[rAijin_]

I think the criteria would depend on the question : Are you planning to get auto loan for the car?

• If No, then it completely depends on whether you can afford to pay a big amount. The CTC is not a factor.
• If Yes, then the criteria is not your salary, its your monthly EMI. How much monthly EMI can you afford based on your monthly salary ( or business profit ). Your existing EMIs and average monthly expense would be a major factor.

Lets take an example of two PersonA and PersonB with exactly same CTC.

• Person A : earns 1Lac per month after deducting all taxes and has no Existing EMI. Average Monthly expense is 40k.
  This person can even get any car with EMIs upto 40k - 50k per month and still save 10k per month. This person can even get a Jeep Compass Model S 4x4.
• Person B : earns 1Lac per month after deducting all taxes. Pays 50k for existing EMIs . Average Monthly expense is 40k.
  This person cannot even afford a new Tata Nano.

[Geta]

Originally Posted by rAijin_

I think the criteria would depend on the question : Are you planning to get auto loan for the car?

• If No, then it completely depends on whether you can afford to pay a big amount. The CTC is not a factor.
• If Yes, then the criteria is not your salary, its your monthly EMI. How much monthly EMI can you afford based on your monthly salary ( or business profit ). Your existing EMIs and average monthly expense would be a major factor.

Lets take an example of two PersonA and PersonB with exactly same CTC.

• Person A : earns 1Lac per month after deducting all taxes and has no Existing EMI. Average Monthly expense is 40k.
  This person can even get any car with EMIs upto 40k - 50k per month and still save 10k per month. This person can even get a Jeep Compass Model S 4x4.
• Person B : earns 1Lac per month after deducting all taxes. Pays 50k for existing EMIs . Average Monthly expense is 40k.
  This person cannot even afford a new Tata Nano.

1) Ability to pay an EMI is not equivalent to affordability. If so, most members here will be driving around in Mercs and BMWs.

Affordability is, something which we can afford to lose if things go wrong, without destabilizing one's finances.

2) There is a lot more in the cost of ownership of a car, than just the EMI.

[rAijin_]

Originally Posted by Geta

1) Ability to pay an EMI is not equivalent to affordability. If so, most members here will be driving around in Mercs and BMWs.

Well, if I was not paying a huge Home Loan EMI, I assure you I would be driving around in a BMW or Volvo.

Affordability is, something which we can afford to lose if things go wrong, without destabilizing one's finances.

I don't quite agree with that. Majority of people owning a car would surely destabilize their finance if something goes wrong provided they are paying monthly EMI for the same. Since, they would be paying monthly EMI and will not have a car to drive. They cannot stop paying EMI since it would affect their CBIL score and they may not get loans later. And they may not be in a state of buying a new car in similar price bracket.
If something happens to my Honda City today and I cannot get any Insurance amount, it would surely destabilize my finance. I may have to buy a 3-4 lac car for 2-3 years ( that too on loan ).

2) There is a lot more in the cost of ownership of a car, than just the EMI.

Of course, it was just an example illustrating affordability to pay EMI as significant criteria for owning a car instead of overall CTC. An actual scenario would have a lot more considerations.

[matizcrazy]

I drive a Nano today and enjoy darting through the Mumbai traffic. I have been contemplating the purchase of a midsized sedan, a compact SUV or a large hatch for a while now and can't decide if it is worth the expense and subsequent depreciation.
And to think that my first car, in the 90s, cost me more than 2.5 times my Annual CTC !!!

[darkLightning]

3 years ago when I was booking the car for my family(I was about to complete 3 years of my professional career also) my criteria was simple.

1. Car should be reliable to get my family from one place to another as safely as possible.
2. Should have decent space.
3. Total cost of car not to exceed 6L (this figure of 6L was a combination of amount I had put aside for the car plus my CTC at that time).
I was sure in my mind that if I follow this combination I would definitely be able to afford the EMI.



Now in 2021 when I am looking for the second car, my formula has changed.

1. I need a car good for travel.
2. Total cost of car can be anywhere between 10-20L but first of all car's ability should justify it's price.

I have zeroed in on XUV300 and Thar both of which are costing lesser when compared with the formula I applied 3 years ago.

