ACCOUNTANT EXPLAINS: How much car can you REALLY afford (By Salary)

[@LamboGallardo560]

My approach so far is buy certified pre owned from a dealer. You get a warranty on a car that's 4ish years old with less than 100k km on it but someone else took the initial depreciation hit. Then I drive it into the ground while maintaining it properly. Bought my current car at 80k and it has 335k on it now and still running perfectly. I see no reason it can't hit 500k without issue.

[@madridejosryuchan]

As much as I want to buy 2ndhand cars, preowned is more expensive or the same price as newer models in Victoria.. it's crazy!

[@ryanboardman8326]

@@delboyinoz1 Honestly call cars should last over 200k miles as long as you drive correctly and service every 10k miles.

[@Simon54236]

May I ask what kind of car you drive?

[@wyntog]

@@al-knows-nothing Agree with this. I have a 2013 1.4TSI Seat Leon (UK) I bought in 2019 for just over £7k (before prices went bonkers during covid). I've now long paid off the loan and its needed nothing but regular maintenance.

[@wyntog]

@@al-knows-nothing I love mine, it's a 3 door too so looks a bit sportier. Without looking at the number plate you would think it's a lot newer than 10 years old.

[@ewucha]

When I saw a video with the late Queen Elizabeth II, using a car that was at least seven years old, I realised societal expectations are mainly for the poor people. Wealthy have nothing left to prove. Thank you for the video. Very helpful. I’m sticking to my 13 year old car as lucky to have a mechanic in the family who keeps it in good shape. Car is just a car.

[@annawong1305]

I agree. A glance at the company car park, I've one of the oldest cars at 14 years but I'm happy with it and believe it'll live at least 20 years old. I'm not wealthy by any means, just secure about my "wealth".

[@ianinkster2261]

I bet it was properly caked in mud also. Shiny Range Rovers are for deanos.

[@GwennBification]

This was so helpful to me! Was experiencing quite a lot of pressure to finance when to be honest a car isnt really a priority for me. Sometimes societal pressure can cause us to make decisions that are not the best for own financial freedom. I vote delayed gratification or not having a car at all if you don’t need it!

[@stevefurness6303]

Don't Give In to pressure do what is right for you, try to save up to buy a car outright it's much better than having to find the car payments every month

[@luciferrussell6874]

Hell yeah, same, all my mates were getting cars straight out of school, some really cool ones via their parents. Held strong, uni was pretty doable via public transport, saved up for other shit. Finally got one when I got my first proper salaried job without wiping out my savings Basically avoided the shitty first car phase went straight to a somewhat decent one

[@anakitasmiles3261]

I never understood why financial advice calculations use pre tax income as base🤔. Is not the actual amount I bring home, so why not post tax income?

[@paulo7507]

i hear you

[@DorkaliciousAF]

Taxation rates vary across territories and over time, so it's left to individuals to work on appropriateness and feasibility. Also, one imagines that this is not 'financial advice' in the legal sense.

[@tantanman2852]

You’re absolutely right. It is done to make people ultimately spend more.

[@m_rod9562]

Because taxes vary as well as any pre-tax contributions that can be easily changed.

[@kirill4531]

​@@m_rod9562exactly, so you need to look at your actual money on your hands!

[@mharshaa]

You are making things really simple and easy to breakdown. Keep doing such Amazing content. Over the years when a whole generation realizes that personal finance is something everybody should study, these videos will come as a reference in the first place for the coming days as well.

[@nischa]

Thank you so much

[@jfrontier1]

Buying a used car in the US can be really expensive. Used cars are going up in price, as they are almost as much as some new cars. Buying a 5000 usedn can can be bad as well, as you will be putting more money into maintenance than you would a new car with a warranty. It is not as simple as you make it seem. Lots of factors go into buying a car, not just the sticker price.

[@mikeberrios1859]

You’re making it seem harder than it actually is to be honest. A Toyota for $5,000 will last forever and have almost no maintenance costs besides oil changes. If you’re not familiar with cars just say that

[@jfrontier1]

@@mikeberrios1859 I am very familiar with cars which is why I said what I did. I have bought used cars for 5-8000 that were nothing but headaches for me, new transmissions, starters, engines etc. Even Toyotas do not actually last forever, although they can last a good long time but they are more expensive used cars.

[@BMW324d]

@@jfrontier1 I have a 35 Year old BMW. Bought it for 3k Euros had to spent additional 3k Euros to get it in Ok/good condition. Now it is in my possesion since 5 years had no problems and just the regular cost of Oil Change, Tires, Insurance. You have to be abit lucky and know which car to buy!!! I also have an Gold MKIV with the Horrendous 1.4L Petrol since i got my license 2015 it left me stranded twice but its the cheapest car i have ever owned. Used Parts are plentiful and cheap, maintenece stuff is cheap. Buying one in ok Condition here in Germany costs 1000-1500 euros so you have 4000-3500 euros to fix some stuff. But you wont win Races with 75bhp.....

[@lazersword66]

It’s the same deal here in Canada. I’m sitting on insurance money to replace my wrecked car. I could get a used car for around 5000 on marketplace, but I don’t really want to drive another 15+ year-old car. With financing, I can get a, relatively low-cost, new car that has a warranty and decent resale value 3-4 years from now. Yeah, it's a depreciating asset, but so is the time left to enjoy life.

