How the hell do people afford cars these days?
Discussion
Andy86GT said:
RayDonovan said:
We've got a '23 plate Tiguan (company car) and a '20 plate Corolla.
The Corolla was paid using a PX (£4k), cash (£4k) and a 5 year Tesco loan. The Toyota salesman was desperate to get us into a PCP and showed us the lower monthly payments.
If we'd had gone with the PCP, we would be handing the car back in a few months with nothing to show for it. Instead, we've now got a about £6k equity.
Although the company car costs me loads in BIK per month, it's still a cheap way to run a brand new car. £450 per month but includes all maintenance etc
Wowsers! The Corolla was paid using a PX (£4k), cash (£4k) and a 5 year Tesco loan. The Toyota salesman was desperate to get us into a PCP and showed us the lower monthly payments.
If we'd had gone with the PCP, we would be handing the car back in a few months with nothing to show for it. Instead, we've now got a about £6k equity.
Although the company car costs me loads in BIK per month, it's still a cheap way to run a brand new car. £450 per month but includes all maintenance etc
You need to get into a PHEV or EV co.car, our X1 PHEV costs me about £60 a month in tax.
Shnozz said:
Andy86GT said:
RayDonovan said:
We've got a '23 plate Tiguan (company car) and a '20 plate Corolla.
The Corolla was paid using a PX (£4k), cash (£4k) and a 5 year Tesco loan. The Toyota salesman was desperate to get us into a PCP and showed us the lower monthly payments.
If we'd had gone with the PCP, we would be handing the car back in a few months with nothing to show for it. Instead, we've now got a about £6k equity.
Although the company car costs me loads in BIK per month, it's still a cheap way to run a brand new car. £450 per month but includes all maintenance etc
Wowsers! The Corolla was paid using a PX (£4k), cash (£4k) and a 5 year Tesco loan. The Toyota salesman was desperate to get us into a PCP and showed us the lower monthly payments.
If we'd had gone with the PCP, we would be handing the car back in a few months with nothing to show for it. Instead, we've now got a about £6k equity.
Although the company car costs me loads in BIK per month, it's still a cheap way to run a brand new car. £450 per month but includes all maintenance etc
You need to get into a PHEV or EV co.car, our X1 PHEV costs me about £60 a month in tax.
The Corolla loan is only £240/month.
For me what's always worked is
- avoiding leasing and PCP.
- try to buy once depreciation has stopped or is slowing
- avoid paying interest
- buy and sell privately where possible
But then i'm ok with accepting the odd large bill for something that goes wrong. And i'm happy with buying and selling privately.
I always pay for my cars/bikes with cash (not often) and a cheap loan, or maybe a 0% balance transfer if possible.
Current daily is a Tesla bought for £19k. My wife's yaris was paid for. We sold that privately for £6k ish. I had £4k in cash to put in. And £9k on a barclaycard 0% deal (3% fee). Paying it off over 3 yrs at £250/month (but the car is saving me half that in reduced fuel costs).
I'm anticipating it being worth £10k minimum when i'm done with it, having added 50k-60k miles. So total cost will be the £250/month, which is pretty cheap going.
That £10k or whatever will be mine to put towards something else. In the meantime i'm saving quite a lot. Granted, if it throws up a big bill then i'm in trouble. But it's under drivetrain warranty until 2027 or 120k miles.
Over the years it's worked out well. Currently got around £60k of vehicles here, and finance on them is about 1/4 of that in total, and i think the debt is going down faster than the depreciation on them, so equity is building up. In a couple of years they're all paid for and i'll do the same again i think.
I struggle to understand the mentality of having a new car on PCP that's in negative equity for such a long period. Being on that treadmill would be depressing.
I did do PCP on a motorbike once, a honda fireblade in 2014, but it was 0% and the GFV was very low. £1.5K off list price. £2.5k deposit. £150/month for 3 yrs. £3.5k balloon. It was a great deal.
- avoiding leasing and PCP.
- try to buy once depreciation has stopped or is slowing
- avoid paying interest
- buy and sell privately where possible
But then i'm ok with accepting the odd large bill for something that goes wrong. And i'm happy with buying and selling privately.
I always pay for my cars/bikes with cash (not often) and a cheap loan, or maybe a 0% balance transfer if possible.
Current daily is a Tesla bought for £19k. My wife's yaris was paid for. We sold that privately for £6k ish. I had £4k in cash to put in. And £9k on a barclaycard 0% deal (3% fee). Paying it off over 3 yrs at £250/month (but the car is saving me half that in reduced fuel costs).
I'm anticipating it being worth £10k minimum when i'm done with it, having added 50k-60k miles. So total cost will be the £250/month, which is pretty cheap going.
