What % of NET monthly salary do you spend on your car

[CX53]

My cringe glands have gone in to overdrive... 6 figs!

Personally I spend barely anything per month unless something breaks or needs servicing. Daily car was purchased on a 0% credit card and paid off at leisure, and the other one was less than two weeks wages worth so no need for finance. I'm not finance averse but i deliberately buy good value, cheap used cars and enjoy them Instesd of committing huge amounts each month to something that's considered more desirable.

I was quite shocked recently when I found out a colleague paid 65 grand for his A7. Firstly, I couldn't quite understand paying 65 grand on a car, and then getting a diesel to save money. Secondly, his monthly payments are actually quite a reasonable mortgage. Whatever floats your boat, but I'd sooner spend a sixth of my monthly income on a second house or something. I mean, 20 grand could get you a fully specced up used A8 with a V8 cost a lot less to run. He has barely any options ticked either so has a comparatively st audio system etc for the caliber of car. Each to their own I suppose, and it's a nice car nonetheless.

[soupdragon1]

lostkiwi said:

Very few people these days actually save money to buy a car preferring instead to take the 'easy' option of leasing. I mean why wait to have something new and shiny?

Exactly, why wait?

Its an easy option leasing a car, and also a brilliant option for some. Why save for say, 5 to 10 years to buy a 25k car and sink your 25k into a car that depreciates like a stone - that's actually even more 'insane' than leasing a car if you think about it. And during the saving process, your driving about in a £200 scrapper or maybe just riding a bicycle while you save up. All that time depriving yourself of what you really want, just so you can hang on to an old fashioned idea that paying cash up front for everything is a good financial mantra.

I've always bought my cars cash and have just decided to take my 1st ever lease which will be in the next couple of weeks. The lease thread on here means you'll always come across cracking deals where you pay circa 20-25% of the value of the car across the 2 years. Not bad for a depreciating asset.

[ChilliWhizz]

I own three cars, the youngest is '98 vintage and the oldest '72 vintage.. I paid cash for each one.. One of them will never be worth less than it is now (if I keep it maintained and the rot under control), one of them will be worth a lot more than its currently worth but I need to spend a load of dosh to get there, and one of them is now going up in value, but will probably never be worth more than I've spent on it in upgrades and keeping it 'mint'.

I have no idea why I have posted this information, it's not really relevant to the thread, and I'm sure nobody gives a feck about what's in my garage. Actually only two are garaged the third has to sit outside. Under a car port....

I have a mate who won't listen to me, about three years ago he traded his Focus ST in for a 350Z. The ST was on finance, so he had to 'pay' that back with an early termination premium, got a stupid trade value on it, then paid top forecourt value for the Z. Feck knows how much money he just 'threw away' but I was aghast.. 6 months later he decides the Z isn't really for him and he wants another ST.. So goes through the whole wallet crippling exercise again....

I guess it just staggers me sometimes to see how much (hard earned) money many people are prepared to throw away to have something today (which they don't really need) when they could save so much by waiting until tomorrow... (ish)

Go easy on me I've been drinking

Edited by ChilliWhizz on Wednesday 4th May 15:55

[veevee]

gizlaroc said:

Haha, perfectly said.


What an absolutely arrogant, ignorant and insular thinking fool he comes across as.

I bet he is only just hit that six figure salary this week, probably came on here after celebrating his pay rise, with a few sherbets and a bag of Peruvien courage and will regret it all in the morning.
Then again, he might just be a .

Probably an estate agent, had a good first quarter due to coming stamp duty changes, and thought he'd pro-rata it for the rest of the year

[lostkiwi]

soupdragon1 said:

Exactly, why wait?

Its an easy option leasing a car, and also a brilliant option for some. Why save for say, 5 to 10 years to buy a 25k car and sink your 25k into a car that depreciates like a stone - that's actually even more 'insane' than leasing a car if you think about it. And during the saving process, your driving about in a £200 scrapper or maybe just riding a bicycle while you save up. All that time depriving yourself of what you really want, just so you can hang on to an old fashioned idea that paying cash up front for everything is a good financial mantra.

I've always bought my cars cash and have just decided to take my 1st ever lease which will be in the next couple of weeks. The lease thread on here means you'll always come across cracking deals where you pay circa 20-25% of the value of the car across the 2 years. Not bad for a depreciating asset.

