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Old 8th August 2011, 22:22   #106
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Default Re: How much should you spend on a car?

Quote:
Originally Posted by oxyzen View Post
Well summarized but that does not take care of a few points. Like Tax, expenditure etc.

My idea is:
To play safe you can buy a car which is equivalent to your 6 months savings.
If you are too much enthusiastic about cars (Which you should be if you are on Team-BHP) and don't have too much responsibilities in future you can stretch it to 12 months savings.

So basically if you can save 20K per month (2.4L) - Used alto/wagonr/santro.
30K / month (3.6L) - Alto, Astar, Wagonr, Spark, Santro.
40K /month - (4.8) - I10, Swift, Ritz, Beat, Figo.
50K / month - (6L) - I20/Polo
70K / month - (8.4L) -Fiesta Classic, Etios, Manza, Verito, Jazz.
1L / month - (12L)- SX4, Verna, Vento, Linea, New Fiesta.
1.5L / month - (18L) - Civic, Laura, Yeti, Corolla, Fluence, Jetta.
2L / month - (24L) - Superb, Passart, Accord, Camry, Fortuner.
3L/ months - BMW/Marc/Audi

And yes you can increase your budget by 1L incase you are going for a diesel.
That sounds the most logical.

Instead of how much one earns, the calculations should be based on howmuch one saves - after subtracting essential expenses and home loan EMIs.
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Old 8th August 2011, 22:53   #107
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Default Re: How much should you spend on a car?

Quote:
Originally Posted by oxyzen View Post
Well summarized but that does not take care of a few points. Like Tax, expenditure etc.

My idea is:
To play safe you can buy a car which is equivalent to your 6 months savings.
If you are too much enthusiastic about cars (Which you should be if you are on Team-BHP) and don't have too much responsibilities in future you can stretch it to 12 months savings.

So basically if you can save 20K per month (2.4L) - Used alto/wagonr/santro.
30K / month (3.6L) - Alto, Astar, Wagonr, Spark, Santro.
40K /month - (4.8) - I10, Swift, Ritz, Beat, Figo.
50K / month - (6L) - I20/Polo
70K / month - (8.4L) -Fiesta Classic, Etios, Manza, Verito, Jazz.
1L / month - (12L)- SX4, Verna, Vento, Linea, New Fiesta.
1.5L / month - (18L) - Civic, Laura, Yeti, Corolla, Fluence, Jetta.
2L / month - (24L) - Superb, Passart, Accord, Camry, Fortuner.
3L/ months - BMW/Marc/Audi

And yes you can increase your budget by 1L incase you are going for a diesel.
Man, this is way too conservative.
Say, a person earns 15 L per annum, which is a decent salary for someone in the early thirties. His take home salary is 90K after taxes. Then, he has a family to maintain, rent to pay etc etc..his savings will not be more than 40K..so all he can buy is a I10.
For my car - Jazz, 70K savings indicate earning of at least 1.25 L take home salary ..so means my gross salary is more than 20L ..Wish it was true (I am not accouting for the home loan EMI which would make my salary even more)
Going by this, I will never be in a position to buy any costlier car.
I have already committed a blasphemy.

P.S. - The above comment is in a light vein. Being aggressive or conservative is one's prerogative. Car is a passionate buy and I believe some times you should take some risks to make your dreams a reality. Sometimes it pays off, sometimes not. But, that is life!
Of all the comments, my funda matches very closely with @noopster's thumb rule.
Cheers!

Last edited by adimicra : 8th August 2011 at 23:02.
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Old 8th August 2011, 22:58   #108
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Default Re: How much should you spend on a car?

It sounds better to benchmark with saving rather than the salary, but, the numbers look slightly pessimistic. If a person is already paying for a house EMI and saving 70K/Month would be earning at least 20 - 21 lakh per annum. At that salary he should be able to afford a good sedan. The numbers look more reasonable for a person who would be saving a lot for purchasing a house or if you consider EMI on house loan as saving too.

Quote:
Originally Posted by oxyzen View Post
Well summarized but that does not take care of a few points. Like Tax, expenditure etc.

