ddcboyle Posted January 10, 2014 Share Posted January 10, 2014 Been looking at my potential future cars for when i depart from the zed (when i look at starting a family basically) How do people work out what car they can afford? I always thought it was, whatever your annual salary, half it, and thats what car you can afford? I know its not taking into consideration, parts cost and mpg. But say, for a general car, i.e. audi a5. Around 19k second hand. Would you still say that half salary rule applies? Quote Link to comment Share on other sites More sharing options...
Leosille Posted January 10, 2014 Share Posted January 10, 2014 I always work on a third but that takes into consideration parts etc just in case. Also the fact that the value of most cars is always falling. Quote Link to comment Share on other sites More sharing options...
Ekona Posted January 10, 2014 Share Posted January 10, 2014 Depends on other outgoings, and whether you're happy with finance. Some people never want to use finance at all which can limit their options, but they may have no mortgage so have plenty of spare cash. Others may need finance because of a large mortgage, however they will be able to get a newer/better car because of this. Some have kids, some like holidays... Too many variables. All I know is I spend waaaaay too much money on cars 2 Quote Link to comment Share on other sites More sharing options...
Grundy Posted January 10, 2014 Share Posted January 10, 2014 Hmmmm, I just go by what I think is a reasonable price for me to save/afford. All be it, when I got the Zed it was currently just under half my wage (Was a trainee at the time) but It's the 1st time i've heard the rule of 1/2 of your salary etc. Quote Link to comment Share on other sites More sharing options...
WhackyWill Posted January 10, 2014 Share Posted January 10, 2014 I always pay cash for my cars, got a budge of about £10k for my wheels, but sometimes I end up with two cars with the best intentions of selling one, that's what I tell the missus anyway.. 1 Quote Link to comment Share on other sites More sharing options...
:RedZed: Posted January 10, 2014 Share Posted January 10, 2014 Yeah 1/2 your salary is waaaay too much. It really depends on if you are saving for it or borrowing for it. If you are saving, you could potentially buy what ever you want, if you save long enough but if your borrowing, it depends on the amount, duration and interest for the repayments. Quote Link to comment Share on other sites More sharing options...
370Ad Posted January 10, 2014 Share Posted January 10, 2014 There is a thread on Pistonheads about this and the general concensus is a 1/3 of your annual salary. Quote Link to comment Share on other sites More sharing options...
ddcboyle Posted January 10, 2014 Author Share Posted January 10, 2014 Ah that knocks a nice audi a5 out my range then lol. Theres a new thing out with buying a car, you have the car for 3years then trade it in for a new one. Anyone tried this? All I think is im renting a car for 200 a month and never actually owning one? Id say 200 is reasonable for monthly repayments, but it does seem to restrict your car choice as it doesnt add up to that much Quote Link to comment Share on other sites More sharing options...
Ekona Posted January 10, 2014 Share Posted January 10, 2014 If 1/3 of your salary on a car is the right figure, then I need to start buying much cheaper cars! 2 Quote Link to comment Share on other sites More sharing options...
coldel Posted January 10, 2014 Share Posted January 10, 2014 Never heard of this, but then again I have always just bought my cars outright. I would have thought as well, it would be half your net salary not just gross, as you never get to see your gross salary in your account? 1 Quote Link to comment Share on other sites More sharing options...
ddcboyle Posted January 10, 2014 Author Share Posted January 10, 2014 I bought my car after my tour, and in forces atm so ive never actually had to bother about finances and what I can afford, within reason, but now im getting out and will have house bills etc, I have no experience in that area. Id ideally like to pay off full as some of you do, but all the nice cars I see are all 2008 or newer, and comes with a finance price tag. We must be able to make a little calculation formula here Whats the average pay for a 25 year old? 1,5? So say, 1,5 after tax, minus the 500 for rent and food and bills (if ur living with partner), 1000 left. Fuel about 200, car fund for tax tyres etc 100 a month, thats 700 left. 100 for prandom bills like phone. So 600 to spend on whatever the average guy wanted. 1/3 of this would be reasonable? Since its an excess? 200 a month, and work out how many years you want to keep the car, add it to some finance calculator and see how much It adds upto over 3 or 5years? Thsts the only way I could think of doing it? Quote Link to comment Share on other sites More sharing options...
Sized Posted January 10, 2014 Share Posted January 10, 2014 I don't really see how you can use x% of your salary as a guide on purchase price. For example you could go out and buy a B7 RS4 or a new diesel repmobile for a similar price (i.e. same % of salary) but one would cost a lot more to run than the other.............. To see if I can afford to run a car I always do a rough calc of running costs based on research then add a bit more for contingency. If that leaves enough for bills/food/beer/holidays etc then buy buy buy! 4 Quote Link to comment Share on other sites More sharing options...
