Quote:
Originally posted by l5a
My experience too agrees with this.
I like that formula. $1000 for 1 Year. Makes sense. But let's ignore the small delta - the maintenance cost, which varies by car age.
Back to my question, how do you relate this "$1000" to an individual's income ?
( A "$1000" do have different value for different ppls)
Consider a new immigrant just landed with a small family and is looking for a car. He is not aware of all inventments/expenses he will face in future.
How would he decide what should be his "cap" on purchase price ?
I would always(now that I know better...i think) focus on wealth building. Invest in assests that stand a better chance of appreciating than going in the negative direction.
I'm no financial expert but heres an idiots(my) guide
I'd give more importance to
1) Owning a Home (you can live in one and it appreciates over time...mostly
2) RRSP ideally as close to max limit as possible...especially with higher incomes.
These are the most common investments a middle-class person in Canada makes...and which is conducive to wealth building at the same time.
In the case of a new immigrant(without adequate resources) a new car will probably be taken with outside finance. He/she will also end up paying atleast 3-4k over the sticker price of the new vehicle. So now hes purchased a new vehicle and if his income in not high enough he will not have the resources to get financing for his home(he will have high % debt-ratio). All this while his investment(new car) is depreciating.
otoh, if the guy purchased a good 3-4 yr old car(low maintenence costs are added benefits of toyota/honda), his loss will be much lower. His debts will also be more manageable(less than half in most cases...for the same vehicle). So he can focus on allocating his resources to better investments. At some point of time when the person feels he can easily afford his mortgage payments and can maximise his rrsp and still has $ for the payments for a new car...he can go and get one
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Quote:
Originally posted by tamilkuravan
It is a 1999 model and had 136K when i bought it. The reason that i got it so cheap was b'cos it was an accident car (i never cared to find out what kind of accident it was).
Ouch! A note for any new immigrant ....please use carfax.com or similar sites to find the history of the car. Stay away from cars that have been in an accident. Most important...research how to buy a used car online.
AND very important...have a trusted inspector check the car. I would recommend an inspector from the APA http://www.apa.ca/
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Location: God's own country
Posted on: 15-03-06 14:28:57
Quote:
Originally posted by jake3d
Stay away from cars that have been in an accident.
Why? What is your and other CD members take on this ?
TK
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Quote:
Originally posted by tamilkuravan
Quote:
Originally posted by jake3d
Stay away from cars that have been in an accident.
Why? What is your and other CD members take on this ?
TK
To be sure that you have not inherited a problem. It maybe a bargain(like it was in your case) but if the garage has not done a good job fixing it, it may prove expensive for a new immigrant. Its already a used vehicle so why take more chances and get one which has been in an accident
heres another link
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20040315/wfive_used_car_tips_040313?s_name=&no_ads=
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My personal view - Income and Car value may not be very related when it comes to Desis.
One of my co-workers in my past employment always asked me why was I driving a Toyota when I could afford Mercedes or BMW. I told him that the function of the car was to take me from place A and place B. Toyota was perfectly capable of doing it. Me and my husband are bean counters so we are not very high on speed or power.
But I have also seen some desis with not high income but bought expensive car to show that they can afford a expensive car.
I guess it is one's mindset.
Quote:
Originally posted by lana2005
My personal view - Income and Car value may not be very related when it comes to Desis.
Don't you think that's the mistake we desi's are making ?
That's the reason I want to come up with some kind of rule-of-thumb.
My proposed rule is: NO More than 40% of gross annual salary. Let's make it 50%
Let's consider 45K as abc's salary. So it's 22K for you car.
From one of the valuable link provided by PramodJi, the post-tax income on 45K salary is ~$36K. Consider 1700 as monthly expense.
That leaves you with ~16K.
This means that you work for 2 yrs, pay your rent/mortgage and groceries and you get your car paid off.
I donot understand how your car can get paid off in 2 yrs.
When I bought my car, I opted for ownership option where you pay double of what you would have paid, had you chosen lease option. Even then I had to pay for 5 yrs before the car was fully paid up.