Like I said - great if you can guarantee future job security and no future recessions which may cause you to increase your spend on servicing debt relative to income. If there is a recession and folks have borrowed beyond their ability to repay it creates a similar situation to what happened in the US subprime crash that caused all the mayhem a few years back.
This isn't about leasing vs buying - its about whether leasing (and by implication personal debt) is good for the economy.

[battered]

lostkiwi said:

It may have escaped your notice but BMW are not the economy.

Where did I say that they were?
It may have escaped YOUR notice but large corporations like BMW are A PART of the economy, employing people, paying wages, and those wages being spent on living expenses. If my parents put £200 a month under the bed it does SFA for anyone, give it to BMW and someone somewhere gets a job.

-What is good for corporations is not necessarily good for the economy.
Again, nobody said it necessarily was. However in a world without corporations our economy is going nowhere.

-What proportion of new cars on the road are currently financed by leases?
A good few. Like renting houses, it's a valid means of getting what you need.

-As personal debt increase the risk to the economy also increases...Personal debt is a very dangerous thing for the economy.
Who's in personal debt to finance a leased car? Quite the opposite, leasing is financed by corporate borrowing, which is subject to different constraints. As for "shiny shiny" and not wanting to wait I know at least one multi-millionaire who leases his cars. Fixed price motoring. It's like renting a house instead of buying in a static or declining market.

[gizlaroc]

lostkiwi said:

Like I said - great if you can guarantee future job security and no future recessions which may cause you to increase your spend on servicing debt relative to income. If there is a recession and folks have borrowed beyond their ability to repay it creates a similar situation to what happened in the US subprime crash that caused all the mayhem a few years back.
This isn't about leasing vs buying - its about whether leasing (and by implication personal debt) is good for the economy.

But as I said, I don't think it is a case of people being flash, a car for many is an essential, all they care about is the cheapest way to stress free car ownership.


Now, if we are talking about borrowing for a big TV, the new sofas around the house, all the new carpets, the bifold doors, that admittedly looks so much better than the French doors that were in there but are costing £15,000 over the next 5 years, the 2 holidays at £5k a pop that have gone on credit cards, and the £3000 a year that many seem to spend on TV and mobile phone contracts then I agree, these are the things that fk the economy over in vicious cycles time and time again.

But leasing a car? I'm not sure I agree.

[soupdragon1]

lostkiwi said:

Like I said - great if you can guarantee future job security and no future recessions which may cause you to increase your spend on servicing debt relative to income. If there is a recession and folks have borrowed beyond their ability to repay it creates a similar situation to what happened in the US subprime crash that caused all the mayhem a few years back.
This isn't about leasing vs buying - its about whether leasing (and by implication personal debt) is good for the economy.

Borrowing is the heartbeat of the world economy - a necessary evil. You use the word 'guarantee' but the economy isn't build on guarantees as there is always and always will be an element of risk. Sometimes st happens though when the balance isn't quite right and thats when recessions happen. You will struggle to get any borrowing these days unless you can afford it so I don't think you can use that 'borrowing beyond means' theory as the lenders won't take the risk. Yes, there is a risk that you may lose your job etc but in reality, that's usually not a concern for most people or lenders either - losing your job is the exception rather than the norm.

[ChilliWhizz]

soupdragon1 said:

Yes, there is a risk that you may lose your job etc but in reality, that's usually not a concern for most people or lenders either - losing your job is the exception rather than the norm.

Unless you work in the Oil & Gas Industry...

[daemon]

gizlaroc said:

lostkiwi said:

Like I said - great if you can guarantee future job security and no future recessions which may cause you to increase your spend on servicing debt relative to income. If there is a recession and folks have borrowed beyond their ability to repay it creates a similar situation to what happened in the US subprime crash that caused all the mayhem a few years back.
This isn't about leasing vs buying - its about whether leasing (and by implication personal debt) is good for the economy.

But as I said, I don't think it is a case of people being flash, a car for many is an essential, all they care about is the cheapest way to stress free car ownership.


Now, if we are talking about borrowing for a big TV, the new sofas around the house, all the new carpets, the bifold doors, that admittedly looks so much better than the French doors that were in there but are costing £15,000 over the next 5 years, the 2 holidays at £5k a pop that have gone on credit cards, and the £3000 a year that many seem to spend on TV and mobile phone contracts then I agree, these are the things that fk the economy over in vicious cycles time and time again.

But leasing a car? I'm not sure I agree.

+1

If someone is leasing a car @ £200 a month because it gives them better commutable employment prospects then whats the issue?

