How are people affording cars?
- Thread starter flibbage0
- Start date
Hi there
Cars tend to have attractive financing packages, for example I purchased the GR Yaris on Toyota finance because it was 0% interest for two years. So the financials are something like:
- £10,000 deposit
- £200 per month for 24 months
- £18,000 final payment next March.
For me it made sense due to 0% as my cash has made me better returns rather than buying outright, all my other cars I own outright.
The new Lotus Emira if I put something like 20k in it is £299 a month for two years, but their interest is around 5% and they will make around 5k in interest if I went ahead with it for the full term with a final payment of £58,000.
Cars tend to have attractive financing packages, for example I purchased the GR Yaris on Toyota finance because it was 0% interest for two years. So the financials are something like:
- £10,000 deposit
- £200 per month for 24 months
- £18,000 final payment next March.
For me it made sense due to 0% as my cash has made me better returns rather than buying outright, all my other cars I own outright.
The new Lotus Emira if I put something like 20k in it is £299 a month for two years, but their interest is around 5% and they will make around 5k in interest if I went ahead with it for the full term with a final payment of £58,000.
Soldato
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It's a double whamy with the the more expensive areas as not only do the people have more disposable income but their higher salaries make the salary sacrifice schemes etc. more tax efficient
Some people earn more or have different outgoings. I do suspect some people overstretch but most people finance cars and that has been the case for years. I don’t care what other people have really, their money their decisions and I don’t foresee a black hole coming to bite them unless they have overstretched as now they will be feeling it.
The cheap ‘deals’ seem to have gone and I don’t see them coming back anytime soon and I suspect interest rates are going one way for a few years now.
We do however suffer from a growing culture of being seen to have, fake lifestyles and all that comes with that. I see fakery on social media as a cancer of our society as it creates a false impression on what people need to do to have nice things. I think cars are part of that. I know of people who put their life on hold to have the special car and that’s crazy to me. It’s just metal.
The cheap ‘deals’ seem to have gone and I don’t see them coming back anytime soon and I suspect interest rates are going one way for a few years now.
We do however suffer from a growing culture of being seen to have, fake lifestyles and all that comes with that. I see fakery on social media as a cancer of our society as it creates a false impression on what people need to do to have nice things. I think cars are part of that. I know of people who put their life on hold to have the special car and that’s crazy to me. It’s just metal.
I go in open minded. I always ensure that I'm saving towards the balloon payment at the end of the term. If I fancy a change then I change, had I decided to stick then I'd either have had the balloon ready to go, or would have had enough of it ready to go that a personal loan for the difference would have been cheaper per-month than I was paying for the PCP, hence staying affordable.
Soldato
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A lot of people have a 'stick their head in the sand' outlook when it comes to financial decision, I don't think this anything new. However with the availability of credit these days and the it's only £xxx' a month attitude it allows people who probably can't really afford something in the long term to pass the affordability checks. Not only with new cars, you see it with phones, expensive holidays, clothes etc.
Don't those two statements contradict each other!
I honestly still don't understand the blanket concept that leasing a depreciating asset (and therefore paying depreciation plus interest) is better than paying the depreciation upfront. Well, not unless you can guarantee returns that are better than the extra you are paying.
That said I am extremely debt averse, always have been.
It's a fantastic theory if you're sat with £50,000 in your pocket and making a choice between spending that £50,000 on a car that will lose £20,000 or investing that £50,000 and using that money and its expected gains to pay for a £20,000 lease - you have the potential for the investment gains to pay for some/all of the lease (but also the risk of losing) and so overall you win (but as you say, this relies on assuming you get those better investment returns).
It's less great when people with no money in their pocket read 'you should lease depreciating assets, it's what rich people do' on social media and convince themselves that means it's a great idea to spank £500 a month of their salary on a leased 320d rather than pensions, savings, investments etc.
It's better if you don't have the £xxk sitting around [As Kenai posted]
I’ve always financed cars as does virtually everyone I know, including the massively wealthy, which I am most certainly not.
I’ve also bought cars outright either day one or end of term. I have also put deposits in that would buy me a nice car outright should I want and I always, these days, put a chunky deposit in so I don’t take a bath when I might need to exit quickly. Cover the risk when you easily can and not when the world turns to crap and you can’t, which is where many go wrong. Lowest possible deposits come with risks.
I can afford payments on both my cars and could afford double what I pay on both too, but then the risk profile goes up and I am risk adverse when it comes to such things where as others are not. I could today buy both outright, but then bathrooms, windows, kitchens and other stuff doesn’t get done.