Bockaaarck Posted January 10, 2014 Share Posted January 10, 2014 (edited) I always work up from what is the minimum I need from a vehicle (doors, engine size, economy, comfort, mileage, age etc) and use that for determining a base level. Then I look at what cars fit in to that filtering. There might be vehicles in that range from £5000 - £50,000 and then I re-filter and refine what I'm really after and prepared to pay on the basis of various vehicles that fall in to that wider category. I'm not sure you can work to a hard and fast rule, other than avoiding putting yourself at too much financial risk / burden. Don't forget, if its a family car you're considering, what the realistic family income will be, there are costs associated with kiddly-winks . I always look at the worst case scenario financially and then re-asses, then I make a choice based on that. I have avoided buying a number of cars which I very much wanted and 'man maths' said were perfectly reasonable buy going through this process. That being said, I have never had an issue affording the cars I've run, perhaps because of that. Perhaps I'm a bit risk averse though Edited January 10, 2014 by Bockaaarck Quote Link to comment Share on other sites More sharing options...
coldel Posted January 10, 2014 Share Posted January 10, 2014 I bought my car after my tour, and in forces atm so ive never actually had to bother about finances and what I can afford, within reason, but now im getting out and will have house bills etc, I have no experience in that area. Id ideally like to pay off full as some of you do, but all the nice cars I see are all 2008 or newer, and comes with a finance price tag. We must be able to make a little calculation formula here Whats the average pay for a 25 year old? 1,5? So say, 1,5 after tax, minus the 500 for rent and food and bills (if ur living with partner), 1000 left. Fuel about 200, car fund for tax tyres etc 100 a month, thats 700 left. 100 for prandom bills like phone. So 600 to spend on whatever the average guy wanted. 1/3 of this would be reasonable? Since its an excess? 200 a month, and work out how many years you want to keep the car, add it to some finance calculator and see how much It adds upto over 3 or 5years? Thsts the only way I could think of doing it? You don't live in London do you ... Quote Link to comment Share on other sites More sharing options...
AliveBoy Posted January 10, 2014 Share Posted January 10, 2014 I bought my car after my tour, and in forces atm so ive never actually had to bother about finances and what I can afford, within reason, but now im getting out and will have house bills etc, I have no experience in that area. Id ideally like to pay off full as some of you do, but all the nice cars I see are all 2008 or newer, and comes with a finance price tag. We must be able to make a little calculation formula here Whats the average pay for a 25 year old? 1,5? So say, 1,5 after tax, minus the 500 for rent and food and bills (if ur living with partner), 1000 left. Fuel about 200, car fund for tax tyres etc 100 a month, thats 700 left. 100 for prandom bills like phone. So 600 to spend on whatever the average guy wanted. 1/3 of this would be reasonable? Since its an excess? 200 a month, and work out how many years you want to keep the car, add it to some finance calculator and see how much It adds upto over 3 or 5years? Thsts the only way I could think of doing it? You don't live in London do you ... Or anywhere near Use a yearly figure too, it's easier in my head so for £1,499.92 a month take home you'd be on £22,320 a year. Is that average for a 25 year old? I'm 24, and that's not what I'm on. Quote Link to comment Share on other sites More sharing options...
ddcboyle Posted January 10, 2014 Author Share Posted January 10, 2014 I bought my car after my tour, and in forces atm so ive never actually had to bother about finances and what I can afford, within reason, but now im getting out and will have house bills etc, I have no experience in that area. Id ideally like to pay off full as some of you do, but all the nice cars I see are all 2008 or newer, and comes with a finance price tag. We must be able to make a little calculation formula here Whats the average pay for a 25 year old? 1,5? So say, 1,5 after tax, minus the 500 for rent and food and bills (if ur living with partner), 1000 left. Fuel about 200, car fund for tax tyres etc 100 a month, thats 700 left. 100 for prandom bills like phone. So 600 to spend on whatever the average guy wanted. 1/3 of this would be reasonable? Since its an excess? 200 a month, and work out how many years you want to keep the car, add it to some finance calculator and see how much It adds upto over 3 or 5years? Thsts the only way I could think of doing it? You don't live in London do you ... Or anywhere near Use a yearly figure too, it's easier in my head so for £1,499.92 a month take home you'd be on £22,320 a year. Is that average for a 25 year old? I'm 24, and that's not what I'm on. I live in London at the moment, but moving to Scotland where everything is bought with food coupons alot cheaper. Well im 24 and on 21k at the moment, if i get the police, i should be on around 24k. I just presumed this was an average pay? My friends vary from 850 a month, to my pay, to some being on 1,8 a month. I know theres other 25 year olds on 35k or more, but i wouldnt have said that was an average? unless i am just accepting a lower paid job than most? Again, a rule of thumb i always heared was, aslong as your earning in thousands what your age is, your doing okay, until you hit 40years old. Quote Link to comment Share on other sites More sharing options...
