It is normal to spend 50k-100k to buy a car?

nomekop on 03/02/2020 - 15:47

Hi all,

I am honestly surprised every time I see a post of people buying a car that expensive. However today the post mentioned buying a 70k car as a gift, so my questions are:

1) Do people really has that much cash running around?
2) Do they go into debt to pay for it?
3) How much do you need to earn to have that level of flexibility?

Today someone mention they are giving away a car like this for a family member, I presume they have the cash, so are they considered rich?

Sorry, maybe I can't just picture that much cash

Automotive

Comments

          • Hybroid on 04/02/2020 - 12:02
            +3

            @Duram: Not everyone thinks that way in a race to be cheap.

          • bobbified on 04/02/2020 - 16:43
            +1

            @Duram:

            That 'happiness' will last about a week

            Everyone enjoys different things.

            I wouldn't call myself a car fanatic or anything, but I still get a smile on my face every time I sit in my car. I can't really put a price on the enjoyment I've got out of it so far.

            • Euphemistic on 04/02/2020 - 17:45

              @bobbified: Out of interest, what car?

              • bobbified on 04/02/2020 - 18:16

                @Euphemistic:

                Out of interest, what car?

                I'd rather not share publicly haha. I was going to PM you but there seems to be no option to PM on your profile?

                • Euphemistic on 04/02/2020 - 19:08

                  @bobbified: Fair enough. Doesn’t really matter just wondered if it was a normal car or an enthusiast type.

                  • bobbified on 04/02/2020 - 19:57
                    +1

                    @Euphemistic: It's definitely not an enthusiast car - just a sports coupe and not normally something to hide (but they're not that common on the roads so if I put it here, it won't be hard for people at work and other acquaintances to figure out who I am haha)

            • ThadtheChad on 07/02/2020 - 09:54
              +1

              @bobbified: ^^ This right here. When you can afford it, sometimes it is really awesome to treat yourself to nice things. :)

  • cloudstrife on 04/02/2020 - 07:27
    +3

    If you can finance it, you can afford it…

    • Snoozer on 04/02/2020 - 15:00
      +4

      This is a great way to stay poor.

      • ribbonsofnight on 07/02/2020 - 22:58

        If you can finance it, you can afford it

        If I can't afford it without finance I can't afford it.

  • Fysh on 04/02/2020 - 07:30
    +2

    I regret buying a 54k car. I bought it when my mother wasnt well and was able to take her comfortably to her treatments. It made me feel better buying it because of that initially. It was the car i always wanted growing up. I sold it 5 years later and it only covered the rest of the loan plus a few grand which I purchased a used car with. I am much more comfortable now and saving that money I use to pay on the loan. I understand parents needing a good safe vehicle but now I also understand practicality and that Im a happier person being more financially stable.

    • Fysh on 04/02/2020 - 07:34

      Also people forget that some of these cars need premium fuel and service every 6 months at around 500 bucks regardless of mileage. These expenses also throw you out and unless you are going down a tax bracket sometimes salary sacrifice isnt worth it.

    • nomekop on 04/02/2020 - 09:13
      +2

      I like you story. I guess sometimes we learn the lesson the hard way

  • Euphemistic on 04/02/2020 - 08:34
    +1

    I don’t see why people buy new cars - at all, given the depreciation. I’ve always bought second hand, the newest was about 18months old at the time of purchase.

    I don’t get it, but lots of people don’t understand why anyone would spend $3k on a bicycle - and that is a mid price bike.

    • b0rnwithabeard on 04/02/2020 - 08:49

      I know some people who buy new cars because they're flush enough with cash that they can pay it off relatively quickly, and so they take advantage of those "0% finance" offers that big dealerships have, which can often save them thousands. They buy a brand top of the range car, pay if off in under 18 months, then sell it/trade it in, and do the whole process again. Seems like a waste of money to me, but that's their little indulgence that they like to have so shrug, each to their own I guess

      • ribbonsofnight on 07/02/2020 - 23:00
        +1

        and without those lunatics who would you get to buy the used cars from.

    • 91rs on 04/02/2020 - 10:08
      +1

      Just because you buy new doesn't mean you intend to sell it, so depreciation isn't a concern to many if you expect to keep it 10 years.
      Then look at people with kids who go and buy a minivan style vehicle with 5-7 year warranty (sure warranty doesn't cover everything), doesnt seem like a terrible idea at all.

    • this is us on 04/02/2020 - 13:16
      +8

      Because they wanna drive cars for whatever reason. Cars are not investment.

