 200k+ a year?

[msommers]

If he does or doesn't, what business is it if yours?

[gpomp]

Originally posted by ddduke


You have a Mustang, Lariat and new Focus. Being really conservative those 3 are worth atleast $50k, you're saying you make 200k+ a year? that's quite low compared to the typical beyonder

[npham]

He probably meant the Focus was 25%, not all 3. Or maybe that's a combined income with his wife/gf for all 3 cars.

[FraserB]

Everyone is comparing different things in this thread so its pointless.

My next car will have an initial purchase price of about 28% of my gross income, payments including insurance will be about 10% of gross per year for 3 years.

[FraserB]

Originally posted by ddduke


You have a Mustang, Lariat and new Focus. Being really conservative those 3 are worth atleast $50k, you're saying you make 200k+ a year?

Wrong comparison, no one is adding their fleets worth and comparing it to their income.

[Cos]

.

[ddduke]

Originally posted by msommers
If he does or doesn't, what business is it if yours?

It's not my business at all. He's just mentioned where he works and his age before which makes a 200k salary near impossible. I was just pointing out his number are probably wrong.

[Canmorite]

Monthly payments are just under 10% of net income.

[bastardchild]

Buy cash or its not yours.

[Sugarphreak]

...

[FraserB]

Originally posted by Sugarphreak


I did :bigpimp:


My fleet is going to get expanded next summer, not decided if it is going to be 5% on a beater or 100% on something a little more exotic this time around :D

Just HELOC once you move.:D

[Sugarphreak]

...

[ap2s2k]

Debt sucks for vehicles.

[Cos]

.

[ercchry]

Originally posted by Cos

... We clear mid 6 figures with my income and my wifes part time.

shiiiit, so like $500k? :bigpimp:

:rofl:

[ercchry]

Originally posted by ap2s2k
Debt sucks for vehicles.

only if you dont know what you are doing...

hrm... paid off car or a $500/month payment and a rental property that increases my income by the purchase price of said car every year... hrm... hrm...

[Cos]

.

[colinxx235]

Originally posted by ercchry


shiiiit, so like $500k? :bigpimp:

:rofl:


exactly what I was about to post as I read it :rofl:

[Cos]

.

[colinxx235]

Originally posted by Cos


Peasants. What DINKS dont make 500 - 750 a year? Jeez. ;) Fixed my post.


find me a girl who makes somewhere in the 4XX mark and your statement is perfectly valid :rofl:

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:( fuckkk

[XylathaneGTR]

Originally posted by colinxx235



find me a girl who makes somewhere in the 4XX mark and your statement is perfectly valid :rofl:

Found one... (http://www.ucalgary.ca/president/about)

[Super_Geo]

Originally posted by colinxx235



find me a girl who makes somewhere in the 4XX mark and your statement is perfectly valid :rofl:

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:( fuckkk

I have found a distinct negative correlation between girls who make big $ and attractiveness. Very unfortunate.

[msommers]

What about that coug on Dragon's Den :D

[flipstah]

Originally posted by msommers
What about that coug on Dragon's Den :D

:love: :thumbsup: :drool:

[Sorath]

buy cash or pay off within 2 years. unless its 0% and you can afford to buy it out right

[Skyline_Addict]

Originally posted by Sorath
buy cash or pay off within 2 years. unless its 0% and you can afford to buy it out right

Sorath's ratio is 275:1.

[Canmorite]

Originally posted by bastardchild
Buy cash or its not yours.

I'll likely never outright purchase a vehicle. Even if it was $50K, who puts $50K cash into a depreciating asset and sits on it? That's 'Beyond baller' style. Especially at today's interest rates.