Percentage of income on a car?

[JHX 1138]

So... I've been thinking of getting a new car recently (which is why I registered here; I had Mz3 on my list). The main reason is because I got a new job and I need to drive to it every day. Also, my current car is 10 model years old (Y2002) and I've had it for 6 years -- and while it's been reliable, it's a slowpoke and not fun enough to drive (more fun than Camry/Corolla, thats about it lol).

I'm just wondering what people think is the relationship between your salary and the car you buy?

My new job is full-time, permanent, full benefits, and pays $66k + bonus. Which probably takes me to 70 but let's just say it's only $66k for now.
How much would you spend on a car with a salary like that? Let's say you already have a mortgage on a townhouse/condo (but it's not too crazy!), and no other debts other than that. Let's also say you have NO kids and NO wife, and your GF is "low maintenance" and is employed herself so she's not too much of a drain :P

i've been thinking of having a monthly payment no more than $450 but that might be too conservative for a "fun" car...
wouldn't mind hearing you guys tell me how i should spend my money lol :)

[Kiyomi]

get a used 2010 speed3 low mileage. :D

[JHX 1138]

get a used 2010 speed3 low mileage. :D

how much is that approx?

[p-o-g-i]

If you have a mortgage, then you definitely have other bills (phone, cable, hydro, property tax, etc.).

I say buy used and spend within your means. Just because you have extra flow after paying your monthly bills, doesn't mean you have to spend it.

[07carbon3]

If you have a mortgage, then you definitely have other bills (phone, cable, hydro, property tax, etc.).

I say buy used and spend within your means. Just because you have extra flow after paying your monthly bills, doesn't mean you have to spend it.

good advice!

[Hoodzy]

Just save up for a car that's reasonable and practical. Pay cash and then retire...

[Jackal]

Probably about 20-24K for a used 2010 MS3.

[drunkmunky]

Say you saved up the 20-24k on a year. Take the 2nd year and you'd have nearly 50.
Go down to the states and pick up a Porsche Cayenne. They only go for about 44k used.
Insurance is not as much as you think, because insurance is based off of vehicle safety records. of course vehicle age is a consideration but not as much. I pay more insurance for my corolla than I do an lexus rx350.

[KenYork]

Don't forget to take into account that you'll still want some savings for vacations and unexpected costs of living.

[JHX 1138]

thx but i was really looking for some sample numbers/percentages :/

i appreciate the advice regarding savings and such... but that's what i've been doing for the past 6 years of Honda ownership :)
i bought the EL with cash i had at the time. since then i've been more or less maximizing my RRSP and then my TFSA.
so my savings are all good... i even put 20% down on my house and some mortgage prepayments. i have 30% equity in my house now which is pretty awesome compared to my same-age friends :) it's also helps that i live in a very high-demand part of toronto so my house has gone up by 12% since i bought it, hehe...

so i'm kinda thinking of "splurging" a bit when it comes to my next car...

[Flagrum_3]

thx but i was really looking for some sample numbers/percentages :/

i appreciate the advice regarding savings and such... but that's what i've been doing for the past 6 years of Honda ownership :)
i bought the EL with cash i had at the time. since then i've been more or less maximizing my RRSP and then my TFSA.
so my savings are all good... i even put 20% down on my house and some mortgage prepayments. i have 30% equity in my house now which is pretty awesome compared to my same-age friends :) it's also helps that i live in a very high-demand part of toronto so my house has gone up by 12% since i bought it, hehe...

so i'm kinda thinking of "splurging" a bit when it comes to my next car...

Not trying to be the Harbinger. But don't be too confident. There is a HUGE real estate bubble happening right now and things can change overnight! Double or triple mortgage rate increases or more, with house prices plummeting. Don't think it will happen, I've seen it twice before!. You won't have access to your RRSP monies without a huge penalty etc; etc;. Anyways my advice keep your 2002 a little longer, aslong as it's not costing you much in repairs and save for your next car. With your income you should not have to wait long to get a good chunk to put down on something nice. The anticipation of saving and waiting will just allow you to enjoy your next purchase that much more.

