How much do you spend on a car?

It really boils down to how much of a deposit you can raise and then how much you can borrow (if needed), that will be manageable based on your circumstances. My last car was nearly $40k but the repayments are manageable to me/us.

I save up until I can pay cash (i.e. Bank Cheque). Unusual these days !

HI F4,
For what its worth I think it just depends on what stage of life you are at and your priorities. My personal view is minimise what you spend on depreciating assets (just as vehicles) until you can get yourself established in an appreciating asset (eg own home, unit or land etc). By doing this you can ensure your future financially which allows you to do many other things later in life - eg new vehicle, travel etc.
If you are young-ish I would suggest a modest car in the lower price range you suggest. If you are older with your own home or other assets go for it - shout yourself a brand newie. This is the advise I followed when starting work and did not buy my first new car until after I was married and had a home (and mortgage). Now our house is paid off and I can buy a more expensive vehicle with no guilt. Good luck which ever way you go,
Cheers,GPM

the only reason we bought a brand spanka was because we were given the large amount to do so!

I have always thought of the amount you spend on a car being 20% of your weekly earnings, ie bring home $600 then repay $120 per week.....but then again it all depends on your circumstances....mortgage, credit cards, school fees.....etc....

so if it was $120 / wk then over a yr it would be $6240 and over a 5yr period it would be $31,200....take in account interest.....Id borrow $25,000 max .......

Just my thinking....

Laura

Depends on how long you want to keep the car, what plans you have for it.
If its a long term investment, yes, without doubt I'd spend 50% maybe more.

if its a disposable, then no I wouldnt.

I personaly think the amount of kms travelled a year comes into it as well. If your doing high ks , then you have to spend more to get the low km vehicle that will last some distance. on the other hand my bro inlaw just bought a 96 V6 Honda Legend with 200,000ks indicated, in immaculate condition for $6000, but they only do about 8000k a year. so that car is a good buy to them.

Cheers Axle.

Tough question, depends on any existing levels of debt etc.

My only advice, regardless of the car, don't buy new, get a demo or a 1 year oldie etc. That initial depreciation upon sale and then in the first few years makes up a huge amount of money, money better off in your pocket.

Have you thought of talking to a financial advisor who can work out your needs, disposable income, priorities, etc.

My philosophy was to ALWAYS spend less than I earned, and only ever borrow for the home. Hence our first house was purchased for 40,000 using a mortgage of 25,000, deposit of 15,000 saved, and the stamp duty/legals of 2500 also paid from savings. Income then was 6000 - that mortgage scared the daylights out of me at the time.....

The car at the time was a cheapie, no loan, and the cheapies then were FAR worse than a cheapie today. It really does depend on how many ks you need to travel for work, etc, and if your wife really needs a car as well - back to the financial advisor for answers to this.

The family car then gradually became two cars, always second hand, until 10 years ago when we were able to buy the Monterey for me and 6 years ago the Sirion GTvi for SWMBO - both new, both paid in cash.

There's no place for "keeping up with the Joneses" where cars are concerned (or anything else for that matter) - you always lose money on cars, and you lose far more on new ones than 2 year old ones. The money you lose could be taking school books/excursions away from the kids.

Good luck !

Well dont let Roachie give you any advice, besides being in the market to sell you a loan, he uses the theory that you take a purchase price and triple it with extras !!! LOL

Cheers Pesty

I would suggest keeping it modest until the house mortgage is actually paid off. Then you buy better as a reward and motive.
Then get rid of the car loan ASAP and back onto investments for the future. Buy the wife an M3 (dinky toy version) so she can dream on ! LOL !

Depends how much you enjoy going away camping or off roading.

We have friends who would sooner spend $10000 on going overseas for two weeks and come back with alot of photos that mean nothing to anybody but them selves.

So for around $10000 per year over 5 years you can have a very capable 4wd with camping gear and go away for longer then two weeks a year.

We spend anywhere form 6 weeks to 12 weeks away each year.

Alot of people would sooner throw money away each year going OS the investing it in a vehicle and equipment.

We look at it as an invesment more then wasting money.

Spend as much as you feel comfortable with even if it only $1000 a year or $25000.

Enjoy life and enjoy Australia because tomorrow you may not be here or capable to do it.

