It is normal to spend 50k-100k to buy a car?

Hi all,

I am honestly surprised every time I see a post of people buying a car that expensive. However today the post mentioned buying a 70k car as a gift, so my questions are:

1) Do people really has that much cash running around?
2) Do they go into debt to pay for it?
3) How much do you need to earn to have that level of flexibility?

Today someone mention they are giving away a car like this for a family member, I presume they have the cash, so are they considered rich?

Sorry, maybe I can't just picture that much cash


    • -1

      He didn't spend money needlessly and yet he bought a Mercedes…really?!? Buying a BMW, Mercedes or Lexus is spending money needlessly, there is a reason they are called luxury cars.

      • I assume Sensiekatie meant he didn't buy into the stupid expensive cars (although what constitutes that would vary person to person). eg I think a C class Merc is just a nice/premium car (in the same way I think of an iPhone is a nice/premium phone). Something more extravagant like an S class or an Aston is where I'd probably say you're spending money on something luxurious.

  • +3

    Bought a car for $500, its pretty much two lawnmowers stuck together.

    It's lavish compared to walking in the rain.

    • +1

      Moneybags! I wish I had $500 to spend on a car! Jees you're extravagant


      • +1

        they see me posting, they hatin'

      • get a milwaukee driver, apparently it has more torque than a mx5.. build a platform with wheels and off you go

  • Yes and much much more

  • Most people view cars as an expensive toaster on wheels. An appliance than get you from A to B.

  • +6

    I believe I am the guy you are talking about, the post about looking to buy my parents car as a gift,

    1) Do people really has that much cash running around?

    Car will be paid in cash, I will be selling one property and the profit is quite significant.
    Plus I will be selling my parents car which I think will be worth about 20-25k.

    2) Do they go into debt to pay for it?

    3) How much do you need to earn to have that level of flexibility?
    Aside from my main job, I have other side project, investments (real estate, business), pass incomes(such as bonds, shares) and consistently putting extra to super.

    I drive a 30k car, my parents their whole life have driven cars around 30k too. This is a once in a lifetime bucket list thing.
    Also no kids and generally live the ozbargain frugal lifestyle.

    • Yeah, if I was to guess, I would say it was your post that inspired this ;)

    • Oh! Thanks for replying!
      Didn't mean to judge you! And as someone mentioned before, it is inspiring you try to give back to your parents some gifts.
      And thank you for sharing your story as well!
      Any financial books/blogs you might recommend?

      • I am not a big book reader. However, I do read up a lot on site like Financial times, Bloomberg, FIRE forums and property forums.

        • great! I was guessing you are following FIRE principles. Thank you again for sharing! Enjoy!

          • @manabeins: I follow those principle loosely. I am a bit of a risk taker and if I see a good deal that I have to double down I will do it.

    • Good on you. You're doing a good thing and I bet your parents are proud of you.

  • Cars are a waste of money. I am tired of hearing pepple complaining about how unfair it is that they can't afford to buy property, yet they have been paying off expensive car loans their whole life.
    I an quite satisfied with my 10 year old second hand car and properties that i own

  • +1

    i read a nice statement about the 2 happiest days you have when owning a luxury car and 70k is in line with luxury (luxury car tax $67525). The first day when you buy it and the day you sell it. The rest of the time you're as satisfied as the owner of a mitsubishi mirage.

    • I loved this answer!
      Great reminder that something new stop being new as soon as you walk out the door

  • +1

    As someone earlier mentioned, a large chunk (those who worked and wanted to buy property) of the population born before 1980 purchased property when it was $120k or less. Heaps of them have paid that debt off many years ago. They now earn >$120k so have a tonne of disposable income and equity to buy cars toys etc

    Then there is us Gen Y and millennials. Some purchased property in 2010-2015 for $500k and are still paying that off.

    Then there’s everyone else who just entered the property market and can’t afford to eat anything other than 2 minute noodles

    what a world

    • I guess I am in the last bit. Will keep up with the noodles XD

    • -1

      You forgot one more category…those who bought Bitcoin 5-10 years ago and can buy property outright with no mortgage.

      • -1

        That's a tiny category… most of the people there were lucky. If people sought it as investments then they'll probably lose all their money long-term anyway.

