How are people affording cars?

[Soviet]

Your realise that mindset is your own bias and insecurities showing themselves? It will certainly apply to some, but not most.

I’m wholly speaking from experience, no insecurities. I honestly couldn’t care less whether people could afford to buy outright or not, or why they’re financing. Neither is it any of my business.

I’m simply providing insight into what I’ve seen. I don’t assume that just because someone’s on PCP that they are can’t afford the car outright. Far from it. Sadly I have seen a lot of people up to their eyeballs in debt take out a finance plan on a car they can’t afford just for looks.

 

[Steedie]

This forum has always had a hilariously backward view on financing cars, it's pretty amusing to see some times. The mindset of "if you can't pay cash for your car, you can't afford it" is just mental and so out of touch with reality.

 

[CapitalOne]

I could afford better cars than I have but...

1) We do about 2000 miles a year
2) They might get nicked/scratched (I've seen friends with nice cars picking seats in resteraunts so they can keep an eye on the steed )
3) If I really fancied a burn in a Porshe or the like I'd just hire one

I cannot be alone in this!

PC's though are a different story.

 

[panthro]

I don't know why anyone cares how others afford anything. You know in yourself what you can and can't afford and if you're sensible with your money then just do what you need to.

 

[Telecaster]

I don't know why anyone cares how others afford anything. You know in yourself what you can and can't afford and if you're sensible with your money then just do what you need to.

It's not that I care, I just think I must be missing out on some trick or scam that is letting people drive around in cars way above what you'd think they'd be in.

It's more a fascination or interest than caring, not being into finance or credit I honestly don't know the tricks of the trade some of these people must be pulling. I'm early 40s and still driving a 14/15 year old car, I've been a petrol head all my life and owned all manner of wacky and fast motors but I'm struggling to justify or afford it these days, before I'm too old to appreciate it I'd love a Porsche but there's Bob Hope of that happening.

Same goes for owning a house, I think I've missed the boat now and it's unlikely to happen with how the market is going.

 

[Kenai]

It's not that I care, I just think I must be missing out on some trick or scam that is letting people drive around in cars way above what you'd think they'd be in.

I really think this will boil down to priorities and what else people are happy doing with their money - we have trainees at work driving cars worth twice what some of the senior managers and directors drive - it's not because they've discovered some sort of trick, it's because they're choosing to spend more of their money on their car - whether they're doing so responsibly, only they know.

 

[AndrewNR]

I could afford better cars than I have but...

1) We do about 2000 miles a year
2) They might get nicked/scratched (I've seen friends with nice cars picking seats in resteraunts so they can keep an eye on the steed )
3) If I really fancied a burn in a Porshe or the like I'd just hire one

I cannot be alone in this!

PC's though are a different story.

Similar here. Current cars are probably worth £5k and £15k on the drive maybe - both incredibly dull.
I could afford up to £1k a month on a rental if I wanted but my mindset just says that's a complete waste of money.
I'd be happy around the £3-£400 a month but I guess that gets something equally dull.

 

[Gibbo]

Similar here. Current cars are probably worth £5k and £15k on the drive maybe - both incredibly dull.
I could afford up to £1k a month on a rental if I wanted but my mindset just says that's a complete waste of money.
I'd be happy around the £3-£400 a month but I guess that gets something equally dull.

If you place a large deposit with a large final ballon then £300-400 will drop you into something pretty exciting and fun.

Not sure if I posted the exact details but say a Lotus Emira AMG FE, put around 25k deposit, circa £300ish a month and around 50k final payment over around two years.

There is no real trick as such people either go with small deposits and large monthly payments or larger deposits with a smaller monthly and both options with a final balloon.

Other option is no final balloon and that typicall means a large monthly over a number of years.

Www.lotuscars.com and configure an Emira and then click the monthly finance to play with deposit, term options to see how deposit and different types of finance work.

 

[Jonnycoupe]

Hahahahah recommendation to get to 300-400 a month is a 25k deposit.

