Even with a monthly income under 5 million won, they drive foreign cars... "I will spend up to 61.34 million won"

Shinhan Bank's '2020 Ordinary People's Financial Life Report'
Households with Monthly Income Over 10 Million Won Say "Willing to Spend Up to 92.51 Million Won on Luxury Car Purchases"

[Asia Economy Reporter Kwon Haeyoung] Households with a monthly income of less than 5 million KRW considered spending up to 61.34 million KRW on purchasing imported cars, while those with a monthly income of over 10 million KRW thought they would spend up to 92.51 million KRW. The most common reasons for purchase were the vehicle's excellent performance and quality, safety, and the image or self-satisfaction that owning an imported car provides.

According to the '2020 Ordinary People's Financial Life Report' released by Shinhan Bank on the 1st, these results were revealed. The survey was conducted via email from September to October last year, targeting 10,000 economically active individuals aged 20 to 64 nationwide (95% confidence level, margin of error ±0.98%).

Households earning less than 5 million KRW per month expected an average budget of 48.78 million KRW for purchasing imported cars and showed willingness to pay up to 61.34 million KRW if they really wanted to buy one. Households with monthly incomes between 5 million and less than 7 million KRW considered an appropriate purchase amount of 57.45 million KRW (up to 69.9 million KRW), those earning between 7 million and less than 10 million KRW thought 65.42 million KRW (up to 79.15 million KRW), and households earning over 10 million KRW considered 75.13 million KRW (up to 92.51 million KRW).

Regarding payment methods for imported car purchases, respondents said they would cover half of the vehicle price in cash and the rest through credit card installments or loans. The lower the monthly income, the higher the proportion of respondents who preferred credit card installments and loans over cash. Households earning less than 5 million KRW per month said they would cover 54.7% of the vehicle price through card installments and loans, 48.9% for those earning between 5 million and less than 7 million KRW, 45.5% for those earning between 7 million and less than 10 million KRW, and 40.7% for households earning over 10 million KRW.

To repay loans taken for purchasing imported cars, households earning less than 10 million KRW per month responded that they could repay about 800,000 KRW monthly. It is estimated that repaying the full loan amount for a 30 million KRW installment or loan would take approximately 3 years and 6 months.

Regardless of monthly income, the top reason for purchasing imported cars was the vehicle's excellent performance, quality, and safety. The image or self-satisfaction associated with foreign cars was also commonly ranked second. Among households earning less than 5 million KRW per month, 23.7% gave this reason, the highest proportion. For households earning between 5 million and less than 7 million KRW, it was 19.2%, for those earning between 7 million and less than 10 million KRW, 17.1%, and for households earning over 10 million KRW, 22.8% said they would purchase imported cars due to image and prestige-related self-satisfaction.

Shinhan Bank advised, "Although the price gap with domestic cars has narrowed and entry barriers to purchasing imported cars, such as installment programs, have lowered, various taxes and insurance fees are added on top of the loan amount. Therefore, a systematic purchase plan considering income levels is necessary to avoid becoming a 'car poor'."

This content was produced with the assistance of AI translation services.