how to measure affordability when buying cars ?

Re: how to measure affordability when buying cars ?

i think it is more feasible to calulate affordability based on monthly take home pay and not net worth., unless your net worth generates a sizable monthly income.

i am sure a lot of sg car owners are slaves to their cars ?
some folks spent all money on cars and left no money to buy hdb ?
 
Re: how to measure affordability when buying cars ?

Tanzy;833849 said:
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.

Well the problem here is the down payment for a house is very much higher than a car. While many people may have some day-to-day cash to pay for a car (say, $1K a month ... 1 year = $12K), a property needs hundreds of thousands of dollars a shot (e.g., 600K x 20% = 120K). To some people this amount of money is impossible to save. They need to work 10, if not 20 years assuming they save $1K/mth. If they had invested their money into their first property likely they have zero balance in CPF and need to start from scratch again.

I think many of us in BMW-SG are at a different level. Individual income levels I think easily exceed $100K p.a. but I do have friends in their mid-30s not even reaching $50K p.a. Sometimes I look back at the days when I was getting paid a miserable salary and recollect how I would have reacted back then. As LKY said, the situation really does make the people.

Cannot buy house, then got extra money do what? Find underage XMM or buy car lor... a lot of people under 35 years old still single, can't even quality for a simple HDB flat...

You can't take a new car price as a comparison just straight off the market. Back in 2008 a new Civic is maybe $60+K. Now it's maybe $120K. Taking the current-day price as reference for an old car is no different from speculation. Paper value, depreciation, etc. are definite and quantifiable calculations that should be used. They rule out market forces.
 
Last edited by a moderator:
Re: how to measure affordability when buying cars ?

Ecadua;833878 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

It's not priority or what but basically at different income levels your priorities also change. $ go and buy house always better, then even millionaires can say "why should I spend $250K for a new 520i when I can use this and downpay another $1m property."

There is no end to it. Some people just live a simple life... one house, one car, one WIFE... few kids, that's all
 
Last edited by a moderator:
Re: how to measure affordability when buying cars ?

There is one thing I don't understand which is car loans. How did it come to a state where you can take a 100% loan for 10 years. Did anybody ask why can't we take 100% loan for 99 years on a property?

If automotive loans went back to 70-80% loan for max 7 years then I believe COE would start going down and there will be less auction vehicles...
 
Re: how to measure affordability when buying cars ?

Car sales cannot take 100% if don't mark up selling price, right?
I always experience buyer with no downpayment buy car $80,000 on paper is $100,000 to apply car loan.

Property got valuation report.
 
Re: how to measure affordability when buying cars ?

detach8;833936 said:
There is one thing I don't understand which is car loans. How did it come to a state where you can take a 100% loan for 10 years. Did anybody ask why can't we take 100% loan for 99 years on a property?

If automotive loans went back to 70-80% loan for max 7 years then I believe COE would start going down and there will be less auction vehicles...

Tharman already said that 30% down not effective, so my suggestion to him before he asks me What Do I Think, is to up the down to 50%, or until as such it has an actual negative impact on car prices. Increasing the down to 50-70% will wipe out some of the low-mid income car buyers, but car tax here has always been seen as a luxury tax, so it doesnt matter. If they cant make the economically correct decision, instead fall to political pressure to please everyone, then i rather them not be my finance ministry.

We need strong leaders to make the right long term decision, not lalang grass sway left right due to light wind.
 
Re: how to measure affordability when buying cars ?

If I cant pay cash for the car means I cannot afford it and will look for something with the right price. My own basis being that since I change car often, I have no wish to pay for all the admin and finance charges that come with car loans. It also complicates matters when I deal with direct buyer of my car.

If you are taking a car loan, but worry about meeting the monthly instalment, or concerned about the fc of the car or the road tax or the insurance, then the car is not for you, Look for somethng within a comfortable budget. There will always be good cars, and they can wait. Let your incorme or savings grow, As Kenn rightly pointed out, no point spend on a car, left with no savings and compromise on everything else since we dont eat and sleep in the car unlike a home. We spend sometimes no more than an hour in the car a day. But we spend more sleeping on the bed. So better off buyung a solid bed!
 
Last edited by a moderator:
Re: how to measure affordability when buying cars ?

T6;834124 said:
If I cant pay cash for the car means I cannot afford it will look for something with the right price. My own basis being that since I change car often, I have no wish to pay for all the admin and finance chrges that come with car loans. It also complicates matters when I deal with direct buyer of my car.

If you are taking a car loan, but worry abiut meeting the monthly instalment, or concerned about the fc of the car or the road tax or the insurance, then the car is not for you, Look for somethng within a comfortable budget. There will always be good cars, and they can wait. Lets your incorme or savings grow, As Kenn rightly pointed out, no point spend on a car, left with no savings and compromise on everything else since we dont eat and sleep in the car unlike a home. We spend sowmtimes no more than an hour in the car a day. But we spend more sleeping on the bed. So better off buyung a solid bed!

and solid partner!!
 
