how to measure affordability when buying cars ?
- Thread starter Darth Vader
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VolanteDB9
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Re: how to measure affordability when buying cars ?
question...
will somebody whom will buy an Aston and a Boxster be willing to stay in HDB?
otherwise having both or both wont stretch his 3m much?
totoseow;833096 said:
question...
will somebody whom will buy an Aston and a Boxster be willing to stay in HDB?
otherwise having both or both wont stretch his 3m much?
snowmanyee
Well-Known Member
Re: how to measure affordability when buying cars ?
Dunno why i suddenly thought of bmw forum classified while reading this....
Like that I overspent liao!! Still possible to buy a $20k-$30k car in the second hand market??
kenntona;832783 said:
Dunno why i suddenly thought of bmw forum classified while reading this....
Tanzy;832907 said:
Like that I overspent liao!! Still possible to buy a $20k-$30k car in the second hand market??
Re: how to measure affordability when buying cars ?
I also hold the view that it should not be above your annual package
Saosin;833384 said:My personal bottom line: total car expenses (installents, rdtax, piaking, repairs, etc all in) must not exceed 25% of take home pay.
I also hold the view that it should not be above your annual package
wobbles
Well-Known Member
Re: how to measure affordability when buying cars ?
A decade ago, my personal, arbitrary rule on car affordability was such: 70%, 7-year loan monthly repayment (cash) + HDB repayments (although largely from CPF) must not exceed 50% of our (wife and my) combined take home pay. That's why I drove a Honda City but could still bring my parents out to good restaurants, wife to good holidays, and never had to worry about the dreaded O$P$ on my wall.
It's always more prudent and financially responsible, to spend well within your means. No pointing trying to impress the neighbors by attempting to punch above your weight. All will be revealed when the O$P$ sign comes calling should your business fails or you lose your job, or the stock market tanks, or someone you love falls ill and require expensive hospitalization .... The list goes on.
A decade ago, my personal, arbitrary rule on car affordability was such: 70%, 7-year loan monthly repayment (cash) + HDB repayments (although largely from CPF) must not exceed 50% of our (wife and my) combined take home pay. That's why I drove a Honda City but could still bring my parents out to good restaurants, wife to good holidays, and never had to worry about the dreaded O$P$ on my wall.
It's always more prudent and financially responsible, to spend well within your means. No pointing trying to impress the neighbors by attempting to punch above your weight. All will be revealed when the O$P$ sign comes calling should your business fails or you lose your job, or the stock market tanks, or someone you love falls ill and require expensive hospitalization .... The list goes on.
detach8
Well-Known Member
Re: how to measure affordability when buying cars ?
Actually buying car in SG is fucking arcane science. Really...
Cannot compare home and car. Home got 99 or 999 or forever. Car ... 10 years or less. Does not appreciate at all, >50% all goes to tax.
I am not an expert, but I think I have studied this topic hard enough. Here are my personal rules to measure affordability.
1. Downpay at least 70-80% of the premium (selling price - paper value) + OMV, e.g. brand new 520i w/90K COE, need to downpay about 80K. This way you won't need to top up in an event you need to sell car because you're just taking loan on the paper value.
2. Always take a shorter loan. Shorter loan is the best way to reduce interest. I typically take 80% of the full term, e.g. 8 years for a 10 year car.
3. If you cannot afford the downpay in the first place, means you're looking at the wrong car. Consider a used car, or a cheaper car.
4. If after downpaying and taking a shorter loan term, the monthly installments takes more than 30% of your take home pay you are stretching it.
5. If after downpaying and taking a shorter loan term, the monthly installments takes more than 50% of your take home pay you really cannot afford it and need to consider another car.
6. Don't forget to calculate insurance, road tax, fuel (take $300/mth as a good baseline), parking... all of these added up to the installments should not exceed 50% of your take home... really. Otherwise you are jialat.
Now I think this is an OK to measure. for those who are younger and have a good stable job. Those who are odd-job or commission based I think kenntona's advise is still a good baseline. But however I think it is also hard to say because old car is cheaper than new car. Using this rule you may end up buying old car and repair until keysiao.
These methods also forces you to understand the tax structure and the rebates. Anybody who does not understand the taxation structure should not commit themselves to a vehicle purchase in SG. IT WILL KILL YOU.
If you use my rules above, you will find that an old 2006 730i is more affordable than a 2010 523i as long as you have spare cash to downpay (and take back later anyway).
Please like my quality post.
Otherwise, hong kan.. I think I need to sell car. Who wants a 523i?
Actually buying car in SG is fucking arcane science. Really...