My idea is:
To play safe you can buy a car which is equivalent to your 6 months savings.
If you are too much enthusiastic about cars (Which you should be if you are on Team-BHP) and don't have too much responsibilities in future you can stretch it to 12 months savings.

So basically if you can save 20K per month (2.4L) - Used alto/wagonr/santro.
30K / month (3.6L) - Alto, Astar, Wagonr, Spark, Santro.
40K /month - (4.8) - I10, Swift, Ritz, Beat, Figo.
50K / month - (6L) - I20/Polo
70K / month - (8.4L) -Fiesta Classic, Etios, Manza, Verito, Jazz.
1L / month - (12L)- SX4, Verna, Vento, Linea, New Fiesta.
1.5L / month - (18L) - Civic, Laura, Yeti, Corolla, Fluence, Jetta.
2L / month - (24L) - Superb, Passart, Accord, Camry, Fortuner.
3L/ months - BMW/Marc/Audi

And yes you can increase your budget by 1L incase you are going for a diesel.
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Old 8th August 2011, 23:53   #109
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Default Re: How much should you spend on a car?

Quote:
Originally Posted by Yeldo View Post
Maybe

Sir, suppose you earn Rs 100L a month/ 1200L PA on personal & company heads. Next year, you earn 150L, that is 1800L a year. So, 10% of the 600L = 60L - is that not enough for you to splurge on a car, which BTW, is another abyss where money disappears: a new car always brings with it celebrations, and pleasure trips in the first 2 - 3 months, and further depreciation down the lane.

Now consider this: with the surge in bullion prices and interest rates, and the rot in property values and the available opportunities in the stock market, aren't there many ways to invest your additional windfall of 600 - 60 = 540L elsewhere than in BMWs and Omegas and Vertus?

Am I making this a business discussion which is by default irrelevant on an auto forum, or am I being simply stupid?
Now I am confused. I an just 25 years old with an average salary in an OEM. I am not sure how business oriented persons will look into this. May be the criterion is different considering the money can be better invested or the risks may be high. but a number like 1200L is something I expect to save in the entire lifetime.

But If I someday can save 3L/month a BMW is something that will be on my top 3 list. But for a beemer I would even take the plunge with 2L savings/month.

Quote:
Originally Posted by DCEite View Post
That sounds the most logical.

Instead of how much one earns, the calculations should be based on howmuch one saves - after subtracting essential expenses and home loan EMIs.
Thanks!


Quote:
Originally Posted by adimicra View Post
Man, this is way too conservative.
Say, a person earns 15 L per annum, which is a decent salary for someone in the early thirties. His take home salary is 90K after taxes. Then, he has a family to maintain, rent to pay etc etc..his savings will not be more than 40K..so all he can buy is a I10.
For my car - Jazz, 70K savings indicate earning of at least 1.25 L take home salary ..so means my gross salary is more than 20L ..Wish it was true (I am not accouting for the home loan EMI which would make my salary even more)
Going by this, I will never be in a position to buy any costlier car.
I have already committed a blasphemy.
May be you should not have gone for the Jazz. Or atleast waited for the price cut. But with 40K savings I would not take the risk.
Right now I am unmarried and my expenses are about 25% of my income. But may be when I will be in the mid thirties I will be in a similar predicament.

But a Jazz with 40K savings is not exactly 100% blasphemy. I save somewhat less than that but cant dream of owning Jazz right now. My Palio is using a fair bit of money for its maintenance from my pocket. If I want to drive something better now, I would hop in my dad's Vento. As for you, the only redemption is to stick with Jazz for a longer period of time.

The 1 year saving was considering the fact that you keep the car for 7-8 years. If you want to change it every 5 years may be a 8-9 month savings would hold good. But 8 years is a long term.Who knows- Your salary may increase by leaps and bounds and so, you might not regret the decision after a few years.

Last edited by oxyzen : 8th August 2011 at 23:56.
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Old 8th August 2011, 23:54   #110
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Default Re: Vitamin M - What percent of your annual income do you spend on your car?

While I agree with most of the "conservative" views on this thread, let me put forth my circumstances when I bought my car in 2008.

