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View Poll Results: %?
<15% 288 55.81%
16 - 30% 145 28.10%
31 - 50% 36 6.98%
51 - 75% 22 4.26%
ARE YOU KIDDING ME ? ALL OF IT ! 25 4.84%
Voters: 516. You may not vote on this poll

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Old 17th February 2009, 22:32   #61
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Quote:
Originally Posted by GTO View Post
Not good? Avoid it like a plague. One bad recession, job layoff or black spell over your business.....there goes your disposable income!

P.S. : I am absolutely thrilled to see 57% of this community (the current poll results) spend 15% or less of their income on cars. Well done!
I have a different opinion here. If you buy a car on loan the interest paid to service the loan is too high hence it is best to first clear the loan and then do any other purchases or investment.

This goes with a presumption that "One should not bite more than what he/she can chew".
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Old 18th February 2009, 02:27   #62
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Originally Posted by GTO View Post
P.S. : I am absolutely thrilled to see 57% of this community (the current poll results) spend 15% or less of their income on cars. Well done!
Thrilled ?
I am sorry GTO, but for all the sensible advice you have given us, it still remains a car community, not something run by bean counters !!

And to those who voted "All of it" , I salute all 4 of you. (Even though I know you are not being totally honest !)
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Old 18th February 2009, 13:57   #63
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Haha. For few if they buy 1 car each produced in India (not CBU) then too it will be < 10% of their annual income. (heck, that corner plot.. its everywhere).
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Old 18th February 2009, 14:09   #64
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A better question would have been " what percent of your Disposable income do you spend on your car/cars"
Since as a neccesity a 2 wheeler or a basic M800 is enough as per Govt of India's thinking. They levy FBT even on a 2 wheeler!!
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Old 18th February 2009, 14:47   #65
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I bought Alto LXI on 3 year loan (100% on road funding). Paying ~9.5k per month as EMI. Planning to close that loan in ext few months. Then total expenditure would become just 3k every month (cost of petrol and 10k cost every year to cover Insurance and maintenance).
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Old 18th February 2009, 14:52   #66
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Originally Posted by DieselFan View Post
I have a different opinion here. If you buy a car on loan the interest paid to service the loan is too high hence it is best to first clear the loan and then do any other purchases or investment.
True. Valid way of looking at it.

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Originally Posted by d3mon View Post
Thrilled ?
I am sorry GTO, but for all the sensible advice you have given us, it still remains a car community, not something run by bean counters !!

And to those who voted "All of it" , I salute all 4 of you. (Even though I know you are not being totally honest !)
Look at it this way, d3mon : I am showing you how to buy something mega a coupla years down the line .
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Old 18th February 2009, 15:15   #67
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As a salaried employee, I am against going for car loans. I can live without the smell and feel of a new car, and would any day prefer a used car that comes for a lot lesser and that you can customise without really being suspicious about losing warranty and all. Only a part of the EMIs will be sufficient to maintain the car in pristine condition.

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Last BUT not the least, do NOT equate a higher price tag with more happiness. Case in point : I am just as happy in my Rs. 60,000 (book value) '97 Jeep as some other dude in his 60 lakh rupee Hummer. If only there was a happy-o-meter, I'd prove it to you.
Spot on! It doesn't matter how expensive your car is. It is how you customise and maintain the car that decides your happiness.
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Old 18th February 2009, 15:39   #68
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I am writing this from a view point of a "aam aadmi".

Buying and owning a car is never an investment, it is always calculated as an expense in various forms like EMI, Tax, Insurance, Fuel, maintenance, etc. It is always advisable to keep expenses low. As GTO suggested, focus more on investments for the future. You would be more than happy at your retirement age that you made those investments. I would suggest less than 10% of annual income to go to automobile expenses, that too for the essential upkeep of the vehicle to give you trouble free service for a longer duration. Choose a vehicle that would take care of your needs and be light on your pocket.

There might be people who can invest more money on vehicles but that is a different league altogether.
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Old 18th February 2009, 15:48   #69
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Quote:
Originally Posted by d3mon View Post
Thrilled ?
I am sorry GTO, but for all the sensible advice you have given us, it still remains a car community, not something run by bean counters !!

And to those who voted "All of it" , I salute all 4 of you. (Even though I know you are not being totally honest !)
Probably the 4 guys are talking about the pocket money they get rather than what they earn themselves
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Old 7th August 2011, 22:09   #70
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Default How much should you spend on a car?

I am in a big dilemma looking for a new car and would appreciate any advice.

