Purchase price of your car vs. income (ratio) poll

[jkelley9]

I'm curious what the folks on here chose to drive in terms of the purchase price of their vehicle (at the time of purchase, that does not have to be "new" or MSRP price, just the purchase price, regardless of any financing) relative to their income (salary or expected income if hourly/commission/royalties/dividends/whatever) at the time of purchase. I feel like this is a good ratio for comparison? I would be very interested in that this ratio is for folks. Looking online they use all sorts of other wild ratios that can be interpreted in so many ways so it's not helpful.

I've put the names as private since I'm not interested in who spends what. More interested in the spread.

Also, if you own more than 1 car (like a daily driver plus a fun car) I would add those two purchase prices together and average the incomes around that time period of purchasing. Just use your best judgement. since estimating that may be difficult if you bought one many years after the other.

If you and your wife both drive cars and both work, I would also estimate like above. Not just one car purchase divided by total income... since your wife (may) also drive a car.

 

For example:

The cash price I paid for my used truck ~2 years ago ($X,XXX) divided by my income at that time ($XX,XXX) yields my ratio (expressed as a percentage) of

$X,XXX / $XX,XXX = 0.0435 = 4.35%  I'm kind of proud of this. I drive a pretty old truck, it looks nice still, and I'm happy with it. 

My wife is still driving the car that her parents hand-me-downed her 12 years ago so I can't really do one for her. But her car right now is worth something like $3,000 or less. She's perfectly content with her car, still. But I guess if she were to buy her car as is right now relative to her income it would be like ~7% max.

 

The reason I put this thread together is because when I first took this job ~3 years ago I noticed that all of the managers making VERY good money at my work drive a LOT older or more modest vehicles than the operations staff. The operations folks are driving the Camaro's, King Ranch edition trucks, Harley Davidson edition F150s, fully loaded Z71's and Tundras. These cars are $50-60k. The average value of the managers' cars is like.... less than $10k ea. Some are old rust buckets.

Edited February 7, 2017 by jkelley9

[Groucho Valentine]

I came in at 6.52. I still drive a pre-owned Subaru outback i bought 10 years ago. 210k+ on it. The thing just wont die...  We bought a preowned Subaru forester last year as a second car. 

Edited February 7, 2017 by Groucho Valentine

[NJpatbee]

One possible explanation for the younger workers driving a more expensive car with a lower salary is the amount of additional expenses an older person usually has.  When you have children, a $2k-3k mortgage payment, as well as a few thousand a month for college education, plus some good golf,  a premium car has a lower priority.   It may also explain why empty nesters treat themselves to a nicer vehicle.  I came in at 18% - 65 year old empty nester.  Now if I could only sell my way too large house!

Edited February 7, 2017 by NJpatbee

[No Mulligans]

You have the middle of your range at around 20... Perhaps you mean 20%?

 2,000,000 car vs 100,000 income = 20, nice car 

When I was about 30 years old, I bought a used Camry from a co-worker.  Her boss reported to me and I was making twice as much as her... She bought a new Lexus.  This doesn't necesarily have to do with age.

[14ledo81]

When I purchased my 07 Yukon XL (I have a large family), purchase price was roughly 30% of my total income. I have driven it for 6 years now (actually wife's rig). It is almost paid off. The old jeep that I drive (1997 Cherokee) was basically given to me.

In approximately 6 months I will have no car payments!!!!! 

[Golfingdad]

Probably around 35% or so, but it's been so long (13-14 years) that I don't remember what I was making at the time.  My next car will probably be in the 25% range since I make more now and plan on getting a simple commuter car - possibly a used one.

[kpaulhus]

I bought my first brand new car last year. I am 35% based on what I paid/salary. The nice part, however, is my car allowance covers the payment and wear and tear, so technically I dont have a car payment. (my company does have pretty strict requirements for cars)

[iacas]

This poll doesn't take into account how long someone keeps their car.

Someone could spend 50% of their income on a car at the time of the purchase… but if they saved up for it, and then keep it for 12 years… that's pretty different than someone who spends even 25% every three years on a new car.

[jamo]

I'm around 35%. I bought my car new almost 2.5 years ago. I'm about halfway through paying it off.

I ended up going new instead of used. Really nice not to have to deal with the end-of-life issues an older car comes with. Pretty pleased with it.

[saevel25]

Comparing my initial car loan, 35%

Comparing to my yearly car payment totals, about 8-9%

[krupa]

I bought a new car this weekend that puts me at about 25%.   Historically, I keep cars around 8 years.   Usually I don't spend so much on a car but this time I decided to splurge a little.

[Kalnoky]

Another vote for borrowing 35%. Yearly car payments 7.3%. Necessary evil I guess.

24 minutes ago, jamo said:

I bought my car new almost 2.5 years ago. I'm about halfway through paying it off.

