What Car Should Be Bought at What Income?


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TSIVipul

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Well,today came across one more example of foolishness,a guy known to me was wedded some one and a half years back(18 months)that time he was offered three cars to choose from by his in-laws as the wedding gift,the cars were:-
1):Maruti Suzuki Swift DZire VDi.
2):Hyundai i-20 CRDi.
3):Ford Fiesta ZXi.
Also they asked him to make out his needs vs priorities chart and select the car accordingly and if he wants some other car then he can notify it to them.

So when the guy met me he asked me which car should be selected?
I simply asked his salary and overall net monthly income of him and he told me that he earns some 30k per month and has to pay house rent etc etc.So I calculated his net savings around 10k per month after making all calculations after he gets wedded,I simply asked him to ask his in-laws not to gift him a car,instead make a cash payment of 6.5 lacs to him for the car.
The guy simply said "Why?When they can give the car,then I'll take the car not the cash.I have decided Fiesta and tell me if its okay or not"?
I again calculated and asked him to get nothing over the Maruti Suzuki Swift DZire and told him that it will be better if he takes cash and buys a small car like Wagon-R and save the rest of the cash for himself and his further expenses.
These words of me sent the guy out of mind and he left saying "Agar mil rahi hai toh lene do,aapko kya matlab,mein sell ho jaunga,par car apni pasand ki lunga,Fiesta(if they are gifting it then let me take it,what you have to do with that?Maybe I can get sold for running the car but I'll take the one I like,Fiesta)".
I said okay dear,then take it.Fiesta is also a good car.

Now after just 18 months today I came across the same guy,but only difference was that instead of the wheel of Fiesta the guy was having a handle-bar of a Pulsar 150 in his hands and he said "Bro,you was right,Wagon-R would have been better".
I said,what happened bro?
He:"Yaar,if anyone is willing to buy a Fiesta then mine is for sale,we(he and his wife) are planning to buy a Ritz LDi on full cash payment".

Now see,a wrong decision has shown its result quite fast.
 
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Its not about income. Its about expendable income.
Net income- tax- home EMI/rent-daily expenses-insurance- miscellaneous= expendable income.
let me cite an example: I buy an Alto at say 3 lacs. I drive 800km per month. my petrol bill is 4000/- per month. That makes it 48,000 per year. Add service plus insurance. Roughly 10,000. Total expense= 58,000 per year.
After 3 years i spend 174,000. But considering depreciation of the car, its value after 3 yrs is say 220,000 max. Thats a loss of 80,000 in 3 yrs. Roughly equals to 26,000 per year. Now add 58,000 to 26,000= 84,000.
So i am spending 84,000 per year on the car.
Imagine the net expendable income being 6lacs pa. So one is spending close to 14% of expendable income on car. In my opinion one must not spend more than 15% of his salary on car. So to buy even an alto you need to save roughly 50k per month. Mind you its expendable income, not gross income.
Its a rough rule in the US, " you should be able to buy the car in 6 months saving". Hope this makes sense. I may be conservative but thats my honest opinion. MONEY IN THE POCKET LOOKS BETTER THAN MONEY ON THE ROAD[:)]
 
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Thank you for starting this thread.
OT: Last Saturday & Sunday I visited 7places looking for a used ss80. Guess what 3 of the ads in the newspaper were wrong (they were not ss80). Finally I got 2models to choose from - in a local garage, (decent condition - no accident etc) one is already repainted (red colour) & the other one is in too bad condition to even think about restoration and is priced at nearly 40K.

The mechanic has quoted 55K for the good one. Then for restoration I may have to pump in another 50K (my blind guess keeping the car condition in mind – engine doesn’t start, ,alloys, tyres, ICE & seats etc).
The big shock to me: No loans for cars older than 2005model! I have postpone my restoration plans for atleast 6months. So that, I can save money to buy the car & apply for a small loan for its restoration. Sorry for this Off Topic content.

Back to topic:
Now guys if I got to buy a classic car or any used car manufactured before 2005, If I choose loans, then I have to get a personal loan paying an annual interest between 16% - 20% for a term of 3years! (just mentioning one of the options)
My salary is 1.8lacs p.a for this the restoration plan will simply be impossible without a car loan. I stay in my own house & have no loans (till now [:D])So for guys with less salary, should simply wait for the right time to buy the car.
Any good condition used car (2005 & above models) will be pretty costly.
My opinion is - If you buy a car for strictly personal use (in as is where is condition, without mods/ restoration) only if your salary is 30K & above.
 