Thinking of our family, my niece has a Corsa 1.3CDTI in stereotype white with black alloys on a PCP deal for maybe £200 a month, however that gets her to a job (and career prospects) greatly beyond what she was previously earning whilst working locally to her home.

She doesnt PCP it to impress her friends, she does so out of necessity. Its a means to an end.

And likewise with a lease, should the economy go pear shaped again simply hand the car back at the end of the lease and chose something cheaper / buy.

And for all the nay sayers / "it'll all end in tears" brigade who buy used instead of leasing / PCP what do they think will happen if the leasing market does collapse, other than the price of decent used cars will go UP considerably.

[daemon]

ChilliWhizz said:

soupdragon1 said:

Yes, there is a risk that you may lose your job etc but in reality, that's usually not a concern for most people or lenders either - losing your job is the exception rather than the norm.

Unless you work in the Oil & Gas Industry...

And whilst thats tough for those in that position currently, they'll get over it.

[daemon]

lostkiwi said:

Yes I can see your argument but thats looking at it from the individual standpoint.
When there is a recession and your brother loses his job due to 'restructuring' for 'sustainable growth' what happens to his lease?
What percentage of his monthly income is now spent on his car?
This is the problem.
If governments could guarantee no more recessions ever (and of course they can't) then yes fill your boots if that's what you want.
The issue comes when we have yet another recession and all those people with leases can no longer afford them.
The car then gets repossessed, sold at auction in a declining market (the nature of recession is there is less cash available), the finance company is out of pocket so they have less cash and the whole thing collapses like a house of cards.
At least when you pay cash you own the vehicle outright. You have a saleable asset if required (ok you will lose money but its still an asset) and you are not adding to the issue in the recession.

Recessions are inevitable with the current business models in play today. A simple rumour can wipe billions off stocks and shares in a day. When that happens businesses restructure almost creating a self sustaining prophesy.

The best way to survive a recession is to have minimal debt.

What happens someones lease when they get made redundant is - "they continue to pay it". Firstly - you're making a massive assumption that someone who leases a car is living hand to mouth. They're not. So the £150 or so lease per month gets continued to be paid until they find another job. If you have ANY skills at all it almost impossible not to be in paid employment again in 3 months.

Simples.

[otolith]

lostkiwi said:

Like I said - great if you can guarantee future job security and no future recessions which may cause you to increase your spend on servicing debt relative to income. If there is a recession and folks have borrowed beyond their ability to repay it creates a similar situation to what happened in the US subprime crash that caused all the mayhem a few years back.
This isn't about leasing vs buying - its about whether leasing (and by implication personal debt) is good for the economy.

If you don't want people to take on debt to buy houses they will have to rent. So presumably you would advocate that they rent their cars too, no?

[daemon]

lostkiwi said:

The issue comes when we have yet another recession and all those people with leases can no longer afford them.
The car then gets repossessed, sold at auction in a declining market (the nature of recession is there is less cash available), the finance company is out of pocket so they have less cash and the whole thing collapses like a house of cards.

Sorry, but this is actually bks of the highest order. "all those people with leases can no longer afford them". Nonsense. Horse st. They're still in employment, they're still living in their homes, they're still leasing their cars. THATS what happens in a recession. IF they get made redundant they find another job. The amount of cars repossessed would be minimal.

All that happened last time was that monthly PCP / lease prices went up for a while. Heck, my wife had to slum it when her Z4 3.0Si PCP deal ended in the last recession. For the same monthly payment she could only get a pro drive modded Subaru WRX-S for the same monthly amount .

lostkiwi said:

At least when you pay cash you own the vehicle outright. You have a saleable asset if required (ok you will lose money but its still an asset) and you are not adding to the issue in the recession.

Ok, so you've been made redundant, and you've no spare cash so you have to "fire sale" your biggest asset - your car. Because its a recession you end up taking £,£££ less for it than you'd hoped. THree months later though you're back settled in a new job and back on an even keel.

Who did better there - the person who had to fire sale their asset in a depressed market, or someone who paid a lease payment of maybe £150 a month for three months?

lostkiwi said:

The best way to survive a recession is to have minimal debt.

The best way to survive a recession is to ensure you have the means set aside to continue to live should the worst happen and you or your partner lose your job until such times as you get another job.

Someone with a lease can just as easily do that - in fact more easily do that - as someone with cash tied up in a depreciating asset.