My idea was to buy a car equal to my annual income. I further factored in my love for driving and I had to push my budget by another lakh. I do not hesitate to admit I took a risk. Having a secure job, being single and with no home loan helped. At one point of time, the only three major outgoings from my salary were my domestic expenses, my car EMI and my SIP / Insurance investments. Diesel and maintenance came fourth.

For me, the car helped me to some extent as a professional (I do not believe that a car defines your professional capability, but Delhi clients seem to do so) and definitely improved my productivity, not to mention those thousands of kilometres of pleasurable driving.

I managed to close my 5-yr car loan in less than three years, so that I could take a home loan. A large part of this was funded by my professional growth and increase in my income, and my car has been a small but useful part of that process. I am not saying that a cheaper car would not have been equally useful, but I have definitely recovered the additional cost of a diesel vehicle in fuel costs by now.

Today my car takes up only 10% of my monthly income. Yes, I haven't factored its ageing and the need to save up for another one which I might need in 3-4 years' time. In the end, I am happy I took that risk three years ago and did not buy the Alto.
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Old 9th August 2011, 00:07   #111
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Default Re: Vitamin M - What percent of your annual income do you spend on your car?

Quote:
Originally Posted by aniketi View Post
@ GTO : - I know this is very old post written by you, but i must admire you that you always write very good comments. They are really worth a lot and ones should follow. You are a gifted person as a good adviser. Your advises are really good & i really appreciate you for that Keep it up.
Many thanks Aniketi

Back to the topic, anyone who thinks they need to spend big bucks to "enjoy a car" doesn't know a thing about being a petrol-head.

I've driven all the premium cars in India costing upto 50 lakhs (and over perhaps), and let me tell you one thing : A car like the Linea T-Jet on a Bombay-Nasik highway is AS ENJOYABLE to drive as a Mercedes. A Swift + good tyres + that sweet engine + tight chassis brings me as many smiles on a ghat section as a BMW does. I am pretty sure I'm enjoying my Rs. 50,000 book value Jeep as much as any 1 crore Landcruiser owner does. Drive a 5 lakh rupee well-modified vRS from Bombay to Goa and then do the same in an Audi A6; believe me, no exaggeration, you will pick the keys to the vRS on the way back.

Related Thread (ARTICLE: The Best (used) Enthusiast cars for 6 lakh rupees! Or less)

It's not what car you own; it's what you choose to do with it. Customise your car the way you'd want to, pick some great roads to drive on, nice music, super friends / family along and you'll be smiling all day long.

My best friend & I were driving back from Lonavla once. I swapped cars with him, and drove that M800 down the ghat section. It felt like a go-kart, you should have seen me....just like a kid in a candy shop. I even came back and wrote up a long post in the Mod forum on this experience.

Last edited by GTO : 9th August 2011 at 00:09.
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Old 9th August 2011, 00:30   #112
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Default Re: How much should you spend on a car?

Quote:
Originally Posted by oxyzen View Post
May be you should not have gone for the Jazz. Or atleast waited for the price cut. But with 40K savings I would not take the risk.
Right now I am unmarried and my expenses are about 25% of my income. But may be when I will be in the mid thirties I will be in a similar predicament.

But a Jazz with 40K savings is not exactly 100% blasphemy. I save somewhat less than that but cant dream of owning Jazz right now. My Palio is using a fair bit of money for its maintenance from my pocket. If I want to drive something better now, I would hop in my dad's Vento. As for you, the only redemption is to stick with Jazz for a longer period of time.

The 1 year saving was considering the fact that you keep the car for 7-8 years. If you want to change it every 5 years may be a 8-9 month savings would hold good. But 8 years is a long term.Who knows- Your salary may increase by leaps and bounds and so, you might not regret the decision after a few years.
First of all, the 40K savings I was talking about is not me..was just giving an example.

I would say to each his own.
I am quite older than you,married and have a kid with a big house loan EMI which is ever increasing and I have seen lots of people who are more conservative than me and many more aggressive than me..people who are far more pessimistic and people far more optimistic....the truth is - there is nothing correct or nothing wrong. Its our money and it is our prerogative to spend it the way we like.
Some spends on cars, some on house, some on travelling......no rules apply. The ultimate thing is to be happy and do whatever that makes you happy.
Of course, you need to save for the rainy days in life but how much? Again, no thumb rule. The wise men will give lot of financial gyan but there are no rules.