      A lot of people in Australia think too much about depreciation… Some people just wanna spend some money, have some pleasure, feel comfortable and safe… Then they sell the car. If you don't see car as an investment you already expect the depreciation and you don't really care about that providing you have used the car enough to feel good about that.

      You are renovating your home and people say you have to put a bathtube in the main bathroom because that gives value to the property. If you don't like bathtubes and you will be living there for 5, 10, or 50 years… Who cares about bathtube valuing the property? From my perspective, that's nonsense…

      If you have the money and you wanna buy a pink pick up, just do it and enjoy your pink pick up without thinking that no one else will buy it from you after a few years, or that you will lose 50% of the money. Again, cars are not investment… And smartphones, wine, silver cutlery, or an amazing trip to the Swiss Alps are not either.

  • b0rnwithabeard on 04/02/2020 - 08:46
    +1

    Why do you care what everyone else does? Everyone has their own situation. You shouldn't be spending any amount of money that you don't consider sensible yourself. You should be buying the car that fits your needs and that you consider to be a wise investment. Just because I don't have $70k to spend on a car, doesn't mean you shouldn't.

    • nomekop on 04/02/2020 - 09:23

      I was just wondering if I am doing something fundamentally wrong with my finances. But I guess you are right, it doesn't matter what people do in the end

  • kaleidoscope on 04/02/2020 - 08:47
    +2

    1) Do people really has that much cash running around?
    Yes some do.

    2) Do they go into debt to pay for it?
    Some do others dont

    3) How much do you need to earn to have that level of flexibility?
    If you’re a millionaire you have no issues, for others either saving or some even have the minimum just to get approved from finance.

    My advice is don’t get distracted by what everyone else is doing. If you start following everyone else around, you will very soon be in alot of trouble financially.

    • nomekop on 04/02/2020 - 09:21

      This is a good advice. I think I after this thread I'll just conclude that it is not worth thinking much about it

      • kaleidoscope on 04/02/2020 - 10:19

        Glad you found it helpful. I’d also advice to read bit about horrors of zippay/ afterpay and credit cards debts. I personally know folks who are running 90% of their lives on debt. They just wear and use lucrative and luxurious items for status quo, but in reality just are waiting for the next pay day to settle an overdue bill or payment.

    • Hangryuman on 04/02/2020 - 09:24

      I've seen Harry Triguboff, Australian's Meriton unit builder billionaire, briefly Australia's richest person, driving his HOT1 and HOT2 Bentleys - back when they might have cost $150K. Let's say $480K now.

      He was rated around AU$16B last time I looked.

      So of $16B net worth, a $480K car might represent 0.003% of his net worth.

      In other words, he could buy 50 of them before he would have spent the derisory 0.15% interest some banks pays for savings accounts. And he's earning way more than that - $770M in one recent year - https://www.propertyobserver.com.au/forward-planning/investm…

      Folks with net worth under $100K spending $50-100K on a new car are blowing 50-100% of their not-much wealth on a losing (money) proposition - tho' of course many will justify it as helping them get to work in peak hour traffic to earn an income, etc. - start with your prejudice then ignore facts to the contrary, etc. - as most of us do …

  • haimrevolution on 04/02/2020 - 08:54
    +1

    70k seems somewhat low if you want something really good these days

  • Vivf on 04/02/2020 - 08:55
    +1

    I don’t think it’s been mentioned yet. Anyone who bought a house in Melbourne or sydney 10-20 years ago is sitting on mega equity. People generally refinance to unlock the equity and use it to buy all sorts or super expensive things like luxury cars.

    • dufflover on 04/02/2020 - 09:02
      +3

      pfft you mean the fancy word to mean just taking on more debt

    • nomekop on 04/02/2020 - 09:20

      So basically people "won the lottery" and therefore what we see is the result of that boom?

    • netjock on 07/02/2020 - 00:16

      If you are not careful you spend all that equity. The only people who made money are the car dealers and the brokers for refinancing.

  • Hangryuman on 04/02/2020 - 09:01
    +1

    Sure - lotsa people spend money they don't have, to buy things they don't need, to impress people they don't like !
    Particularly if they grew up poor and feel a need to show that they made something of themselves - others don't care.

    When I worked selling real estate, the average salesman in a shiny new suit driving a shiny new expensive car had a net worth of MINUS $X'000 as he was in debt for his friggin' car loan !

    Conversely I have read many stories of guy in shorts, thongs and tshirt walking into a Mercedes showroom - being ignored by snooty young salesman in a new suit, so walks over the road, pulls out $150K cash from his pocket and drives off in a new Audi.

