What Car Should Be Bought at What Income?

[furious_driver]

Some information is missing in your post.

From a finance point of view
You have a free play of around 20k per month
- Are everybody covered by health insurance? if not, 20k is too less
- Do you have an emergency fund for 6 months? If not 20k is too less
- Are you covered for your kids college education? If not, 20k is too less
- Do you have any medium term plans? Holiday? Then you will need save for it from this free play amount.
I am assuming your investments are purely to cover your post-retirement life

1. Yes
2. Yes
3. No( Son is 3 years old and daughter is just 7 months old. So is it necessary now?)
4. No holidays planned for next 2 years due to personal reasons.

Coming to the cars
I do not know the year of manufacture of your Xcent. Based on my experience of selling cars, year of manufacture has a big role in the resale value despite its running condition. Resale value typically follows a exponential decay curve with the resale value plateauing post 5 years. I am assuming 4L is a good value. So, moving on...
Corrolla should have higher running cost compared to Xcent (extrapolating Innova experience). God forbid if you have to replace Toyota parts. They are EXPENSIVE. This additional cost must be kept in mind. I am assuming that the Corolla that you are looking would be in great condition with very little dough to plough further.

Since you are plugging the entire 4L from the sale to buy Corolla, you would still be paying off the Xcent car loan. (Is that possible? Isn't the car hypothecated? Shouldn't you clear off the loan before transfer of ownership?) So, the additional 2L is additional loan which you need to pay from your free play amount.

I have paid off the car loan for Xcent by taking loan from my extended family member. So if I sell the car, no need for hypothetication and all that. So assuming the deal closed at 3.8L at worst, I would pay off 2L debt and put up the rest as initial payment for new car.

If Toyota is EXPENSIVE, how about Honda. Today I saw 2009 VTEC S @ 80k going for about 4.5L. Car was in excellent condition and maintained like a baby. Do you suggest that?

The reason why I'm always hesitated to buy Corolla was, because of the steep spare prices but lately, my colleagues who own Corolla says price is much better now. Anyways, I have checked the Corolla today and it is in excellent condition but it is J model. No ABS and nothing. So I had to say no for that.

All the above ran on top of my mind when I read your post. Now let me give you my subjective opinion
1. Can you afford the car? Yes (90%. Statistically nothing untoward happens to us most of the time)
2. Will it make you happy? Yes
3. Will it serve your objective of carrying wife, parents and kids? No
4. Should you buy the car?
I am relatively young (at least I would like to believe I am young). My biggest regrets in life were things i did not do, experience or enjoy. The time is gone and I will never gain that. Since, you love Corolla ( I love Corolla too and I know I will be buying this car when all the stars align right), I would suggest you to buy the car. But NEVER at the expense of safety of your dependents (mostly financially in this case)

3. Corolla is extremely spacious and I was like What!!!!!! when you say it can't seat 5 in comfort! Any reason why?

 

[ravib]

If Toyota is EXPENSIVE, how about Honda. Today I saw 2009 VTEC S @ 80k going for about 4.5L. Car was in excellent condition and maintained like a baby. Do you suggest that?

I would blindly suggest you to go ahead with this. Its a complete no nonsense car. It'll definitely last you another 2-3 years. Returns an avg of 10kmpl.

 

[soap]

I assumed you had two school going kids which would mean separate seats for them and hence told Corolla was not spacious.

Between Corolla and City, I would prefer Corolla.

 

[furious_driver]

I would blindly suggest you to go ahead with this. Its a complete no nonsense car. It'll definitely last you another 2-3 years. Returns an avg of 10kmpl.

I am little worried about service costs and spares. Is it expensive like Corolla?

I assumed you had two school going kids which would mean separate seats for them and hence told Corolla was not spacious.

Between Corolla and City, I would prefer Corolla.

Dude, I ain't that old!

 

[CRACING]

If Toyota is EXPENSIVE, how about Honda. Today I saw 2009 VTEC S @ 80k going for about 4.5L. Car was in excellent condition and maintained like a baby. Do you suggest that?

Price quoted is on higher side. I got my City 2009 VMT for 5.20L 4 years ago and it had 47k ODO. Later after 2 years, changed the battery (Exide 3.5k) and last year tyres (P3ST 26k). Money spent for servicing so far, 14k. Starting I used to go for car servicing every 6 months and now I go once a year.

The one you have found is midend and 80k requires more parts and fluid change. Body condition and cabin might look good but we have to check internal parts too. IMO, 3.5L is the best price for that vehicle.

I am little worried about service costs and spares. Is it expensive like Corolla?

City is lower segment and costs much less then Corolla so obviously City's service and parts cost will be cheaper. Corolla can be compared with Civic or Accord and cost of ownership will be similar.