Briggsybriggs1 Posted January 10, 2014 Share Posted January 10, 2014 I just go with my hart not my head my self. But then got a cheap TDI to go work and back in simples :-) . If you pay cash for them it's not a problem but if you get on the monthly payments they can hit you and the wrong times. Like 350£ just befor Xmas or when MOT and tax comes up iv being there and not doing it again :-) Sent from my iPhone using Tapatalk Quote Link to comment Share on other sites More sharing options...
WhackyWill Posted January 10, 2014 Share Posted January 10, 2014 Ah that knocks a nice audi a5 out my range then lol. Theres a new thing out with buying a car, you have the car for 3years then trade it in for a new one. Anyone tried this? All I think is im renting a car for 200 a month and never actually owning one? Id say 200 is reasonable for monthly repayments, but it does seem to restrict your car choice as it doesnt add up to that much My mate got a new reasonable spec Merc on a Company lease deal for 3 years for £220 a month. Quote Link to comment Share on other sites More sharing options...
Ekona Posted January 10, 2014 Share Posted January 10, 2014 I bought my Zed in 2008 on finance, just as the market crashed. Oops! Quote Link to comment Share on other sites More sharing options...
coldel Posted January 10, 2014 Share Posted January 10, 2014 (edited) Wow, £500 for rent and bills, must be out in zone 6 somewhere which is quite a small place? We own a flat in north London for instance, 1 bed, rent is £700 a month before bills. Then you have council tax (circa £100-£200 a month), water rates, leccy, gas which is another £150 a month I would say. Then the smaller stuff like TV licence, monthly travel costs to work, lunch at work, etc. Clothes top ups generally set me back £50 a month on average ie new shoes, work clothes etc. Then you start buying food...this is all before you have even stepped out the door to have a beer with your mates! I am sure there are many other costs which I have missed as well. What bank you with? Most now do a cost of living calculator which outlines all the possible bills per month and if you fill it in with a worst case scenario in mind (whereas most people are inclined to put best case) then it should give you a good idea of what your disposable income is. Edited January 10, 2014 by coldel Quote Link to comment Share on other sites More sharing options...
AliveBoy Posted January 10, 2014 Share Posted January 10, 2014 All I know is next month my £300 a month for my zed is finished, can't wait to have that much "extra income" 1 Quote Link to comment Share on other sites More sharing options...
brillomaster Posted January 10, 2014 Share Posted January 10, 2014 Well i've only ever bought cars outright in cash, and my usual thought process goes: have i got enough saved +sale of my current car to afford the new one? Is the insurance reasonable (which for me means less than £800 currently) Can it get reasonable mileage (cut off here is no less than 25mpg on a motorway run) am i expecting big bills/is the car expected to be reliable? If the answer to all these is yes then i'll probably consider it. Also if it helps, i normally put aside £100 a month in savings, which covers insurance, roadtax, tyres and servicing. That way when they come around annually, i've already got the money saved for it. 1 Quote Link to comment Share on other sites More sharing options...
KyleR Posted January 10, 2014 Share Posted January 10, 2014 Ah that knocks a nice audi a5 out my range then lol. Theres a new thing out with buying a car, you have the car for 3years then trade it in for a new one. Anyone tried this? All I think is im renting a car for 200 a month and never actually owning one? Id say 200 is reasonable for monthly repayments, but it does seem to restrict your car choice as it doesnt add up to that much It's not new, it's been around for years. You can either pay the final payment, hand it back it back and walk away, or what a lot of people do, use the difference in car value vs final payment to put a deposit on a new car with the same dealer. This is why you see people with a new car every 3 years, but it's always the same manufacturer. Yes it's pretty much renting a car, but some like having a new car all the time and this is probably the best way to achieve that, unless your loaded. Quote Link to comment Share on other sites More sharing options...
KyleR Posted January 10, 2014 Share Posted January 10, 2014 All I know is next month my £300 a month for my zed is finished, can't wait to have that much "extra income" if only it worked like that Since I bought the zed my insurance has dropped by £150 a month (I know) and I've stopped smoking saving me £100 a month, but I have ZERO extra money Quote Link to comment Share on other sites More sharing options...
AliveBoy Posted January 10, 2014 Share Posted January 10, 2014 All I know is next month my £300 a month for my zed is finished, can't wait to have that much "extra income" if only it worked like that Since I bought the zed my insurance has dropped by £150 a month (I know) and I've stopped smoking saving me £100 a month, but I have ZERO extra money I've got a wedding to pay for, so the money will be good. Following that it will be blown on car stuff for a few months and then I'll try to be sensible, need to get a mortgage at some stage, so that will kill it. Glad I have a deposit already though! Sent from my C6903 using Tapatalk Quote Link to comment Share on other sites More sharing options...
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