    So I have learned that the shiny new suit in the shiny new car probably has a net worth of Zero to Minus $X'000.
    And the guy in the shorts, thongs and tshirt may just be the millionaire next door who doesn't flaunt his wealth.

    Yesterday I read a US article suggesting you shouldn't spend more than 10% of your disposable income to buy a car - point being purchase is only the start of the running, maintenance and repair costs of a car.

    I drive little and despite having enough in the bank, have not justified to myself spending more than $3K on a car.
    My current nearly 30yo Japanese car (still ticks like a Swiss watch) has cost me about $2200 a year mostly rego, insurance with stationary costs being 62% of the cost of owning my car.

    Not counting depreciation aka Loss Of Value being the many $$$ thousands you can expect to kiss goodbye if you buy a new car. What do they say - maybe 20% when you drive it out of the showroom - if you sold it back to them immediately they'd give you 20% less ? - ooh on a $35K car you've just kissed $7K goodbye - someone feels good and it won't be you … !

    I was interested briefly in Mercedes C250 - until I saw Scotty the Texas car mechanic on YouTube (a very entertaining guy) ranting about how Mercedes disc brake pads are deliberately designed to not wear flush to the outside edge of the disc, so it wears a groove in the disc, so when the pads wear out you can't just replace the pads, you have to replace the discs at a cost of like $4000 ! That changed my mind - probably not this video but he has lotsa fun ones - https://www.youtube.com/watch?v=TZk6P5PR7b0

    • foolsgold on 04/02/2020 - 09:12

      Scotty also would replace those disc pads for a lot less, as would any other independent. I wouldn't let brakes scare you off a euro car.

    • nomekop on 04/02/2020 - 09:19

      I think we share the same mindset regarding cars. I am wondering though what do you think of the safety of your car? Some may argue that old cars represent a risk for the driver and family specially if young kids are involve? Would you say is true? Or it is just a matter of keeping maintenance on schedule?

      • Hangryuman on 05/02/2020 - 09:26

        having had my major motorbike accident my view on safety is the most important is to not be the nut loose behind the wheel a la PEBKAC - and drive as if every other vehicle on the road is trying to kill you.

        we don't have kids so that fear is removed - but a friend with 3 kids and an old Tarago (that's all they can afford after kids' expenses) drives badly - inattentive, not watching the road, drifting across lane dividers, and scares me when I've sat in his front passenger seat with his family in the back.

        But yeah I love the parents who worry about their kids safety so buy them a new BMW as their first car to learn to drive - oops !

        Like one story I read of entitled rich girl - 'sorry I crashed the Lamborghini you gave me daddy - can I have a purple one next time ? {BLINK BLINK!!!}

    • techlead on 04/02/2020 - 09:30

      I would not drive a 30 year old car. Does it even have airbags?

  • DrRalph on 04/02/2020 - 09:09

    1) Do people really has that much cash running around?

    Yes.

    2) Do they go into debt to pay for it?

    Yes.

    3) How much do you need to earn to have that level of flexibility?

    $150,000.

    • techlead on 04/02/2020 - 09:23

      $150,000 a year before or after tax? If its before tax, that's not actually very much. Most jobs I have seen in my industry are over $100k, maybe my experience is quite skewed.

      • netjock on 07/02/2020 - 00:19
        +1

        Don't worry I've seen people making $250k gross a year living pay cheque to pay cheque.

        • techlead on 07/02/2020 - 13:24

          Yea, true, they pay for alot of necessary non-essential things.

          • netjock on 07/02/2020 - 17:31
            +1

            @techlead: Agreed. It is bracket creep just like taxes. You unknowingly keep spending because you can afford it until you can't.

  • techlead on 04/02/2020 - 09:21

    It really depends on your own personal circumstances. I recently purchased a new car outright.

    Here's what I have learnt.

    I wanted to purchase a SUV, something with a relatively big interior but not too big like the CX9. So I shortlisted and test drove the Honda CRV, Mazda CX5, Kia Sportage and MG ZS. I could have bought any of those outright. In the end, I chose the MG ZS, I cannot justify the premium for the other cars. I don't need gimmicks like sunroofs, emergency braking, blind spot detection etc etc, I have always drove cars without it and never had an accident, so I can live with out it. The MG ZS was $22990 drive away and I'm very happy with it so far, great fuel economy for a car this size, 10L per 100km. I had some paint defects fixed up so they gave me a Kia sportage as a loan vehicle, I really didn't like it and it was $32990 drive away. Fuel economy for the Sportage was very bad, over 12L per 100km and I just can't see an extra $10k of value in it, I'm happy with my choice. I wouldn't spend more than $40k for a new car.