Cannot compare home and car. Home got 99 or 999 or forever. Car ... 10 years or less. Does not appreciate at all, >50% all goes to tax.
I am not an expert, but I think I have studied this topic hard enough. Here are my personal rules to measure affordability.
1. Downpay at least 70-80% of the premium (selling price - paper value) + OMV, e.g. brand new 520i w/90K COE, need to downpay about 80K. This way you won't need to top up in an event you need to sell car because you're just taking loan on the paper value.
2. Always take a shorter loan. Shorter loan is the best way to reduce interest. I typically take 80% of the full term, e.g. 8 years for a 10 year car.
3. If you cannot afford the downpay in the first place, means you're looking at the wrong car. Consider a used car, or a cheaper car.
4. If after downpaying and taking a shorter loan term, the monthly installments takes more than 30% of your take home pay you are stretching it.
5. If after downpaying and taking a shorter loan term, the monthly installments takes more than 50% of your take home pay you really cannot afford it and need to consider another car.
6. Don't forget to calculate insurance, road tax, fuel (take $300/mth as a good baseline), parking... all of these added up to the installments should not exceed 50% of your take home... really. Otherwise you are jialat.
Now I think this is an OK to measure. for those who are younger and have a good stable job. Those who are odd-job or commission based I think kenntona's advise is still a good baseline. But however I think it is also hard to say because old car is cheaper than new car. Using this rule you may end up buying old car and repair until keysiao.
These methods also forces you to understand the tax structure and the rebates. Anybody who does not understand the taxation structure should not commit themselves to a vehicle purchase in SG. IT WILL KILL YOU.
If you use my rules above, you will find that an old 2006 730i is more affordable than a 2010 523i as long as you have spare cash to downpay (and take back later anyway).
Please like my quality post.
Otherwise, hong kan.. I think I need to sell car. Who wants a 523i?
Last edited by a moderator:
detach8
Well-Known Member
Re: how to measure affordability when buying cars ?
Actually my rule is like 40% but you know after adding all the food, etc... the savings is really not much.
Many people fail to calculate the actual running cost of a car. My installments is only about 60-70% of the full sum of my vehicle expense. The remainder 40% or so goes to insurance, taxes, parking and FUEL.
wobbles;833495 said:
Actually my rule is like 40% but you know after adding all the food, etc... the savings is really not much.
Many people fail to calculate the actual running cost of a car. My installments is only about 60-70% of the full sum of my vehicle expense. The remainder 40% or so goes to insurance, taxes, parking and FUEL.
Last edited by a moderator:
detach8
Well-Known Member
Re: how to measure affordability when buying cars ?
I can be damn buay paisey and post my HDB up for sale at $800K... even though in an ulu corner of Singapore in Bukit Panjang. Like that maybe I can buy 80K car...
Jokes aside...
If like that those stay in $300-400K HDB can choose between a 2006 Hyundai Verna... or 2004 318i... obviously depreciates differently.
I think cannot calculate like that. Car need to use depreciation, not absolute value.
I still remember when I was a little younger earning miserable pay I bought a brand NEW Latio... when time comes to pay insurance and road tax I really eat char kuay teow at Amoy every day.. $2 nia cheap cheap, then drink kopi from uncle choon... 70c. Then I started to realize how cheap my Nissan March was... and regretted selling that car. My advise to friends is... don't kill yourself paying for a car then every weekend find excuse to go JB eat bak kut teh when u KNN obviously go there for fuel...
BTW there is a freaking long discussion in MCF... on paying full in cash or taking loan. All sorts of ways to view this. IMHO do whatever you want, don't kill yourself.
Tanzy;832907 said:
I can be damn buay paisey and post my HDB up for sale at $800K... even though in an ulu corner of Singapore in Bukit Panjang. Like that maybe I can buy 80K car...
Jokes aside...
If like that those stay in $300-400K HDB can choose between a 2006 Hyundai Verna... or 2004 318i... obviously depreciates differently.
I think cannot calculate like that. Car need to use depreciation, not absolute value.
I still remember when I was a little younger earning miserable pay I bought a brand NEW Latio... when time comes to pay insurance and road tax I really eat char kuay teow at Amoy every day.. $2 nia cheap cheap, then drink kopi from uncle choon... 70c. Then I started to realize how cheap my Nissan March was... and regretted selling that car. My advise to friends is... don't kill yourself paying for a car then every weekend find excuse to go JB eat bak kut teh when u KNN obviously go there for fuel...
BTW there is a freaking long discussion in MCF... on paying full in cash or taking loan. All sorts of ways to view this. IMHO do whatever you want, don't kill yourself.
