[sauravm_89]

Originally Posted by anshumandun

A car is much more than a depreciating effort. It is a major part of your road-trip vacations. It becomes a part of your memories. It takes you on journeys that you remember for a long time. If I look back at my photos with friends with family, there is always a car that took us somewhere. You can't put a price to that.

I could'nt agree more to this. A lot of posts here seem more like a lesson on frugality than anything else. While the underlying sentiment is definitely logical and warrants merit, there is a lot more to a car or a bike than the "depreciating asset" logic. It is a part of your memories, and it gives you a reason to aspire and motivates you to bear the brunt of daily life. You probably end up spending a large part of your daily life in it. If you are young and can stretch it a bit, there is no harm IMHO. We can prepare all we want for rainy days, it will hit when it has to.

Reminds me a bit of when i was 27 and bought a harley street 750 and half my office (middle aged guys mostly) told me off on the need to save, financial prudence etc. Even though I probably did have to compromise on a few other things, it has been 7 years and I have not regretted my decision for a day.

[Hatari]

This is a good thread, simply because there needs to be a ball park in mind when spending on a 'passion', otherwise it becomes an excuse to go about a purchase without any logic.

One needs to know when you are over spending (you have every right to do so ofcourse).

A rule of thumb is 10% of your take home salary x no of years of ownership.
Therefore, on a 10L take home - 1L x 5 years.
Keeping a car for 10 years? go ahead and spend a bit more : 10L!

People who see cars as a piece of transport - spend less and those who dream about cars at night - go ahead and spend a bit more!

Now think of the other passions/excesses/responsibilities you have and factor all that in!

I am enjoying my 1.6 Verna - a bit more now, because I hate the new cars having a speed warning beep.
Its honestly put me off buying a new car.
The other plus of having an older car - is you can muscle it on the road and dont need to be paranoid about a nick/scratch.

[skarthiksr]

Originally Posted by e46

I have a family with child, dependent parents & housing loan. Could have gone for a sub compact crossover, but settled for a humble i10 last year considering everything.

I am taking this as an example for putting forward my opinion and nothing personal. For the exact reasons you have mentioned here, i.e one has a family with dependents and financial liabilities, the better decision in my opinion is to go for a safer sub compact crossover(May be Tata Punch?) instead of i10 though the former one would be expensive. My intent is not to digress the topic to go into which car is safer, but critical earning members of the family should not go for a cheaper car just because they cannot afford safer ones which might be comparatively expensive. Rather, one should continue to opt for public transport or safer rental taxis(May be choose Innova kind of taxi even if the members are 4 or less) till they can build their savings good enough(Even if it would take years) to buy a proven safe car even if its going to come at a premium. India unfortunately doesn't have a single 5 star safety rated hatchback and hence in my opinion, even if its going to take time to build your savings, it is better to wait and buy a safer car rather than going for an entry level car with lot of safety compromises.

[Iconoclast]

In my view; there are a few additional factors which would influence the answer to this question. They are:-

a) Where do you live? - If you live in a city like Mumbai with astronomical rent coupled with a very reliable/historically good public transportation system; it's easy to see why people there don't prioritize car buying. So in a city like that; the percentage of income spent on cars is a lot lesser as people wouldn't buy a car unless they can really afford it. On the other hand; if you live in a place like Goa where I come from; having your own car is considered essential; almost like having your own house. Because public transport/cabs etc. are non-existent/infeasible and there's no way for people to get around if they don't have their own vehicle. So the percentage of income spent on cars would be a lot more there.

b) What do you care about? - People care about different things in life. Some care about cars; most of us on this forum definitely would. But others care about other things - electronics/gadgets, vacations/experiences, clothes, etc. I know people who would have an annual household income of ~1cr. but drive around in an 8-year-old Ritz. They take exotic vacations to fancy places twice a year and would spend a whole lot there.

c) Company-car lease/Depreciation benefits - In case you have these options, it allows you to sort of punch slightly above your weight vis-a-vis car buying as the net cost of the car comes down significantly due to tax benefits.

[automowheels]

Originally Posted by Hatari

A rule of thumb is 10% of your take home salary x no of years of ownership.
Therefore, on a 10L take home - 1L x 5 years.
Keeping a car for 10 years? go ahead and spend a bit more : 10L!

People who see cars as a piece of transport - spend less and those who dream about cars at night - go ahead and spend a bit more!

This is one of the most sensible takes on this matter so far. Yes, I would certainly take into consideration the number of years of planned use. I was unable to wrap my head around how someone would ignore this when budgeting a car. None of the budgeting formulae so far talk about how many years to keep the car when you use, for instance, the 20-4-10 formula. To me, the longer you intend to keep the car, the more you can add to your budget, provided you actually stick to the target lifetime of the car.
However, to this formula I would recommend the usage of net usable take home, i.e. deduct net take home with essential expenses and any current or projected loan EMIs. From this actual net 'usable' take home, one could probably use between 10-20% towards their automotive needs. This will ensure your essentials are accounted for, while investing a substantial portion (between 80-90%) for your future expenses (such as retirement, vacations, next car purchase).