    So answering your question with that context:

    1) Do people really has that much cash running around?
    Yes

    2) Do they go into debt to pay for it?
    I suspect most people do. One of my colleagues just recently bought a CX5, it was financed. The dealership was pushing finance very hard as well, I've been asked multiple times to consider financing even though I've told them repeatedly that I have the cash. I suspect they get a nice commission for the finance deal, some insiders say the commission is fatter than the actual profit they make on the vehicle!

    3) How much do you need to earn to have that level of flexibility?
    That's abit hard to say. I don't like the idea of going into debt to buy a depreciating asset, so I would never finance a car, unless they have a very good 1% finance deal with no early break fees, so I can arbitrage.

    • nomekop on 04/02/2020 - 10:37

      I have bookmarked your comment. It clearly confirms what I was guessing, that over a certain amount, you cannot justify the premium at all.
      I hope to get a similar car one day. Would you have considered buying used?

      • techlead on 04/02/2020 - 10:48

        I considered buying second hand, but then if I can't justify it buying brand new, why would I buy it used? Used Toyotas are selling at a premium because of their perceived quality and when I start going into the second hand market, there could be alot of other issues which I don't want to deal with.

        The MG I bought comes with 7 years warranty and so far the dealership has been pretty good, they share a service center with VW. I found some paint defects and they fixed it all at my first service pretty quickly and I got the Kia Sportage to drive in the meantime. That further validated my choice, I didn't like the Sportage at all, when all things are considered including the price.

        I plan to sell the MG after around 5 years and re-evaluate the market then.

        • nomekop on 04/02/2020 - 12:25

          Sounds like a solid plan! I guess you can get a used car but there are also risks involved.

        • popcornready on 04/02/2020 - 22:44
          +2

          Wow an MG.

          The entire thread is talking about depreciation and how badly that can affect your finances, yet you are literally setting your money on fire.

          I am also sure I have read that the MG’s don’t have the best safety scores. Yes, you pointed out you are a good driver and don’t rely on it, too bad you cannot control others on the road

          • techlead on 05/02/2020 - 14:05

            @popcornready: Yes, it only has a 4 star ANCAP rating, only because of the frontal offset test. Those types of accidents are usually caused by the driver, not others, eg, hitting a wall front on, rear ending another car etc, all of that is under my control.

            It scored 16 out of 16 in the side impact test.

            I have also considered depreciation as well. Take the Mazda CX5 Maxx Sport, this is a very popular model so should be easy to sell. Brand new its $39,990. The 2014 Mazda CX5 Maxx Sport are selling for around $18,000 to $22,000 depending on the mileage and other factors. So around $20,000 of depreciation over 5 years. The MG ZS I purchased was $22990 drive away, in 5 years time, I'm pretty sure I can get more than $5000 for it.

            So how am I setting my money on fire?

    • imurgod on 07/02/2020 - 18:12
      +1

      MG is made in China (owned by SAIC), that's why it's so cheap and not exactly good build quality.

      At $22,990 you got a 4 speed 1.5 litre producing 84kw and 150nm of torque which is about as powerful as an asthmatic smoker who just ran a marathon, so of course you can't compare it to the Kia, Mazda or Honda since they are all better in every way and 10L/100km for a 1.5L engine is awful fuel economy (worst in it's class). Direct competitors like the Peugeot gets 4.8L/100 and produces more power too. The MG also requires 95RON fuel, so add that to the cost.

      The MG ZS reviewed fairly poorly in both iterations as Chinese cars generally do.

      Then there's the feel of the brakes and suspension and overall safety (which got a 4/10). Id' never risk my family in such a deathtrap.

      The Carsguide review absolutely panned the new version (2019) and it's a leap over the older model.

      Carsguide

      The point I'm making is that all you've compared is price, but there's a lot more to it (like safety, for example) and you've compared it to more expensive, thirstier vehicles which are all safer, more powerful, drive better, are more efficient and are simply better in every way.

      You said you'd expect more than $5,000 if you sell it in 5 years, but considering a 2018 model can already be bought for around $13K (and that's the essence, not the base model) at inflated used dealership prices, let alone private sale, and add to that the unpopularity of the vehicle, I wouldn't hold my breath.

      You're not comparing apples with apples. A horse and cart will also provide transport, but you can't compare it to a BMW M3.