So the conclusion I can draw from my experience is that while salary has a big role to play in choosing the car it should serve as only the upper limit.

"At any point, the total cost of car should not exceed the savings put aside for car plus one year worth of salary"

Anything less which satisfies the requirement is always a plus

[Keyur Shah]

Mod Note : Please do NOT post plagiarise & cut-copy-paste comments from elsewhere just to increase your post count.

We advise you to read the Forum Rules before proceeding any further. Request to post ONLY when you have something substantial to add to a discussion.

[ParthVyas777]

A bit of a controversial opinion but I think there is no rule for what car at what salary. There's people earning 10-15cr a year who drive around in C classes and people who earn less than 1cr a year drive around in S classes. Neither are wrong, its just that their priorities are different. Life is at the end, all about priorities.

For most of us, the reality is a choice between a good car, a good lifestyle, a good house and long term security. You can't have them all, so you must choose wisely.

My priorities revolve around cars. That doesn't make me materialistic, that just makes me an enthusiast. For me personally, the joy of waking up early on a sunday, taking my car out on a blissful drive and giving it a thorough wash + detail after, surpasses the joy of waking up in a bazillion bedroom mansion wearing Gucci underwear with a bunch of money in the bank.

Bottom line, its your money. Do what you feel is right as long as you don't have people depending on you. If the latter is the case, secure their future first and then proceed to do whatever you wanted anyways.

[inder]

No offense, but some of the cars mentioned above no longer exist in the new car segment.
viz SX4 , Zen ,Manza , Indigo

[pavanmadhini]

7 years back, I bought a car which cost about 70% of my annual CTC. But then, I was single and in my mid-twenties and had no home loans to worry about.

Fast forward to this April, and I am closer to my mid-30s, and as a working couple with a kid and a home loan to boot, we bought a car which cost less than 10% of our combined CTC.

There really is no golden rule here which can be applied under all conditions - context is everything. Our next car I am fairly sure will cost 5x the last car we bought, which we consciously skimped on, so we can buy a luxury car in a few years.

[kushagra452]

I don't foresee myself spending more than 8L-12L on a car, regardless of my earnings. Even though I do value safety, comfort and the ownership experience, at the end of the day it's to be used to take me from point A to point B. Moreover, it's a depreciating asset with a capped life (especially for residents of Delhi NCR). As mentioned by the esteemed experienced Team BHPians themselves - getting a used car makes more sense (especially if purchasing a ICE car).

[AntPaul]

My first car was purchased pre owned with around 2 years of savings while I was around 5 years into my career. It was around 60-70 Percentage of my CTC salary at the time and I was single

My second car, a beater was purchased 1 year later with around a 1 month's salary take home.

I do not like the idea of taking a car loan to buy a car, but if I am to replace either of the cars, I may have to think of a car loans are priorities and time at hand has changed as I am father of 2 burdened with a home loan.

[amtak]

While coming back from gym, I was thinking that on an average about 25,000 SUVs get sold a month. Have the salaries really gone up by that much? I understand that loans are easily available, but has the SUV race enabled the tendency to cut it too thin on savings front?

[audioholic]

Originally Posted by amtak

While coming back from gym, I was thinking that on an average about 25,000 SUVs get sold a month. Have the salaries really gone up by that much? I understand that loans are easily available, but has the SUV race enabled the tendency to cut it too thin on savings front?

I am also thinking the same. In general, the whole idea of buying things on EMI has exploded and spread to more and more people. Last month my cousin sister who is 3yrs into IT wanted to buy a car that costed nearly twice her CTC. I was with the plan and she told me that she got influenced by another friend of hers who brought a Baleno home with a seven year EMI which in turn was not very high when thinking of monthly expense. The ease of getting loans as well as lower interest rates have made buying cars easier. Many friends of mine have gone in for Cretas and Seltos because they could get a seven year loan and the EMI burden was not much.

[giri1.8]

Most wealthy people I've met usually spend around one month's profit from their business for car purchase, white Toyota is the one they prefer

[anto1212]

Originally Posted by giri1.8

Most wealthy people I've met usually spend around one month's profit from their business for car purchase, white Toyota is the one they prefer

This applies only to those make in 8 digits. The rarest group.