I'ed say think twice before buying 4th gen City but go blindly for 3rd gen City.

 

[furious_driver]

Price quoted is on higher side. I got my City 2009 VMT for 5.20L 4 years ago and it had 47k ODO. Later after 2 years, changed the battery (Exide 3.5k) and last year tyres (P3ST 26k). Money spent for servicing so far, 14k. Starting I used to go for car servicing every 6 months and now I go once a year.

The one you have found is midend and 80k requires more parts and fluid change. Body condition and cabin might look good but we have to check internal parts too. IMO, 3.5L is the best price for that vehicle.

I thought about the same. Will look for lower running vehicle. On another note, this particular city has single moustache type chrome grill. Isn't it supposed to be three slate chrome grill for 2009 City?

City is lower segment and costs much less then Corolla so obviously City's service and parts cost will be cheaper. Corolla can be compared with Civic or Accord and cost of ownership will be similar.

I'ed say think twice before buying 4th gen City but go blindly for 3rd gen City.

3rd gen is the one with three slate chrome grill, right? And newer one is 4th gen. Please correct me if I am wrong.

 

[CRACING]

I thought about the same. Will look for lower running vehicle. On another note, this particular city has single moustache type chrome grill. Isn't it supposed to be three slate chrome grill for 2009 City?

3rd gen is the one with three slate chrome grill, right? And newer one is 4th gen. Please correct me if I am wrong.

May be owner has installed aftermarket chrome grill. Like the one I have attached below.

OEM grill on 3rd Gen City has three painted slates (Release date: 2009-2011). Face-lift model of 3rd Gen City has three chrome slates (Release date: 2012-2013).

4th Gen City has single chrome slate grill (Release Date: 2014-2016) and same goes for facelift (Release date:2017-Present).

Note: These gen naming is specific to India only. If you check worldwide then current gen is sixth and previous is fifth. Wiki

 

[Commuter]

I would like to share my financial strategy in going about buying the car. I delved into the total cost of ownership and chose to refrain myself from opting for a vehicle which will get me bogged down in future. I was in my late twenties and I was confident of being able to spare up to an amount for vehicle expenses while avoiding undue stress on essentials. I had a 2008 Apache which was incurring huge bills from the dubious dealership who started seeing me as a sucker for big bills.

I had two options. Either I could by a dream bike and wait a while(hindsight:few decades) to buy a car, which I would still refrain from driving as much as I want or I could buy a car and make it my daily drive. I decided to keep myself in check and avoid the pitfall of buying a motorcycle and end up spending half the amount I have earmarked for vehicle expense(or even more) in just one motorcycle alone. I firmly decided that I could use a car, which has a reasonably low cost of ownership, as a daily driver when I have the full vehicle expense amount for car alone with cycle as backup.

And yes, I am buying the car for safety and comfort and I dint think much about how others are inspired by my car. Businessmen are usually hard pressed to have the latest model of a car, which is perceived by the onlookers as 'premium'. I am mercifully spared of the trouble. The option of second hand vehicle was pursued in earnest but proved to be elusive. I couldn't get a vehicle with proper service history, reliable ownership record and apt price even after searching for quite a long time. I might have had a good option if had chosen to haggle over. But haggling is not my forte.

Then started the quest for the new car. The requirement was that it should have the lowest total cost of ownership. I calculated the Total cost with the simple formula. I used the current cost of parameters and left price fluctuation to be evened out by inflation and increments. Therefore I decided to leave out time value of money. I assumed my monthly mileage to be 1500 kms. I assumed that I will have the car for 10 Years. The formula I adopted was, TOTAL COST OF OWNERSHIP = Purchase price+ Fuel cost + Cost of regular service + Insurance + Total interest paid in Loan - Resale value. I used the FE that is shared in the ownership reviews online. We had a petrol Indica and this influenced me to take the lowest FE for petrol car reviews. The adverse fuel price fluctuations during the past decade left a bitter taste on the preference for petrol cars.

I decided to stick to the base variants that have AC and PS. I calculated the cost for Nano, Alto, K10, Celerio, swift LXI, Indica, Vista, Eon, Grand I10, Kwid, Micra, Liva, Verito, Polo, Bolt, Eeco, Datson Go A-eps, Punto and Brio. I was surprised to find that the difference in the cost of lower priced petrol cars and base variants of entry level diesel cars was within a few months of current salary. This combined with the perceived additional cost of maintenance of certain brands pushed me into opting for the base variants of entry level diesel cars. I was oscillating between Indica, Vista and Bolt diesels. Because of this preference my budget has already ballooned from 3 lakhs to 6 lakhs.