Re: how to measure affordability when buying cars ?

T6;834124 said:
If I cant pay cash for the car means I cannot afford it will look for something with the right price. My own basis being that since I change car often, I have no wish to pay for all the admin and finance chrges that come with car loans. It also complicates matters when I deal with direct buyer of my car.

If you are taking a car loan, but worry abiut meeting the monthly instalment, or concerned about the fc of the car or the road tax or the insurance, then the car is not for you, Look for somethng within a comfortable budget. There will always be good cars, and they can wait. Lets your incorme or savings grow, As Kenn rightly pointed out, no point spend on a car, left with no savings and compromise on everything else since we dont eat and sleep in the car unlike a home. We spend sowmtimes no more than an hour in the car a day. But we spend more sleeping on the bed. So better off buyung a solid bed!
Oh damn, I have this thing going on.... "Eat Sleep BMW", almost put decal on car too.
 
Re: how to measure affordability when buying cars ?

whymehor said:
and solid partner!!

Agree !!!....................
 
Re: how to measure affordability when buying cars ?

T6;834124 said:
If I cant pay cash for the car means I cannot afford it will look for something with the right price. My own basis being that since I change car often, I have no wish to pay for all the admin and finance chrges that come with car loans. It also complicates matters when I deal with direct buyer of my car.

If you are taking a car loan, but worry abiut meeting the monthly instalment, or concerned about the fc of the car or the road tax or the insurance, then the car is not for you, Look for somethng within a comfortable budget. There will always be good cars, and they can wait. Lets your incorme or savings grow, As Kenn rightly pointed out, no point spend on a car, left with no savings and compromise on everything else since we dont eat and sleep in the car unlike a home. We spend sowmtimes no more than an hour in the car a day. But we spend more sleeping on the bed. So better off buyung a solid bed!

Well there's a very looooong debate going on about this in MCF:
http://www.mycarforum.com/index.php?showtopic=2678567

Like I said, when one reaches that stage (I see you have a M3... AND a boxster... buying M3 + boxster with cash is no joke because each of that is the price of a small HDB flat nowadays) the perceptions start to change.

If I had that kind of spare cash to throw around I would also have bought my car with cash (duh).

Banks need to earn money... and I do not think loans are a bad thing if used properly. Cashflow is important.

Can debate until cows come home though :yummie:
 
Last edited by a moderator:
Re: how to measure affordability when buying cars ?

detach8;834136 said:
Banks need to earn money... and I do not think loans are a bad thing if used properly. Cashflow is important.:

Agreed. There are those who choose to borrow if the return on their cash exceeds what they have to pay for bank loan interest. But not many are good with that. I will candidly admit I am one of those who would not know where to park savings other than in my bank a/c, in fixed deposits or with some insurance companies. I have tried my hands at equities - suffice to say you will make money if I sell, you buy or when I buy you sell. I suck at equity market.
 
Re: how to measure affordability when buying cars ?

T6;834159 said:
Agreed. There are those who choose to borrow if the return on their cash exceeds what they have to pay for bank loan interest. But not many are good with that. I will candidly admit I am one of those who would not know where to park savings other than in my bank a/c, in fixed deposits or with some insurance companies. I have tried my hands at equities - suffice to say you will make money if I sell, you buy or when I buy you sell. I suck at equity market.

Bro T6, hehehe... Then please lemme know when you're buying so I can sell, and lemme know when you're selling, so I can buy hahahahaha :lol2:
 
Re: how to measure affordability when buying cars ?

with $200K, would you buy a used F10 535i 100% cash or downpayment for a M5?
 
Last edited by a moderator:
Re: how to measure affordability when buying cars ?

T6;834124 said:
If I cant pay cash for the car means I cannot afford it and will look for something with the right price. My own basis being that since I change car often, I have no wish to pay for all the admin and finance charges that come with car loans. It also complicates matters when I deal with direct buyer of my car.

If you are taking a car loan, but worry about meeting the monthly instalment, or concerned about the fc of the car or the road tax or the insurance, then the car is not for you, Look for somethng within a comfortable budget. There will always be good cars, and they can wait. Let your incorme or savings grow, As Kenn rightly pointed out, no point spend on a car, left with no savings and compromise on everything else since we dont eat and sleep in the car unlike a home. We spend sometimes no more than an hour in the car a day. But we spend more sleeping on the bed. So better off buyung a solid bed!

I have to agree with T6 on the ideal scenario to own a car. Unfortunately most Singaporeans never fall in this category,
Donkey years ago we ever touched on this topic and my view for buying a car is min 30% down. Now I think 50% down is more realistic that you‘re able to afford your dream car(s). The monthly installment you can treat it as rental. If anything (financially) would to go wrong just dispose it and likely you get back some money, no liability at all.

Andy, is one bed for one partner rite and be honest to us how many beds do you have? kekeke

Kenneth is reverse engineering type he looks for solid partner first then bed, oh almost forget that he loves to squeeze in one king size water bed with many partners. Please don’t let him know I say one…..whahahahahaha
 
Re: how to measure affordability when buying cars ?