        • You serious? How are you backing that statement up?

          Bitcoin has been around for 10 years, if you purchased it at any point except when it was between $USD10k and $USD19k (which was a very brief period of time) you are in profit. Over the past 10 years, it has been the best performing asset, maybe some small penny stock somewhere did better.

          I have used the dollar cost averaging method since 2013. Eg, buying small amounts periodically. You can check for yourself via this online calculator:

          If you bought $200 worth of Bitcoin every single month from Feb 2015, you'd have over $143k with a total outlay of $12,200.

          If you bought $200 worth of Bitcoin every single month from Feb 2013, you'd have over $471k with a total outlay of $17,000. I have been buying a lot more than that. Compare that to someone slaving away paying off a mortgage.

          Luck has nothing to do with it. Bitcoin and other crypto assets has become a new asset class. Also, the falling AUD is super charging my profits.

  • Bought $65k car. Did not have cash sitting there to pay for it. Own my business, financed it through my company. Pay myself a wage of $100k pa. Finance is around $1200pm over 5 years with no balloon. I don’t notice the repayments as it comes straight out of the company account. Just bought a $19k Kia Cerato Sport via finance for an employee and it’s much nicer to drive than my car. Whilst still not a good financial investment, you do get some helpful tax allowances if you buy through your own company.

    • I would say, VERY helpful tax allowances. haha
      But I am happy for you! You should make a AMA about your bussiness

      • Yes tax “allowances” help, I still pay plenty of tax though, would’ve bought cheaper, but needed 7 seater and wanted 4x4 (I use it often for this).

        Dare not raise an AMA in my industry, I’m considered only one or 2 rungs above a used car salesmen, I have thick skin and am happy to cop abuse, but no time or inclination to discuss the ins and outs here

    1. Yes. 2. Yes.and no. 3. What ever it takes. Never judge a book by its cover. I have meet people drive a late model BMW, dress well and appear well off financially and don’t have $2 to there name and people who are well off and drive a budget SUV.
    • Thanks for the reminder that we can't see what is behind each story

  • It’s your money and you spend the way you want it, nothing to do with “normal” or “not normal”

  • +3

    Normal? Is it normal to drink my own urine?
    But its sterile, and I like the taste.

  • -1

    "It is normal to spend 50k-100k to buy a car?" I would say yes, the majority of Australians nowdays are rich. When I was school age most families were poor, lived in mediocre houses, and could only afford a single cheap vehicle.

    • +1

      I wonder if this wealth is really accessible to all Australians as you said. Maybe a selected few of the big population, but noticeable nonetheless

    • That is because car loans weren't given out like confetti.

      Back in those days a home loan interview was like a court trial. Credit cards and personal loans were almost impossible to get.

  • Its all relative. Even though average income might be 60-70K there is a lot especially in Sydney that earn in excess of 200K. I'd say if your income is 250-300K then a 70K car isn't all that much. But most people on income that high don't actually buy a car because either they are smart with their finances or have a financial adviser that will tell them to just lease a car and get a new one every couple of years. Cars lose in value a lot so it makes no sense to buy it, unless of course you are so rich that even a 500K Ferrari is like peanuts for you.

    • I really wonder after this conversation if it is only the really rich ones that buy expensive cars. I feel that the 70k cars are often purchased by people with less than 100k in annual salary

      • I admit I'm one of those people who bought a $70k car when I hit $100k lol… but I also had minimal expenses/etc since I still lived at home back then.

  • Since they go down in value I wouldn't ever pay over 30k for a car. I'd rather spend it on other things.
    Unless I was super rich and could afford a supercar and not care abiut it's value.

  • 1) Do people really has that much cash running around?
    No, i assume majority of people buy car in loans. Even if they have the cash ready in there account, money is cheap now so borrowing is a good idea.
    2) Do they go into debt to pay for it?
    It depends! But personally yes. (Brand new car with less than %10 of your income is manageable within 5 years, under warranty so no extra cost other than petrol + insurance + capped service).
    3) How much do you need to earn to have that level of flexibility?
    My role is you should never look for a car that worth more than your yearly salary. Things change so fast these days so you should expect the unexpected.

    • I was thinking I shouldn't look for a car that is more than 30% of my annual salary. Although you make the point that if you pay it in 5 years, the cost will be reduced in the long term.

