downgrading car lifestyle
Discussion
Dave200 said:
Nomme de Plum said:
Dave200 said:
The point is still valid. Leasing and PCP expose the renter to a fixed cost. As opposed to a buyer who even with discounts and free car mats is still exposed to variable depreciation costs through the ownership term.
I'm not denying that which is why it is popular but generally that route will cost more in the long run. It's a nice little earner for the salesperson and their retail company too. Nomme de Plum said:
Yes and the most economic way to run a car is not to take out a PCP or lease assuming no tax advantages. You are conflating certainty with financial savings. They are not synonymous.
Not necessarily true.There are many lease examples where its absolutely cheaper than depreciation.
There are many PCP deals that are at 0%.
There are also many PCP deals that have financial incentives included in the finance agreement, which someone insisting on paying in cash wont get.
Nomme de Plum said:
Dave200 said:
Nomme de Plum said:
Dave200 said:
The point is still valid. Leasing and PCP expose the renter to a fixed cost. As opposed to a buyer who even with discounts and free car mats is still exposed to variable depreciation costs through the ownership term.
I'm not denying that which is why it is popular but generally that route will cost more in the long run. It's a nice little earner for the salesperson and their retail company too. I guess I've technically gone the other way, from an old MX5 (worth about 3k on a good day), to a newer Mini JCW, which cost me £12k which for me is the most I've ever spent on a car, and in all honesty, it's probably the most I'll ever spend on a car.
In my defence, the mx5 really needed quite a lot of TLC to bring it up to the standard I really wanted for a 'keeper', like talking thousands of pounds, and in the end, I wanted something a bit different from my car given I can only have one, it's got to be a bit of a do it all car, hence it would have been foolish to spend money on a car I wasn't going to keep.
Having said that, I had regarded the mini as a stepping stone towards something like a GR Yaris, but I've actually fallen for the Mini, and when I see the price of a new GR and even an old one, both of which are many multiples more in terms of price, I'm just not sure it'll ever happen, I simply can't reconcile in my head that it's twice or four times as good as what I've got now; it's arguably worse in some areas.
Also, as I'm getting a bit older now and with the recent death of my dad, I'm starting to think about whether I really want the financial burden of an expensive car... I don't, simple as. I also have to be realistic about my earning potential, I'm not exactly the most intelligent or motivated person at the best of times.
I'm grateful for the experiences I've had with cars but I'm sort of done in a way, of course I don't have a boring car (life is too short), but the days of swapping for swapping sake are done, and for the first time in my life I'm trying to be grateful for what I have now, rather than thinking constantly about the next big thing.
Interesting thread, thought provoking.
In my defence, the mx5 really needed quite a lot of TLC to bring it up to the standard I really wanted for a 'keeper', like talking thousands of pounds, and in the end, I wanted something a bit different from my car given I can only have one, it's got to be a bit of a do it all car, hence it would have been foolish to spend money on a car I wasn't going to keep.
Having said that, I had regarded the mini as a stepping stone towards something like a GR Yaris, but I've actually fallen for the Mini, and when I see the price of a new GR and even an old one, both of which are many multiples more in terms of price, I'm just not sure it'll ever happen, I simply can't reconcile in my head that it's twice or four times as good as what I've got now; it's arguably worse in some areas.
Also, as I'm getting a bit older now and with the recent death of my dad, I'm starting to think about whether I really want the financial burden of an expensive car... I don't, simple as. I also have to be realistic about my earning potential, I'm not exactly the most intelligent or motivated person at the best of times.
I'm grateful for the experiences I've had with cars but I'm sort of done in a way, of course I don't have a boring car (life is too short), but the days of swapping for swapping sake are done, and for the first time in my life I'm trying to be grateful for what I have now, rather than thinking constantly about the next big thing.
Interesting thread, thought provoking.
TameRacingDriver said:
Also, as I'm getting a bit older now and with the recent death of my dad, I'm starting to think
That was actually my catalyst for going the other way. When my Mum died last year the fragility and shortness of life really came home to me. I’d deferred replacing my Aston for a few years and wondered what pleasure I was deriving from a load of figures on a screen versus a tangible lump of metal and plastic to play with. Worst case was some depreciation and opportunity cost in the shares I sold. Shnozz said:
TameRacingDriver said:
Also, as I'm getting a bit older now and with the recent death of my dad, I'm starting to think
That was actually my catalyst for going the other way. When my Mum died last year the fragility and shortness of life really came home to me. I’d deferred replacing my Aston for a few years and wondered what pleasure I was deriving from a load of figures on a screen versus a tangible lump of metal and plastic to play with. Worst case was some depreciation and opportunity cost in the shares I sold. I think from my point of view it's more about getting out of the rat race, and out of work. However the future is not guaranteed; I've always had quite a 'fatalistic' outlook on life and never expected to live long (not even to the age I am now) so I guess reflecting on it, it's quite surprising that I'm thinking this way...