Finally when Ford launched the Aspire, I took a test drive and that made a tremendous influence on me. But when quoted the price tag of over 7 lakhs, I hesitated because I dont want all my calculations to be tossed into the bin. I also began to expect the New Figo to be priced reasonably. I assumed that they will price it competitively. Initially there was a rumor that the Figo might get a detuned engine. But I decided to ignore that. Then came the crucial news that the New Figo will feature a Base variant which made me feel assured that the New figo will cost a lakh cheaper than the base Aspire. The New Figo was launched on September 23, 2015. With great confidence in the knowledge I have acquired from various sources, I strode in to the Showroom after the new launch ceremony was over. I told the sales staffer that I am going to book a Base variant. I was vehemently discouraged from opting for the base variant. They also said that they didn't have worked out the prices for the models on the day of launch. I told them that I have noticed the prices at which the New Figo models have been launched in Delhi and I know the price of the New Figo Base 1.5D to an extent. They finally told that the Base variant will take three months to get delivered. I smilingly agreed, wrote a check and booked.

They did take some time to deliver and I got the car registered on January 5, 2016. The on road price was 6.17 Lacs. This car is my daily drive with an amazing FE of over 23 kmpl at every refill. The service cost is always lesser that what is quoted on the Ford service price promise page. I have driven over 30k kms and am very pleased with the purchase.

 

[rakeshkn]

btw, I am not offensive but in this planet, somebody having a car who is getting 15k per month. That also new one :) Pursuit your dream and think about it later on. You can sell it of if you cannot manage it well!

 

[furious_driver]

btw, I am not offensive but in this planet, somebody having a car who is getting 15k per month. That also new one :) Pursuit your dream and think about it later on. You can sell it of if you cannot manage it well!

Well said! It is all like US of A. Where people buy things after they purchase.

 

[Commuter]

btw, I am not offensive but in this planet, somebody having a car who is getting 15k per month. That also new one :) Pursuit your dream and think about it later on. You can sell it of if you cannot manage it well!

Big salute to the courage. Please say how it worked out on the initial purchase. Was it purchased on loan? Give us an inkling on the dependents and cost of living in the place.

 

[Penter]

Interesting thread by an expert @TSIVipul ! Kudos!

When I had few lakhs rupees and I have to pick 1 out of 2. Either buy home or car. I took wise decision (though I call myself "car enthusiast" and got home from that money. :-)

My wife & I had numerous discussion/debate on car. I have more knowledge in comparison to her. She doesn't know anything about cars. For her small tin box is also okay She doesn't want to spend too much money on car (I agree up to an extent. It is depreciating asset). Let's say even you get that "tin box" in Rs7L and sedan in same price, she would pick small "tin box" However my pick would be based my preference/likes it won't come <10L . She may not happy if I buy 10L car but one thing is we both are very clear & follow this principles in life "don't bite off more than you can chew". I will also try to pay "as much" from my pocket to avoid another EMI brunt & end-up paying much more to bank.

Hope I didn't hijack thread's purpose.

Question: I have two though but will ask only one here. With few lakhs reserve & monthly saving between 20K to 40K, would it be okay to buy a 10L car?

 

[VR Shenoy]

Interesting thread by an expert @TSIVipul ! Kudos!

When I had few lakhs rupees and I have to pick 1 out of 2. Either buy home or car. I took wise decision (though I call myself "car enthusiast" and got home from that money. :-)

My wife & I had numerous discussion/debate on car. I have more knowledge in comparison to her. She doesn't know anything about cars. For her small tin box is also okay She doesn't want to spend too much money on car (I agree up to an extent. It is depreciating asset). Let's say even you get that "tin box" in Rs7L and sedan in same price, she would pick small "tin box" However my pick would be based my preference/likes it won't come <10L . She may not happy if I buy 10L car but one thing is we both are very clear & follow this principles in life "don't bite off more than you can chew". I will also try to pay "as much" from my pocket to avoid another EMI brunt & end-up paying much more to bank.

Hope I didn't hijack thread's purpose.

Question: I have two though but will ask only one here. With few lakhs reserve & monthly saving between 20K to 40K, would it be okay to buy a 10L car?

Morning power went off due to heavy rains and hence a small reply to you.
I am glad to know that you are a wise man but credit should go to your wife too as she made you wiser.

 

[furious_driver]

Question: I have two though but will ask only one here. With few lakhs reserve & monthly saving between 20K to 40K, would it be okay to buy a 10L car?

Definitely. Try not to use liquid cash to buy car. Try to pay as much as maximum 30% as initial payment and take loan for short term like 5 years. With the condition you mentioned, you can easily buy a 10-15L car!

 

[vaibhav]

I think in private jobs people should save 50% of salary

Rest can be spent any way they like be it cars or holidays