  • If I could afford it, I’d love to.

    For now it’s my trusty $3500 Yaris

  • +1

    OP there are a lot of boomers out there who invested in property (even just their own home) in the 70's, 80's and 90's who made millions in capital growth over 30 years and are now sitting on fat nest eggs in retirement with money to burn having sold this property and downsized. A $150k car is easily affordable.

    • I wonder what would be the economic impact of all this burned cash. If money is used to buy depreciating assets at a big scale, and not increased production, society will be affected right?

    • -2

      Nonsense and just inter-generational jealousy.

      For every boomer who "made millions" on a house in Balmain a hundred own a normal house worth just a million now, if the 100 "downsize" they are lucky to get $100k cash as their new house is just as expensive. If the "rich" ones do downsize and pocket cash they have to move way way out of their suburb away from friends and family. Then the kids come around for their money.

      Boomers in general are frugal, millennials simply refuse to be that, they refuse to save, they want everything now.

      • Woah easy tiger. No jealousy here, I am a beneficiary…..

        • -1

          Fair enough but to your point.

          How many "boomers" would sell their lifelong home, which accidentally became located in a gentrified area, after a lifetime of frugality, then buy a $150,000 car?

          Their millennial children would be appalled and demand the money instead, they rely on the bank of mum and dad these days, few save for a deposit.

          • @SamR: I was generalising about entire generations, as were you. There will be many examples of both yours and my example. So we are kind of agreeing to disagree, as its impossible to justify either of our assertions without any statistics.

            I guess all I was trying to say in general terms, is there are lot of boomers in Australia with plenty of disposal cash.

            • +1

              @Skramit: Agreed, cool discussion.

              • @SamR: <3

              • +1

                @SamR: BTW luxury cars don't even crack the top 10 in sales in Australia. So this thread is really not representative of the majority of people buying a car. The brands below do have cars in the 50-100k range:

                Top 10 brands – 2019

                1. Toyota (205,766, -5.2 per cent)
                2. Mazda (97,619, -12.3 per cent)
                3. Hyundai (86,104, -8.6 per cent)
                4. Mitsubishi (83,250, -2.0 per cent)
                5. Ford (63,303, -8.4 per cent)
                6. Kia (61,503, +4.6 per cent)
                7. Nissan (50,575, -12.3 per cent)
                8. Volkswagen (49,928, -11.8 per cent)
                9. Honda (43,868, -14.9 per cent)
                10. Holden (43,176, -28.9 per cent)

                Butttttt….. the top 10 models sold have basically only the work utes in the 50k+ range. Which would be business purchases mostly.

                Top 10 models – 2019

                1. Toyota HiLux (47,649)
                2. Ford Ranger (40,960)
                3. Toyota Corolla (30,468)
                4. Hyundai i30 (28,378)
                5. Mitsubishi Triton (25,819)
                6. Mazda CX-5 (25,539)
                7. Mazda3 (24,939)
                8. Toyota RAV4 (24,260)
                9. Kia Cerato (21,757)
                10. Mitsubishi ASX (20,806)


                • @Skramit: Hilux and rangers are not cheap

                  • @netjock: True but as I said above, a lot of those will be business purchases by tradies etc.

                    Majority of cars sold in Australia for private use would not be over 50k

      • -2

        Ok boomer

  • I guess it depends on your lifestyle. For me any vehicle over 50K is expensive. maybe it's me being cheap. I paid 40K for the family SUV, 6k for the second car (used), 8k for my motorbike (used), $560 for my e-scooter and 200 for my bicycle (used).

    • +1

      I think these are reasonable prices! Don't think you are cheap

    • If you buy an SUV you obviously got money to burn in the long term

  • Yes it's normal.

  • Lol. I know someone who went to a shopping mall without any plan, like we all do to kill some time. Except this time he went home as a new Lexus owner, while driving his old Lexus home. Yeah, some people are that rich. But no, this guy is not Australian but he's not even considered as ultra rich in his home country. I think its harder to find them here, but they exist I'm just not lucky enough to befriend them haha.

    On a different note though, I knew a local Aussie girl who bought a $50K modded Holden on loan because that's what his boyfriend loved. They're not together after a year, and she's still paying her car loan. While affording the fuel and only working as postal office worker.