_3

[JHX 1138]

Not trying to be the Harbinger. But don't be too confident. There is a HUGE real estate bubble happening right now and things can change overnight! Double or triple mortgage rate increases or more, with house prices plummeting. Don't think it will happen, I've seen it twice before!. You won't have access to your RRSP monies without a huge penalty etc; etc;. Anyways my advice keep your 2002 a little longer, aslong as it's not costing you much in repairs and save for your next car. With your income you should not have to wait long to get a good chunk to put down on something nice. The anticipation of saving and waiting will just allow you to enjoy your next purchase that much more.

fair enough but i've already calculated that house prices need to drop by 30%+ for me to get "underwater" (owe more than my house is worth) on my condo. that's a true doomsday scenario!

yeah the other possibility is keep my 2002 for longer and maybe splurge next year on a 2-year-old is350 or something? lol

one of the reasons i wanted to get something by the end of this summer is because i've been holding off on $900 worth of maintenance on my EL: timing belt, water pump, coolant, maybe spark plugs, etc. If i want to keep it past the summer i'll have to do that (since i was supposed to do it last yr)

[taz4432]

fair enough but i've already calculated that house prices need to drop by 30%+ for me to get "underwater" (owe more than my house is worth) on my condo. that's a true doomsday scenario!

yeah the other possibility is keep my 2002 for longer and maybe splurge next year on a 2-year-old is350 or something? lol

one of the reasons i wanted to get something by the end of this summer is because i've been holding off on $900 worth of maintenance on my EL: timing belt, water pump, coolant, maybe spark plugs, etc. If i want to keep it past the summer i'll have to do that (since i was supposed to do it last yr)

A timing belt job is not something I'd put off it's already a year overdue, especially for a car you require to get to work and back. If it fails, the repairs will be a lot more expensive and time consuming.

Go to Jimmy at Street Performance, I can't speak on exact prices, but I guarantee you he will ask for a fair bit less than the $900+ you're being quoted right now and there aren't too many people who do better work than him, definitely not for a better price!

He knows those cars/engines inside out and could probably have you in and out in a matter of hours if you make an appointment.

See here for SP contact details. (http://www.torontomazda3.ca/forum/showthread.php?17212-Street-Performance)

My advice: Do the maintenance (it's not even repairs, just maintenance) and keep driving it till she kicks the bucket or you've saved up more. Gas is expensive, insurance is crazy (if you're under $25, may as well at least wait until you hit 25 to get that new car) and you're not in *need* of a new car, you just want one. If it's reliable, keep it.

[cSPEED]

Not trying to be the Harbinger. But don't be too confident. There is a HUGE real estate bubble happening right now and things can change overnight! Double or triple mortgage rate increases or more, with house prices plummeting. Don't think it will happen, I've seen it twice before!. You won't have access to your RRSP monies without a huge penalty etc; etc;. Anyways my advice keep your 2002 a little longer, aslong as it's not costing you much in repairs and save for your next car. With your income you should not have to wait long to get a good chunk to put down on something nice. The anticipation of saving and waiting will just allow you to enjoy your next purchase that much more.

_3

HUGE real estate bubble? That's such a crazy exageration lol. HUGE real estate bubble = sub prime mortgage crisis, let's not get carried away.

Expect the housing market to slow down in the next year. Key word being SLOW DOWN. Expect mortgage rates to rise slightly depending on Europe situation. Key word being slightly. If you live in a detached home in the downtown core, I think you'll be ok. If you live in a condo in the downtown core, I'd worry slightly more, not enough more not to spend an extra 5-10K given your situation and financial standing on a toy. You won't have the option of buying something quick and fun forever.. do it while you're young.

[loki]

why don't you go talk to a financial advisor instead of asking the internet

if you have no idea how much you should be spending, how do you know you're getting good advice here

are you crazy?

[Fack_Dude]

thx but i was really looking for some sample numbers/percentages :/

i appreciate the advice regarding savings and such... but that's what i've been doing for the past 6 years of Honda ownership :)
i bought the EL with cash i had at the time. since then i've been more or less maximizing my RRSP and then my TFSA.
so my savings are all good... i even put 20% down on my house and some mortgage prepayments. i have 30% equity in my house now which is pretty awesome compared to my same-age friends :) it's also helps that i live in a very high-demand part of toronto so my house has gone up by 12% since i bought it, hehe...
so i'm kinda thinking of "splurging" a bit when it comes to my next car...

