cynic

How much do you spend on average on your car in relation to your annual income?

geko29

Annual or Monthly? We spent 2/5 of our annual gross on the Lexus, and our monthly payment is 1/16 of our net monthly income.

Threxx

My BMW's lease payment is about 4% of my monthly gross income.

The 4runner was bought outright so no payment.

I don't think I'd be comfortable with that percentage exceeding 10% of my gross income. After taxes and retirement savings I only have 40% of my gross remaining anyway... and that has to take care of everything else from house to cars to insurance, food, and entertainment... oh and non-retirement savings too.

T0ked

iTrader: (2)

I bought my fully loaded FJ out-right and it ended up being a bit over 20% of my annual. But no more payments. In my family we usually keep our cars for a very long time. Unless my mom totals it. My SC is 14 years old and counting.

mhlamin

I go to college and earn very little. I would say, including all the modding I have done and my income over the past few years, I would say about 80% of my money went into my cars. Swapping and building motors ain't cheap, neither is suspension work, damn sports cars stealing all my riches (or lack thereof).

Mbenz528i

Now that I am married and much smarter, I spent 20% of my annual gross on the Lexus, but previosuly on my X5, making a lot less ofcourse, spent 60%. LOL I porbably still would now if my wife did not keep me sane! LOL!

2010mRXsh

I've always wanted to know the answer to not this question exactly, but something like it. I wanted to post a new question under a different topic but it seems almost redundant.

However, I didn't like the way this question was posed--it allows for a huge amount of variability in the answer, leading to an inaccurate picture or conclusion, maybe? At least given what I think the intent of the question is.

I mean, how long do people keep cars? How many cars do they keep? What about debts in credit cards, houses, and other things like businesses? What's the total net worth? How much is insurance? And on and on.

Because for insurance, some people pay nearly an entire car payment per year.

Because I want to know how much someone thinks is reasonable to spend on a car, given a certain income.

From another Web site, about the new LX:

"Prospective LX owners (household income in excess of $385,000, so the marketing wizards at Lexus say) are more likely to be attracted to the..."

$385,000? Really? That's crazy. I guess that explains the number of sales per month and per year, but still...they're marketing the car to people who make a bunch of money and only spend something like 2% on their car a year.

By that number, IS owners should be making like $160,000 a year(???)

I think the reality is people spend a lot more on their car, and overstate income to keep up appearance.

It's great to think people are that frugal, but I don't think they make that much money.

Sorry, I don't know if this was a threadjack or not. Perhaps it should be a separate post?

Threxx

I have serious doubts that the average LX buyer has an income in excess of 385k per year.

Maybe that's what their marketing team has been told to target the car toward, and then let everyone else desire the car that is marketing toward wealthy people because many people like the image of being wealthier than they are even if it's at the expense of being poorer than they really should be (what is known around here as ghetto rich).

On the flip side I do think it's a shame to see so many young adults 18 to 25 spending such a huge portion of their income on their car when it's in reality the absolute BEST time of their life to begin saving for retirement and let compound interest work its magic.

soakgame

when i bought the gs it was over half my yearly income.. and the monthly was about 20%

my income isn't the greatest but i believe in quality.. so i'll spend a little extra

mmarshall

This is a figure that has stayed relatively constant for decades. Back in the 1960's, the average family (or person) spend about six months' worth of income on the average car. That remains true even today.....the average family has more vehicles, but also more people in the family working.

Of course, there are many exceptions.....and those of us here at CL are not necessarily representative of the average car buyer.

Rock-a-Lex

iTrader: (4)

Well, for example...if someone says they leased car X brand new and the lease payment is 3% of their gross monthly income. (Now let's just say that we know that this car leases in general for ~$600/mo.) Don't you take the $600 and divide it by 3% to come up with the gross monthly income? If so then the above example means that this person makes around $240,000/yr gross. Does this sound right??? If so, I am low man on the totum pole around here! lol

If I was making 1/4 mil a year I would be hitting up Porsche or Ferrari or at least the Audi R8!

Threxx

Mine is 4% of my gross household income (my wife works too) and my payment is $489/month. However our net income after taxes, retirement, and other savings is only about 40% of my gross.... so in reality it feels like I'm spending 1/10th of my actual income in my checking account every month... and that also goes toward things like insurance, house, food, entertainment, medical, clothes, cell, internet, TV, etc... so the difference between spending say 4% and 10% of my gross is actually much more apparent to me in how much money I have left in my budget at the end of each month. I like minimizing the 'slack' money leftover in my budget each month because if I shelve it away before it has a chance to build up slack then I'm far less likely to feel like I have money to burn and go waste it on something frivolous.

RON430

Not necessarily agreeing or disagreeing here. To my mind, leases severely put things out of whack here. Leasing is a way that much lower income can get you into an expensive vehicle. And it is surprising how many people leasing say the "own" their car. Well, that's not what the title says. Second, I truly doubt that the typical Lexus customer is here on this site. This is a performance oriented site and it draws a high percentage of young males. Third, I fall into that category that the Lexus wonks say are typical for LX owners. I have paid cash for cars for well over twenty years so I don't fit this poll at all. And I am shopping now for everything from a 535 to an S550 and I will pay cash for it as well. My monthly expenses on both GS's? Well under 1% of income even with gas at these lofty prices.

Threxx

Leasing is a financially responsible way to structure ownership of a vehicle if you KNOW you're going to be getting a new vehicle in 2-3 more years anyway, KNOW you'll be driving "X" amount of miles per year and that amount isn't extremely high or low, and KNOW enough about the predicted depreciation of the vehicle as well as the alternative value of your cash to realize whether or not the terms the leasor is giving you will save you money in the end.

In my case I'm keeping this car for 2 years, 12k miles a year, 489/month including all maintenance. I'd be out WAY more than that amount of money if I bought it outright and then sold it 2 years later.

You tell me assuming I have already decided I was only going to keep the car for two years, which one is more financially responsible... buying or leasing? I say leasing since it saved me quite a bit of money... and I don't just mean a lower monthly payment, I mean in the end I'll walk away with several thousand more in my bank account.

I agree leasing is often abused by people that are automatically attracted to the lower monthly payment and make no real consideration of the pros and cons of leasing vs buying.

But I disagree with not saying you 'own' the car. Technically you don't. But in common usage, do people with bank loans not say they own their car and house even though technically the title is in the bank's name until they pay the last dollar on the loan? Leasing is just a way to have a guaranteed and structured depreciation schedule, which is nice for finance nerds like me. I don't have to worry about what my car is worth, selling it, or getting screwed on the trade in.

PhilipMSPT

iTrader: (5)

Well, I bought my IS because I think I deserve it.

I work 95 hours a week at $7.35 an hour, so I deserve a nice ride...