      • techlead on 07/02/2020 - 21:34

        The one I got is the 6 speed automatic 1.0 litre with Turbo producing 82kw @ 5200rpm and 160 Nm of torque @ 4700rpm.

        I drove the Kia Sportage for a week, it doesn't drive better. The engine is so loud, even when I'm not revving it, just day to day use. The suspension and brake feels about the same.

        I'm not sure where you can get the 2018 Essence model for $13k, all the dealerships I have seen advertise them at over $20k.

        • imurgod on 08/02/2020 - 09:38

          Oh ok my bad. I read the review on carsguide which said it was a 4 speed. I can't say I've driven any of them personally, so I can't comment.

          The used 2018 one i found for $13k is on carsales. It's still up there right now. Its the one with the glass sunroof and so on.

          MG have struggled with sales due to the quality and I remember I used to look after the importer for Chery which were a Chinese brand trying in Australia. They had no end of issues and recalls.

          The fact is that Chinese made cars are pretty awfully in general as any review will tell you.

          MG are matching the best warranty out there, which is good, but resale will be bad and I'm pretty confident you'll start seeing the build quality flaws during your ownership of the vehicle.

          For my money, I would've bought a good used model of a better brand, but we're not all alike and we all have different reasons for our purchases.

          Obviously it'd be irrelevant comparing it to a Mercedes Benz or even a Honda Civic, but we're all in different places financially and with different needs.

          Personally, I like high end cars and can justify the cost to myself in so many ways, not least of which is image. The area in which I live, the business I am in, the circles in which I move, etc.

          But nothing beats the drive itself. Powerful, grippy, exciting, fast and the interior is a lovely place to be. Once you own one, it's hard to go back to even good Japanese cars.

          I bought mine cash and I can easily afford it, but I know lots of people who finance beyond their means and others who don't understand what they're getting into by putting it on the business when the business simply doesn't earn enough AND not all of the price is tax effective. After a certain point, it's just burning money.

          I don't see value in people saving all year to do overseas holidays every year or people who buy exotic wine and I especially don't see any value in everyone in Sydney having a Coke habit, so I guess in that way, I justify my car as a luxury that comes from me working hard and earning my success.

          • techlead on 08/02/2020 - 10:08

            @imurgod: Maybe my tastes will change as I age. I can easily buy a Mercedes or BMW outright if I wanted to, but I just don't see the need. Maybe the dealership might give me a VW as a loan car at my MG's next service so I can test that out for a few days.

            Have you got the link for the $13k Essence? That's a good deal!

              • techlead on 08/02/2020 - 11:50

                @imurgod: Wow, did you actually read that ad?

                It is a 2018 MG ZS Excite, not the Essence and look at the kms. Over 136,000 kms. I doubt I would even have that after 5 years, I'm struggling to drive over 5000 a year. Over $13k is abit expensive for that, I wouldn't pay that. They most likely used it as an uber for 2 years. If it still runs, it shows its reliability. From what everyone said how its build quality is bad etc etc because it was built in China, after 136,000kms, you'd think it would end up in the junk yard already.

                The Excite model is the base model, it doesn't have the sunroof. Mine is the Excite plus, basically like that one, but with a newer 1.0L Turbo engine.

                • imurgod on 08/02/2020 - 12:12

                  @techlead: Fair enough. 136,000 km isn't much for today's engines and we don't know what's been fixed on that engine. The person is selling the vehicle at around 12 months of ownership.

                  Thee build quality refers to other components and fit and finish as well.

                  Admittedly, I didn't read the ad, I just looked at price range.

                  Apologies for the confusion of the model, I got that from the review.

                  • techlead on 08/02/2020 - 14:24

                    @imurgod: 136,000 is a lot of kms. The car I had before only had 108,000 kms when I sold it earlier this year and its 13 years old. That MG ZS Excite at 136,000 km at around 12 months of ownership has been used quite extensively.

                    • imurgod on 08/02/2020 - 15:59

                      @techlead: It's relative, I suppose. I have a friend who's Mercedes is closing in on 400,000km and still going.

  • lltravel on 04/02/2020 - 09:37

    1) Do people really has that much cash running around?
    Yes

    2) Do they go into debt to pay for it?

    No its called saving

    3) How much do you need to earn to have that level of flexibility?

    You need to learn to run a business that turns a profit.

    One of my good friends just recently bought a car that cost 550k

    This forum is for bargain hunters so it will blow their mind that people actually spend that much money on cars.