About me going for a Jazz, after an year of ownership, no repentance at all and now I think I was conservative with my budget using my own forumla. Actually, I know one of my close friends with similar earning and liabilities bought a Civic coz that was his dream for a long long time and since then, I am feeling that I sud have stretched and got a Civic for myself.
Now, time to earn more to get my hands on a Beemer some day ...hope you words about my salary increasing b y leaps and bounds come true..dream On

I guess enough of ranting as of tonite...cheers and drive safe.

Last edited by adimicra : 9th August 2011 at 00:39.
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Old 9th August 2011, 01:00   #113
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Default Re: How much should you spend on a car?

Point being - if I have $hitloads of money, I'll buy more cheap cars, than one super-deep-hole-in-my-pocket car.

Here's my modified illustration:
20K per month (2.4L) - Used alto/wagonr/santro.
30K / month (3.6L) - Alto, Astar, Wagonr, Spark, Santro.
40K /month - (4.8) - Used alto/wagonr/santro X 2
50K / month - (6L) - Alto, Astar, Wagonr, Spark, Santro X 2
70K / month - (8.4L) - SX4, Verna, Vento, Linea, New Fiesta.
1L / month - (12L)- SX4, Verna, Vento, Linea, New Fiesta X 1
(+) Used alto/wagonr/santro X 1
1.5L / month - (18L) - SX4, Verna, Vento, Linea, New Fiesta X 1
(+) Alto, Astar, Wagonr, Spark, Santro X 1
2L / month - (24L) - SX4, Verna, Vento, Linea, New Fiesta X 2
3L/ months - SX4, Verna, Vento, Linea, New Fiesta X 3
...
nL/ months - SX4, Verna, Vento, Linea, New Fiesta X n

Does anyone relate to such a thought process?
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Old 9th August 2011, 09:14   #114
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Default Re: Vitamin M - What percent of your annual income do you spend on your car?

I am kinda confused. As per the poll, majority people say that for a guy earning 15L p.a, the max he can buy is a car having 2.5L cost??? Am I on the wrong track here?
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Old 9th August 2011, 09:38   #115
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Default Re: Vitamin M - What percent of your annual income do you spend on your car?

Quote:
Originally Posted by _raVan_ View Post
I am kinda confused. As per the poll, majority people say that for a guy earning 15L p.a, the max he can buy is a car having 2.5L cost??? Am I on the wrong track here?
I look at the logic proposed on the thread in 2 ways:

1. 10 - 15 % of income = car worth . So an Income of 15 L allows you a car of 2.25 L

2. 10 - 15% of income = expenditure on car. For the sake of the argument, I take this as cost of purchasing the car only and not running expenses. So on a monthly basis this works out to 18750 on an Income of 15L. If 18750 is taken as an EMI on a car, over a 3 year period, one can buy a car worth approximately 6 lakhs.

Personally, as a salaried employee, I am more comfortable with scenario 2.


Note: this is very simplistic, as interest cost on a car loan as well as running and maintainance costs have not been factored in. Calculations are on 15%.
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Old 9th August 2011, 09:47   #116
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Default Re: Vitamin M - What percent of your annual income do you spend on your car?

I spend about 10% of my monthly income on my car, which includes only fuel costs (Petrol car you know, and nearly a 50km commute!). Or rather, used to.
I decided last month that I dont even need this 10% expenditure, so I decided to take the bus. And since have been spending a really negligible amount on it. No EMIs on car for me, but then I live with my parents, am single and have no other EMIs or expenses either.
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Old 9th August 2011, 11:36   #117
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Default Re: How much should you spend on a car?

Quote:
Originally Posted by oxyzen View Post
Now I am confused. I an just 25 years old with an average salary in an OEM. I am not sure how business oriented persons will look into this. May be the criterion is different considering the money can be better invested or the risks may be high. but a number like 1200L is something I expect to save in the entire lifetime.

