How much of an income should one make to be able to afford this appropriately?
Of course if you're on a 50k salary, it would be stupid. But what I'm asking is, what would you say would have to the minimum yearly income to be able to buy a car of such value without being too stupid (quite ironic because it's a depreciative asset).
Just here to hear people's opinion :)
I have heard somewhere that you should spend about 6 months salary on your car, so I am guessing 200k a year, maybe?
Depends on how much you need for other things. If you live with your parents and your whole salary is disposable income then not as much than if you were buying a house. I am amazed at how many young people I work with who spend a high % of their salary on car repayments and then complain about how unfair it is that they can't afford to buy a house.
Personally I spend a low % of my salary (which would probably be regarded as a good salary) on cars - i would far rather put it into something that is not just money down the toilet….
maybe you could finance it or lease it without needing $100k but i think you would be better off spending that money on an investment.
Also depending on your occupation? For example if you are a real estate agent I thought it's pretty much required to drive around in expensive cars. Know a couple (both REA) with kids living in a 2 bedder but drive around in a BMW and Land Rover.
Moreover as @mattgal said, I would think many of those $100k+ luxury cars are leased with tax saving schemes. Yeah some might be bought outright, but I can't imagine all those beemers and merc on Sydney street are paid in cash.
You're asking members of OzBargain about 100k+ cars? :P
Why not?
I was born cheap. I was born broke.
I might no longer (knock wood) be broke, but I can't get the cheapness out of my system :D
Priorities. How much do you love a nice car?
(a)How much is your dream car?
(b)How much do you want to spend on other stuff?
(c)How much are you earning?
c - b = a + savings + investments
Some people don't spend much on (b), other stuff. Some people choose not to have much savings/investments. Others earn a lot and have all of the above.
And yeah, many middle class folks you see driving 100k+ cars are doing so with ridiculous loans, or have dipped into their savings to "treat themselves".
A rule of thumb that I've always thought makes sense is to limit your car expense to max 20% of your disposable income, and a loan of no greater than 3 years. So if you can get a car on a maximum 3 year loan, with repayments of no more than 20% of your disposable income, then go for it.
Here's a WSJ article that has some other good tips (it has an American slant):
http://guides.wsj.com/personal-finance/buying-a-car/how-to-f…
I have seen other finance sites that simplify it by saying your car should cost no more than 20% of one year's gross income. If you make $100k a year, then your car should cost no more than $20k. You can see by that rule that not many people would be driving the cars they do.
You meant to say if you are on 100k, so after tax, lets say 70k, as long as the repayments doesn't go over $14,000/year for 3 years… then go for it?
No, I said 20% of disposable income. After all the essentials are paid - mortgage, rent, utilities, insurance etc. That's likely to be much less than $14k.
Interesting. That's a good rule of thumb!
Don't forget, insurance on a $100k+ car will be phenomenal (excluding top-spec 4WD's Landcruiser and Patrol), registration will be high and you'll get hit with a Luxury Car Tax…
It's not the cost of the car that's the issue, it's the continuing costs that will be high… servicing will be way up there, parts will be beyond imagine, and the cost to keep clean without losing paint quality… it's mad.
I bought a $43k car in 2006, total loan cost over 5 years was round $50k (bad loan, beware). Insurance is mediocre, running costs are high (performance turbo hatch). Just be careful what happens after the purchase.
no its not
we had a Mercedes E class
rego was ~$400 just like a Falcodore
insurance was about $1,400 which is more than a premium Falcodore but not by much
sure you pay the $57k luxury tax but more importantly you cant deduct over that amount, this was a business expense car
however servicing was a killer with $400 minor, $900 major and $1,800 overhauls but you pay to play
I pay approx 3% of my gross income on a car inc. depreciation, bills but not fuel, and I feel it is way to much.
Mind you, I am prepared to drive a 16yro Toyota.
A $100k car means you could have retired a few years earlier, no matter how you lease it etc.
I don't think there's a hard and fast rule on when are you comfortable to own one of these - it's entirely dependent on your lifestyle, circumstances and financial goals. At the moment I'm looking at something that's $150k, while the repayments are bearable at my level of income but I'm forgoing investment opportunities to afford it.
1 important thing about expensive cars is: they are equally expensive to service :s
Even if I was earning a million dollars a year, I wouldn't be able to stomach paying any more than $40,000 or so on a car. That said, I'm not a 'car guy,' and I see them as utilities to get you from A to B as efficiently and safely as possible. I do have my personal vices but a car isn't one of them.