[@ianinkster2261]

@@mikeberrios1859 In Britain i spent 1500 on a Toyota Yaris from a couple of thrifty Yorkshiremen. 26, 000 miles on the clock. TRULY mint condition. It will last 300, 000 miles. That's half a lifetime's driving in Britain. Well, I'm 40 , and I've driven 60, 000 miles in my life (in anything, total clocks of all cars I've driven). I will l still buy other 2nd cars for fun, as the Yaris is small and slow, but it's my FU car. I will never get rid of it because I've forever solved the car problem mentioned in this video.

[@artunucci]

Unfortunately these rules don't apply here in Brazil, where cars are ridiculously overpriced and the economy is different. Still, the general idea of not overspending makes total sense. I wish I could take your approach and ride my bike to work, but it is too far. Great video, though, Nischa!

[@Li-jn2qz]

Not safe either to cycle to work in Brazil

[@curtisaugustine2318]

same in the caribbean a new car usually start from 15x your salary upwards

[@roberthodder801]

Every time I watch one of these videos I wonder where these car prices are a reality. Obviously the push is for a used vehicle or a ridiculously cheap newer purchase. I have not found a new car for a price that fits the equation. I choose to spend more as long as I am meeting my savings goals.

[@ianlaccohee7180]

I had an employee that was earning around $58,000 per year. One Monday morning he showed up in a 3 year old F-150. He proudly told me it was over $50,000, & it was over $700 p/month for 7 years. It was a beautiful truck, but I couldn’t help but think, what an idiot. I dread to think what it will be worth by the time he actually owns it. I’ve since sold my house & business in Florida & moved back to England, where I was able to buy a newer, but used car with cash for the first time. It felt really good.

[@ridingdreamer]

This is the problem with most people, not just cars but most things. I earn more than three times of that guy and I am a motorcycle rider (so I need both a car and a bike) and combined they cost $60000.

[@CashMoneyReckadz]

I used to work for Enterprise Rent-A-Car and if you didn't have a credit card, we had to verify your income. You'd be shocked how many people drove 1/2 - 3/4 ton pick-up trucks making

[@eddiew2325]

@@CashMoneyReckadztruck driving used to be lucrative until Obama destroyed the industry

[@lifeisgood9474]

Don't be soo quick to judge, he could have a partner who may make more than him, or had some cash from selling a previous car, but even if not you shouldn't call him an idiot for doing what he wants and can afford to do because I doubt you've made the best financial decisions all your life.

[@markoniksic3630]

Different people have different priorities. Someone wants to travel the world others want to sit in a nice car every day

[@smileychess]

I drive a ten year old electric car (they’re so cheap used) around town to save on maintenance and gas. And I have a 20 yr old van for long distance / hauling. Combined value is about $10k and it’s worked very well so far.

[@fredsmith6725]

Hi Nisha, great video. I'm probably not your average viewer, but I have followed another method which aligns with your "investing in life skills" approach. I bought a family car for £2850 in 2010 with 28000miles on the clock. I researched the reliability and bought a car without unnecessary electrics that will inevitably go wrong. Using skills learnt as a lad I do all the simple servicing myself. I still have the same car 13 years later and have only farmed out complex fixes twice. It's still going strong 100000 miles later and still looks clean and is rust free. I recently looked up second hand versions of my car with under 30000 miles on the clock and they are still known for reliability and can be bought for around £2-3000.

[@nischa]

I love that!

[@jamesmaddox7567]

What car do you have?

[@fredsmith6725]

@@jamesmaddox7567Hi James, just a boring Nissan Almera 1.5SE. Simple bullet proof Japanese design with a galvanised body shell. Stay safe!

[@waleedhaq2727]

@@fredsmith6725still driving this as my first car 3 years on! Will have to see how it fares with under an hour’s commute from next month

[@fredsmith6725]

@@waleedhaq2727 You chose well my friend👍. Stay safe.

[@sks4347]

Clear statement and simple fundamentals, cannot be explained more than this. Always love your videos.

[@Mo.Jo.]

I paid my car off and now it shall be treated with the utmost care to ensure it survives as long as possible. My recurring monthly expenses on my vehicle are just 7.5% of my NET salary and they include insurance and gas. That comes to 5.3% of my GROSS salary. It has been extremely tempting to upgrade after paying off, but considering the current state of the car market and the crazy interest rates, I would surely be paying much much more even if I traded in my current vehicle and put in a sizeable down payment. So stay strong people and resist the urge if you don't need to upgrade!

[@adzcraig]

Bangernomics for me at the moment. Had an older luxury car that was costing too much to maintain, bought a little run around for £800. Still driving it 4 years later! Now able to extend my home with the proceeds/monthly costs I'm saving by remortgaging and not spending on a car. I love not having unsecured debt on my credit file. The added footprint of the home with generally continue to appreciate in equity, unlike most cars. I can also sink a few thousand into nicer holidays and random getaway weekends without a second thought. That to me is more important, but each to their own with priorities. Having other investments that pay for the liability of a newer car is my ultimate goal and I'm prepared to wait and work towards that. Love the advice about saving for 4 years to buy the car outright, but however, I couldn't ever see myself going "yeah, I'm just gonna sink 25k cash into a piece of shiny metal" 😂. Would definitely be a property or other investment.

[@robday3296]

Just went through this. Was very tempted to get a new car and take out a loan, held off and took a week just to think about it then paid cash for a 15 year old run around. So glad now as no monthly payment and no taking on debt for a depreciating asset.

[@richieduck67]

I just drive a ten year old car cars are depreciation money pits 😢

[@aaronjudesaldanha5688]

Worthwhile despite higher repairs and running cost?