Thread Starter #35

TSIVipul

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Its not about income. Its about expendable income.
Net income- tax- home EMI/rent-daily expenses-insurance- miscellaneous= expendable income.
let me cite an example: I buy an Alto at say 3 lacs. I drive 800km per month. my petrol bill is 4000/- per month. That makes it 48,000 per year. Add service plus insurance. Roughly 10,000. Total expense= 58,000 per year.
After 3 years i spend 174,000. But considering depreciation of the car, its value after 3 yrs is say 220,000 max. Thats a loss of 80,000 in 3 yrs. Roughly equals to 26,000 per year. Now add 58,000 to 26,000= 84,000.
So i am spending 84,000 per year on the car.
Imagine the net expendable income being 6lacs pa. So one is spending close to 14% of expendable income on car. In my opinion one must not spend more than 15% of his salary on car. So to buy even an alto you need to save roughly 50k per month. Mind you its expendable income, not gross income.
Its a rough rule in the US, " you should be able to buy the car in 6 months saving". Hope this makes sense. I may be conservative but thats my honest opinion. MONEY IN THE POCKET LOOKS BETTER THAN MONEY ON THE ROAD[:)]
Well said,no doubt if one studies his/her budget this way while going to buy the car then no one will ever regret their decision of choosing the wrong car for them.

Thank you for starting this thread.
OT: Last Saturday & Sunday I visited 7places looking for a used ss80. Guess what 3 of the ads in the newspaper were wrong (they were not ss80). Finally I got 2models to choose from - in a local garage, (decent condition - no accident etc) one is already repainted (red colour) & the other one is in too bad condition to even think about restoration and is priced at nearly 40K.

The mechanic has quoted 55K for the good one. Then for restoration I may have to pump in another 50K (my blind guess keeping the car condition in mind – engine doesn’t start, ,alloys, tyres, ICE & seats etc).
The big shock to me: No loans for cars older than 2005model! I have postpone my restoration plans for atleast 6months. So that, I can save money to buy the car & apply for a small loan for its restoration. Sorry for this Off Topic content.

Back to topic:
Now guys if I got to buy a classic car or any used car manufactured before 2005, If I choose loans, then I have to get a personal loan paying an annual interest between 16% - 20% for a term of 3years! (just mentioning one of the options)
My salary is 1.8lacs p.a for this the restoration plan will simply be impossible without a car loan. I stay in my own house & have no loans (till now [:D])So for guys with less salary, should simply wait for the right time to buy the car.
Any good condition used car (2005 & above models) will be pretty costly.
My opinion is - If you buy a car for strictly personal use (in as is where is condition, without mods/ restoration) only if your salary is 30K & above.
Well,won't the maintenance of such an old car be quite painful for you?
 
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Well,won't the maintenance of such an old car be quite painful for you?
Sometimes its a "No Pain, No Gain" situation. I should be able to maintain it, may be by reducing shopping, minimizing other bills or even add another part time job. Love isn't easy, especially when it is with an old car[:)]. I fully agree Old cars need more maintenance.
 
Thread Starter #37

TSIVipul

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Sometimes its a "No Pain, No Gain" situation. I should be able to maintain it, may be by reducing shopping, minimizing other bills or even add another part time job. Love isn't easy, especially when it is with an old car[:)]. I fully agree Old cars need more maintenance.
Taking a bit too much pain for a car,I am sure there is going to be some good gain too.But still its better spending a bigger sum once then spending some smaller sums frequently.[:)]
 
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Hi All,

Let me give my perspective with a little story.

Circa 2005 - I wanted a car. My family said, go in for a home now and we'll buy a car later. No, I want a car. Okay, we bought a car.

Cost of the car then - INR 4.2 Lacs
Cost of the home then - INR 8.0 Lacs

Circa 2011 - I want a home
Circa 2011 - I want a car

But, what happened to that home and that car?

Car cost as of now - INR 1.0 Lac and home cost 1.0 Crore! So what I lost is a whopping 99 lacs ( not doing calculations but saying on the basis of current cost of home and car).

Now, coming to the present:

Cost of a home - 35 lacs to 90 lacs (and even crores)
Cost of the car - 3 lacs to 7 lacs (am talking abt me)

If, I would have listened to my parents then, I would have had the opportunity to grab a much bigger car today then what i bought then. However, I was single, had free will, didnt want to take responsibilities etc etc. Now, I am married, got a son, I don't even feel ashamed to look at the Nano as my priorities have changed.