That £10k or whatever will be mine to put towards something else. In the meantime i'm saving quite a lot. Granted, if it throws up a big bill then i'm in trouble. But it's under drivetrain warranty until 2027 or 120k miles.
Over the years it's worked out well. Currently got around £60k of vehicles here, and finance on them is about 1/4 of that in total, and i think the debt is going down faster than the depreciation on them, so equity is building up. In a couple of years they're all paid for and i'll do the same again i think.
I struggle to understand the mentality of having a new car on PCP that's in negative equity for such a long period. Being on that treadmill would be depressing.
I did do PCP on a motorbike once, a honda fireblade in 2014, but it was 0% and the GFV was very low. £1.5K off list price. £2.5k deposit. £150/month for 3 yrs. £3.5k balloon. It was a great deal.
Edited by LowTread on Friday 3rd May 08:50
Edited by LowTread on Friday 3rd May 08:54
LowTread said:
For me what's always worked is
- avoiding leasing and PCP.
- try to buy once depreciation has stopped or is slowing
- avoid paying interest
- buy and sell privately where possible
100% (and more!) agree with this approach. Whilst you may get an outlier killer finance type deal on some popular car that makes sense, in general buying a new car and taking the first 3 years biggest depreication hit whilst paying interest is never going to be clever move. - avoiding leasing and PCP.
- try to buy once depreciation has stopped or is slowing
- avoid paying interest
- buy and sell privately where possible
But we shouldn't shout this too loudly for it is those people (businesses with the tax break or fleet ecomonies of scale and those that just have to have a new car and will pay for it) that supply us who buy "our" way. If we didn't have these people we'd be stuck for finding those 3-5 year old cars that have plently of life and value left in them that we can run for a fraction of the intial purchasors depreciation and finance cost.
I had a big bill on my old car that mixed with it being 10 years old (I had it for 9.5 years...), part needed was obsolete meant I sold it spares repairs.. but it only cost me £1500 per annum in both depreciation and maintenance cost which i didn't think was too bad for a family estate car with all the things you'd want (leather, xenons etc etc). Unfortunately having moved house, bought a second modern car for my wife due to where we now live and spent some of my car fund meant I borrowed to buy it's replacement but I pay it off a £grand a month so that I can get a good few years use out of it with no finance and use that time to rebuild the replacement car fund.
I also have an old VW Corrado in the garage which I am rolling restoring but that isn't losing money anymore. Hope to buy something else older and depreciation free once I've recovered from my day to day car purchase too.
However, if I got sucked into a lease/PCP deal 20 years ago and kept renewing it there is no way i'd be able to have the old classic cars in the garage and nor would I be able to live in the house I live in. Fag packet maths says I would have spent £100k on leasing with down payment 1 family car over 20 years vs approx £30k spent on the route of "buy and hold" i've done to date. Compound that into 2 cars on the drive that many have to have ( I lived next to London so had no need) and then the difference is quite staggering for those starting out in life: it really is the difference between a dream home and luke warm one.
Edited by VeeReihenmotor6 on Friday 3rd May 10:31
otolith said:
LowTread said:
I struggle to understand the mentality of having a new car on PCP that's in negative equity for such a long period. Being on that treadmill would be depressing.
It's a different mindset - more like paying for a service than coveting ownership.I've known people that have paid a few hundred quid/month and just get a new car every 3 years. For some people it makes sense, but it's not for me. Not yet at least.
I had a lease on an M135I in 2014. £3k down and £300/month. 2 yrs and 20k miles.
On paper it was a great deal at around £10k over 2 yrs for a £35k car, but i'd never do it again. We chewed through the miles in 18 months and in the end we gave it back by paying 50% of the remaining payments. It needed two tyres and a service so we opted to bail out. Our fault for not structuring it correctly to fit our needs.
I'd not do it again. Learnt my lesson there.
Doesn't really appeal to me either. It's paying the premium for owning something new that doesn't seem worth it to me. I bought a brand new Civic Type-R in 2002, and it's nice to have something pristine, but not that nice. But then I know people who pay for a minimal cost sim only phone contract and buy a new handset when they want one while I have a contract phone essentially out of laziness - expect it would be cheaper just buy the phone.
A Lot of people who engage with PCPs don't care about being in negative equity etc, they just want a fixed cost per month.
It's only really car nerds on here who ever consider residuals, equity etc. The average punter wouldn't even know (or care) about neg eq - they'll just hand the car back and start again
It's only really car nerds on here who ever consider residuals, equity etc. The average punter wouldn't even know (or care) about neg eq - they'll just hand the car back and start again
Surely most who want a reasonably new car decide the PCP or leasing is a very cost effective way to spread the depreciation over 3 years. Even if you buy a 3 year old car which has depreciated a lot you will still more than likely be paying back a loan that is equivalent to the PCP payments on new car, or near enough as to not matter.
Most people swap cars every 3 years or so anyway.