[@bigdarshan]

​@@aaronjudesaldanha5688I think the key is to buy a well maintained pre owned car.

[@joshflynn2173]

@@bigdarshan and actually maintain your car well. If you don't look after it, the costs will be high

[@JManners10]

Amazing how good a ten year old car is nowadays... when i first started driving a ten year old car was about £100 and it was a heap of shit 🤣

[@bobfg3130]

​@@bigdarshan It doesn't matter if it's well maintained. Old cars need more maintenance.

[@geezee1946]

Unless you have all your other expenses paid off, or unless you are a successful millionaire you rarely should even consider buying a brand new car. You will almost always be better off buying a used car outright. Buy a good Japanese car and you are set for life.

[@paulo7507]

amen brother

[@lessdatesmoreonmyplates1457]

Toyota, Honda, Mazda all phenomenal used cars and wont break your bank and give you reliable and afforadble means of transportation.

[@stevefurness6303]

Just buy a car outright, unfortunately we live in a time of social media and peer pressure like never before and people always want the latest shiniest gadget wether it's a car,mobile phone or whatever.

[@stephen_101]

Never more than £5k - can usually get a fair 10 year old car for that with no need for a loan. Just don't understand spending more on a depreciating asset that sits outside collecting bird poop 95% of the time.

[@paulo7507]

you are 110% correct 🤣 but if your a car guy or woman then I can understand them wasting money of cars but the majority of ppl just need cars to get them from A to B and yet spend 10's of thousands for it 🤣 silly silly billies

[@cornishhh]

And just because you can afford more, why would you spend more?

[@inthebackwiththerabbish]

You guys have seriously neglected anyone but yourselves. Not everyone treats a car as an A to B method of transport. For some people cars are a big passion and they will spend a lot of money on them just as the next person might spend a bunch on clothes. Why not buy all your clothes from George, Asda? All they do is cover your skin anyway

[@lumen8039]

I just found your channel and I’m starting a new position that will move me into a new income bracket. I appreciate how thoughtful and clear you breakdown everything in your videos. Thank you for offering these resources that make seemingly complicated topics, easy to digest and not feel overwhelmed by

[@JoshHitti]

Informative as always! One thing for people to really take away from the video is the cost of maintenance and insurance, that drastically shifts the potential cost of ownership. For instance, a new Toyota/Honda will have a fraction of the maintenance/insurance costs of a BMW/Audi in the same price range.

[@HughieW]

This is something I've explained to countless people too - the amount of people who neglect to look into maintenance and insurance costs of their chosen car is unreal!

[@lessdatesmoreonmyplates1457]

​@@HughieW Most people treat cars like a pay and forget type of thing which just stems from general lack of education and financial responsibility. As you said, maintenance and inssurance, not to mention registration, summer set of tires, winter set of tires will all greatly increase the total value.

[@apolitis1]

These rules don't apply with current car prices. In the EU a middle specked Toyota Corolla hatchback costs around 30K so by your logic you'll get a small Toyota with an annual income of 100K which as salaries go is quite unachievable in the first place.

[@BillSaltbush]

You make perfect sense. It is surprising how many people in our communities reject and outrightly refuse to accept the principles of which you speak. I've watched this behaviour for all of my 50 years of adult life. I tried and tried, through those years, to convince many friends and acquaintances to take on and put into practice the principles of compound interest. Nope! Nothing doing. Most were simply not interested, or wouldn't make the small sacrifices needed. Now, in early retirement (it's VERY comfortable for me), I see many rueing the circumstances where they have little to support them in their retirement years. It really is quite sad.

[@borinvlogs]

My salary is between £65k to £80k South West England. Bought a 3 year old Tesla Model 3 Performance for £35k cash with just 20,000 miles, so the car still looks and drives like new to me and i saved myself £25k as the new one similar spcced cost £65k. I have driven it for 7000 miles currently and charging at home has cost me just £27 so far as i charge mostly at work for free. It just feels like travelling for free. Absolutely amazing!!! There is no road tax, free chage at some hotels, restaurants and there is no annual car service schedule like regular cars. Great purchase!!!

[@paulo7507]

well its not really travelling for free since you purchased it for £35k is it 🤔

[@N666able]

I bought a 2004 Audi A4 diesel for 2.4k, for the difference in purchasing price I can keep that running until I retire😂

[@m33ddyhv]

not everyone is rich like you and can straight up buy a tesla , borin.

[@borinvlogs]

@@paulo7507 yes my Porsche costs £120 in fuel to drive for 200 miles. Then £730 a year road tax and thousands for maintenance and service every year.

[@borinvlogs]

@@N666able does it have 500bhp and 660Nm of torque and hits 60mph 3.1s, 5 star safety rating, autopilot, dog mode, preconditioning the interior or defrosting the windscreen from the phone features? Free toad tax, free London ULEZ, free refill in some restaurants, hotels and work? What a logic. You might as well sleep at the train station instead of buying a house and paying for a mortgage just to sleep at night.

[@therealjag]

Also another tip. If going for pcp or hp check your bank as they sometimes do loan deals. For example with lloyds bank i got 6.9% apr so my monthly bill came to £260 a month whereas the dealers best was 9.9%. Practically saved myself around a £1200 for the full length of the 3 year loan

[@fossilfueled27]

This is a great video, and people should take this advice, but the issue with this, and car buying in general, is that it's rarely looked at as a wealth-drainer - it's looked at as a status symbol. If we all took this truly pragmatic approach to our transport, the crossover SUV wouldn't exist, because we'd realise a hatchback offers exactly the same ownership experience (minus high seating position), for a much lower outlay. My approach has been to keep my first car. It's 21 years old, was free and costs me a few hundred a year in maintenance, and that's about it.