I think it's damn condescending to say if you didn't pay cash you can't afford the car and maybe you should take the MRT. Somebody wealthier than you is gonna say if you didn't pay cash for your house you can't afford it - so you really ought to go live under a bridge.

Oh so you fly first class to London once a month? Gasp! What happened, no private jet?? How come you're not at Art Basel this week?

Where does it end? The forum is not a place to show off wealth so please get off your high horses already (even if it's an Andalusian breed).
 
Re: how to measure affordability when buying cars ?

wt_know;834194 said:
with $200K, would you buy a used F10 535i 100% cash or downpayment for a M5?

Depends on how much disposable income you have to take care of the M5. The car cost about $500k, so there is $300k more to service after $200k downpayment. If you service that over 3 years, the installment is $9k a month. If service over 6 years, it is $4500 a month. All these before insurance and steam FC. If you don't want your disposable income to be used for this level of loan servicing, then settle for the 535. So it really depends on amount of disposable income, whether you wish to stretch your loan and also how much depreciation you can stomache.
 
Re: how to measure affordability when buying cars ?

arsenal62;834210 said:
I have to agree with T6 on the ideal scenario to own a car. Unfortunately most Singaporeans never fall in this category,
Donkey years ago we ever touched on this topic and my view for buying a car is min 30% down. Now I think 50% down is more realistic that you‘re able to afford your dream car(s). The monthly installment you can treat it as rental. If anything (financially) would to go wrong just dispose it and likely you get back some money, no liability at all.

Andy, is one bed for one partner rite and be honest to us how many beds do you have? kekeke

Kenneth is reverse engineering type he looks for solid partner first then bed, oh almost forget that he loves to squeeze in one king size water bed with many partners. Please don’t let him know I say one…..whahahahahaha

I think it's hard to be specific by using % because every car has different paper value, hence my very specific method using definite numbers. It's a little complicated, but quite sure it works. Of course one can get a bit lazy and just say downpay 30% or 50%. Sure, it works but not that many have that kind of cash. :(

MCF discussion has some different viewpoints on this. Some say that come a bad time need to sell house, sell car, sell children is bad financial planning. Realize in such (bad) times you may run a huge loss, e.g. your 80-100K worth of downpayment may vanish into thin air. If you could hold the car through a difficult period you may not have lost so much. I guess a lot of things are similar in this manner, e.g. stocks.

IMHO car is a "want", not a "need", hence I do agree with you it should be let go. I'm just sharing the various views on this.

I do have a cheap car (wife's) to go around with though, so the family won't be entirely car-less. That's how I planned it. :juggle:
 
Last edited by a moderator:
Re: how to measure affordability when buying cars ?

Oilman;834223 said:
I think it's damn condescending to say if you didn't pay cash you can't afford the car and maybe you should take the MRT. Somebody wealthier than you is gonna say if you didn't pay cash for your house you can't afford it - so you really ought to go live under a bridge.

Oh so you fly first class to London once a month? Gasp! What happened, no private jet?? How come you're not at Art Basel this week?

Where does it end? The forum is not a place to show off wealth so please get off your high horses already (even if it's an Andalusian breed).

Dont be mistaken bro. My formula is no different from Kenn's. A good gauge is one year's salary. Whether one wish to take a loan to service it or to pay cash also depends on how good that person is in investing his fund (to get better return that more than offset the loan interest). I am providing my own gauge so I think there is no need to whack me for that. And like Kenn, I do not recommend overspending on a car as there are other things we should not miss out on in life.
 
Re: how to measure affordability when buying cars ?

T6;834227 said:
Depends on how much disposable income you have to take care of the M5. The car cost about $500k, so there is $300k more to service after $200k downpayment. If you service that over 3 years, the installment is $9k a month. If service over 6 years, it is $4500 a month. All these before insurance and steam FC. If you don't want your disposable income to be used for this level of loan servicing, then settle for the 535. So it really depends on amount of disposable income, whether you wish to stretch your loan and also how much depreciation you can stomache.

Disposable income can change (job changes, economy changes), similarly other lifestyle habits can also cause it to change (run lion)... it's a hard thing to figure out. Somebody who earns $3K may say disposable income $2K. Somebody who earns $20K, is the disposable income still $19K?

Lifestyle changes are needed. It all goes back to this... have we forgotten where we came from? (Recalling what wobbles said got published on TNP)...

If one day I ask a million dollar net worth person to take a low salary, eat hawker everyday or even say cook yourself "dorm style", can he/she adapt? Some people I know say they can't. You tell the auntie washing your dishes at the foodcourt, she will tell you siao ah stop eating restaurant and sell your car and stop running lion lah. :furious:

I appreciate that some simple things in life are fine and it does not necessarily mean that if one day I am forced to sell my BMW and eat char kuay teow at Amoy all day it is a bad thing... it's just a path we may need to cross to get to bigger things.
 
Back
Top