    • techlead on 04/02/2020 - 09:42

      Each to their own I guess. I would never spend more than $40k on a car. Don't see the need, but I have a $5000 PC, some people who never spend that much on a PC.

      So whatever floats your boat.

      I've seen some very good cars on the road, like lambos and lotuses, good head turners but I'd never buy one no matter how much money I have.

      • lltravel on 04/02/2020 - 10:18
        +3

        If you have 50 million you would

        Why wouldn't you want to enjoy life a little

        This is the same as those people who win the lotto, and say they will keep working.. let's get real here

        • techlead on 04/02/2020 - 10:25
          -1

          Nope, even if I have $100 million I wouldn't buy a car more than $40k.

          I test drove the Honda CRV, Mazda CX5 and Kia Sportage when I was looking for a new car. The additional price is not justified with additional value over the car I bought. So what am I paying for? The fancy badge? Gimmicks? I don't want to pay for a badge or gimmicks. Put it this way, what more do you get when you pay $100k or $550k instead of $40k? What extra features or value do you receive for the premium?

          And if I win lotto (I don't ever play because I can calculate the odds), I would still keep working because I enjoy what I do. I'm very lucky to have a job that pays well and I enjoy very much.

          Paying more doesn't mean you get more value. Would you pay $10 for a $5 good?

          • lltravel on 04/02/2020 - 12:33
            +6

            @techlead: If you cant answer that question yourself then you are clearly uneducated

            You're not a car person so I am not going to write out a list

            It's like asking what's the difference between a 2-star hotel vs a 5 star. They both have a bed, right?

            • techlead on 04/02/2020 - 13:20

              @lltravel: True, great analogy. I've never stayed at a 5 star hotel for a personal holiday, only for work trips. When I do stay at 5 star hotels, I don't use most of the amenities, its very similar to all the bells and whistles of a $100+ car.

          • montyy on 05/02/2020 - 15:54

            @techlead: Why did you pay $5000 for a PC?

  • saltypete on 04/02/2020 - 09:46
    +6

    I always thought that spending big money on a car is a waste, but probably will in the next 12 months or so. After getting through cancer my priorities have changed a little. We are retired and have some savings and wife is strongly of the opinion that if it is something you will use and it is what you really want, should probably go for it. I’ll buy it and use it while I can.
    We do not buy lots of other things though, the phones, etc and always prefer to wait and get a bargain. (We will also do this on a car of course). Over the years being prepared to wait, only spending on what is actually really useful for us and bargaining hard has enabled us to create savings. Think of it, buy a $700 phone that does the job And you are happy with instead of the $1800 phone that you buy on a plan. Make this sort of decision most of the time and you can save the extra needed to buy that car, go on a holiday, retire early - your priorities.
    I was really happy to read about that Ozbargainer the other day who had done well and wanted to show love and gratitude to his parents. It is not the car, it is his priorities that are at work here. I am sure that many on here do similar as they have the opportunity, just not something as expensive as a car.

    • nomekop on 04/02/2020 - 12:24
      +1

      I think you are right. The post the other day was about giving something back to parents, the point was not the car, but the appreciation to the family. I missed the point completely on that one.
      I think keeping our priorities straight is important.

  • zine21 on 04/02/2020 - 09:53

    well there are 2 groups of people that do this

    group 1 - usually own their business/and or have high incomes where the car can be used to offset tax

    group 2 - can't actually afford the car - however they're so obsessed with how others view them that they will get into debt just to have a fancy car. I know few people like that - and they're usually impulsive buyers that then require their parents to pay for their bills as they simply can't afford their impulse purchases even though they have decent incomes.

    • YellowDieselGolf on 04/02/2020 - 20:05
      +5

      Group 3 - average joe, no kids, no debt, no vices. Likes cars.

    • netjock on 07/02/2020 - 00:24

      Buying something for $1 to save 30c (company tax rate) is a joke I will never understand.

  • Oz8argain on 04/02/2020 - 10:16

    Don't forget there're business owners as well, I know some make a 500k+ a year and will get new 'company' cars to reduce taxes. I also see lots of Real estate agents driving c63s, 911s, M3s. They want to show success of their business / career.

    Most ppl are shallow and are likely to assume you're not successful if you show up in a 90s camry to promote your business (even though they are great). you gotta spend money to make money i guess…

    there're also people who are very passionate about cars and that is their only hobby. some will drop 20K-100k over a few years on travelling around the world, skiing in the alps, buying carbon bicycles, or even own a few pets could cost you a lot. Maybe some don't have kids, childcare can cost 60k+ a year if you have 2 kids and no one to look after them.