[@turbostyler]

1. Never buy a car with a loan, start off with something less fancy and move up. 2. Do your research! Make sure the car you buy is a common car for your area to ensure parts availability and some kind of resale value. Search for key problems with the car and the type of motor/gearbox it uses as those are the bigger ticket items that could cost you. 3. Maintain the vehicle yourself. In the age of internet you can find everything to show you how to do basic servicing and maintenance on almost any car. I buy cars that are around that 4 year old mark and hold for another 6-8 years. After the 4 year mark people sell their leased cars and the biggest depreciation occurs then. For the next 6-8 years, I ignore manufacturer service intervals and do them at half the recommended mileage/every 6 months depending on how much I've been driving.

[@ianinkster2261]

4. Buy an oldish semi-classic so you feel better about the cheap car. I bought a 7th gen Celica for 2K and stuck a modern satnav in it. 35mpg, nice highway cruiser, timeless looks, nice conversation starter, Toyota reliability (they last 300, 000+ miles), understated but with a touch of dash. A timeless, sporty Camry. Or buy a $600 Jag and pay the $1000 a year to maintain. Swings and roundabouts.

[@gazilew]

My salary allows me to stretch my finances to buy a unicycle.

[@paulo7507]

then so be it

[@01man01truck]

Don't forget that there's another option. If you already have a car and maybe it's getting a little older and has a bunch of miles, you can always just get the engine replaced assuming the rest of the car is okay. I have a 2010 mustang with a little over 100,000 miles on it. When the time comes I'm just going to have the engine replaced. I can get a used engine with around 60k miles for about 2 grand and have it installed for another 2 grand. I could get the whole thing taken care of for under $5,000.

[@oluwatomio.t.bombata8872]

So I live in Nigeria 🇳🇬- I love your analysis a lot but I really feel it’s relative to the country at which you live in, so for example you live in London, therefore I can certainly imagine it’s cost-effective to not own a car, however I live in Nigeria and if I constantly utilize a taxi or an Uber, I might “pay cost in time” in terms of how long it takes for me to constantly request a ride etc as opposed to me owning my own car However in London the external variables are eliminated, nevertheless I’m so glad you decided to speak about this topic and it’s really timely :) Thank you Nischa!

[@dannievig]

I'm in need of a car but unfortunately I'm only earning 22K per annum. We just aren't paid enough to afford anything! I think I'll stick with not having a car for now. Great video as always :)

[@asamoahbk]

Get yourself a little corsa or better yet Ford KA if you need a vehicle. I’m sure you can get one < £150 a month.

[@sidathwijeratne7168]

Get a used Vauxhall Corsa for around £2500… they’re reliable and easy to get parts for

[@yusuf.alajnabi]

I love cars honestly I do and I do own a couple. But I am also very conservative. I have two golden rules. 1 never borrow money to buy a car unless extremely necessary. 2 Your car should not be worth more than 10 percent of your total net worth. So if you have 50 thousand dollars saved you buy a car worth no more than 5 grand. If you have less than 30 grand saved then you can buy one not more than 15 percent of 30 grand. You can buy plenty of reliable cars for 3 to 5 thousand. If you have 500 thousand saved then 50 thousand is your limit. I personally don't like losing money. It's good to have a nice car as long as you can afford it.

[@maitremonkey5561]

As always JayZ said, if you have to calculate you cannot afford it. So earn more money…..

[@xechs88]

Basically everyone who owns a pickup truck now. 700-900 a month payments but complain cant buy a home. Thats half mortgae payment.

[@waynejohnstone3685]

I’m in sales and always had a company car. Doesn’t always have all the options I want but gas, insurance, maintenance and payments are all paid for and I get a new one every three years. I have an amount added to my income every year as a taxable benefit so my actual cost is only through tax, about $1500 per year. This is a huge benefit and anyone negotiating a sales job should look into it. Current vehicle is a Silverado - really nicely equipped truck. I figure I’d need about 20-25$k pretax salary to pay for it.

[@marinasinitsa9120]

Hi, probably not about your video exactly. But we with my husband put a step on a changing our life’s road (for us and for our sons) and just want to say, I found your Chanel today and cant stop watching! 😊 live the way you give information and it is inspired me so much! ❤

[@albaker2938]

One of the perks of being an auto technician is i can maintain my 20 year old vehicles.

[@NavinBagga]

As a Car enthusiast, it’s real hard to find the balance. I have been contemplating about 1 roadster lately which I am putting back for now and target with a proper plan inspired from your guidance videos. Very timely, as if you could read my mind.😅 Thanks,

[@yinsoen]

You can always hire one for a weekend trip if you have that itch

[@DirectorChanel]

I used to be a Car enthusiast. I traveled around the world, worked in Australia for a year and changed my mind about my preferences 😊 With the car you will lose your money... always!

[@NavinBagga]

1. yinsoen - Of course. If it's a one off on a weekend, it makes sense to hire only for the days. If you like to spend a lot of days on the road, then it may be worth an investment. 2. DirectorChanel - Great that you found a new perspective with world travel. Commuting Cars definitely lose in value, classic cars however may be a different bet. So far, so good and when you got the bug, you just have to go through it once :)

[@shibaspeed]

Which roadster?