However, that doesnt mean, that I cannot spend on a high end car, its just that over a period of time our priorities change and so do the preferences. For me now, cars are just a mode of transport for reaching from Point A to Point B. No longer an accessory to attract girls/show off to my friends.

So as someone rightly pointed out, see what is best for you but do consider the future as well. SAVINGS should be your top most priority.
 
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Best response to the thread! Somethings in this life are done not considering the logical value. I belong to the school of thought which believes that if you can you should, otherwise you will repent it later. If in case a car is just a means of transport to you then put all your math into it and buy what is most affordable. But in case you dream about driving, then why not push a little. Isn't this life meant to push a little and achieve what we yearn for. If you want to be a Gautam Buddha (not to anyone in particular), no one is stopping you, but then why to be on this forum!

Imagine saving a fortune for you children and dying with only desires in your heart, do you think you lived a worthy life!

Perfect , i also live my life according to your principle! I think we all car lovers and enthusiasts push our budget and are willing to take risks when it comes to cars while an average buyer will be content with a normal car.


I am not yet into earning and business. We are into business and do not fall in any category you mention. Business is always ups and downs. When we were looking for a new car replacing Safari we could have easily got even a 30-40Lakh SUV but dad took into consideration the maintenance costs , insurance premiums , EMI'S and said we should not look beyond Fortuner in worst case and the cheaper the better , well we bought the Aria.
 
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Very well explained vipul, mumbaikar and amtak. In India 90% people are inclined towards showoff. The calculation done by mumbaikar is correct and those hidden expenses such as insurance, A.S.S. costs and depreciation value should be taken into account rather than just fuel costs.
 
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Many people buy a car only by looks. They not even bother whether it is a petrol or diesel variant. I know a person who went to a Maruti showroom along with wife and took the A-Star (MT). When I asked him that why you have chosen this car, he replied "my wife likes its look'. Hearing this I told him that thank God, your wife did not like the looks of Kizashi. They not even took a test drive of any car. This is the scenario in our country so the things like insurance, A.S.S. costs and depreciation value are far beyond consideration of a buyer.
 
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I totally agree with the fellow members about buying car on a heavy loan being a loss-loss situation (got it rhyming with Win-Win [lol]). I never believe in going for a heavy loan for luxury, rather we should be sensible enough to be prepared for the needs.

One of my colleague bought an i20, by paying 2 Lakh downpayment, top-end diesel cuz some stupid who calls himself an enthusiast just suggested it to him...agreed his household income was around 1L per month. He did not even know driving and learnt on it and his daily drive is just 15kms. One month later, he was taking a turn, a tractor came from the wrong side and being a newbie driver, he did not notice and kept looking towards the traffic coming from behind. BANG !! The front went for a huge toss, repair cost 95k, insurance paid only 40k, rest 55k from his own pocket.

I think the total cost involved after the loan would place it somewhere near Verna Diesel. [frustration]
 
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How did I miss this thread? I will point this threads to my friends, if they ask me any suggestions on deciding budgets for car. Btw, I'm married and fall in 90K - 1L budget (including my wife's salary) and I own a Hyundai Accent Executive and happily munching miles. I'm a person believe in regular maintenance, never felt bad after that purchase decision. We are happy with our car.
But when I was a bahelor, I had a Honda Civic Lx Coupe in USA.

Drive Safe!
 
Thread Starter #44

TSIVipul

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Perfect , i also live my life according to your principle! I think we all car lovers and enthusiasts push our budget and are willing to take risks when it comes to cars while an average buyer will be content with a normal car.


I am not yet into earning and business. We are into business and do not fall in any category you mention. Business is always ups and downs. When we were looking for a new car replacing Safari we could have easily got even a 30-40Lakh SUV but dad took into consideration the maintenance costs , insurance premiums , EMI'S and said we should not look beyond Fortuner in worst case and the cheaper the better , well we bought the Aria.
Dear Dhaya,a small problem with many people is that they have enough cash that they can buy a Honda City and sell it off next week because they liked Linea T-Jet more.In other words I mean to say that you are absolutely right that an enthusiast buys the car he/she likes irrespective of what can fulfill his/her needs.But only one problem is that when a person finds that he/she is going out of cash because of high installments or high running costs then enthusiasm of that person also gets burnt with the fuel.you may not agree with me but its true that enthusiasm lives only till the time you have enough cash in your pocket,THE CASH IS GONE,ENTHUSIASM AUTOMATICALLY DISAPPEARS,if you feel my words wrong,then look at mechanic,he may be enthusiastic,but since he does not have enough cash,so his enthusiasm is overtook by the responsibilities.
I am in the business and help my father carry out the works.You are right business is ups and downs but you can still calculate your yearly average.You can get a FORM-16 and calculate your income every 3rd month at the time of ITR.So its quite easy.
right now I am also in a car hunt with budget open from 12-25 lacs but still I know if we buy a 25 lac machine,then it will make us look at the bills while if its a 12 lac one then won't feel her maintenance,insurance etc etc.Ao I am also in for trying to keep me bound below 20 lacs.