Wow. You must be rich if you live in a high demand area in toronto. In that case buy a new speed3 and live life. Lol

[zzz3]

run the EL into the ground (and get a cheap bike if you want to have fun in the mean while). then buy that new car you want (or used to save on depreciation).

[PearlM3]

I guess no one wants to actually answer the question. Between myself and my wife we make just over $100 000 yearly. My car payment is 450/month and hers is 500/month. We rent but are looking to purchase, and are able to save, but we do make certain sacrifices to have 2 larger payments. In my opinion I wouldn't spend more than $500/ month in your situation

[krimsalt]

No matter what we say, you are in your own situation and only you know how it will end up, no matter how much advice you ask for. The truth is we don't know the ins and outs of your financial situation; or the situation with your girlfriend. Are you living together? Because that could change everything in the event of a split up, even if it's just common-law.

But... If you want an opinion on WHAT to buy rather than IF you should buy..... Subaru Impreza STi

[cSPEED]

He wants something less expensive with some power I think. The perfect medium is of course a speed

[Flagrum_3]

HUGE real estate bubble? That's such a crazy exageration lol. HUGE real estate bubble = sub prime mortgage crisis, let's not get carried away.

Expect the housing market to slow down in the next year. Key word being SLOW DOWN. Expect mortgage rates to rise slightly depending on Europe situation. Key word being slightly. If you live in a detached home in the downtown core, I think you'll be ok. If you live in a condo in the downtown core, I'd worry slightly more, not enough more not to spend an extra 5-10K given your situation and financial standing on a toy. You won't have the option of buying something quick and fun forever.. do it while you're young.

If you believe what your saying then fine, but those words I mentioned do not come from me but from the head of the Bank of Canada and several other prominent financial experts...You've been warned ;-) ...Point was one shouldn't over-extend oneself for something like a car in an unsure market.

_3

[Astig02]

Good to hear that your are in a good financial standing. It is not bad to spoil yourself once in a while. I guess you earned it.
However, even though you make enough money does not mean you go spend that extra cash. The economy is a bit unstable right now. Things can go 180deg. just sayin'.

If your are set on your budget then go ahead go look for that "perfect" car for you.
List your priorities i.e. what you want in the car and then go start lookin'.

Since you are in the forum, most likely we will say get a mazda. They truly fun to drive.
However, the market now is saturated with "fun" to drive car as well, so there are many options out there.
I am no expert in cars, but a few of them comes to mind.
Hyundai Genesis Coupe, VW GTI, Subaru Impreza, mazdaSpeed.

Goodluck on your car shopping. Hope you find something that you will be passionate about like the guys here.

[KVS17]

"... much rather spend it all while I'm breathing..." lol..

Go pick up a Speed3, and enjoy it lol.

[RTEnthusiast]

30K buys a nice Maserati nowadays...

http://cgi.ebay.com/ebaymotors/2005-MASERATI-QUATTROPORTE-SUNROOF-NAV-SUNSHADES-33K-MI-/190685071452?pt=US_Cars_Trucks&hash=item2c65b7485c

http://cgi.ebay.com/ebaymotors/COUPE-GT-2-OWNER-PERFECT-CARFAX-LOW-MILES-NAV-ALL-SERVICE-NONSMOKER-GARAGE-KEPT-/251075356708?pt=US_Cars_Trucks&hash=item3a7541e824

http://cgi.ebay.com/ebaymotors/2002-MASERATI-COUPE-BLUE-ONLY-8K-SAT-RADIO-PREMIUM-SOUND-CAMBIOCORSA-/180887061034?pt=US_Cars_Trucks&hash=item2a1db5822a

[JHX 1138]

damn, why are they so cheap? aren't they 100k+ brand-new? depreciation really that bad eh?

[n00bMeiSter]

I guess no one wants to actually answer the question. Between myself and my wife we make just over $100 000 yearly. My car payment is 450/month and hers is 500/month. We rent but are looking to purchase, and are able to save, but we do make certain sacrifices to have 2 larger payments. In my opinion I wouldn't spend more than $500/ month in your situation

Yeah, I love how this has degenerated into people trying to tell him how to save his money and others talking about the housing market.

