AIBU to spend £20k on our first car?

I mean your money your choice, but that would not be something I'd do. We have a bigger income a mortgage which is probably less than a lot of people's rent and hell would freeze over before we spent that kind of money monthly on a car. Buying new is for idiots or people who can burn money (mortgage paid if and a great income). The function of a car is to get you from a to b in some level of comfort with as little hassle as possible. 18 months old (or even older tbh) less 'prestige' brands will do that just fine and unless you are a family of five golf sized is good for most. You can meet those requirements for much less than 20k. It's not an asset (that holds value or grows in value), it's not an investment that will help you earn more (like a bit of kit for a business or a training course) so in 'money sense' terms you should spend as little as possible on it. If you want it fine, but you certainly don't need it and there is no financial justification.

If you can afford it, go for it.

I think you’d be crazy to pay for it in finance. Surely with that (net?) income you can afford to save for 6 months and buy it outright?

but I presume you need something quicker. In which case, I’d buy something cheap and roadworthy in cash and then save hard to upgrade in a few months.

also, don’t forget budget for insurance, repairs, tyres wrecked potholes etc.

Sounds crazy but your take home sounds enough. Personally I wouldn't have anything I couldn't pay for outright. I'd find something like that and put the £500 a month to a pension.

Compound interest would make that a very nice pension and might be the difference between your retiring much earlier than you might otherwise.

But if you want the car why not?

You would be mad to get a loan and pay interest on it if you have enough cash to buy the car outright. Either buy with cash or get a cheaper car with cash is what I would do

Yes, but do you need to get on finance?

Can you save up or buy a cheaper car and put it on a zero interest credit card? Car finance is notoriously expensive.

Is that with a loan? In theory I guess you can afford your monthly payments..but have you done the maths on how much interest you’re paying in total? I presume the car cost £20k at face value? If it’s a loan, it’s not spending £20k on a car, it’ll be far more, so in the end you’ll be ‘under water’ paying out for a car depreciating in value. Also if you’re planning to buy soon, the monthly payments will impact on your lending options. I’d suggest buying a cheaper car that you can afford outright instead.
I’d suggest looking at what Dave Ramsey has to say about car loans!

Spending 5% of your pay on a car is not crazy, although I’d question why you can’t buy it from savings if you are bringing home that much. If you are spending everything as it comes in then what will you now cut to cover that £500, plus insurance and maintenance?

It’s worth starting a savings pot so that when you come to replace it in a few years you have the option of not financing the next one.

Do you want the commitment of £500 pcm for years? It will affect how much you can get a mortgage for. What if one (or both) of you loses your job?

I mean, people do buy £20k cars of course but it's a want not a need. Cheaper, yet still perfectly good, cars are available.