Regards Richard

All good advice from everyone. I would just buy what you can afford and dont leave yourself struggling. Possibly higher interest rates next year, higher fuel etc it all adds up. Yes my wife and I could have gone and bought a new D4D prado and had one parked in the garage but I hate borrowing or should I say knowing that I have to pay it back with interest so bought what we could with the cash we had. The only money I actually owe like most people is a morgage and one credit card. We are lucky in a way as we dont have any kids which as everybody says cost a fortune. As a few people on here know my wife did IVF over the last two years and 20k later with no results and not covered by private health as its classed as cosmetic surgery. Had it worked I would probably still be driving around in the hilux and my wife would not have bought her brand new toyota last december. As metioned above maybe get a financial advisor and see what they say. Either way all the best with whatever you spend and hope it gives you trouble free motoring. Regards Steve M

One thing to keep in mind. You will never use the vehicle as much as you think you will off road and camping. Also i drove past a Caltex servo today and diesel was $1.50 a litre, so the price of getting out and about is steep and it will only continue higher.. Yikes.... $1.50 in surburbia... Michael

We sold out house, during a boom, we had lived in the house for 13 years and because everything was developing around us into blocks that people could not swing a mouse in, we made a profit, our house was on 700sqm, people in the new estates were building 400sqm.

So we brought our first brand new car, with cash, though the dealer did not like, they get kickbacks on the finance. We paid around $47K , after the extras.

We don't even have a credit card....

Probably not much help to you but I always say that if you can't picture yourself saving up an amount of money then it's too expensive.

At the time I had nearly saved 8 grand and bought a 4wd costing 12 5000 which I could have saved in another 6-12 months or so.

Personally I hate debt and would rather drive around in a piece of crap for a few extra years and save for something better than take out a loan.

Barnesy

I spent most of my life in hock with cars, houses and other stuff and in my late 50's was able to cut up the credit cards and get out of debt forever. Never again will I be in debt.

Pay cash mate, and buy what you can afford. There are many people driving around in 25 year old 4bies and cars which run just as sweetly as the new ones

Cheers

G'day F4,

Just a suggestion, why not pick out the new car you really do want. Say the beamer your wife wants. Find out how much the repayments are on the new car of your dreams and then keep your current car for six months. Put aside the repayments on the possible new dream car and see how you handle it.

Me, I purchased a new second hand 80 series 1997 model many years ago. It was almost new. Still going like a charm,I just maintain it as per the manufacturers instructions.

Jim

I would have thought the hard decision was
'what sort of car to buy'.

What do I want to do with the car?

Who is going to drive it most?

How often is it going to be used?

Is it going to be a commuter car etc.

All these questions before deciding how much to spend on a car.
10-15K will get you a near new Korean runabout or 10-15K will get you an older Mercedes. Or many others in between, including older Patrols and Landcruisers.

Bit of difference between the cars, but not much difference between the dollar spend.

Dave

Hello All

You have asked for a specific ammount of discretionary spending on one item . A financial adviser would lead you through a number of steps in the budgetry process , and decision making , to come up with a figure .

You can save on the financial advisers cost by going through the process yourself and then get the adviser to confirm or change what you have planned .

Start with your weekly take home pay .
1 Deduct weekly mortgage cost so that you provide a family home .
2 Deduct weekly ammount for all bills which will fall due over the year , include food costs , but no car costs .
3 Deduct an ammount for saving (investing} . 9% of gross salary has already been placed into super , so about another 6% of gross should be salary sacrificed . If you want money set aside for emergencies , invest all or some of the 6% outside super in an easily redeemable investment .
4 Pay yourself and SWMBO a weekly ammount to enjoy life .
5 What is left is available for discretionary spending on the car and other pleasures . First deduct other items such as hollidays , what is left is for the car .

A financial adviser would have included the car in item 2 , I have separated it out for clarity . There is a fair ammount of flexibility in some of the areas set out , for example at what age to start supplementing super and by how much . A financial adviser can quantify the effects of variations in your particular case .

F4, doesn't answer yr question, but years ago I did pay cash for my cars. found it was an awful lot of money sitting there.
now do a novated lease under salary sacrifice.
cheers Tom