[RGK]

Originally Posted by Hatari

This is a good thread, simply because there needs to be a ball park in mind when spending on a 'passion'.

True. I include the usage as well.

~18k km per year is the optimum utilization for any car. If one engages a cab, the average spend would come around ~2.7L. The savings would be nearly 1.7L (after fuel exp @ Rs 6/km) and if one is prepared to keep the vehicle for 8 years then ~13-15 L can be the budget of the car.

[int3]

An estimate I followed as a guideline is to ensure that all your loan EMIs are less than 38-40% of your monthly income. Anything above that amount will make it difficult to handle all your other expenditure as well as saving for future.

[aviator1101]

Originally Posted by aseem

what I want to be able to gather from this thread is, what you feel is an appropiate spend on a car given a persons salary:
....
The idea I am trying to get at the end of the day is, what car I should be considering once I read all the options and only I know my salary

I think you have left out the existing liability part from the equation. The grouping/bracket should be net savings per annum vis-a-vis purchasing capability.

But remember, most people here are passionate about automobiles and passion is priceless

[TROOPER]

Reading some posts here about the 'minimum income', I feel either I have no clue how much people/car buyers in this country are earning or looking at the cars sales, this thread is among the most threatening ones for carmakers, and even bankers. More so than those Skoda type exposé threads

Although for me, it should be an upfront no loan one if salaried. So it could be whatever one has saved up in the 'car fund'. I wonder if there's any data of how many cars are bought on loan each month.

[OffRoadFun]

Originally Posted by Hayek

But assuming you have no responsibilities other than those for yourself and your spouse / children, I would set the following benchmarks based on age:
…

No offense but very conservative I would say.

[dicor]

Originally Posted by na_agrawal

Going by this recent posts/discussion on this thread, am I right if I conclude that -

Some of my senior colleagues who are driving a BMW X1 or Mercedes C 200 are earning atleast 2Cr per annum??

Secondly, the colleague who sits just 2 places besides me, bought a 25L Alcazar. He must be earning atleast 1Cr.

-NA

You are forgetting a concept called "double engine ki sarkaar" here.

Your colleague may not earn a million dollars, but if he is passionate about cars and he and his wife earn even 40 lakhs collectively, they can afford Alcazar easily.

He might not have a mortgage on his shoulders. (most localities, get a roof from the beginning in their home town).

He is getting Alcazar (7 seater) so their are chances that he is staying with his parents. Parent(s) may also have a pension or sufficient savings.

In short, do not guess someone's wage based just on the colour and size of their car.

[Samfromindia]

Originally Posted by dicor

The question should be
What car? What salary? What age? and What is your passion?

That pretty much sums it up. And we all know your annual salary now

Same logic applicable for other aspirational items. On 2011 I got iPhone 4S for a little more than my monthly salary. Now my Galaxy S phone cost a fraction of it.

[vishnurp99]

Originally Posted by dicor

The question should be
What car? What salary? What age? and What is your passion?

IMHO this is a very sensible post. Just to add my 2 cents, I brought a diesel Terrano in 2015 for 13 lakhs OTR and a diesel S-Cross in 2018 for 12 lakhs OTR. When I look around to replace either of these cars today, comparable cars in terms of comfort, responsiveness, running cost & utility are around 25 lakh OTR.

Considering that the average salaried joe gets no tax benefit from depreciation , it just doesn't make sense to buy a new car in India today.

If you want to drive good cars, it's best to migrate to a European nation or USA where you can get a Tesla or a BMW 3 for around 40 lakhs INR.

[shankar.balan]

Originally Posted by vishnurp99

gets no tax benefit from depreciation , it just doesn't make sense to buy a new car in India today.

If you want to drive good cars, it's best to migrate to a European nation or USA where you can get a Tesla or a BMW 3 for around 40 laks INR.

In India its better to buy second hand cars if you find a good one that you like. This is applicable more to the Prestige or Luxe segment.
More than ‘ownership’ I think many evolved folks are slowly tending towards ‘experience’ - so they travel and rent cars that they like and experience them - it is actually a good movement if you come to think of it. A lighter footprint on the world while at the same time gaining multiple experiences. Overall cost is also lesser and there is no responsibility once the rental period is over.

[Axe77]

Originally Posted by dicor

According to what I understand, spending power is determined by priorities and interests. not income.

I have one crucial difference of opinion here (perhaps at the cost of being pedantic on the choice of phrase).

… spending decision is determined by priorities and interests. not income.

Spending “power”, within a broad range of fiscal prudence can’t vary too dramatically. Ultimately, its a factor of current and foreseeable / contingent liabilities, measured in the context of net income, probable income trajectory (in time and quantum), certainty of such income and your life goals.

Within this there can be certain indulgences. Within reason. But (as a random example) if one empties one’s bank account at age 45 - 50 to buy his / her dream car, because cars are their priority and passion - its a “spending decision” that’s beyond their “spending power” - and a decision that is financially imprudent IMHO.