I do fancy a 765 it must be said but I also prefer to shower without the water ending up in my kitchen so needs must
I’ve also bought cars outright either day one or end of term. I have also put deposits in that would buy me a nice car outright should I want and I always, these days, put a chunky deposit in so I don’t take a bath when I might need to exit quickly. Cover the risk when you easily can and not when the world turns to crap and you can’t, which is where many go wrong. Lowest possible deposits come with risks.
I can afford payments on both my cars and could afford double what I pay on both too, but then the risk profile goes up and I am risk adverse when it comes to such things where as others are not. I could today buy both outright, but then bathrooms, windows, kitchens and other stuff doesn’t get done.
I do fancy a 765 it must be said but I also prefer to shower without the water ending up in my kitchen so needs must
I usually buy runabouts for £2k or so cash and move them on. No interest in cars these days, as long as they start and go. I do know a few at work who've over stretched themselves or are living with parents in their mid/late 30s (just lol), driving fancy BMWs and Mercs but that's their life.
Soldato
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I've always bought used seeking out a good example and sold my old car privately or traded in. The difference would be a personal loan with a focus on paying that off as quickly as possible and no more than £175 a month, once it's paid off that £175 a month goes into savings for next car. At no point is what I owe more than value of the car so I could sell the car and clear the debt and have change at any time after purchasing it.
It means driving an older car which is why I seek out out well maintained examples, current car is 7 years old, bought by me 3 years ago. Itching to change it but can't justify the change because there is absolutely nothing wrong with it.
I can't see me ever buying a new car, lease, PCP etc I don't like debt and don't like the idea of renting
It means driving an older car which is why I seek out out well maintained examples, current car is 7 years old, bought by me 3 years ago. Itching to change it but can't justify the change because there is absolutely nothing wrong with it.
I can't see me ever buying a new car, lease, PCP etc I don't like debt and don't like the idea of renting
Soldato
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I tend to buy premium cars that are 5 to 10 years old but in great condition, and keep them 3 to 5 years.
I feel like its a pretty good way of doing it - I get to drive a decent motor, and I never loose more than 1K a year in depreciation, more recently I'm probably only loosing £500 a year as second hand car prices have gone up a bit.
I feel like its a pretty good way of doing it - I get to drive a decent motor, and I never loose more than 1K a year in depreciation, more recently I'm probably only loosing £500 a year as second hand car prices have gone up a bit.
It is a thing for sure. 15 year old SUV’s, private plates, blacked out windows, huge wheels carrying a collection of footballers wives look alike’s are quite common around here. All dressed in designer gear and with fake handbags (I’m now an expert on this as it happens, thanks to my girlfriend who has a collection of the real ones and I’m astonished how much they are worth and how women covert them…) but oddly not coming with the footballers house.
All power to them if it makes them happy. Their money their choices and if it catches up with them so be it. We have one life live it in a way that makes you happy.
Deleted User 298457
Deleted User 298457
The silly thing is, if you have the capital, the real bags are worth a fortune on re-sale (i.e. hold their value or actually appreciate). Hand bags aren't to be snubbed as a ladies passion, just like shoes, trainers, watches etc. they are a booming collectible market.
The fake ones however are just converting cash into trash.
Both my cars are around 3 years old. Both felt like my brand new cars when I took delivery but both were 40% cheaper. My Merc was £162k new. Two people added less than 4K miles, PPF’d it for me (4K) and then i bought it for 62k less. That’s the way to do it. Not sure what the list on my Bimmer was but suspect not much change from 50k and I paid 31k after 3 years.
She has them as investments, bought the right way and she watches the market. My circle has some extremely wealthy people in it and one said “I don’t care how much my wife wants all the Chanel bags she has when she is ready to sell”. Getting her to sell is the hard part.
Deleted User 298457
Deleted User 298457
Yeah the latter part is where I need to snap out of it. I've got colleagues with nice watches and they say how they've never lost a penny, but I know they've worn them during key engagements, bought them for special reasons - they are never being sold.
I have a few watches that are appreciating but like you say, coming to sell them is highly unlikely
Soldato
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Same here, I take comfort from them being something I could sell if I fell on really hard times!Yeah the latter part is where I need to snap out of it. I've got colleagues with nice watches and they say how they've never lost a penny, but I know they've worn them during key engagements, bought them for special reasons - they are never being sold.
I have a few watches that are appreciating but like you say, coming to sell them is highly unlikely