What Car Should Be Bought at What Income?

[TSIVipul]

Hello friends,

I have observed that many of the new buyers are confused of what car they should buy,I mean that the people many times by mistake buy a car from a segment higher than they should buy and after that they complain about the high maintainance cost and high service costs of the car.Here is an example:-

One of my friends who has a salary of 30k per month (ie: his salary package is about 3.6 lacs) the guy told me that he wants to buy a new car for himself and I told him to have a look at Alto,Wagon-R or i10 considering that he will be taking a loan and will have to pay the installments too from his salary,but what the guy did was that he went on and bought a Swift VDi ABS and got a good amount of loan over his head.

Now the real story starts,the car came home and since it is a diesel car so the guy started running it mindlessly without thinking of the money spent,what he thought was just running costs.After the free services were over the joy of a new Swift got converted into sorrow of loan installments,insurance premiums and maintainance(although Swift is very low on maintenance but if you are out of budget then it also seems to be very expensive).But the worse was to come,the guy met an accident and nearly the whole front panels needed replacement and MS quoted 35k for replacement..Result:The car was sold away at true value.Now the guy is running a Wagon-R duo and is happy with it.

From the above story I simply wanted to show the picture of nearly all of the youngster guys who trapped into the glamor of big cars generally exceed their budget and get heavy loans for them and after sometime they make some great deals in the used car market.Now the following are my views on buying a car according to the income(I have taken monthly income into consideration and only city residents who own a house are considered,CORRECT ME IF I AM WRONG):-

15-20k:-
At this income one must not buy a car at all if he/she is residing in a city and even own a house too.

20-30k:-
You can go for an Alto or a Nano or a M800 better it will be i you can buy it on cash instead of a loan.

30-40k:-
Wagor-R(Best choice),Santro,Alto(most sensible for happy mile munching),i10,Zen and many more at this rice basket.

40-50k:-
Now you can buy a Swift p/d according to your wish,better it will be if you buy it on cash.

50-60k:-
This is the actual Swift salary,here you can happily harness the Swift territory.

60-70k:-
DZire,Manza,Indigo etc etc are happy buys at this salary,you can now happily opt for Skoda Fabia or VW Polo too at this salary and will enjoy real happy mile munching as the cars won't make hole in your pocket.Bolero also can be added now.

70k-1 lacs:-
Here if you buy the above mentioned then you won't need to think of the expenses of car and can buy them for cash too so that there is no tension of a loan at all.If you don't want the car's expenses to be a part of your budget then you can opt for above mentioned price baskets.
Rest now you can also think of a Vento,Linea,Honda CITY(really heart ruler),Hyundai Verna(most tempting buy) and SX-4(most sensible buy),but now car's expenses will effect your budget. Now Scorpio or Safari or Innova can also be added.

REST TO FOLLOW SOON,WAITING FOR THE REAL LIFE EXPERIENCES OF CASH AS WELL AS LOAN BUYS OF MY SENIORS AND FRIENDS....(I bought all of my cars for cash and feel it the best,note:it is my personal opinion.)

 

[truecitylover]

This thread is pretty interesting. Nothing harm in starting this thread. I would say things are case to case basis and cannot be taken overall.
I own a ANHC but i do not fall into the bucket you have mentioned.

If you are mentioning about "no monthly budget feel" car, i would say anything > 2L & < 3.5 L is a sensible & practical choice upto 40K PM and > 3.5L & <6L will be a sensible one till 75K PM.

When you go for cars, you look for something more always. So, the options/ temptations for going to a higher end car will always prevail and suceed.

If you are talking about insurance, it definitely is a burden at the particular month. No matter you own a Nano or City.

 

[350Z]

You have stated a very valid point. Many times people buy cars of higher segment regardless of whether they really need it or not. Most common fallacy is that just stretch the budget while buying and that’s it (sometimes dealers also insist this for their interest). But the real story begins from here onwards. Car is about not only buying and paying for fuel expenses but also maintaining it as well which not just limited to routine servicing. I never recommend stretching the budget to extremes. A few bucks more or less are all right but not any more if you cannot afford. Similar outset is for second hand cars which although may apparently cost dirt cheap of their original market price but it’s important to bear in mind about their maintenance and other such related expenses.