    You sound like a young bloke, you'll understand as you grow.

    • nomekop on 04/02/2020 - 10:23

      Your point about kids being expensive is quite true! You are right, we all spend in different things. And of course traveling is very common nowadays.

      • Oz8argain on 04/02/2020 - 16:33
        +1

        I'd rather go for a drive with my mates in a fun car than sipping expensive wine in a 5 star hotel in Paris. but priorities change once you're married though haha

    • netjock on 07/02/2020 - 00:27

      Real estate agents with expensive cars I think twice about what they say. Even if they work 16 hours a day can they drive a car worth twice as much as one working 8 hours a day?

      There isn't special houses they sell which gives so much more commission.

    • netjock on 07/02/2020 - 00:30

      I'd you had a company you'd tax plan, pay yourself a target amount say $180k. Then keep the rest as retained profits at 30% company tax.

      Spending an extra $50k on a car so you can save 40% because you couldn't stop yourself dipping into the cookie jar is just bad financial management

  • pformag on 04/02/2020 - 10:17
    +2

    Depends, I earn well over 100K, but upgraded from a 4K corolla to and 8K sportswagon.

    • nomekop on 04/02/2020 - 10:26
      +1

      I hope that I can follow your example one day haha

    • Rockets84 on 04/02/2020 - 10:53

      I'm the same. Cars are a good way to waste money. I drive a 04 Holden Berlina. For it's age it's in top condition, has everything I want after I upgraded the head unit to one that supports CarPlay. I service it regularly but otherwise has been trouble free. I work from home so don't have to drive that much during the week.

      My wife on other hand has a 19 Carnival for running our 3 kids around in. We bought it used and saved a fortune. By far the most expensive car I've ever bought at $34K.

  • Jugganautx on 04/02/2020 - 10:19

    No. I made 70k after tax last year and i bought a 16k toyota aurion. The rest went into my mortgage and living expenses.

    Some people just have other priorities and a fast or luxurious car makes them happier than seeing a number in their bank account go down.

    Although i made a decent amount of money (in my eyes) it was mostly 60+ and some 84 hour weeks on casual rates so risk vs reward. 14 Hr days are no fun.

    • nomekop on 04/02/2020 - 10:25

      That's a lot of hours! But I am happy you keep priorities right

    • techlead on 04/02/2020 - 10:30

      60+ hours wow, that's heaps!

      It definitely is about priorities and also investment choice. If you bought $1000 a bitcoin every month exactly 5 years ago, you'd spent $61,000 and it would be worth more than $715,000 today. You could have bought a unit and a car with no mortgage.

  • HeWhoKnows on 04/02/2020 - 12:12
    -3

    Frankly OP this is NONE OF YOUR BUSINESS!!!!!!

    You just worry about what car you are buying and how much you spend.

    • nomekop on 04/02/2020 - 12:22

      Agree with this, will keep it in mind.

  • redvaldez on 04/02/2020 - 12:33

    I spent $55k on a new 4WD. My income is <$100k per year. I took out a personal loan to buy it but had a reasonable deposit (after a good year at work).

    I live regionally and so cost of living is minor compared to the capital cities. I had already purchased a modest house which I am paying off.

    The flipside to living regional living is that you drive everywhere, often on ordinary roads. I bought new so that I could purchase something modern, refined, comfortable, good to drive on road, and safe. I previously had quite an old 4WD and it wasn't any of these.

    I plan to keep this car for at least 10 years, which will be 200,000+ km of driving (not bad given my daily commute is 7km return). It will be under warranty for the majority of that time too. I'm not mechanically minded.

    Finally, and perhaps most relevantly, I'm a 'car person' and so it was something that I was happy to prioritise my spending on. I was also prepared to pay a premium for a 4WD because it is something I do regularly and is something that I enjoy.

    • nomekop on 04/02/2020 - 13:00

      Thank you for sharing. If you don't mind asking, are you planing to keep paying it for 5+years, or pay it very quickly?

      • redvaldez on 04/02/2020 - 14:18

        No problem. Would like to pay it off sooner but haven't been diligent enough to funnel in extra repayments.

        • nomekop on 04/02/2020 - 14:55

          Thanks for sharing!

  • deme on 04/02/2020 - 12:40

    No

  • Viper8 on 04/02/2020 - 12:40
    +1

    Just under 90% of new car buyers use finance. How much they spend on their car is irrelevant when they don't actually own it.