Deep Thought said:
Not necessarily true.
There are many lease examples where its absolutely cheaper than depreciation.
There are many PCP deals that are at 0%.
There are also many PCP deals that have financial incentives included in the finance agreement, which someone insisting on paying in cash wont get.
Maybe things have changed but when I was involved in buying our company cars we always got deals as we paid cash. It also meant we didn't get hit with BIK. There are many lease examples where its absolutely cheaper than depreciation.
There are many PCP deals that are at 0%.
There are also many PCP deals that have financial incentives included in the finance agreement, which someone insisting on paying in cash wont get.
The PCP deal at 0% still has the depreciation in built. All the players in the supply chain are in business to make profit including the finance provider.
Personally I would not buy a new car if i was trying to run a newish car economically. Pre registered and up to one year old. The discounts are substantial and way better than a PCP.
The next step down is a car one to two years old and again substantially less expensive than new on PCP.
It is a bit naive to think you are not funding depreciation somewhere.
Dave200 said:
My point is simply that you can't guarantee that. In a thread where we're talking about personal financial situations changing, certainty and cost transparency is a very useful thing. The most economic way to run a car is to buy a banger and give it absolutely nothing more than the bare minimum of maintenance. I was simply illustrating that PCP and lease deals protect the buyer against depreciation through fixed costs. if you want to continue to argue a different point, that's fine. But it's not really what I was talking about, nor what this thread was about.
The thread is " Downgrading car Lifestyle" , not the benefit or otherwise of PCP or leasing.I am not arguing that financing arrangements don't give certainty if that's what a person wants in exactly the same as fixed rate mortgages and term contract power deals do.
It is not guaranteed however that it is the most economic route.
TameRacingDriver said:
I'm grateful for the experiences I've had with cars but I'm sort of done in a way, of course I don't have a boring car (life is too short), but the days of swapping for swapping sake are done, and for the first time in my life I'm trying to be grateful for what I have now, rather than thinking constantly about the next big thing.
I feel the same. Gone are my days of chopping and changing cars. I'm currently daily driving my BMW M2, which to be fair, I would have got rid of at Xmas if the price hadn't tanked, so I'm keeping it for a while longer. But, when this car goes, I'm done with performance cars for a while and this is echoed through my friendship group and seems to be a common theme in other car clubs I'm a member of. Nomme de Plum said:
Maybe things have changed but when I was involved in buying our company cars we always got deals as we paid cash. It also meant we didn't get hit with BIK.
We're talking about private sales thoughNomme de Plum said:
The PCP deal at 0% still has the depreciation in built. All the players in the supply chain are in business to make profit including the finance provider.
It has what they believe will be the future value of the car built in yes. Therefore you are paying the difference between agreed price for car and residual value (assuming 0% APR). We are talking about the situation whereby that residual value turns out to be badly wrong - which can happen. When the value of the car is much lower than that, then the customer wins, because they can simply hand the car back. When its higher than that, the customer also wins because they are free to sell the car for market value and pocket the difference.PCP protects you from an unexpected market change. As said, people who bought new EVs via PCP deals back in 2021 will be VERY glad of the option to hand it back.
Also, the point was that PCP at 0% can protect against unexpected future depreciation because the residual value is set up front. NOT that you avoid depreciation.
Also worth noting that on new cars, the finance offering is almost always via the manufacturers finance arm ,who are there to facilitate the sales of new cars. So technically they dont have to make a profit.
Nomme de Plum said:
Personally I would not buy a new car if i was trying to run a newish car economically. Pre registered and up to one year old. The discounts are substantial and way better than a PCP.
Usually but not always. We bought our new M140i in 2019 for £28,200 (£10K off via discount, manufacturers incentives, finance incentives). Pre-reg and ex-demo were sitting at the dealers at £29,995 (with a big headline of 'Save £8,000').But yes, broadly speaking you should be able to buy a nearly new car for notably less.