    • I believe this story. Someone told me some international students arrive and get apartments on the spot on cash.
      And sorry to hear about your aquitance… Bad decisions for sure

      • +1

        Yep, some people are just born lucky and wealthy. I also once went a local festival and they're giving out free Macbook Pro. I was dying for one because I was a poor ass student and can't even afford one. Winning number was called out, I missed it by like 3 numbers.. and guess who won it? A kid who came from like top 5 of richest families in his home country. His family could literally buy Macbook like its a spring roll.

        Yeah, life is not fair haha

  • +2

    I was on 90-100k / year, self employed and bought my dream car, a brand new 2015 BMW X5 for just under $120k. Monthly repayments of almost $2k month with insurance over 4 year finance. I claimed 80% as a tax expensive but that still means you are out heaps. I still have the car and have refinanced at about $1200 month.

    I literally saved nothing over those 4 years and there were times when business conditions changed and I thought I'm screwed but was able to recover and still on about the same money. Before this I had a $30k i30 which I hated driving but the amount of joy and happiness I got from the luxury car just made life for me so much happier and easier. I seemed to get a lot more respect and was being taken more seriously and people were just generally nicer.

    I'm currently looking at now changing cars but I've completely dismissed the idea of paying this much for another car and unless my financial situation changes, I would never pay this much again. Although cars I'm looking at now are still around the 90k so still considered very expensive for most.

    • +2

      I think you really love cars right? I think in cases like yours, make sense to spend that much in something you love.

      However do you really think people judge you and treat you different just because of type of car you have? It seems to me that would be shallow. Maybe they treated you nicely because you were happier and joyful. Or maybe it was about your business, which some need a fancy car.

      Would you do it all over again if you go back in time?

      • +2

        do you really think people judge you and treat you different just because of type of car you have?

        Unfortunately yes. Of course not everyone is like that but you'd be surprised at how many people would.

        This is more pronounced in heavy client-facing jobs I feel (real estate agents etc).

        • +1

          This is more pronounced in heavy client-facing jobs I feel (real estate agents etc).

          Nope. Partially correct.

          Beleive it or not mate, but even in kid's school people change their attitude when someone drives a more expensive bomb. I have seen the similar change in attitude in game classes.

          Essentially, people value your persona based on your choice which they can see and quantify against theirs.

    • -3

      That’s the most retarded story in this thread. And you’re going to do it again.

    • +1

      Cool story bro but a BMW X5 is just a crappy SUV, hardly life changing.

      Buy a $72k Tesla, that is life changing and you pocket $50k.

      • +2

        ehh x5 isn't exactly crappy
        Tesla is great but has its faults too

        validation : personal ownership

    • -1

      You just aren't that good at driving the i30 and playing the pity card. It is the best card to play.

  • I'm in no position to comment more than what's already been said, but from what I gather, two major groups buy expensive cars
    1. assets rich people, they might have no full time job but they could be sitting on a pile of assets, 100k car means little to them financially.
    2. people buy under their company's name for tax purpose.

    • And poor people who cannot afford it

      • Lots of asset rich but cash poor people. Lots of Australians in $1m houses. Which is no cashflow (if living in) or negative cashflow. Cashflow and continuity of cashflow is the problem.

        Buying under company name. Yes there are benefits such as depreciation and getting 30c in the dollar back for non private use. But I'll rather have cash than paying out $1 to get 30c back from the tax office. Other than depreciation on a higher purchase price, you still get 30c back in the dollar for expenses driving a Corolla.

  • +1

    No it's not normal.

    • -2

      Some think otherwise, but I am inclined with the "not normal" answer. Maybe common, but not normal

  • +1

    Don't believe everything you read on Ozbargain forums especially the expensive stuff. This is just entertainment.

    Seriously if you have the brains to make $70k to $100k to buy a car but you don't have brains to figure out the car you want (if in doubt just buy a Corolla or a Camry because nobody is going to shame you for going for good old reliability)? You deserve to buy an expensive lemon.

    • Some people can be really clever in one field, but not wise financially. They deserve the lemon though

      • +1

        Agree. Life can't be all sunshine, rainbows, bread, milk and honey. Need to suck a lemon otherwise you don't know how good you got it.