[daemon]

lostkiwi said:

If there is a recession and folks have borrowed beyond their ability to repay it creates a similar situation to what happened in the US subprime crash that caused all the mayhem a few years back.
This isn't about leasing vs buying - its about whether leasing (and by implication personal debt) is good for the economy.

Why are you assuming that someone who leases is borrowing beyond their ability to repay?

[CX53]

Crikey...

[gizlaroc]

daemon said:

lostkiwi said:

If there is a recession and folks have borrowed beyond their ability to repay it creates a similar situation to what happened in the US subprime crash that caused all the mayhem a few years back.
This isn't about leasing vs buying - its about whether leasing (and by implication personal debt) is good for the economy.

Why are you assuming that someone who leases is borrowing beyond their ability to repay?

My guess is lots of people who don't have a guaranteed or set monthly income and have to put money away when the times are good, probably have a very different view to people who do have a regular income?


I know all my mates who get paid per job, and more often than not, get paid cash tend to 'buy' their cars cash and have the same mentality as Lostkiwi.
Where as all my mates who tend to draw a salary of dividends on a regular basis tend to lease, pcp etc.

I think that it maybe hard to see it from the other persons perspective?

[ChilliWhizz]

daemon said:

ChilliWhizz said:

soupdragon1 said:

Yes, there is a risk that you may lose your job etc but in reality, that's usually not a concern for most people or lenders either - losing your job is the exception rather than the norm.

Unless you work in the Oil & Gas Industry...

And whilst thats tough for those in that position currently, they'll get over it.

I'm sure you're right

[lostkiwi]

gizlaroc said:

daemon said:

lostkiwi said:

If there is a recession and folks have borrowed beyond their ability to repay it creates a similar situation to what happened in the US subprime crash that caused all the mayhem a few years back.
This isn't about leasing vs buying - its about whether leasing (and by implication personal debt) is good for the economy.

Why are you assuming that someone who leases is borrowing beyond their ability to repay?

My guess is lots of people who don't have a guaranteed or set monthly income and have to put money away when the times are good, probably have a very different view to people who do have a regular income?


I know all my mates who get paid per job, and more often than not, get paid cash tend to 'buy' their cars cash and have the same mentality as Lostkiwi.
Where as all my mates who tend to draw a salary of dividends on a regular basis tend to lease, pcp etc.

I think that it maybe hard to see it from the other persons perspective?

I have a full time paid job thanks. I always have done aside from 7 years as a contractor so I have experience of both sides of this.

People are trying to turn this discussion into a justification for them having leases.
I personally don't give a monkeys if people do or don't have them - their money, their choice. We have 4 cars. Three owned outright and 1 on a PCP.
My original premise was that leases are not good for the economy following a comment made by someone earlier (can't be bothered to look back and see who). I still stand by that. Leasing and by implication personal debt are not good for the economy. Plenty of evidence online for it if people bother to look. The scenarios I listed out were simplistic I grant you but the premise they were made on is still valid. How many people have the funds to survive a recession? To suggest that you can just get another job in 3 months if you have skills is mind numbingly naive. In a recession the unemployment rate rises so people find it much harder to get a new job once made redundant from a previous one.
If you are unlucky enough to live in an area of low employment (parts of the North East, North West or South Wales for example) it just adds even more to the difficulty in finding more employment.
This is especially true when a large employer such as Tata shuts large sites down releasing thousands onto the job market in a small area.
I would be interested to see how many people with leases or PCPs have sufficient funds available to pay their leases and mortgages for prolonged periods.
This is especially true if an employer (such as one I worked for) opted to pay the minimum legal amount. For those who don't know what that is its capped at £464 per week, 20 years service maximum and a maximum of 1.5 weeks per year of service. So if you had been with a company for 25 years and were on £50k a year your payment could be as little as £13,900. If you'd only been there 5 years and were under 41 years old its only 1 week per year @ £464 per week.
I can see some folks (especially those with young families) struggling to make payments after a very short time.

Edited by lostkiwi on Wednesday 4th May 17:09

[otolith]

lostkiwi said:

My original premise was that leases are not good for the economy following a comment made by someone earlier (can't be bothered to look back and see who).

It was me, and the comment wasn't that car leasing is good for the economy, it was that if we stopped lending in general the economy would grind to a halt. Which it would. The people at Positive Money might think we'd be better off if our economy didn't depend on debt that way, that central economic planning of the use of debt would not end in disaster like every other attempt at any form of central economic planning, and perhaps they are right, but we are where we are.