Nomme de Plum said:
The next step down is a car one to two years old and again substantially less expensive than new on PCP.
I dont think anyone would argue with you there.Nomme de Plum said:
It is a bit naive to think you are not funding depreciation somewhere.
No one said that of PCP. On a lease it doesnt matter a jot as its a rental. How the lease company choses to structure it (which will be wildy different to a private purchase) is up to them.Edited by Deep Thought on Thursday 28th March 12:56
Edited by Deep Thought on Thursday 28th March 13:23
Had an slk55 until a couple years ago, sold that due to a house move and got a nissan cube, just a slight difference!
However the only thing I really miss about it is the noise, there was always a worry that something very expensive might raise it's head and the running costs were at the point where I was avoiding using it unless I had to which kind of missed the point of having it.
The cube has been very handy both for my house move, that of other family, and as a general workhorse.
The nissan was a properly stress free thing, though I'm now looking at something else a bit better suited to lugging bikes around and motorway miles.
As much as I like a nice/ fast car, the majority of the time it just needs to be the right tool for the job. The mercedes definitely wasn't.
However the only thing I really miss about it is the noise, there was always a worry that something very expensive might raise it's head and the running costs were at the point where I was avoiding using it unless I had to which kind of missed the point of having it.
The cube has been very handy both for my house move, that of other family, and as a general workhorse.
The nissan was a properly stress free thing, though I'm now looking at something else a bit better suited to lugging bikes around and motorway miles.
As much as I like a nice/ fast car, the majority of the time it just needs to be the right tool for the job. The mercedes definitely wasn't.
I think I've been through every stage. Buying 3-4yo cars with cash and keeping them 3-4 yo then always trying to "upgrade" to a newer faster car. Tried PCP on brand new cars a few times. Leased a few cars. Done a bit of shedding (actually really enjoyable).
Think I peaked performance wise at a 996 turbo which made me realise there's a point where performance just becomes a number to try to impress people. I currently have a few cheaper, older cars (There's not much post 2010 that excites me) that are quick(ish) and I use a beat up old van for my daily.
I could sell everything and put the lot in to 1 flash fast car but tbh I've lost interest. As others have said, there is just little joy in driving in this country now. This statement has to be viewed in the context of the fact that I live on the west coast of Scotland only a stones throw from some of the best B roads in the UK. When you add up the cost of tax, fuel, insurance and sprinkle the terrible state of roads clogged up with traffic, speed traps etc All the fun has been removed as the motor car has increasingly become vilified.
Think I peaked performance wise at a 996 turbo which made me realise there's a point where performance just becomes a number to try to impress people. I currently have a few cheaper, older cars (There's not much post 2010 that excites me) that are quick(ish) and I use a beat up old van for my daily.
I could sell everything and put the lot in to 1 flash fast car but tbh I've lost interest. As others have said, there is just little joy in driving in this country now. This statement has to be viewed in the context of the fact that I live on the west coast of Scotland only a stones throw from some of the best B roads in the UK. When you add up the cost of tax, fuel, insurance and sprinkle the terrible state of roads clogged up with traffic, speed traps etc All the fun has been removed as the motor car has increasingly become vilified.
I had 5 cars at one point. All older, couple of dailys that were approaching 10 years old and 3 cars that were 30ish years old.
I down graded to 2 more modern daily cars and kept just 1 30 year old car.
For me it has been great. I get reliable modern motoring that I just service and put tyres on (unless i get unlucky of course) with engines that get decent fuel economy. I then have 1 x 30 year old car i can tinker with without bankrupting me as that sort of car always needs something and having 3 of them was expensive. I never have to bring a 30 year old car out into daily duties like was beginning to happen with my previous 10 year old car and if works are needed and I can't justify the spending I just close the garage door and do something else.
My daily are a 2.0 Tdi and 1.0 turbo petrol and i honestly do not need anymore than that. I plan to now keep on top of them and trade them out when they get to, say, 7 years old for a 2 or 3 year old model.
I down graded to 2 more modern daily cars and kept just 1 30 year old car.
For me it has been great. I get reliable modern motoring that I just service and put tyres on (unless i get unlucky of course) with engines that get decent fuel economy. I then have 1 x 30 year old car i can tinker with without bankrupting me as that sort of car always needs something and having 3 of them was expensive. I never have to bring a 30 year old car out into daily duties like was beginning to happen with my previous 10 year old car and if works are needed and I can't justify the spending I just close the garage door and do something else.