[@timgibney5590]

It is a terrible hobby for regular non rich folks unfortunately. A vehicle is the 2nd most expensive purchase you can ever make outside a roof over your head. Unlike your house they go down in value like a rock. H omes go up in value hence driving a junk beeter to get you a house is the first step in the process of getting rich. If you are renting you snould never ever buy a new car. I knew a guy who bragged about getting his new 75k raptor (probably worht 100k today) every other year leasing while rented a crappy 1 bedroom apartment making 80k a year. He never owned a house because he had to have the newest truck. SMH

[@GrindhouseProdutions]

Very insightful. I point blank refuse to pay any interest on a car for the sheer reason I’ll be paying over the odds for a product that depreciates over time.

[@TruthTeller00]

The faces you pull for the thumbnail kill me 😂

[@nischa]

Welcome to KZbin!

[@TruthTeller00]

@@nischaAmazing videos as always. I love cars, but if you make them non essential in 2023, they’ll be luxury in 2043! 😉

[@adrianhuluban8579]

Great advice Nisha, love your videos. The rule of thumb that I've been following my whole life (advice I've been given by a super wealthy person when I was very young) - do not borrow money to buy an depreciating asset ie a car and do not spend more that 5-10% max of your savings on a car. The way I've been doing it for years and i believe it's by far the best strategy is to buy in cash second hand cars that are the depreciation sweetspot- meaning if you buy it now and sell it in 2-4 years time you'll sell it at the same price, in some cases even with a little profit

[@user-um3cp9es3k]

I think it is also important to consider depreciation when it comes to letting go of the car

[@ShonTolliverMusic]

She's definitely an accountant, because all i heard was numbers and I started to disengage after the 3-minute mark.

[@yourface07]

I get what you mean. Pause it regularly and chew on what was said, might take you a few visits back to the video, buts it’s worth it. This pretty good advice

[@TomReichner]

I buy well used cars from private individuals via ads on Craigslist. This is how I have bought my last 4 cars, dating all the way back to the 1990s. I buy Toyota Corollas with over 120,000 miles on them, and they last me for years and years without anything hardly ever needing to be repaired or serviced. I pay between $4,000 and $5,000 U.S. dollars. I really love the Corollas because they get great mileage and are easy to maneuver and drive. And of course because almost nothing ever breaks or wears out except tires and occasionally brakes. I drive 30,000 to 3,8000 miles every year, so a car that doesn't ever have stuff wear out is really important to me. Plus I am poor so I could honestly never afford to have a car repaired if it ever needed a major repair. So Corollas are really just about the only suitable choice for me.

[@deathwarmedup73]

I use my car infrequently and have no family so it gets de-prioritised. I usually by 4 - 5 years old at about 30K miles and run it till it's scrap. I base the cost on the remaining lifespan up to 15 years (extra years are a bonus) and divide that into the cash price to compare, then factor in road tax (significant over 10 years or so). My biggest concern is long term corrosion. I got a 6 year old Suzuki with 22K miles on it this time, that's free on tax and is giving me 55 mpg so far on the open road.

[@kashv2500]

2010 ford focus 1.6 Tdci here, being an accountant myself makes it hard investing in a nice daily car (& i love cars!)

[@windspoint]

Another great video. There was a guy on KZbin a few years ago who replaced his car every year buying a car with 12 months mot for around £500 so it shouldn't need any money spending on it for 12 months then taking it to the scrap yard when the mot was due and getting £100 cash and starting again. That's minum depreciation/expense. Myself I like 10 year old quality cars usually paying up to £3,000 cash keeping the car about 6 years so affective depreciation of £500 per year average. My current car is a VW Passat I paid £1,700 4 years ago so I'm on the right side at the moment

[@cornishhh]

Bangernomics.

[@DCuerpoJr]

Paid off my car last year and it was such a relief to no longer have that monthly payment. I put 50% down and financed the rest over 5 years. Looking back, I never want to finance any percentage of a car again. I'd rather keep up with maintenance on my current car and save up until I can pay for another car outright.

[@joeljr9403]

this guide is so honest and clear that i immediately shared this to my brother. hopefully he will be enlightened to my opinion using your explaination.

[@rlmccann]

This blew my mind. I earn £120k a year and drive a 5 year old VW Golf, I bought for 15k, at 18 months old. I've always questioned how people afford to drive BMW, Audis and Mercs. Now I know it is because people's priorities are messed up.

[@craighenderson1645]

You also have to consider the costs of operation, maintenance, insurance, and reliability. You can't put your job in jeopardy by not owning a reliable car, if you rely on a car as your primary transportation. Everyone's situation is different. Many times vehicular advise is based on a particular lifestyle and doesn't fit with someone who has a long commute from a rural or suburban area to a job location in the city. For those in a situation which demands reliability and a significant accrual of miles on a car, they will have to spend more for that reliability and durability.

[@staLkerhu]

Sure, I smiled a bit during the video aswell, but remember this is supposed to be a guideline, and I think it has some truth in it, but also a terrible stuff I couldn't handle. First off, not spending all your money on a car is wise, and you definitely should draw the line somewhere in the mentioned scale. I think max 30-35% of your annual salary before taxes is a good starting point for everyone, and a bit more or less is OK. Second, when she mentioned loan as a good option I almost yelled at the screen... you NEVER buy a car with loan! The only acceptable exception is when you have a family and they desperately need it, OR doing your job depends on it. Pay with CASH!!!

[@Atrides0777]

The best car is a well maintained older vehicle. Environmentally friendly too if you run it until maintenance is no longer economic. I've scrapped a few that just started to look bad but we're still running.