    • nomekop on 04/02/2020 - 13:00

      Good point as well. I wonder how much are interests though.

      • techlead on 04/02/2020 - 13:09

        The finance offer they gave me was 6.8%, I presume with one of the big banks. I didn't ask for details as I wasn't interested in any finance over 1.5%.

      • Viper8 on 04/02/2020 - 13:34

        Meh. Even if its 0% comparison rate (so 1-2% total to cover admin) they're still spending money they don't have.
        Only thing I'll ever borrow for is a house due to the extreme up front capital required. Everything else should be purchased in cash. If you don't have the cash for what you want then you can't afford it. Our society are slaves to debt due to their greed, and so most will never accumulate wealth.

        • Soothsayer on 04/02/2020 - 15:17

          In most cases people don't have the money yes - but if there is a 0% comparison rate loan available (0% by definition means there is no fees) then it would be more financially astute to take it rather than pay in cash, IF you have that cash on hand.

          • Viper8 on 04/02/2020 - 15:29

            @Soothsayer: My bad. Yes you will never get 0%. Best is 1-2% comparison with 0% interest.

            Maybe. You pay more to insure a financed vehicle, and you also take a big hit to your "debt serviceability" score. It's also just another thing to track and another hassle to deal with when the finance duration is up. All of this on top of the 1-2% is why I personally buy new cars in cash. Done and dusted, I own the car 100% and never have to think about it again. Likewise if I lose my job and cannot regain employment I'm not concerned about losing my primary mode of transport.

            • popcornready on 04/02/2020 - 22:50

              @Viper8: So Vioer8, let’s use your logic with this example.

              you have $500k in savings.

              You spend $50k on a car. You have $450k savings towards your debt serviceability

              Alternatively, you have $500k, finance a $50k car at 0%. Still have $500k in your bank but a $50k liability

              Net result and serviceability is likely the same

              if you lose your job, you still have that cash as savings to pay down your car, and should you not find a job in time, you can eventually sell it. If your money is 100% tied up in the car, you may have to make that move earlier

    • techdave on 05/02/2020 - 09:05

      I was curious as well on the numbers, but looks like it's around 20% purchased under finance. https://www.finder.com.au/aussies-reliant-on-car-loans
      But this does say new cars only, not sure what the proportion is for all car sales. Also I would imagine the percentage is pretty high for >$50k cars as people usually lease them.

      • Viper8 on 05/02/2020 - 09:31

        Rubbish. That won't include leases and may also exclude non-bank loans.

        Latest official gov stats I've seen were 88% finance. New car salesman will also tell you its around 90%.

        • techdave on 05/02/2020 - 12:57

          Oh, ABS is rubbish then .. :)

          A finder.com.au analysis of Australian Bureau of Statistics (ABS) data has found that in the 12 months to November 2017, there were 1,182,631 new cars sold and 236,451 had car loans attached to them.

          • Viper8 on 05/02/2020 - 14:15

            @techdave: I never said your source was rubbish. Just because you have a reliable source doesn't mean you're understanding the data, and what it does and does not relate to regarding this discussion.

            Car loans and finance are 2 separate things. A novated lease car for example is owned outright by the leasing company, and therefore is purchased without a loan. However the actual driver of the car has entered into a leasing/finance agreement with the leasing company. Many government, corporate and personal vehicles are purchased in this manor. This is significant given personal sales only account for roughly half of total new cars sales.

  • No ONE on 04/02/2020 - 13:41

    Sorry, maybe I can't just picture that much cash

    Probably Whirlpool users are trolling on OzBargain and having a laugh at us. 😉

  • Sensiekatie on 04/02/2020 - 13:47

    My husband’s boss buys a new car every year. He would be spending over 150,000 every time. When his boys were younger, he was gifting 2 cars every time as well. Sometimes, the boys might have to slum it and one would get Dad’s old car instead of a brand new one. The boss also has a habit of collecting expensive watches. Which he consults my husband about regularly.

    Yes, the boss is very rich. There are plenty of those types around. He lives a pretty lavish lifestyle.

    My husband’s Uncle was rich. He was very careful with his money and always looked for the best deal. He was also happy to wear a $5 polo shirt when he retired from business life. He saw no need to waste money on fancy clothes. For cars, he was a BMW man but in latter years he went to Mercedes which he didn’t like and then Lexus. He didn’t see the point in the really expensive cars. As I said, he didn’t spend money needlessly.

    • nomekop on 04/02/2020 - 15:23

      I guess I should have followed a career in whatever your husband does.

Login or Join to leave a comment
Login Join