Last edited by a moderator:
detach8
Well-Known Member
Re: how to measure affordability when buying cars ?
U can buy a Cayenne ah, why not
Used Porsche Cayenne Car for Sale in Singapore, Exotic Motor - sgCarMart
Darth Vader;832727 said:
U can buy a Cayenne ah, why not
Used Porsche Cayenne Car for Sale in Singapore, Exotic Motor - sgCarMart
Re: how to measure affordability when buying cars ?
That's why I state clearly that it is based on valuation (usually referring to bank valuation), not your own happy whims and desires. Also, I gave the example that the 10% refers to brand new price of the car and not actual selling price. If the cap is $250k and if buying a used car, the used car when new price cannot exceed $250k, regardless of what is the price you are paying for now. My guide actually takes into account depreciation because you will be getting less use of a used car compared to a new car with 10 years COE.
All these rules put in place by various individuals are their own personal ways to prevent getting into the stretched to death situation. Some are more stringent than others but it depends on what is your risk appetite vs. your appetite for really cheap food. Some might consider not exceeding 1 year basic pay as too tough, but some might consider 10% of home price too strict. My priority is property so I prefer to put cash in home first then car, hence I reference the home price.
Going back to an example for a $400k HDB owner being unable to purchase any car at $40k brand new. It is quite true that the HDB owner really shouldn't be considering buying a car now because the monthly installment for the vehicle or the cash used to purchase the car could very well be used to upgrade to a bigger or better home first. The $1000+ per month installment for the car can contribute to a $600k loan for property or even better the $200k cash used for buying a car should be used for downpayment for a home.
detach8;833822 said:I can be damn buay paisey and post my HDB up for sale at $800K... even though in an ulu corner of Singapore in Bukit Panjang. Like that maybe I can buy 80K car...
Jokes aside...
If like that those stay in $300-400K HDB can choose between a 2006 Hyundai Verna... or 2004 318i... obviously depreciates differently.
I think cannot calculate like that. Car need to use depreciation, not absolute value.
I still remember when I was a little younger earning miserable pay I bought a brand NEW Latio... when time comes to pay insurance and road tax I really eat char kuay teow at Amoy every day.. $2 nia cheap cheap, then drink kopi from uncle choon... 70c. Then I started to realize how cheap my Nissan March was... and regretted selling that car. My advise to friends is... don't kill yourself paying for a car then every weekend find excuse to go JB eat bak kut teh when u KNN obviously go there for fuel...
BTW there is a freaking long discussion in MCF... on paying full in cash or taking loan. All sorts of ways to view this. IMHO do whatever you want, don't kill yourself.
That's why I state clearly that it is based on valuation (usually referring to bank valuation), not your own happy whims and desires. Also, I gave the example that the 10% refers to brand new price of the car and not actual selling price. If the cap is $250k and if buying a used car, the used car when new price cannot exceed $250k, regardless of what is the price you are paying for now. My guide actually takes into account depreciation because you will be getting less use of a used car compared to a new car with 10 years COE.
All these rules put in place by various individuals are their own personal ways to prevent getting into the stretched to death situation. Some are more stringent than others but it depends on what is your risk appetite vs. your appetite for really cheap food. Some might consider not exceeding 1 year basic pay as too tough, but some might consider 10% of home price too strict. My priority is property so I prefer to put cash in home first then car, hence I reference the home price.
Going back to an example for a $400k HDB owner being unable to purchase any car at $40k brand new. It is quite true that the HDB owner really shouldn't be considering buying a car now because the monthly installment for the vehicle or the cash used to purchase the car could very well be used to upgrade to a bigger or better home first. The $1000+ per month installment for the car can contribute to a $600k loan for property or even better the $200k cash used for buying a car should be used for downpayment for a home.
Re: how to measure affordability when buying cars ?
I agree with this- like you, housing always take priority over cars for me. Some bros here prioritize cars over housing, no issue there. Some people die die must drive lambo, that's why you used to see an orange lambo in the sin ming hdb carpark. But at the end of the day, people can do whatever they want with their money. It all boils down to priority. As long as they are happy with what they are doing and it is sustainable then I guess it's alright. To each his own I guess.
My 2ct
Tanzy;833849 said:
I agree with this- like you, housing always take priority over cars for me. Some bros here prioritize cars over housing, no issue there. Some people die die must drive lambo, that's why you used to see an orange lambo in the sin ming hdb carpark. But at the end of the day, people can do whatever they want with their money. It all boils down to priority. As long as they are happy with what they are doing and it is sustainable then I guess it's alright. To each his own I guess.
My 2ct
