Annual income to price of car

[Daft99]

Say you have a job/business etc.

What do you figure you should be bringing in annually to afford a $50,000 vehicle? Say a TL or so.

How about if you are in a slightly different league, and looking at exotics?

What do you figure you should be bringing in annualy to afford a $300,000+ vehicle?


Do you think the margin should change between those different types of vehicles? If so, what do you think the margin should change to?
ex:
If you want to purchase a $50,000 vehicle, you should make at least 1.3-1.5 times that amount. (Pulling these figures from thin air)

If you want to purchase a $300,000 vehicle, you should make at least ___ times that amount.

[adam c]

to be approved the maximum u can put towards loans of any nature is 42% or less of your gross income

what that means is if u have other loans or debt that is also factored into how the type of car u can afford

[rc2002]

This is going to vary widely for everyone. People who own their own company and can write off the vehicle as a business expense can afford to spend a lot more. Some people are always going to be tighter with the purse strings too - The owner of Ikea is the richest man in the world and drives a 20 year old Volvo.

On a side note - Are TL's really going for $50k now? I know that they were going for $40k out the door (everything in) a couple years back.

[The Cosworth]

The rule of thumb I use is 70% of your yearly before tax salary is the most I would EVER pay on a car.

Hence 50,000 a year is a 35,000 car.

I went well below that and still have lots of cash to blow.

Currently I am at 40% and it sometimes seems like a waste of money

[blownz]

I have always thought it isn't wise to spend more than 50% of your yearly income towards a vehicle. So for your 50 grand vehicle I wouldn't recommend buying that unless you made at least 100k a year. But that is just me. Everyone is a bit different. How many years you plan on keeping the car would make a difference too imo. That said I have never spent more than 35% of my income on a vehicle.

A 300k vehicle is a bit differnt though. I would never consider buying an exotic worth that much unless I had the cash in the bank and didn't need it for anything else. So yearly salary doesn't matter as much. Again depends on the person. My boss makes 7 figures and thinks spending 300k on one car that you can't drive year round is stupid but he buys about 3 100k cars every year and loses a ton on depreciation each year but doesn't care when others would find that stupid.

[Mazstyle]

It basically comes to down to people opinions, nowadays people are buying way more car then they really should be thanks to leases/longer finance terms etc. I think you should look at whats a comfortable monthly payment for you and try not to stretch it out past 4 maybe 5 years max.

IE: say you want a 30k car and get a good interest rate ~1.9, financed over 5 years your payment would be $524

There's a bunch of loan calculators out there - http://www.bmo.com/popup/loans/Calculator.html

[finboy]

even 40% sounds high to me, guess i'm cheap

[turbotrip]

Originally posted by blownz

A 300k vehicle is a bit differnt though. I would never consider buying an exotic worth that much unless I had the cash in the bank and didn't need it for anything else. So yearly salary doesn't matter as much.

indeed, i dont think the 300k car has to do with yearly salary as much as what u can spend without feeling it too much

[Jlude]

Originally posted by finboy
even 40% sounds high to me, guess i'm cheap

when I bought my car it was only 20% of my annual income... I'm cheap too... trying to change that though

[bituerbo]

I guess it all depends. Yeah I have heard that 40%-50% is a typical number. I'm closer to 20-25% but I's CHEAP.

[Team_Mclaren]

keep in mind you dont have to pay for your car in one year.

[adam c]

im telling u.. i used to work for the bank..

banks and finance companies wont approve you for more then 42%

[CRX-R]

Originally posted by adam c
im telling u.. i used to work for the bank..

banks and finance companies wont approve you for more then 42%

What you're talking about is payments, your finance payments can't be more than 42% of your income, mortgage, interest, loans, etc.... But even this isn't a hard rule.

[z1_bam]

I spent 110% of my income on a truck last winter (financed) but I dont feel too bad about it as I end up being in my vehicle enough (~70,000km/year) to want something comfortable and reliable

[ricefarmer]

Originally posted by adam c
im telling u.. i used to work for the bank..

banks and finance companies wont approve you for more then 42%

by that logic if I make $100k/year I will only get approved to buy a $42k car.

Only the bank will care about your debt service... most factory or dealer financing/garbage lenders can aprove based on credit score alone.

these guys arene't talking about a TDSR anyways just the ratio between annual salary and price of the car

[max_boost]

There is no magical ratio that can link how expensive car you drive to your income.

What's the point anyway? Really? To determine how much some guy makes? To tell someone, wait, you can't drive that car because you don't make 3X the value of it?

[Daft99]

Originally posted by max_boost
There is no magical ratio that can link how expensive car you drive to your income.

What's the point anyway? Really? To determine how much some guy makes? To tell someone, wait, you can't drive that car because you don't make 3X the value of it?

It's more just to see what people on the board are comfortable with.

Nowhere did I indicate that I am looking for a hard and fast rule, nor did I say I was trying to find anything out.

[gpomp]

Originally posted by max_boost
There is no magical ratio that can link how expensive car you drive to your income.

What's the point anyway? Really? To determine how much some guy makes? To tell someone, wait, you can't drive that car because you don't make 3X the value of it?

the ratio is 1.7445. it's set by the canadian government every year. this number is accurate as of jan 1, 2008.

[max_boost]

Originally posted by Daft99


It's more just to see what people on the board are comfortable with.

Nowhere did I indicate that I am looking for a hard and fast rule, nor did I say I was trying to find anything out.

Everyone is going to give you a different answer. The situation will vary between each person as everyone has different expense obligations.

[Daft99]

Originally posted by max_boost


Everyone is going to give you a different answer. The situation will vary between each person as everyone has different expense obligations.

And that's what I'm hoping for

Thanks for the input Max_boost.