Gibbo you have done great with your cars and clearly funding them but, mate, you missed the audience there with that one! #realworld

 

[jpaul]

I’m wholly speaking from experience, no insecurities. I honestly couldn’t care less whether people could afford to buy outright or not, or why they’re financing. Neither is it any of my business.

except in so much that if overall high % of credit use across the country means little margin for people to afford energy bills, and other inflation costs;
which necessitates interest rates increase, housing melt-down again, todays consumer purchase figures weren't good. ... the interconnectedness of things;
some youngsters will then be able to afford houses again though,
inaccesibility of the housing market is commonly considered as the reason why younger demographic might spend more money on cars, than forefathers.

 

[b0rn2sk8]

Hahahahah recommendation to get to 300-400 a month is a 25k deposit.

Gibbo you have done great with your cars and clearly funding them but, mate, you missed the audience there with that one! #realworld

The principle isn’t wrong though.

To put that in a more realistic scenario, if you pick up a nearly new hatch back for £20k (at the current LOL prices) and don’t put any money down the PCP prices will also be £lol. You’ll probably be paying £1k a year in interest alone before you even start paying for the car.

If you put down a healthy deposit, say £5-6k, the monthly payments will be far more reasonable and the interest will be substantially reduced.

 

[Jonnycoupe]

I didn’t need that explanation on the maths, thanks though if you thought it added value.

Point stands for the majority, people simply do not have that sort of money for a deposit; which is why we see the market develop as it has.

 

[Robbo]

I'd say the average person will want to put in a 10% deposit?

 

[lemonkettaz]

If you can bang 25k down for a car deposit, you shouldn't be worried about the 400 a month repayment.

Think this conversation is for the people who think you must walk on water to just chuck a quick 25k deposit down

I'm on nearly 40 a year and financing a new car that I'd like is pretty much a pipe dream. And I don't even have sky or Netflix, I must drink too much coffee

 

[XeNoN89]

When I was getting my car serviced last month I was amazed by the amount of scruffbags coming in and buying brand new BMWs. No idea how they do it!

 

[Mike9000]

Don’t post here much but this I feel is the answer….

To the OP's opening question.

1) People earn different money
2) People have different outgoings
3) People have different priorities

If you are struggling to see how you can do this then it's 1, 2 or combination of the both. If you can but can't understand why you would, it's 3.

3 for now. New kitchen, house modifications/maintenance and my two children are not cheap. I own my fun/enthusiast car outright and have a loan on my family car. Far from overstretched and cautious after being made redundant a few years back.

I’m doing better than I ever thought I would but don’t have anything on the flexers on OC forums

 

[Bug One]

Deposit? It's not a deposit tough, it's a first payment. If it was a deposit you'd expect to get it back at the end.

 

[lordrobs]

If you can bang 25k down for a car deposit, you shouldn't be worried about the 400 a month repayment.

How so? Is £4800 a year not a lot of money to someone with £25k in cash?

 

[Lopéz]

How so? Is £4800 a year not a lot of money to someone with £25k in cash?

I think the point he's getting at is that in order to have amassed £25,000 to spend on an initial payment for a car, then you must have a decent level of disposable income and/or have been saving for quite a long time - therefore monthly outgoings of £400 are not likely to be of great concern.

Gibbo, I'm not sure that your average person (assuming average means the median UK salary of £32,000 approx) is going to be whipping out £25 grand to stick down on renting a Lotus for a few years.

 

[Gibbo]

I think the point he's getting at is that in order to have amassed £25,000 to spend on an initial payment for a car, then you must have a decent level of disposable income and/or have been saving for quite a long time - therefore monthly outgoings of £400 are not likely to be of great concern.

Gibbo, I'm not sure that your average person (assuming average means the median UK salary of £32,000 approx) is going to be whipping out £25 grand to stick down on renting a Lotus for a few years.

Fair enough, I was just posting an example of how I do it, plus for me its not renting as I generally always end up owning them in the end, I've never handed a car back.
The poster I responded too also mentioned having 20k in value of current cars, as such I assumed he would potentially sell those cars to make way for something newer which gives the deposit potentially as a trade in.

How people do things is their business, either drop a large deposit for lower monthlies, or a low deposit and higher monthlies or a blend of the two, there is no right or wrong, all that people should always pay close attention too is the "TOTAL AMOUNT PAYABLE" and to always consider other payments methods and to always ensure whatever they do finance wise that it is regulated and that the final GFV value they are happy with.