[motorworks]

While everyone has a view on this topic, I think its a very superficial discussion. How much to spend on a car does is not just defined by what salary you take home alone. Each individual’s family background, kids, other lifestyle choices like vacations etc. For example, I have seen few individuals spend a lot more on cars than what their salary would allow them to do so, but it may be also because they have some backing or fall-back from their parents and hence they tend to be a lot more liberal in their choices. And it could be the opposite too, a well earning individual driving around in a much lower priced car cause he does not necessarily have that “fall-back” option and may actually be taking care of the finances of his/her parents.

There are more factors to this as well, some folks have 2-3 kids, some have none, so that plays a big factor in allocation of finances too.

Then there is real estate, how much each of us decide to spend on our homes also makes a significant difference. I have seen many folks in my society, owning an apartment worth 2.5-3 Cr and driving around in a sub-10 lakh car. And folks who don't own a home, but driving around in a 20 lakh Creta or a 30 lakh XUV700.

Point being, to each his own. Good to read about experiences and learn from it, but there are far too many factors in life and we cannot just arrive at what car to drive at what salary in a paragraph or two.

[shankar.balan]

Originally Posted by m8002?

Isnt it in line with inflation and salary increments? I am pretty sure someone who was earning 17 lacs 3 years back will be earning 21 lacs now with 7% annual increment each year. So from a purchasing power, things have not changed much. Anything more in increments, the car is relatively cheaper now.


Of course, everyone likes all things to be priced low and only their income to increase

It is interesting that 32-33 years ago, the salary for an average man was about 3500-9000 range depending on the company.
Having just embarked on liberalisation the concept of ‘Company House’ and ‘Company Car’ was a big deal and considered a massive perk. At that time, a Maruti 800 used to cost about 1.35-lacs. When the Zen came along it cost some 4 lacs and the Esteem around 5 lacs.

If one’s salary as a young man then, was Rs 10K a month after say 2 years of work experience, it would have taken that said young man, 4 years of his pay, to buy an Esteem. So basically it was simply not attainable for normal working folks unless one got help from the family.

Around 1999-2000, I remember meeting someone who had emigrated to Dubai when I was on a work trip there. He was driving a Mercedes Benz new E Class - E250 I believe it was. He dropped me from far along Sheikh Zayed Road which just became open desert after the Emirates Golf Club, to Burjuman and for me, (as the owner of a humble Maruti 800 mpfi in India), it was an experience to relish - the plush leather and the fragrance and the music and the sense of being wafted along. And his remark to me then, was that if he were to want to own such a car in India, he would have had to be a ‘Clothing or Commodity Exporter or Trader’, but had he been a salaried man, he would have been able to own such a car only if he reached the very top of a good Company - Chairman level etc.

Consider then, the last 25 years of progress. Nowadays, more or less anyone at all in India can own a Mercedes Benz, provided they are in a reasonably well paid job and have a decent credit rating. The proliferation of Hire Purchase has simply democratised most things.
So perhaps the old Janis Joplin song ‘O Lord Won’t you buy me a Mercedes Benz’ is no longer relevant to the modern context.’

[deehunk]

Originally Posted by motorworks

While everyone has a view on this topic, I think its a very superficial discussion. I have seen many folks in my society, owning an apartment worth 2.5-3 Cr and driving around in a sub-10 lakh car. And folks who don't own a home, but driving around in a 20 lakh Creta or a 30 lakh XUV700.

Point being, to each his own. Good to read about experiences and learn from it, but there are far too many factors in life and we cannot just arrive at what car to drive at what salary in a paragraph or two.

Exactly, housing loan eats a lot into our income, then interiors, furnishing complicate things further. We have to find a balance somewhere and handle the expenses with caution.

[jithin23]

Originally Posted by raviemailid

That said, I’d like to share my own dilemma. And honestly, I don’t expect a solution, knowing there are many factors at play here.
…
I usually approach finances with a strict mathematical mindset, avoiding emotional decisions. That said, buying the XUV in 2015 was an emotional choice, and opting for the E-Class or EQE now would be too. I feel like I’m stuck in an endless loop, and I don’t see myself breaking free anytime soon.

