[Acharya]

Originally Posted by shankar.balan

To actually take home Rs 3 lacs a month the gross salary per annum has to be around Rs 45 lacs!

Small correction, for a take home of 3 lakhs, you need gross salary of 55-60 LPA at least.

[Deeps]

Originally Posted by Torquedo

I am quite bemused by the way votes have been casted on this poll and the poll on which variant to pick, here are the reasons.

1) An average car buyer would buy a car for a bare minimum ~ 4L (be it used or new), now if this be the case that means the ones who have voted for <15% have at least an annual income of 26.6 and this is dated back to 2015 so 2017 the earnings would be much more.

I simply cannot buy the fact that someone earning close to 30 LPA would settle for a car ~ 4L, i'm dead sure, he/she would look for a more premium offering.

2) On the variants poll, it seems most of the BHPians would opt for the top spec variant, can we request the ones who have polled for this variant also mention which variant they drive? Dead sure again, numbers would not add up.

Polling it seems, follows the herd mentality, not for all, but for a good number.

You've got the line of thought wrong. The poll refers to the expense entailed AFTER the acquisition of the car - i.e. maintenance, fuel, accessories, EMIs

[dailydriver]

In 2010, my car cost me double the amount of my (then) annual earnings . Current expenditure on all foreseeable expenses is about 7% of my yearly income. Even if i have to bear some unforeseen expenses, it wouldn't cross 10%.

However, if i were to calculate the overall expenses (cost of EMI, repair, accessories etc) to income ratio spread over the last seven years of my car ownership, it would be around 15%.

[shankar.balan]

Originally Posted by Acharya

Small correction, for a take home of 3 lakhs, you need gross salary of 55-60 LPA at least.

With good tax planning you can mitigate your effective tax liability to around 22%!to 25%.
So if you earn 45 to 50 lacs and pay around 12 -15 lacs as TDS you should be getting there as far as your 3L pm take home is concerned.

[narayans80]

Originally Posted by Deeps

You've got the line of thought wrong. The poll refers to the expense entailed AFTER the acquisition of the car - i.e. maintenance, fuel, accessories, EMIs

No, the thread is about the total cost of ownership which includes both the purchase+maintenance+fuel+etc factored in.

I doubt running expenses warrant such a thread, unless ofcourse the car is from the marquee brands.

[AbhisheKulkarni]

My daily ride is a Polo GT TSI, and I'll share my two cents here.

For salaried individuals (like me) who work in the private sector, I feel buying a brand new German marque is a bad decision. It not only means spending anywhere between 2-5 year's salary on the purchase itself, it also means that one would need to let go of liquid savings for the down-payment itself. Add to that the effect of depreciation, which would be just too much to deal with.

Now maintaining the car would be a different beast all-together, what with costly insurance and maintenance packages and all. And once the package expires, may god be with the owner for part replacements/accidents/warranty claims.

Due to the volatility in the job market itself I feel a salaried individual should be prudent and stick to the <15% thumb rule in a automobile purchase. And to go a step further, you know a purchase is going to go wrong if it is going to affect your basic needs in life, like a retirement corpus or your child's education savings etc.

[AbhisheKulkarni]

Originally Posted by Hells Bells

Unfortunately, spending 60% on home loan EMI is also not financially savvy. In a prudent financial plan, such emi should not be above ~30% of home take away.

Considering that the duration of a typical home loan is anywhere between 20-30 years, I feel most people take a home loan with the expectation that their income would increase over time.

Hence the EMI-to-Income ratio (per month) would be variable and would become easier to handle over time is what is a general observation.

Also, it is impossible to buy a house that you love and expect to be able to stick to a 30% EMI-to-Monthly income thumb rule. Maybe possible in Tier-2 cities as property costs are lesser, but not possible in Tier-1/Metro cities.

[Revy]

I voted <15% considering only the EMI, running costs, insurance, mainetance etc in an year. The reason why I did not factor in the down payment that I plan to make (about 50% of new car cost) is that - I consider that amount as saved up money from last 2 years when I stopped paying EMI for my current car :-). So I have started incurring cost every month for my future car for last 2+ years !

I am actually not comfortable spending more than 10% as much more important priorities like home loan, kids education etc. eats major part of income.

That said, I know lot of people who own fancy cars spending nearly 50% of their income on that ! Generally I observe that this is done by people who are rich by assets and poor by regular income. For them, a car is a major status symbol and since they own assets (mostly inherited), they have no issues spending 50% of regular income on a car.

PS : No offense to those who are "asset rich" but not having a great regular income...People like me have to struggle to create assets while they are lucky to have it already. So they can take bigger risks with their spending as they have a back up of assets, while people like me do not have that luxury and hence more conservative in spending, no matter what our heart yearns for..