[@alexandr3148]

It's worth mentioning that certain used models barely loose any value within 2-3 years, while a new car would loose about 30 % in the first year. You can change cars every 2-3 years with minimum loses, each time buying a 2-4 years old car.

[@allenpaul102]

Lose*

[@jeandique]

dam with this method I can't even afford a car from the toy store

[@vava995]

I appreciate the video being really basic a probably easy to undestand for most people. On the other hand, it generally ignores Total Cost of Ownership (TCO) which is the real cost of owning a car. To that, a lot more factors come into play such as interest rate on loan, investment return from any money not put towards a car, maintenance costs, insurance... Price of the car itself is just the beginning of the real costs. Would love to see a more advanced breakdown of options.

[@tanyaharrison7138]

I make $93,000 a year and I just bought a $43,000 car with payments. It was a hard decision but I dont regret it. I'm 300 km from the nearest town and I wanted reliability as I don't want to be stranded, especially in the middle of winter at -40 (yes its cold in northern Canada). It's also twice as good on gas as my old car.

[@ryancrawford8042]

I see this and shocked bc I know lot of guys making $70k annually and they have $70k trucks. By her rule though, to responsibly buy a $50k-$70k car unless they make about $200k. I see cars priced that every second, but know few making that money. Then again, this is what Americans do.

[@ryand4940]

@@ryancrawford8042you are correct Americans love to buy a vehicle that costs as much as they make in a year. It’s crazy. I make over 300k a yr and drive a vehicle that I bought cash for $9000 and will drive it til it falls apart and then buy another one under $10k and repeat. I rather buy property with my $. It gives back.

[@mattbrown4833]

⁠@@ryand4940This is the sensible way to do things. Amazes me the attitude that thinks not stretching yourself to the absolute limit on depreciating assets in order to show off is broke behaviour. I could go buy a Lambo, but I drive a second hand Hyundai i30 🤷‍♂️

[@staLkerhu]

Well, lots of people can't really buy a proper car for 25%. That number is quite brave. You can't really buy a good car in relatively good condition below 7.500 USD, and here in Hungary the average annual salary before taxes is around 23.000 USD, so the target 7.500 USD is somewhere around 1/3 of the salary (33%). 25% (~6000 USD) is viable, but those cars are the absolute low end of the usable stuff, which may cause higher running costs over the years. Sounds like an OK scale, but the lower end isn't necessarily the better choice.

[@therealjag]

Don't forget about the extra costs before buying a car which she doesn't mention. No matter which option you go for, especially with newer cars don't forget: - gap insurance (up to £30 a month) - road tax - car insurance (usually higher for newer cars) - warranty (optional but peace of mind especially with complex newer cars today) - alloy wheel insurance (up to £20 a month, again optional but chipped alloys devalue your car) - paint, scratches dents insurance (again optional) Some of the optional ones can be left out but if youre doing pcp like i am then you wsnt to return the car in its best condition so that you dont get left with a extra bill to pay. Also i know alot of money advice guru's just say dont throw your money into a car its not logical. However driving around in a nice newer car is cool af and 1 of lifes joys so i did it anyway 😅

[@megapangolin1093]

Great advice, Nischa, all the time you are guiding people to think before they spend and to reflect before spending gratuitously. If everyone could do that society would benefit enormously. The other thing about buying a second-hand car first is to test out the car that you think you want before paying a lot for a new one. Not forgetting that cars normally are left outside in the rain, depreciating, for 95% of their entire life. The owner gets no joy out of this reality and could be getting more joy out of spending money on something they use/experience more.

[@WhiteThrash]

My personal rule of thumb has always been 2 months net average income for a car. I can buy almost any car available on the market without finance, but it's not that important to me to compromise on other needs hence it's under 2 months income. But I never owned a financed car.

[@Mochachinoexfk]

I'm really into my cars. I have a £600 2005 golf on 168k miles. I use this for going to work, travelling about etc. I see an expensive car for this use as a waste of money. I also have a BMW M3 track car worth over 40x the value of the golf, which I have to enjoy. If I wasnt into my cars, I would still have the golf and spend money on something else I enjoy instead. Cars for A to B use can be an incredible waste of money.

[@misterkurosaki2672]

Hello Nisha! Great video ! I also prefer for the moment not to have a car and to use public transport with a season ticket. In Paris, it is more advantageous to use the metro than car. Have a nice day ! 🙌🏾

[@mortelski5814]

I save the money in advance, then it takes me 5 years to choose the car. 😂

[@bigdarshan]

That's fine but you obviously don't love cars. I want to watch a video on how to get rid of my love for cars. I really lust after them😢 and public transport in my country is bad

[@mortelski5814]

@bigdarshan I do really like them, but I go round and round in circles trying to reach the right compromise between options that are quick, practical, well equipped, reliable and economical to run. I end up at the Octavia VRS every time. This time I think I fancy an M340i Touring, but it is so hard to justify 😂

[@r1pfake521]

There are a few issues: - You don't get a new car for 10-14k and the average person doesn't earn 60k - A cheap used car sounds nice in theory but it can be a huge gamble because if you are unlucky you have to pay high maintenance cost which increases the price closer to the price that a new car would cost. Then you have a old car for almost the same price but with older safety features etc. - If you use delayed gratification then the numbers shown at the start are already obsolete unless you start with zero savings. - The 20/4/10 rule sounds decent, but I wouldn't use fixed numbers, pay as much down payment as you can and try to reduce the duration as short as possible, so if you can afford a down payment of like 40% and still have enough savings left, then I don't see any reason why you should limit it to 20%, you will just waste money, because higher down payment -> lower duration -> lower total cost

[@steflift5165]

Thanks for mentioning you don't own a car for financial reasons - I actually am the same since I live in a city. I do think it's helpful to be qualified (as it can take time to be allowed to rent etc, e.g. 2 years) but I feel better about not owning a car. It always made more financial sense. However, it does come to a point where you're less useful as a partner if you can't drive them around or are dependent on them if they're comparing you to others

[@DorkaliciousAF]

Delighted to hear you reach a conclusion for yourself that buying a car would be a sinkhole for cash. More people should take this on board. Most people do not "need" a car.