The cars I've purchased till date have been a both heart and a mind decision. I have picked one car under loan and one by paying cash. Both were used cars though. For reference, I'm 28 years old and whenever I buy a car I look at these factors which fulfill my purpose. Agreed we live once but we need to strategize and live life with a good balance as well. I do not bother about peer pressure or if others buy even I should. I'll buy only if by financials permit and I usually go all in. Also, keep in mind that I buy the car to own it for as long as possible(with the only exception of selling my Figo as it was under used). FYI, I bought my first car at the age of 25 and cleared my car loan last December.

The factors I look for are:
1. The usage type - City, Highway, mix of both
2. Purpose- To commute and travel wherever I can on the map within the country.
3. Power and torque needs to be adequate to pull a full load of passengers in a hill station(this is the real litmus test of the car's capability).
4. Tuning Potential if you're more on the performance side.
5. Fuel type & Efficiency- Subjective but I prefer diesel for its torque and efficiency
6. Budget- If new, 50-80% of current salary. If used, you can go upto 1.5x your salary too. When I bought my first car, the price was 1.5x more than my annual salary but I picked a used one so I could save a lot on depreciation.
7. Finance- If you're financing the car, take the maximum tenure but aim to complete the loan within 3-4 years. I use this strategy so that the EMI amount is lesser and I can do bulk payments at frequent intervals.
8. Car Type needs to be based on your usage and purpose.
9. Maintenance- The thumb rule is 0.5-1% of your car purchase price. Certain brands might have upto 2% but that's upto you if you prefer a particular brand.
10. Service interval, availability and spares- Pick a popular brand or a popular car so that you can get the car running within a day or two at max.
11. Resale- One of the last options I consider but do check online platforms to see the prices of used cars which you have shortlisted to understand how strong is the hold of the car in the market.
12. Variant - Please choose the topmost or top minus 1 because these variants get almost all the necessary features with OEM backing and warranty on each part. The reason being even if you spend on good aftermarket parts, the price is almost similar to procure an OEM part and OEM is OEM, period. and one need not spend unnecessarily on mods(unless you're passionate), wiring differences in the lower variant and top most models generally have higher resale value and can be bought for a good price in the used market.
13. PDI and Service history check(if used) needs to be done.

Hope this helps!

[F10D_Estilo]

I am 23 Years old with just over 2 years of work experience in automobile manufacturing, so I am just being paid minimum wage by modern standards. When my savings reached a specific threshold, I thought of buying a used car and what better car than a good ol Maruti (More on that in my profile). I got a great deal at Rs. 35000 from my grandma for a 2008 Maruti Zen Estilo which was pending for re-registration. Many might be skeptical of buying such an old car but not me as I knew the car inside and out. It's the car I learned to drive on and had many fond memories during my college days. I knew most of the repairs it needed beforehand. As soon as I bought it, I got most of it fixed. Currently, I am about Rs.75000 into it and for that price, I can't think of a car that can run this good while being dead reliable.

To sum it up, I feel like if you have good knowledge on automobiles and have some good contacts with mechanics, you could strike pretty sweet deals on old cars like these. I know, most of them wouldn't have the opportunity to spend years with a car before buying it but trust me when I say, I have seen plenty of marutis of this vintage still prying on the roads of Hyderabad just because they are cheap, simple and dead reliable. If you just want cheap basic transportation and don't care much for driving dynamics, you can get yourself a maruti of this vintage. Can't go wrong with it.

As far as finances are concerned, including all the repairs, I am well under 1/4th of my CTC.
Depreciation is not even a thing with this car. If not anything, there are people ready to pay me more than what I spent to get their hands on it.
Running cost is not much. Still gets 15 to 18 Kmpl, not bad for such an old car.
Maintenance cost is equivalent to that of a slightly fancy motorcycle.
Spares are plentiful and dirt cheap. I got a used alternator for Rs 3500, Brand new OEM Lower control arms for a little over 500 a piece, Front suspension bush kit for a little above Rs 1000, and a set of engine mounts for less than Rs. 2000. Can't get much cheaper than this in my opinion.

I am not married yet, and I don't have dependent parents or any significant living expenses since I still live with my parents. The only real expense I have is maintaining my vehicles. Given my circumstances, I could probably afford a fancier used car without much financial strain. However, this car meets most of my needs and holds immense sentimental value to me, so I plan to keep it for life.

I might be somewhat of an exception that many people may not relate to, especially as I am probably the least experienced Bhpian here when it comes to finance and automobiles in general. So, please take my words with a grain of salt.