There is a fundamental tension between my impulsive brain and my rational brain. The impulsive brain says go buy that 30L car. I can actually afford it with a reasonable down-payment and an EMI which will not cause me grief. But the rational brain says NO. It says 1L on Insurance, 30K on service and god knows how much in case the car is damaged in an accident is not worth it. Buy a cheaper (but still good quality) car which you can drive in peace. With a 30L+ car you have greatly increased chances of hypertension, especially when driving in Gurgaon.

So here is my question- Is there an objective measure of how much you should spend on a car? As a percentage of net worth or annual salary or savings etc? What would a financially prudent person do?

Thanks
Suman
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Old 8th August 2011, 05:12   #71
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Default Re: How much should you spend on a car?

There is no objective measure to this. What you could do is from the monthly salary take home remove expenses that you already know of and then see the residual amount. From this amount you need to save for contingencies, Save for future (Retirement, House anything else) and then the rest can go to the expenses like EMI of the car.

The other way to look at is do you really need the car which costs 30L (This is assuming you have done the math above and you think its financially viable). What additional value you would gain if you spend 30L? How expensive will be the long term support and expenses of the car? Work the math out and you would know if you should (or shouldn't) buy that car.

I think as enthusiasts we do like to stretch and go our dream wheels, and in no way i am advocating don't stretch. All i am saying there is a healthy stretch, and too much of stretch will lead to pain and problems in future. So make your own judgement call and decide.

And welcome to Team BHP.
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Old 8th August 2011, 07:40   #72
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Default Re: How much should you spend on a car?

My 2 paisa worth:
As a depreciating asset, I would not buy a car on loan. I have seen my friends go through 5 or 7 year loans for a car that would not sell at even 2 lakhs today.
I would settle for a lower segment car with available resources and invest the balance, so the piggybank is bigger when I buy my next car. If this is not enough, I would also consider the pre owned car market for a great deal.

As for an amount or percentage of annual income, it really depends on other obligations and propensity to spend/ save.
IMHO, a financially prudent person saves a certain portion of his income. The decision about the ratio is best left to the person to finalise! And what he does with the balance is upto money management skills
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Old 8th August 2011, 09:17   #73
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Default Re: How much should you spend on a car?

A very pessimistic approach would be to buy a car worth 6L and budget 1-1.5L p.a for fuel and maintenance expense. This assuming that you get 30L p.a.

Most often than not, the impulsive brain wins over the rationale one

Quote:
Originally Posted by anilisanil View Post
I would not buy a car on loan. The very fact that I have to pay an interest on a depreciating asset discourages me. So buy any car that you could buy w/o a loan. Everything else is moh maya!



I beg to differ. With 30L pa, I would buy a car in the range of 10-15L. 6L is too pessimistic man!!
That why I used the term 'very pessimistic'. A car in 10-13L bracket would be a sensible choice.

Last edited by sachinj12 : 8th August 2011 at 09:32.
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Old 8th August 2011, 09:23   #74
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Default Re: How much should you spend on a car?

I would not buy a car on loan. The very fact that I have to pay an interest on a depreciating asset discourages me. So buy any car that you could buy w/o a loan. Everything else is moh maya!

Quote:
Originally Posted by sachinj12 View Post
A very pessimistic approach would be to buy a car worth 6L and budget 1-1.5L p.a for fuel and maintenance expense. This assuming that you get 30L p.a.

Most often than not, the impulsive brain wins over the rationale one
I beg to differ. With 30L pa, I would buy a car in the range of 10-15L. 6L is too pessimistic man!!

Last edited by anilisanil : 8th August 2011 at 09:25.
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Old 8th August 2011, 09:35   #75
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Default Re: How much should you spend on a car?

Given that a car means a totally different thing to different people, don't think there would be a mathematical means to arrive at such a figure, @saraf_suman, especially when we are getting into luxury cars now.

Think of it - We have people like Vijay Mallaya and Anil Ambani, who own private jets etc and we also have Narayan Moorthy (not sure of their net worth) who travelled the latter part of his working life in a Lancer, which is a sub-10L car! And I don't see any of them being wrong. It is to do with what you have, what you want to do with it and what image you want to convey.

Now getting to your decision. One way you could approach it is to have a good comfortable car for everyday use in Gurgaon; one which wouldn't make your heart reach your mouth everytime a rickshaw comes close to your car. And then have another (possibly even pre-owned) car which your heart wants, which could be for more special drives.

Do update us on your thought process too, @saraf_suman. Would be interesting to know how 'you' yourself are thinking
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