Drive Safe,
350Z

 

[Surfer]

Actually its quite a personal decision as every person has different financial situations
eg:If 'x' is playing home loan EMIs (approx 60% of us do) then big chunk of money goes here,So rest of amount 'x' has to spend on daily expenses etc
so these calculations are bit complicated.
Now a days there are more people earning in home (husband-wife working) + parents getting pension etc, so they can afford car.
If 'x' is going to take car on EMI's the your calculations are correct, higher the car cost higher the EMI + petrol/diesel expenses.

 

[mumbaikar]

I guess max one should spend on a car is about 5-6 times his salary. just my personal opinion. a car is not an investment, i fact it depreciates like anything. It can be considered an asset.
Buying a car is not just the OTR. Add to that the fuel bills, yearly premium, depreciation. and am not even considering accidental repairs.
Lets consider this example- One buys a swift vdi at say 6 lacs with 2 lacs down payment and 4 lacs loan. consider rate of 12% pa. So now he/she is paying 48K yearly just in interests. Thats 4K per month. At the end of 5 years the total car would be for 8.5 lacs. But whats the market value of the car- probably 3-3.5 lacs max. Sol lost roughly atleast 4lacs in 5 years, Thats 80 thou per yr.
So if one has a an income of 30k, he should be looking at a car around 2lacs max.(Used alto,zen etc).
Please correct me if am wrong, am very poor in maths! So didnt take up engineering!!
Good thread btw.

 

[TSIVipul]

Well,first of all there are some minor points:-
1):In the study I have not counted the home loan EMI etc.
If anyone has home loans,education loans etc then its better remove that amount from your monthly income and then proceed with the one is left with you.That will be applicable.

2):Running of your car depends upon you,so I have taken a fixed 1500-2000 kms per month.

3):These datas are applicable to married persons or the persons living with their family in the city,not singles.

4):Other expenses too are there,so its always better to go for a car which costs at least as much as your yearly income,this will give you a car according to your needs as well as the car won't hurt you much too.

5):Loans,I have considered as the 66% of the car's price and the installments as roughly 2300 per lac.

 

[TSIVipul]

The list continues further(Posted back to back because I felt that both replies may be confusing if posted together):-

1-1.5lacs:-
This is the proper income with which you can buy a Honda City or Vento or Fiesta or Linea.Buying a diesel will make it delight for you,but petrol too won't affect you too much here until you have to pay a hasty home loan installment with the car loan one.
Here in my views SX4 makes the most sense if you are a loaner and Honda City(petrol) and Verna(Diesel) are most sensible if you are a cash buyer.

1.5-2 lacs:-
Now you can buy anything below 12 lacs and can live peacefully.it can be a hatch,Sedan or a SUV.All will be delight for you and none will make a hole in your pocket.
I bought my Innova in this category and even today don't know about the maintainance costs.THIS IS HOW MY STUDY IS EFFECTIVE.

2-2.5 lacs:-
Just go and get that Civic guys,Cruze is now a delight for you and you can thoroughly enjoy it without thinking of anything in the world.Now you can get anything from a Civic to a Laura TDI.
But if you cross the 16 lacs price basket and buy a Fortuner,Yeti,Laura,Captiva etc etc the car will make you think about the service costs.

2.5-3.5 lacs:-
Just go and get whatever you like in the market till 20 lacs,maybe a Jetta,Laura,Cruze,Civic,Corolla..now everything is open for you and you don't need to think even once before going for them.

3.5-5 lacs:-
This is where I bought my Laura and Corolla and even bigger dents or maintainance costs never ever bother me at all..AGAIN MY PERSONAL OBSERVATION.

Now you can go for that glistering Passat,Superb,Accord,Fortuner,X-Trail etc etc etc and you don't need to think of it at all because now your salary will cover everything and you will just feel some scratching in your pocket.
NOW YOU CAN ALSO GO FOR THE BABY BIMMER..THE BMW X1,320D CE and now you can also enter the German trio and with beginning models you don't need to think too much.

5-7lacs:-
Go and get that Audi or BMW or Merc or that Volvo,now they are for you only.Now you are really qualified for those true status symbols and you really don't need to think of everything out there,just rest in the serene environment of your car...