My daily are a 2.0 Tdi and 1.0 turbo petrol and i honestly do not need anymore than that. I plan to now keep on top of them and trade them out when they get to, say, 7 years old for a 2 or 3 year old model.
TameRacingDriver said:
Shnozz said:
TameRacingDriver said:
Also, as I'm getting a bit older now and with the recent death of my dad, I'm starting to think
That was actually my catalyst for going the other way. When my Mum died last year the fragility and shortness of life really came home to me. I’d deferred replacing my Aston for a few years and wondered what pleasure I was deriving from a load of figures on a screen versus a tangible lump of metal and plastic to play with. Worst case was some depreciation and opportunity cost in the shares I sold. I think from my point of view it's more about getting out of the rat race, and out of work. However the future is not guaranteed; I've always had quite a 'fatalistic' outlook on life and never expected to live long (not even to the age I am now) so I guess reflecting on it, it's quite surprising that I'm thinking this way...
Fiisch said:
I can picture Dave Ramsey reading this thread and nodding his head vigorously....
I'm late 30s and done the whole downgrading thing last year to devote more of my funds to family/children. I've always had new/nearly new hot hatches and a few highly tuned old Jap cars since passing my test (the Subaru Impreza is the one that I've never fully recovered from selling), but currently rocking a 2018 Skoda Superb with 70k on the clock and a 2020 Nissan Leaf as a local runaround.
Not having monthly car payments has been liberating, and the money I am saving using an EV as local runaround for school runs etc. (20 mile round trip) has been a revelation, as much as I hate to say it. 90% of the time, with kids in the car or traffic on the roads, both cars are all I need and more. But the 10%, when the sun comes out, or when I see a couple of enthusiasts convoying to nearby Silverstone, it kills me.
Sometimes, it makes me feel quite down that I don't currently own anything that I could take to Caffeine & Machine or would lure me into taking a leisurely drive on a warm summer's Sunday evening, but I keep telling myself it's a temporary hiatus rather than a permanent move into motoring mediocrity. I am scared with the rise of EVs and nanny safety systems that by the time I'm in the market to buy a hot dad wagon / weekend toy, prices will have rocketed as less and less new enthusiast-aimed cars are being churned out.
So yes, I've downgraded, yes the money I'm not wasting on unnecessarily fast cars is nice, but deep down it's tinged with regret.
Good post, with which I can empathise. And this is the problem with "downgrading car lifestyle". Even although, rationally, you know that having a nice car is not a sensible move, and may even be counterproductive to overall life satisfaction (given what else you could do with the money), the emotional pull of cars is hard to resist for a petrolhead. Add in high uncertainty about where things are going with ICE/EV/automation and it is hard to know what to do. I'm late 30s and done the whole downgrading thing last year to devote more of my funds to family/children. I've always had new/nearly new hot hatches and a few highly tuned old Jap cars since passing my test (the Subaru Impreza is the one that I've never fully recovered from selling), but currently rocking a 2018 Skoda Superb with 70k on the clock and a 2020 Nissan Leaf as a local runaround.
Not having monthly car payments has been liberating, and the money I am saving using an EV as local runaround for school runs etc. (20 mile round trip) has been a revelation, as much as I hate to say it. 90% of the time, with kids in the car or traffic on the roads, both cars are all I need and more. But the 10%, when the sun comes out, or when I see a couple of enthusiasts convoying to nearby Silverstone, it kills me.
Sometimes, it makes me feel quite down that I don't currently own anything that I could take to Caffeine & Machine or would lure me into taking a leisurely drive on a warm summer's Sunday evening, but I keep telling myself it's a temporary hiatus rather than a permanent move into motoring mediocrity. I am scared with the rise of EVs and nanny safety systems that by the time I'm in the market to buy a hot dad wagon / weekend toy, prices will have rocketed as less and less new enthusiast-aimed cars are being churned out.
So yes, I've downgraded, yes the money I'm not wasting on unnecessarily fast cars is nice, but deep down it's tinged with regret.
That said, the large number of people on here saying they are giving up performance cars suggests that you will be able to pick up 2 for a £ in a few years. So maybe there will be opportunities to buy back in after all.
Some great discussions going on here, with lots to catch my interest.