[@grolfe3210]

For me (in the UK) I need a big estate car and like a bit of luxury so bought a 6 year old Mercedes E Class. I plan to keep it for at least 5 years. It should depreciate by £1,000 per year and running costs are £800 in fuel, £35 road tax, £300 mot and service. £200 on consumables like tyres. So that is £2,335 per year in actual cost which is £45 per week. I am very happy with that. If I had bought a new car I would be on about £10,000 depreciation and £500 tax, which then changes the cost to £11,800 per year or £227 per week which is a vast difference for a slightly newer car.

[@susanwaterworth5622]

I love that you live the delayed gratification values that you promote here. Walking the talk!

[@humphrey]

Nice video Nischa! 👏

[@nischa]

Thanks for the inspo!

[@TheReal_TOP-G]

ahaha S.I.M.P

[@WillemNout]

My income would make it possible to buy a €25k car, but I drive a 12 year old €5k Mitsubishi Colt. I have a smile on my face everytime I have to pump gas, pay taxes or do maintenance. Get a car that you own, not car that owns you.

[@friedrichwinkler6915]

Im honestly loving your videos nischa. Not only ae they interesting but tthey give great advice for financial education. And futhermore, in my opinion with your pure existence and online presence you are doing a lot for the emmpowerment of women in economy and business.

[@aliessam7744]

love it ! could you please do the same type of video for travel budgets based on salary

[@fran8181]

That's a very prudent approach. 35% max would mean you need to make 250-300k to buy most of the new electric suvs out there. You only see these on the road however these days. I would definitly not follow the advice here. See what monthy cost you can bear based on your NET salary. Most ppl can live with between 300-1500 a month on cars.

[@spidermain]

Insurance is 2k per year for young drivers in the uk. Plus 1k on fuel you are already looking at 10% of your salary. That leaves no room for car depreciation and maintenance.

[@WVURxMan]

I've made over $150k/year for over a decade and the most I've ever spent on a car is $15,000. And that felt like I was splurging to me. Stop throwing money away, people.

[@menguardingtheirownwallets6791]

Here in Canada, 4 and 5-year-old vehicles with 100,000 km on them are selling for almost as much as brand-new vehicles of the same design/type. So you don't save any money buying used, in fact when you take into account the fact that the vehicle will soon need significant repairs, buying used will end up costing you MORE money than if you bought new instead. The only problem is that when you buy new you place your order and then wait 6 to 12 months for it to be delivered.

[@markhancox5475]

A lot of people have fallen into the PCP trap now. A small deposit and £500 per month gets you into a brand new £40K car. At the end of the term they have to give the car back or sign up again and get another new car and so the trap is set.

[@LiamR90]

I'm relatively young and doing well financially. I've always purchased my cars with cash. The most I've spent is £6k on a 3 years old Ford Focus in 2016. Its still running fine. There's no need to ever buy a brand new car.

[@Ezinma88]

I needed this dose of reality. I've been slowly falling in love with the new Volvo EX20. Trying to work out how long I'd have to wait to get something like that. It certainly wouldn't be brand new. But, every now and then it's good to have a reminder that cars aren't actually necessary. And, that for the price of that vehicle I could buy a house(!)

[@nadeemdean3216]

Hey friend, how are you....I am the first view of your video. Yay! I wish I could talk to you.

[@bensanchez9705]

I’m new to the channel and absolutely love it! You did a great job of explaining the different options and the pros and cons of each. I am definitely going to subscribe and watch this channel quite a lot in the future, again, excellent job!

[@spacecoyote6646]

What's 20/4 / 10 rule. The 10 is 10% of your gross income for everything the payment, the insurance, the operating expenses, Andis set aside for maintenance now look at the purchase price of a car it's 15,000 or so

[@taypac1775]

Gotta factor in taxes, maintenance costs, gas milage, and depreciation. Think about how much or often you drive too. Additionally after this, don’t forget to consider the value of how the car makes you feel. If you drive a lot, then get something a little nicer assuming you feel better throughout the day and night. Your attitude throughout the day affects more than you think but is difficult to value.

[@martinea199]

The best advice I’ve heard is to invest that lump sum car payment into an asset (investment property - you can JV to cover deposit/ refurb costs) then with the monthly profits from your investments use that to get a car on finance. Never use your hard earned money to pay for liabilities, make your assets pay for your liabilities.

[@idiocratease]

My approach is… only pay for a car by cash, no finance. So I mostly have had cheap cars, but my priority has been saving into pension and owning house out right… just about to retire… 62, and driving XC60 T8 PHEV…

[@oyandakona5994]

Im not into cars but soon ill buy one , nice vid👌

[@GoBzi]

Back in 2021 i spent £17k for a 2nd hand car (2017, 25k miles). My monthly expenses for the car is less than £200, including insurance/services/road tax/diesel. Honestly i don't care if i lost money, as long as i know im not tied in a contract, i can scratch it, i can modify it, i can, paint it, i can do whatever I want with it.