[shankar.balan]

Originally Posted by F10D_Estilo

I am 23 Years old with just over 2 years of work experience in automobile manufacturing, so I am just being paid minimum wage by modern standards. I am probably the least experienced Bhpian here when it comes to finance and automobiles in general. So, please take my words with a grain of salt.

This is a post which simply shrieks of an attitude driven by ‘common sense’ and ‘zero ego’.

If you have begun your career and working life in such a manner and this mature and rational way of thinking, you will undoubtedly do well.

As someone wise once said, ‘The modern world makes us buy things we don't need with money we haven't earned/ don't have, to impress people we don't like.’

Now you on the other hand, have taken the path which is much more sensible and prudent, unlike most of the rest of us. And the best thing is that you’re still a very young person.

So a lifetime of this kind of solid, common-sense driven behaviour, will undoubtedly benefit you and yours.

Good work! Well done!

[V.Narayan]

Originally Posted by F10D_Estilo

I am 23 Years old with just over 2 years of work experience in automobile manufacturing, so I am just being paid minimum wage by modern standards. When my savings reached a specific threshold, I thought of buying a used car and what better car than a good ol Maruti (More on that in my profile). I got a great deal at Rs. 35000 from my grandma for a 2008 Maruti Zen Estilo which was pending for re-registration. Many might be skeptical of buying such an old car but not me as I knew the car inside and out. It's the car I learned to drive on and had many fond memories during my college days. I knew most of the repairs it needed beforehand. As soon as I bought it, I got most of it fixed. Currently, I am about Rs.75000 into it and for that price, I can't think of a car that can run this good while being dead reliable.

Given my circumstances, I could probably afford a fancier used car without much financial strain. However, this car meets most of my needs and holds immense sentimental value to me, so I plan to keep it for life.

A most sensible post full of wisdom and common sense. I fully endorse your line of thought. My philosophy is if you can afford to buy a car cash down without breaking the bank then that is what your affordability level is. And as GTO often states second hand cars, thoughtfully evaluated, can be great buys. Wish you many happy miles with your Estilo.

When I was your age car loans and EMIs were not an option. Even though my wife and I for quite a while were what today are called DINKs we stayed with a second hand Lambretta for the first 10 years of our working lives. In those days that Lambretta culturally was the equivalent of your Estilo. Our first priority was to book a house. Then a year later came the car, a Premier Padmini bought for cash.

Where cars go I believe if you can afford an E-class buy a Camry. If you can afford a Maybach buy an E-class.

[am1m]

Originally Posted by F10D_Estilo

When my savings reached a specific threshold, I thought of buying a used car and what better car than a good ol Maruti (More on that in my profile). I got a great deal...

Just going to add my admiration because like you have correctly said yours will be a minority path taken. With such a good head on your shoulders at such a young age (I wish I was that sensible when I was your age!), you are on the right track. The best use of money is to buy time and freedom. And with today's traffic and parking situation in our cities, your car is going to be as effective as any other!

[shankar.balan]

Here is a sensible video - Zero1 by Zerodha.

https://youtu.be/nFf9trArZF8?si=Qsk96vO2R0vQtHyj

This chap is a young fellow but some of his videos do impart very good common sense and wisdom in personal financial management.

It doesn’t matter at what age I may be - I am still happy to listen to learn about some of these perspectives.

I really wish our Education system would include formal Personal Financial Management as subject in the curriculum from School itself.

[xcentrk]

I'm 39, a startup founder and freelancer as well. Right now, my earnings after expenses and tax comes around 2.5L every month, this is only my freelancer income as I don't take any salary from my startup since it is yet to break even. My startup is bootstrapped and I believe it will break-even by next year. My expenses are 90k per month including HL EMIs. I own a humble 2014 Hyundai Xcent, 94k run and I'm the first owner. When I bought the car, it was the all-rounder at that price. Not even Maruti came close to the packaging and VFM factor that the Xcent had.

My monthly usage is around 500-700km. For long outstation trips, I use my brother's Creta. I have no real reason for a car today. But as a petrolhead, I always wanted a Honda City, a petrol. Even now I look at various sites for a pre-owned City and I can see a lot of decent ones(4th gen) goes for 6-7L and a excellent examples for 8-9L. For context, I don't have additional parking space.