TO BE CONTINUED....

 

[jayadev]

Remember Harry Porter?

You dont choose the wand but wand chooses his master.

You dont choose the car but car chooses its master.

 

[TSIVipul]

The hell with the wand and master...okay then take the philosophical punch from me:-
when you go to buy your dream car at the showroom,
just get connected to the car by your heart and try to feel her..
Then put your ear on the heart of the car(The hood)and you know what will happen..
If your heart is connected with her then you will hear a sound coming from her heart and the voice will be..
"HAI DUM TOH LE CHAL MUJHE APNE SAATH(If you have potential then take me with you)".

And every car speaks this,but what does these words mean?Well,let me explain:-
these words means the following:-

1):The car itself says,buy me only if you can afford to buy and run me.

2):The car always warn as well as challenge you of your capabilities.If you get her,then you win but if you leave her because you can't afford her(or sell her for the same reason or keep her parked)then she wins..

OHO..HARRY POTTER WAS QUITE CORRECT..BUT FAILED..

 

[shailinder]

Remember Harry Porter?

You dont choose the wand but wand chooses his master.

You dont choose the car but car chooses its master.

I some what agrees to Jayadev here. At times, people stretch too much and once the consequence starts they break in to pieces. One should keep everything on table and calculate his inflow vs outflow on monthly basis.

 

[codename47]

Tell me about it man :p

LAst year I spent most of my money on cars :p
Chaser and Skyline
17K + 15 K - Down the drain haha

 

[EnfieldRyder]

Interesting thread gave me food for thought, I fall in the bracket of 20-30k with no loans to my name. I've had my eyes set on Punto for a loooong time, & it increased even more after reading the reviews of the guys who own it.

Now I found out the car OTR is 6.81 lacs here in Hyderabad, so what would be the premium for the car insurance & my running might vary it can be about 1500 to might go up to even 3000 or more a month, I got time & not at all in a hurry to buy this beauty yet. Kindly reply to my query

 

[TSIVipul]

Well,first of all there are some minor points:-
1):In the study I have not counted the home loan EMI etc.
If anyone has home loans,education loans etc then its better remove that amount from your monthly income and then proceed with the one is left with you.That will be applicable.

2):Running of your car depends upon you,so I have taken a fixed 1500-2000 kms per month.

3):These datas are applicable to married persons or the persons living with their family in the city,not singles.

4):Other expenses too are there,so its always better to go for a car which costs at least as much as your yearly income,this will give you a car according to your needs as well as the car won't hurt you much too.

5):Loans,I have considered as the 66% of the car's price and the installments as roughly 2300 per lac.

@Enfieldrider:
Have a look at the above mentioned points and if you are single then you can opt for the car which will come under 30-40k budget.I have made this list considering the fact that owner must not feel the heat of the maintenance or spare parts price etc.

 

[madaneeraj]

Well, Perspective! only word that comes to mind! What is a car meant to you is the primary criteria here (well most of enthusiast think like that, don't we)
for some, car is a medium to take you from point A to B, who cannot differentiate between Alto and Wagon R (not went to extreme) except the price . On other hand there are people who buy cars on installments, but get them seized by defaulting EMIs.
I believe "which car to buy" depends upon how much you can invest. Even for a person in HIG having high liabilities should not invest too much in car. No car can make you enjoy forever and the day it start pinching your pocket, implies love is over.
Best option is to decide on a budget, calculate upkeep cost, EMIs and buy the car. Get 0 depreciation insurance if going for high end cars, Skodas can kill anybody
Best example could be a bachelor earning 40K with no liabilities can even go for a City (Enthusiast type), but a married guy with 2 kids and a house loan might need to content with Wagon R, even for a 80K earning.
Regards,
Neeraj

 

[EnfieldRyder]

@TSIVipul

Thanks for those pointers, however right now I am single (might get mingled soon) & my income bracket which I have already mentioned needs to go up according to me (yeah we all do don't we?) apart from that I don't have any loans on my head right now nor will I have any in the future. So the First & Third points are not applicable to me right now, the Third might be applicable at a later point 1 yr or so down the line.