[BB311]

Save First, Spend Second. I am a firm believer of this principle but a failure in application of the same.

A mere percentage number can only be suggested, but actual application might not be possible. However, since a suggestion is to be made, I would say it should be less than 15% (fuel, base cost, emi, insurance) of your income during the expected life cycle of your car. So, If you are earning 10 Lakh PA, expect an increment of 10% per annum, your total earning in 10 years comes down to : ₹ 1,59,37,424.60

here's the breakdown of each year:
1 ₹ 10,00,000.00
2 ₹ 11,00,000.00
3 ₹ 12,10,000.00
4 ₹ 13,31,000.00
5 ₹ 14,64,100.00
6 ₹ 16,10,510.00
7 ₹ 17,71,561.00
8 ₹ 19,48,717.10
9 ₹ 21,43,588.81
10 ₹ 23,57,947.69
total ₹ 1,59,37,424.60
car spending ₹ 23,90,613.69

Assuming, that car's purchase price is just 50% of total ownership cost, it comes to approx : 11.5 Lakh Rupees. If you decide to keep Rs 1.5 lakh aside for your first year of car ownership aka pampering and splurging your new ride,you can easily say, value of car = annual salary at the time of year of purchase.

If you buy a new car, mind it, real return is in keeping the car for longer duration. Please refer this thread


It's just my opinion and rule that I follow, Buy a big beautiful car. Maintain it well for 10 years, or more and than sell it.

Please do not bring the 10 year old ngt ban discussion in this, as I have always owned petrols, and my current car is my first Diesel.

[jagzrk]

When I started out my career, my obsession with 2 wheels moved to 4, just because I thought I could afford it. Bought a New Nano thinking I could afford to pay an EMI which is 20% of my salary. Boy, was I wrong.

Few years down the line, I've realized many people in our country sell their cars too fast actually when they've just run in and hardly 5-6 years old. (50K-75K kms) The value of these cars and the depreciated cost are too tempting to ignore. Even considering the maintenance costs including repairs some cars from stables like Honda, Toyota and Nissan are just about fine considering the low initial cost you actually paid for the car.

Look at it this way - Would I pay 12-13 lac at initial costs (not considering the interests) to own a new Honda City and around 2 lac more to maintain it over a 7 year period? Or get a 6-7 year used one at 4 lac (again not considering loan interest) and spend 5-6 lac over the next 7 year period? Factor in interest costs, savings in insurance costs, and buying pre-owned seems to be a no-brainer. I agree, there's a huge risk of buying a lemon or accidental, abused car in used, but there are good guidelines that you can follow to not get cheated and hey for me it was worth the risk.

We now own 3 cars, my first car the Nano which stays in family for city runs, 2 of them bought used - Honda City and Nissan Micra and still the percentage of costs spent on these remain under 15% of our income. These vehicles have and are serving really well and maintenance costs are actually lower than what I spent on Nano. Otherwise we could have just afforded "one" new premium car and also spent more than 15% of income on it.

[rajshenoy]

There is a lot of difference between wishing and doing(spending)

[samyakmodi]

It's interesting to see so many different view points on this - and needless to say all are quiet thought provoking

I for one strongly believe that one should spend not more than 30-35% of whatever is your average annual earnings of 3 years for all the cars put together.

So let's say you have an average earning of 1,00,00,000 per annum for 3 years - then you should not spend more than 30-35 lacs total on cars. So if you've bought a car worth 20 lacs once in these three years you can maybe splurge another 10-15 lacs on another car.

Once you've exhausted your budget - you should wait for another 3 years and consolidate your earnings for 3 years and then maybe buy another car.

This way buying a car is never heavy on the pocket and nor is maintaining them.

This also adds to the discipline of not spending on cars unnecessarily while doesn't make you bleed monthly with emis that pinch.

Also when after 4-5 years you want to change your car - the depreciated value doesn't hurt you psychologically as well as financially.

[PatienceWins]

With growing expenses and insecurity with current jobs, I am not comfortable spending more than 15 % of annual income on car. I try my best to avoid loans - save and then spend.

Started my career in 2003. Saved and bought Getz 1.3 in 2007. Still using it by maintaining it very well. Planning to save and get my next car in another 3 years.

[ac-cobra]

I spend about 6% of my post-tax income on my car including maintenance and insurance.

[balajisv]

My current ride is around 9% of my annual income calculated over 3 year duration.
As I have a 3 year/45K km Gold AMC, my maintenance costs are near to zero till now. I'm into 2.5 yrs of my ownership and this is my 4th car.
Except this and my previous car, the earlier two cars were 'pre-worshipped' cars and ensured they were less than 10% of my income. I plan to spend 15% of my income on my next car and I plan to use it for 6-7 years at least.