My Xcent, in exchange will fetch me around 1.5L and if I try to sell outside can fetch a little more, may be 2L. Is it wise to sell 11 year old Xcent to get a 8 year old City? My heart says go for City but my mind says don't.

I have portfolio of ~40L(MF+FD) and not including Real Estate since I don't consider those as IN THE BANK amount as of now.

My question is, if I am going to buy Honda City, I'll put my car sale amount + rest as cash. Is it a wise decision to buy now? Or should I wait a bit longer and increase my savings before going for a purchase? If I am going to answer this question I will say don't but want your opinion because I like City !

[speed79]

Originally Posted by xcentrk

I like City !

If you like the City, get it. If withdrawing ~5L from your savings, while you have consistent freelance income of 2.5L per month, does not dent your financial security/comfort, buy it now. City is also a much safer car as compared to Xcent. I believe you will feel much comfortable in your 'own' City for the outstation trips as well.

[Robinhood82]

Originally Posted by shankar.balan

Here is a sensible video - Zero1 by Zerodha.

This is really an awesome video. This guy has really changed my mind towards buying a new car. Hope the automobile companies don't block his channel, lol.

[antz.bin]

Originally Posted by Robinhood82

This is really an awesome video. This guy has really changed my mind towards buying a new car. Hope the automobile companies don't block his channel, lol.

The video is too pessimistic.

Calculating 25k in maintenance per year over and above the insurance for a new car? Seriously? Average annual service cost on my first car has been 4500/yr for the first 5 years. I changed the battery after 4.8 yrs (5k) and a set of tyres (20k). That is less than 50k in 5.5 yrs. Annual cost is <10k/yr. This estimate is off by 2.5x! This guy here is talking about cars in the 15 lakh bracket if I remember correctly. I doubt if even a larger car like an XUV700 costs that much in upkeep. Does it? There may be more expensive to keep vehicles but with warranty and all, you are covered for a LOT. As long as you avoid black sheep (Germans, Cars with the Fiat 2.0 engine etc), you should be good.

The other thing he did not consider was the alternative. What is the alternative to not buying the car? Uber? Has anyone done TCO analysis on your car (including resale value) and the same for an Uber ride? Don't tell me that the alterative is an Activa/Pulsar. What happens if you save 10 lakh from not buying a car and then die in a traffic accident from being hit from behind by a German sedan being driven by an intoxicated driver?

He mentioned that the situation can be improved by making a larger downpayment but I digress here. If you can't afford a car with 20% downpayment, you can't afford it with 80% downpayment either. The upkeep will keep you awake at night. Instead, what I would say is, go ahead and buy the car with 80% downpayment, but only if you have cashflows to buy it at 20% downpayment as well. You don't want to drive around in an M5 with a 1 lakh rupee salary just because you somehow found the money to pay the large downpayment.

Anyways, you've got to live a little too. Finfluencers behave as if the only way to live is to save every penny and invest in the stock market. What will you do with all the money if you keep saving till your last breath and then what, just die? Money can only give you happiness if you know where to spend it. Or else, 100 Cr in the bank is just numbers on a screen.

[beemer5499]

Originally Posted by Turbanator

No harm in getting what heart says as long as it does not pinch the brain

If Nexon is working as intended, add a fun car and retain the Nexon. There are cars which depreciate much less or sometimes, one can sell at higher than cost. BE6 or newer EVs will be a big No irrespective of the tax benefits or the gizmos those have.

Are you against BE6 and newer EVs because of the resale value or you think these cars will come with issues? Resale values for EVs is a grey area right now in my opinion but may increase in future with tightening regulations for Petrol and diesel cars and the caveats around them (10 year diesel ban in NCR, 30% ethanol in petrol by 2030, low mileage in turbo petrols)

[PhiGolden]

Originally Posted by beemer5499

Are you against BE6 and newer EVs because of the resale value or you think these cars will come with issues? Resale values for EVs is a grey area right now in my opinion but may increase in future with tightening regulations for Petrol and diesel cars and the caveats around them (10 year diesel ban in NCR, 30% ethanol in petrol by 2030, low mileage in turbo petrols)

Both points are valid, but the reduction in resale value is primarily driven by the rapid advancements in EV technologies and the continuous decline in costs. This trend is likely to continue for quite some time until the market reaches a stage of maturity where progress becomes more incremental.