      • +2

        What make them "deserve a lemon"?

        Just becsuse they can afford soemthing you can't?

        • I can afford it but I just don't want my bank account to suck lemons. I'll rather drive a $40k car and have $40k in shares than $80k car . If you know anything about cash flow and appreciating assets.

          Just because you have money doesn't mean it needs to burn a hole in your pocket.

  • +1

    A counterpoint: cars shouldn’t be viewed as investments (even though they are since many people judge a car based on its price and depreciation rate.) Rather, I think they should be judged on utility, enjoyment, satisfaction etc.

    For example, if you love driving, a Porsche 911 for $250k is going to bring you a lot of satisfaction. Yes it’s going to lose a lot of monetary value over say 5 years, but if you’re happy driving it during that time then who’s to say otherwise right? The alternative is that you spend your money on other things that don’t bring you any sort of return on investment eg expensive restaurants and bars, flights/holidays. You lose your money with all these as well but if you’re happy doing it then go for it. I know a family friend who earns $500k+ as a lawyer a year but pretty much blows it all on expensive clothes, holidays, food etc. Net result is that even though he doesn’t even have a car, he could only afford a $1m apartment or 2 years salary worth when most people buy homes that cost 10-15 years worth of salary.

    Obviously this is all assuming that your finances are in order and that you can actually afford to keep the car. But IMO there’s nothing wrong with viewing cars as something to enjoy rather than a liability that loses money for you. I do agree that owning an expensive car can give you an inflated sense of self worth, which I’m not a fan of, but I don’t think I’m going to rule out buying a luxury car if/when my finances allow me to do so.

    • I think you are confused. Investments return more money than the money "invested".
      If you buy an ice cream or car, even if you really like them, it is not an investment.

      Some people might argue that doing things you like, it is "investing in yourself", however to do so you need to spend money or time in things that will help you generate more money. To have a reliable car is a good investment, but going over the top definitely is not.

      • That’s what I mean, people judge it as an investment and then say it’s a waste of money because it doesn’t give positive returns. I’m saying that it’s not an investment and it should be instead judged against other things that are nice to have but not needed.

    • -2

      So you think someone on circa $500k can afford a $1m apartment in two years? Right…

      • +1

        Read a bit more slowly, I said 2 years salary worth. The whole point is that he blew all his money and could only afford a $1m apartment, even without buying a car.

    • You are right. Some people think a $100k car is an investment because they think everyone looks down on them. But truth is people just look more at them driving the $100k car thinking who is the fool.

      Or maybe some people just have allergy to something they put into cheap cars. Maybe expensive car interiors are gluten free.

  • +1

    OP, my income is below 100k and my wife earns below 50k. we save 50k per year after mortgage and Living costs. Since we have paid cash for 2 normal cars and deposit for house, we dont have much stress for anything. Thats why ppl buy better cars because they can afford.

    • Many people have better cars than me, sometimes two, they live large, yet I know I could buy and sell them a couple of times at least.

      They live on debt, if they lose their job and can't find another in a month or two they are in serious trouble. Sure that may never happen but they are living on the edge but don't appreciate the risks they a taking.

      And God forbid if interest rates go back to historically normal levels.

      • thats right. ppl need to have 6 month reserved cash to be comfortable and safe. Always be aware of risks and control spending will greatly help the family financial status. So my conclusion is dont buy expensive cars unless you are already rich enough.

  • In Sydney, the median house price is close to a million dollars. Spending $50-$100k on a car can appear normal.

    • That is the problem, relativity.

  • Buying a car is a liability and a depreciating asset. Think of having $70k of cash and pouring petrol and lighting it up. Fun hey!!

    However if you can afford it why the hell not, you only live once and you can't take it with you.

    I have assets that buys my liabilities so I have no issue spending 250k on a liability.

    • +3

      You could argue that buying nice clothes is also depreciating but brings you happiness and confidence so that in itself is priceless just like driving a nicer car

      • Placebo assets. Might as well go to the doctor and get some happiness and confidence pills filled with sugar. Lot bloody cheaper.

        • Each to their own if you want to spend money on placebo pills instead of a car or clothes

  • Most cars are bought with finance by people who have to stretch to afford it. Not many people exercise "Living below your means".

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