In India 90% people are inclined towards showoff. The calculation done by mumbaikar is correct and those hidden expenses such as insurance, A.S.S. costs and depreciation value should be taken into account rather than just fuel costs.
Now a days used car market has some really very tempting deals and Is there anyone who remember those recession days?Those days nearly new cars were available for half the price because their owners had to fill up their loans which they took so that they can show of more than they really were.If a person look at all these points before buying then he/she will never need to sell off his/her car for such reasons.


Many people buy a car only by looks. They not even bother whether it is a petrol or diesel variant. I know a person who went to a Maruti showroom along with wife and took the A-Star (MT). When I asked him that why you have chosen this car, he replied "my wife likes its look'. Hearing this I told him that thank God, your wife did not like the looks of Kizashi. They not even took a test drive of any car. This is the scenario in our country so the things like insurance, A.S.S. costs and depreciation value are far beyond consideration of a buyer.
No doubt on this point,half of the Verna Fluidics are booked only on the looks basis,here I have came across the news about 2 guys who just booked it and then canceled the booking because they were unable to arrange for money to buy the car.


I totally agree with the fellow members about buying car on a heavy loan being a loss-loss situation (got it rhyming with Win-Win [lol]). I never believe in going for a heavy loan for luxury, rather we should be sensible enough to be prepared for the needs.

One of my colleague bought an i20, by paying 2 Lakh downpayment, top-end diesel cuz some stupid who calls himself an enthusiast just suggested it to him...agreed his household income was around 1L per month. He did not even know driving and learnt on it and his daily drive is just 15kms. One month later, he was taking a turn, a tractor came from the wrong side and being a newbie driver, he did not notice and kept looking towards the traffic coming from behind. BANG !! The front went for a huge toss, repair cost 95k, insurance paid only 40k, rest 55k from his own pocket.

I think the total cost involved after the loan would place it somewhere near Verna Diesel.
This is why I always say that if you buy a car then you must always have at least 20% of its price as bank balance for the car itself,this will automatically make you relaxed.I relative(married+1 kid) of mine is a civil engg with a salary of 1.2 lacs per month,when he asked me wich car to buy,I recommended him an i-10 considering his needs and he bought it,he drives the car and is very happy with the car.

Same way,when my TSI was brand new,one day I bruished it up with a truck,all my known Skoda critics said "now you will understand what Skoda is"..but since we already had enough bank balance to get it repaired,the car was repaired within a week.and if I'd have bought it on a salary of even 100k per month then it would have been repaired after a month or two,or maybe sold out.

How did I miss this thread? I will point this threads to my friends, if they ask me any suggestions on deciding budgets for car. Btw, I'm married and fall in 90K - 1L budget (including my wife's salary) and I own a Hyundai Accent Executive and happily munching miles. I'm a person believe in regular maintenance, never felt bad after that purchase decision. We are happy with our car.
But when I was a bahelor, I had a Honda Civic Lx Coupe in USA.

Drive Safe!
Well,Rekharam dear,as you have mentioned about your buy,now you yourself may be knowing how much does the car and its maintenance effects your budget.I think you may never feel the heat of any maintenance,insurance etc etc of the car..
 
Thread Starter #45

TSIVipul

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One more example I encountered while carrying out my car search,came across us a used car(which was sold within hours of coming to market):-
Car was a SX4 ZXi and had done just 29k kms in 17 months.
The owner was a manager in an insurance company and after he switched to another company his distance of travel increased to four times it was before.
To worsen the party "He got married",His company demoted him for some reasons and now a married guy with about 45k salary had to pay house rent,car installments and was soon going to become a father too.
At last the guy broke down and sold his car for just 4.3 lacs,of which about 2.6 lacs was his loan and for rest of the money he bought a used Indica Trubo from Mahindra first choice on full cash for about 2 lacs.

Again I was talking to the guy and he was regretting his decision of buying a car out of his budget for just showing-off.
 
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