Not for me as I buy cars at 8 to 10 years old maintain them myself and keep them for 5 years or so. The last one of mine a lexus RX400h is leaving my stable next week after 7 years of faithful service, bought at 9 years old with 85k on the clock, now on 160k. My spreadsheet tells me that it has cost £892 a year to own. This does not include insurance, mot, tax and consumables like oil, filters, tyres and brakes as I have to buy them whatever I drive.
Most people swap cars every 3 years or so anyway.
Not for me as I buy cars at 8 to 10 years old maintain them myself and keep them for 5 years or so. The last one of mine a lexus RX400h is leaving my stable next week after 7 years of faithful service, bought at 9 years old with 85k on the clock, now on 160k. My spreadsheet tells me that it has cost £892 a year to own. This does not include insurance, mot, tax and consumables like oil, filters, tyres and brakes as I have to buy them whatever I drive.
The big cost is changing cars.
Leasing and PCP encourage/force you into constantly changing cars, but you can still fall into the same trap with buying them outright.
Even if you buy a 3 year old car cash and change every 2 years you can still expect some decent depreciation. Particularly if you are buying and selling into the trade. The cheapest way would be to buy the 3 year old car and run it for 10+ plus years and spread out that depreciation. Otherwise I wouldn't say there our big savings to be had with buying a 3 year old car and changing every 2 years, over say some of the leasing deals we have seen in the past.
I know this as is I like changing cars! (and I can't bring myself to shedding)
Leasing and PCP encourage/force you into constantly changing cars, but you can still fall into the same trap with buying them outright.
Even if you buy a 3 year old car cash and change every 2 years you can still expect some decent depreciation. Particularly if you are buying and selling into the trade. The cheapest way would be to buy the 3 year old car and run it for 10+ plus years and spread out that depreciation. Otherwise I wouldn't say there our big savings to be had with buying a 3 year old car and changing every 2 years, over say some of the leasing deals we have seen in the past.
I know this as is I like changing cars! (and I can't bring myself to shedding)
RayDonovan said:
A Lot of people who engage with PCPs don't care about being in negative equity etc, they just want a fixed cost per month.
It's only really car nerds on here who ever consider residuals, equity etc. The average punter wouldn't even know (or care) about neg eq - they'll just hand the car back and start again
Well quite, not having to care about that is part of the point! They don't have to worry about what happens when they need to offload the car because they just hand it back.It's only really car nerds on here who ever consider residuals, equity etc. The average punter wouldn't even know (or care) about neg eq - they'll just hand the car back and start again
otolith said:
RayDonovan said:
A Lot of people who engage with PCPs don't care about being in negative equity etc, they just want a fixed cost per month.
It's only really car nerds on here who ever consider residuals, equity etc. The average punter wouldn't even know (or care) about neg eq - they'll just hand the car back and start again
Well quite, not having to care about that is part of the point! They don't have to worry about what happens when they need to offload the car because they just hand it back.It's only really car nerds on here who ever consider residuals, equity etc. The average punter wouldn't even know (or care) about neg eq - they'll just hand the car back and start again
FamousPheasant said:
Particularly if you are buying and selling into the trade. The cheapest way would be to buy the 3 year old car and run it for 10+ plus years and spread out that depreciation.
This is what I did with the last new car I bought. I also bought a pre-facelift out of stock just as the facelifts had arrived in the showrooms and the dealers needed to shift the old stock. I got 25% discount just for that. Anyway, to make the numbers work for me I told myself I have to keep that car for ten years for it to make sense - because I was paying cash. But in the back of my mind I rather suspected I would change earlier, however...
I'm five and a half years into it and I still love it just as much as the day I bought it. It only feels like I've had it a couple of years. It still feels new to me and still gets a second look when I walk away from it. So, finding the right car that stops you wanting to change seems to be a factor too.
VeeReihenmotor6 said:
100% (and more!) agree with this approach. Whilst you may get an outlier killer finance type deal on some popular car that makes sense, in general buying a new car and taking the first 3 years biggest depreication hit whilst paying interest is never going to be clever move.
But we shouldn't shout this too loudly for it is those people (businesses with the tax break or fleet ecomonies of scale and those that just have to have a new car and will pay for it) that supply us who buy "our" way. If we didn't have these people we'd be stuck for finding those 3-5 year old cars that have plently of life and value left in them that we can run for a fraction of the intial purchasors depreciation and finance cost.
This is very true. Noticeable in Spain how horrendously expensive second hand cars are due to the absence of company cars and those electing to do PCP/personal lease. No throughput and s/h prices are eye watering as a result. But we shouldn't shout this too loudly for it is those people (businesses with the tax break or fleet ecomonies of scale and those that just have to have a new car and will pay for it) that supply us who buy "our" way. If we didn't have these people we'd be stuck for finding those 3-5 year old cars that have plently of life and value left in them that we can run for a fraction of the intial purchasors depreciation and finance cost.