I ended up going new instead of used. Really nice not to have to deal with the end-of-life issues an older car comes with. Pretty pleased with it.

I'm also 2.5 years in & halfway done. I'm also very happy with my car, although admittedly, I'm not a "car person". If I could teleport myself everywhere I would love that. 

Anyway my last car I held on to a bit longer than I should have. Near the end it started costing me a lot of money. Old cars are bad business unless you're handy around cars. I hate debt, but buying new was the only sensible option at the time. 

[krupa]

4 hours ago, jkelley9 said:

The reason I put this thread together is because when I first took this job ~3 years ago I noticed that all of the managers making VERY good money at my work drive a LOT older or more modest vehicles than the operations staff. The operations folks are driving the Camaro's, King Ranch edition trucks, Harley Davidson edition F150s, fully loaded Z71's and Tundras. These cars are $50-60k. The average value of the managers' cars is like.... less than $10k ea. Some are old rust buckets.

Not counting kids and ex-wives and what-not, perhaps the managers just don't care about cars?  Do they have other expensive hobbies, like golf memberships, boats, etc, ?

[NCGolfer]

Should I include the ~$11k I netted from VW in the Dieselgate settlement that I put towards my next car?  

[Kalnoky]

4 hours ago, jkelley9 said:

The reason I put this thread together is because when I first took this job ~3 years ago I noticed that all of the managers making VERY good money at my work drive a LOT older or more modest vehicles than the operations staff. The operations folks are driving the Camaro's, King Ranch edition trucks, Harley Davidson edition F150s, fully loaded Z71's and Tundras. These cars are $50-60k. The average value of the managers' cars is like.... less than $10k ea. Some are old rust buckets.

Class based value system. 

My shop staff drives nicer cars and trucks than I do. Some of them spend $400 a month in gas and have over $1000 a month in payments (outrageous).

They give me a hard time about my car, but I wasn't raised to think of cars as an extension of my ego. I was raised to think of cars as a depreciating asset.

[No Mulligans]

1 hour ago, iacas said:

This poll doesn't take into account how long someone keeps their car.

Someone could spend 50% of their income on a car at the time of the purchase… but if they saved up for it, and then keep it for 12 years… that's pretty different than someone who spends even 25% every three years on a new car.

That and, someone could have their first job after college making 30k and they buy a Honda Civic for 15k or 50% of their income.  Not extravagant at all, practical actually.

Or, a 60 year old who has retired, has 2 million invested, only made 50k because the bond market sucked last year, and buys a 60k Lexus, 120% of their income.  Also not extravagant at all.

I'm not a car person, I like to get from A to B.  I drive a 2003 Honda Civic.  Some people really love cars and put a lot more of their budget towards a car.  Even still, maybe I pay more on restaurants per month than their monthly car payment.  Different strokes for different folks.

What does any of it mean.. Not much.  What is more meaningful is how much someone saves as a % or their income (but even that would have to be stratified by age group).

[jkelley9]

1 hour ago, iacas said:

This poll doesn't take into account how long someone keeps their car.

Someone could spend 50% of their income on a car at the time of the purchase… but if they saved up for it, and then keep it for 12 years… that's pretty different than someone who spends even 25% every three years on a new car.

Man @iacas you always seem to swoop in and find some fault. That's not what I'm asking in this poll so, yes, you're right. I have no intentions of adding additional filters. I tried to break it down as simply as I could without adding parameter after parameter, which is why the reply function is nice, to explain (and has been useful). I know you like your statistics and being accurate and representative, but I think this ratio shows something. Just maybe not useful to you.

Of COURSE there's a difference to people who keep cars 10 years versus 2 years, and those who save versus buy with 0 down. But that's not what I'm interested in. 

The interest I have is what "amount of car" people are picking up at their income level, saved up for or not, at that particular point in time. It says something on it's own. 

I'm not dismissing your point. I'm just not interested in that portion of the car-buying process for this poll.

1 hour ago, krupa said:

Not counting kids and ex-wives and what-not, perhaps the managers just don't care about cars?  Do they have other expensive hobbies, like golf memberships, boats, etc, ?

Actually a lot of our managers do care about cars. I feel like they may not feel they need to drive around in something super nice, though. They just like talking cars in general. Managers in my work don't do the country club thing and maybe a couple of them have boats. But a lot of our operations staff also have boats. It's just a different lifestyle I guess. They don't feel like they need to be driving something nice. 

[iacas]

1 minute ago, jkelley9 said:

Man @iacas you always seem to swoop in and find some fault.

My brain is wired that way.

1 minute ago, jkelley9 said:

I think this ratio shows something.

I didn't say it didn't. That's why I was using the commenting capability myself - to post, as others have, to explain their vote or whatever.

People sometimes read too much into what I say.