When I first started my car search many many years ago, I was looking at financing. Most dealerships I went into told me I shouldn't be spending more than 15% of my monthly income on my car.

[Flagrum_3]

Yeah, I love how this has degenerated into people trying to tell him how to save his money and others talking about the housing market.When I first started my car search many many years ago, I was looking at financing. Most dealerships I went into told me I shouldn't be spending more than 15% of my monthly income on my car.

I wouldn't exactly call it degenerating, that depends on how you look at things. It is not the first time a post has gone on several tangents either! Thats the beauty of these sites, I think.

Anyways I was told the same 15% of your net income, I believe.

_3

[n00bMeiSter]

I wouldn't exactly call it degenerating, that depends on how you look at things. It is not the first time a post has gone on several tangents either! Thats the beauty of these sites, I think.

Anyways I was told the same 15% of your net income, I believe.

_3

True, but I think this is the fastest I've ever seen it happen lol

[RTEnthusiast]

damn, why are they so cheap? aren't they 100k+ brand-new? depreciation really that bad eh?

Yeah, depreciation is a killer.

[beyond]

I wouldn't exactly call it degenerating, that depends on how you look at things. It is not the first time a post has gone on several tangents either! Thats the beauty of these sites, I think.

Anyways I was told the same 15% of your net income, I believe.

_3

I heard 20% of your net income at most?

[Flagrum_3]

I heard 20% of your net income at most?

Well to tell you the truth, I can't remember if I was told 15% of Net income or Gross income. but I remember the 15% lol. So say your NET income is $3000 a month, 20% of that would be $600, that just seems a little high to me, if you consider all other expenditures one has, to be allowable for a car payment. But I could be wrong.

_3

[Slade]

Since you asked for just hard numbers..

I make ~60k a year.
Pay rent ~$900 month
My cable.phone,internet and cell phone bill is $40 month , benefit of job.

My truck payment is $150 biweekyl ($300 mnthly)
My insurance is is $160 a month right now but drops to $120 next month I believe.

These are my bills other then my $500 visa.

I do live on my own, my g/f just moved in but has no taken on any bill responsibility yet (fine by me for now)
I do buy groceries.

I put my truck loan over 7 years because;
-it leaves money available for repairs and maintenance.
-it leaves money for mods (I could have paid off almost 1/3 of the payments left if I did not mod at all.
-I will drive it at least that long, if not longer.
-gas, I spend a lot more in gas in the truck then I ever did in the Mazda 3.

So out of bringing home $1800 month, $460 is spent just for my vehicle not including gas.

Its not about what you can afford to drive, its about what you can afford to drive and maintain.

[midnightfxgt]

2004 Mazda3 & 2007 VW Rabbit. Bought the Mazda3 brand new, and the Rabbit a year old. Took 3yrs to pay off the Mazda and I think 1.5 to pay off the VW.

Car payments suck. I don;t think I will ever buy brand new again. The depreciation is killer, and not worth it to me

[rajin929]

OP - sounds like you have your stuff in gear, by driving the EL for the past several years and bulking up your savings and equity in the house, if you crunch the numbers and can swing the $450 + gas and insurace a month, without eating Kraft dinner every night or having to sell the car if this new job doesn't pan out - then go ahead and do it.

Only you know your comfort level, and even though the money spent on a car is sunk - it takes you to the job that brings income into the house. Just don't go and buy something outlandish to spoil yourself for now....but you'll be kicking yourself in the pants for later.

[midnightfxgt]

My only suggestion: Look at Mortgage calculators and see how much $450/month will knock down the mortgage. OR bank into RRSPs too ;)

[hgmahaha]

15% sounds reasonable. I would definitely spend money on a house before I get a nice car. But since you have your condo, then go get the nice car! You're still young (I'm assuming) so might as well splurg before you have to make that minivan purchase lol

[Kat]

Personally, since your car is still in good shape, drive it for one more year while you start your savings for the estimate car payment. This will get you a nice downpayment after a year of savings and lower monthly payment or shorter loan. At an estimated $450/mth, that's $5,400. Also, if you have a tax refund next year, add that to your downpayment. Think about it.

I did it for about 6 months before my old car died and it knocked off 1 year off my car loan.