I have bought new and used, cash and financed. I think sometimes it’s your personal circumstances or what you need from it that dictates how to buy.
I like to buy mostly new cars because I enjoy specking a car to be as I want it. As I do not plan to keep them long enough to spread the depreciation I accept that to have a new car frequently, under warranty and trouble free I may be paying a little more if bought used and kept for a long time.
I looked into this before and realised for the cars I wanted to drive there was no point buying used, out of warranty. I needed reliability and modern mod cons.
I also ran sheds before without an issue but I like newer cars. Spending a long time in a car, I prefer new with good stereo, comfortable seats and dare I say a little luxurious if possible. Makes the miles pass easier.
Going electric next… no way I would buy it in cash….
I like to buy mostly new cars because I enjoy specking a car to be as I want it. As I do not plan to keep them long enough to spread the depreciation I accept that to have a new car frequently, under warranty and trouble free I may be paying a little more if bought used and kept for a long time.
I looked into this before and realised for the cars I wanted to drive there was no point buying used, out of warranty. I needed reliability and modern mod cons.
I also ran sheds before without an issue but I like newer cars. Spending a long time in a car, I prefer new with good stereo, comfortable seats and dare I say a little luxurious if possible. Makes the miles pass easier.
Going electric next… no way I would buy it in cash….
My personal view is what do I care what others drive or how they afford it. Life’s not fair so not point moaning.
Some people are happy to lease or PCP for £x amount a month. Others like to pay cash and have no monthly payments. Both are fine.
Ultimately you still just have a car on your drive and as long as people are happy with their choice what’s the problem.
Personally my approach is random and depends on the car and realistically what I think is best value at the time.
People spend extra to get a certain brand of clothes, or to eat at a fancier restaurant, get a bigger TV or to holiday somewhere. For some reason paying a bit extra for a car is frowned upon despite spending every day in one or it adding value to your life.
Some people are happy to lease or PCP for £x amount a month. Others like to pay cash and have no monthly payments. Both are fine.
Ultimately you still just have a car on your drive and as long as people are happy with their choice what’s the problem.
Personally my approach is random and depends on the car and realistically what I think is best value at the time.
People spend extra to get a certain brand of clothes, or to eat at a fancier restaurant, get a bigger TV or to holiday somewhere. For some reason paying a bit extra for a car is frowned upon despite spending every day in one or it adding value to your life.
CG2020UK said:
My personal view is what do I care what others drive or how they afford it. Life’s not fair so not point moaning.
Some people are happy to lease or PCP for £x amount a month. Others like to pay cash and have no monthly payments. Both are fine.
Ultimately you still just have a car on your drive and as long as people are happy with their choice what’s the problem.
Personally my approach is random and depends on the car and realistically what I think is best value at the time.
People spend extra to get a certain brand of clothes, or to eat at a fancier restaurant, get a bigger TV or to holiday somewhere. For some reason paying a bit extra for a car is frowned upon despite spending every day in one or it adding value to your life.
First sensible post I've seen in a while on hereSome people are happy to lease or PCP for £x amount a month. Others like to pay cash and have no monthly payments. Both are fine.
Ultimately you still just have a car on your drive and as long as people are happy with their choice what’s the problem.
Personally my approach is random and depends on the car and realistically what I think is best value at the time.
People spend extra to get a certain brand of clothes, or to eat at a fancier restaurant, get a bigger TV or to holiday somewhere. For some reason paying a bit extra for a car is frowned upon despite spending every day in one or it adding value to your life.
CG2020UK said:
My personal view is what do I care what others drive or how they afford it. Life’s not fair so not point moaning.
Some people are happy to lease or PCP for £x amount a month. Others like to pay cash and have no monthly payments. Both are fine.
Ultimately you still just have a car on your drive and as long as people are happy with their choice what’s the problem.
Personally my approach is random and depends on the car and realistically what I think is best value at the time.
People spend extra to get a certain brand of clothes, or to eat at a fancier restaurant, get a bigger TV or to holiday somewhere. For some reason paying a bit extra for a car is frowned upon despite spending every day in one or it adding value to your life.
I don't think anyone really cares. It doesn't mean you aren't allowed to discuss it.Some people are happy to lease or PCP for £x amount a month. Others like to pay cash and have no monthly payments. Both are fine.
Ultimately you still just have a car on your drive and as long as people are happy with their choice what’s the problem.
Personally my approach is random and depends on the car and realistically what I think is best value at the time.
People spend extra to get a certain brand of clothes, or to eat at a fancier restaurant, get a bigger TV or to holiday somewhere. For some reason paying a bit extra for a car is frowned upon despite spending every day in one or it adding value to your life.
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