[@ishinelone]

Finally a new video ❤

[@DarkDramon]

Basic cars now are over $30k (CAD) wages havent kept up, so now it takes almost 5 years now to save up for a down payment to keep your monthly payments at a number that wont financially kill you.

[@Leo-zf4ge]

Here in Canada cars have become pretty expensive. I own a 2011 kia that I've purchased at the end of 2014. with 45k kilometers. Now is 128K. The engine is well but the metal started having rust spots in the front and on the side despite i keep it in the garage. The snow and winter i guess must have done a pretty good job there. I'll buy another soon with around 30 or 40 k kms and will keep it for another 10 years. For me it's a sweet spot.

[@annawong1305]

I bought a 7yo VW at 3 months salary (25%) and 7 years later it is still going strong. I spend on average £500 a year for repairs/replacements such as tyres, bulbs, wipers, brakes, wheel bearings, transmission fluid change, cambelt change, etc. Cheaper than depreciation on a newer car, for sure.

[@inferior650riderhd6]

"25% of annual income on a car" 🤯 meanwhile me who spent 9% on a 12 year old car, owned it for 3 (almost trouble free) years and it's still worth what I paid for 😍

[@megabaneen8057]

😊 Love your videos there's so informative and straightforward for us lay people.. can you in the future do a portfolio?

[@Florin_Bolocan]

I live in UK, although I have a decent wage as an automotive engineer, i wouldn’t spend much on a car. I recently bought a Peugeot 308 Diesel 74k miles, 2011 for £1500 I spent an additional £1000 in parts and now the car is in pristine condition, it should run without any issues for minimum 5-7years. I also budgeted £50 per month for maintenance, total £600 per year… repairs, oil changes, timing belt, tyres etc) Overall for 5 years I’m budgeting £2500 initial price + £3000 in maintenance => £5500 over 5years which comes to just over £1k per year Insurance is £320 Road tax is £30 MOT is £40 ALL included, is about £1500 per year + fuel (depending on usage) You might say I’m frugal, I don’t mind, I prefer investing our finances towards home improvements, rather than a car. This is my current thought process when it comes to budgeting for a car.

[@FGGiskard]

Who’s watching this and wondering which cars cost 10K€

[@lessdatesmoreonmyplates1457]

There are some used 10-12 year old cars that you can get for ~10k. The biggest struggle as with any used car purchase is to buy it from the 1st owner if possible and with a good and provable track record of on time maintenance.

[@karliszemitis3356]

Well, by far the best option is always buying used, 3-5 years old(I would stretch to 7). And there are plently or choice there. For reliability you must do research on specific engines before purchase to avoid crappy designs.

[@flawlessjem3248]

We could do with understanding more of the variables when buying a car, not just the interest. A few more variables I would be interested in are insurance, warranty, services and maintenance. I have been stung by this before.

[@jieqiangtan9979]

TLDR. You have to be financially self-destructive to own a car in Singapore. In Singapore, there is a certificate of entitlement just to own a car for 10 years that currently costs $100k SGD (as of writing). The price of a modest Japanese car (e.g. Toyota Pruis) is around $30k SGD, bringing the total cost of the purchase of a car to $130k SGD. By the 25% - 35% rule, you will need an annual income of $371k - $520k SGD. Around 33% of Singaporeans own a car but only the top 3% Singaporeans earn more than $371k SGD. That would mean almost everyone that owns a car in Singapore is killing their wealth. This also does not factor in the recurring costs of car ownership which are substantially higher & the higher depreciation due to the 10 years ownership limit from the certificate of entitlement. It sometimes really baffles me why many people would still purchase cars in Singapore when the purchase & recurring costs are so high & public transport pretty much can bring you to 90% of the country reliably.

[@Jason-zh7wo]

i have a yearly public transport pass where i live as i dont need a car, the company i work for contributes 40% so it only costs me around 350€. i just take an uber when ever i need to.

[@tomgreenleaf7906]

One point to consider that was not addressed was the interest rate paid on a loan versus what it could earn if invested. So if you spent $25k on a good used car and bought it cash you would indeed not be paying interest to finance it, but you would also be losing what that money might have earned if invested, plus the money would no longer be available to you. You would lose liquidity. If, and it's a big if, your car loan was at 6% and your index fund was paying 8%, you should keep the cash invested and borrow for the car, and maintain liquidity.

[@pgowans]

There is no business case for owning a car BUT… when I want to play golf or drive to work or drive from Edinburgh to London (which I will do a few times a year) or go to B&Q or whatever it is just SO convenient - in the future it will probably be car as a service but we aren’t there yet and most of the time it’s convenience v practicality

[@VintageRadius]

I’m sure you have a lot of “know-it-alls” commenting, so apologies if this comes off that way, but I disagree with a firm recommendation of 20% down payment and to pay off the car in 4 years. It really depends on the interest rate available to you and the opportunity cost of parting with the cash. Same concept applies with a mortgage. If you can generate a higher return than the cost of borrowing then you should borrow, invest (in your business or whatever) and pocket the delta. I’m sure you understand this and are just trying to keep it “simple” for people who need help, but the point that I just made is a fundamental financial concept taught by the CFA institute and elsewhere.

[@jaredthetrain5309]

This was much needed information as my car is getting old lol. By the way, Nischa, you are stunning. Keep up the simple, straight forward, helpful videos. 😎