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.

[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) .

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.