But If I someday can save 3L/month a BMW is something that will be on my top 3 list. But for a beemer I would even take the plunge with 2L savings/month.

When I was 25, I thought 100L PM was pretty high too. You have got a long life in front of you, and let us hope that we may be able to take this up on this very same forum when you are 40. The economy is growing fast, and young people have lots of opportunities of making it big!

May I suggest we leave this here? And I vaguely remember a similar thread "what car on what income" or so somewhere else on this very forum?
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Old 9th August 2011, 12:55   #118
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Default Re: Vitamin M - What percent of your annual income do you spend on your car?

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Originally Posted by GTO View Post
It's not what car you own; it's what you choose to do with it. Customise your car the way you'd want to, pick some great roads to drive on, nice music, super friends / family along and you'll be smiling all day long.
Perfectly said here! Exactly my sentiments (although sometimes a solo long drive does for me what meditation does to others)


As for the car and the loan - decide the car you like - then add some logic to it (economy, cost of maintenance and your capacity to spend on it). After this find the loan amount that you can get, the amount that you can plonk in upfront and see if the car fits in your budget. If it does not, reiterate the above steps.
Do take a loan that you can cover within 3 years, considering that the interest rate would rise by atleast 2 points within the period.
Then try to go for a finance institution who will allow you to make prepayments without extra charges or penalties.

It is difficult to collect money for a car for a few years and then purchase it (probably a bachelor might get married and have his wife's choice coming in, or a newly married guy might become a father and have other factors affecting his choice, so waiting too long will make all the planning go for a toss!)
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Old 9th August 2011, 13:43   #119
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Default Re: Vitamin M - What percent of your annual income do you spend on your car?

Quote:
Originally Posted by GTO View Post
Many thanks Aniketi

Back to the topic, anyone who thinks they need to spend big bucks to "enjoy a car" doesn't know a thing about being a petrol-head.

I've driven all the premium cars in India costing upto 50 lakhs (and over perhaps), and let me tell you one thing : A car like the Linea T-Jet on a Bombay-Nasik highway is AS ENJOYABLE to drive as a Mercedes. A Swift + good tyres + that sweet engine + tight chassis brings me as many smiles on a ghat section as a BMW does. I am pretty sure I'm enjoying my Rs. 50,000 book value Jeep as much as any 1 crore Landcruiser owner does. Drive a 5 lakh rupee well-modified vRS from Bombay to Goa and then do the same in an Audi A6; believe me, no exaggeration, you will pick the keys to the vRS on the way back.

Related Thread (ARTICLE: The Best (used) Enthusiast cars for 6 lakh rupees! Or less)

It's not what car you own; it's what you choose to do with it. Customise your car the way you'd want to, pick some great roads to drive on, nice music, super friends / family along and you'll be smiling all day long.

My best friend & I were driving back from Lonavla once. I swapped cars with him, and drove that M800 down the ghat section. It felt like a go-kart, you should have seen me....just like a kid in a candy shop. I even came back and wrote up a long post in the Mod forum on this experience.
Totally agree chief!
Making the best of what you have, & having what you can, when the time is right, are two completely different things.
We often confuse or are overwhelmed by the array of choices & overall the capacity to purchase those choices.
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Old 9th August 2011, 14:49   #120
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Default Re: Vitamin M - What percent of your annual income do you spend on your car?

Quote:
Originally Posted by GTO View Post
It's not what car you own; it's what you choose to do with it. Customise your car the way you'd want to, pick some great roads to drive on, nice music, super friends / family along and you'll be smiling all day long.

My best friend & I were driving back from Lonavla once. I swapped cars with him, and drove that M800 down the ghat section. It felt like a go-kart, you should have seen me....just like a kid in a candy shop. I even came back and wrote up a long post in the Mod forum on this experience.
Well said GTO, however what you say holds good for cars above a certain segment. A Linea T-Jet is a good example, but driving M800 for anything beyond 100KMs or so will be exhausting, needless to mention not very safe on our highways. My point being, sometimes it does make sense to strech a little and not compromise on things like space, ABS, Airbags etc.

Besides, dont we all know that buying a car os also a lifestyle statement in India, irrespective of whether you are Team-BHPian or not
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