I've run shed and expensive cars over the years. I've had the weekend toy in the garage and the daily driver on the drive. I've also at one point in my life worked in the slightly more reputable end of the motor trade. I thought I'd add some perspective on the financial side of the equation as it came up many times.
The PCP is a handy tool if you want to run a brand new or slightly new car for a period, and then move on to another car. At the end, typically, the options are:
1. Trade in, use the equity as the deposit on the next car.
2. Pay the balloon, and keep the car, or
3. Hand the car back, and walk away.
Option 1 is the preferred option for the trade, and what the PCP was designed to do, keep the car change cycle going. Option 2 is less desirable, as there is no new car sale at the end of the agreement.In most but not all cases, interest charges on a PCP can be higher, and if long term ownership is the desired outcome, the PCP may not be the most cost effective way of purchasing the car, but can be very convenient. Option 3 is not desirable for the finance company, as the only set of circumstances where this would be desirable for the person using the agreement is if the Guaranteed Future Value is higher than the actual value. Subject to mileage and condition, you walk away owing nothing. Then, the finance company has a car owing more than it's actual value, and a loss is on the cards. (This had a very big part to play in the collapse of MG Rover.)
I've always been a believer in the two car solution as the best way to manage the compromise. At the moment for me that's a Corolla Hybrid and an MX-5. I've recently had a look around to see what might replace the Corolla and have been astonished at how much more expensive new cars have become since I bought the Corolla (Sep '21) I can see a lot of people being very surprised come decision time when looking to renew their existing PCP. A significantly higher purchase price and higher interest rates mean higher monthly payments which with the cost of living increases lead me to suspect that many will be "Downgrading Car Lifestyle" as the title asks.
The PCP isn't a bad tool by itself. I've used it many times personally. It does give you flexibility and certain protections. Leasing can be a very dangerous tool for the private (non-business) customer. It is very inflexible and trying to end an agreement early can prove to be incredibly expensive or impossible. There can be exceptions. (In my day, a BMW 7 series is a lease dream, as the total lease costs will be less than the depreciation the car will suffer over the term, so it becomes the cheapest way to drive the car.)
Cash or finance? Legally, the law doesn't allow a credit purchase to be penalized. In reality, it's the other way around. When selling finance, the dealer is missing out on a profit opportunity. Cash sales have less opportunity for profit. It really is a myth from the old days that a cash buyer is a dream customer. Many manufacturer backed finance options include deposit contributions... a discount... on top of what other discount can be negotiated off the retail price. If the interest rate is 0%, or lower than your money can earn elsewhere, cash is not king at all.
I've run shed and expensive cars over the years. I've had the weekend toy in the garage and the daily driver on the drive. I've also at one point in my life worked in the slightly more reputable end of the motor trade. I thought I'd add some perspective on the financial side of the equation as it came up many times.
The PCP is a handy tool if you want to run a brand new or slightly new car for a period, and then move on to another car. At the end, typically, the options are:
1. Trade in, use the equity as the deposit on the next car.
2. Pay the balloon, and keep the car, or
3. Hand the car back, and walk away.
Option 1 is the preferred option for the trade, and what the PCP was designed to do, keep the car change cycle going. Option 2 is less desirable, as there is no new car sale at the end of the agreement.In most but not all cases, interest charges on a PCP can be higher, and if long term ownership is the desired outcome, the PCP may not be the most cost effective way of purchasing the car, but can be very convenient. Option 3 is not desirable for the finance company, as the only set of circumstances where this would be desirable for the person using the agreement is if the Guaranteed Future Value is higher than the actual value. Subject to mileage and condition, you walk away owing nothing. Then, the finance company has a car owing more than it's actual value, and a loss is on the cards. (This had a very big part to play in the collapse of MG Rover.)
I've always been a believer in the two car solution as the best way to manage the compromise. At the moment for me that's a Corolla Hybrid and an MX-5. I've recently had a look around to see what might replace the Corolla and have been astonished at how much more expensive new cars have become since I bought the Corolla (Sep '21) I can see a lot of people being very surprised come decision time when looking to renew their existing PCP. A significantly higher purchase price and higher interest rates mean higher monthly payments which with the cost of living increases lead me to suspect that many will be "Downgrading Car Lifestyle" as the title asks.
The PCP isn't a bad tool by itself. I've used it many times personally. It does give you flexibility and certain protections. Leasing can be a very dangerous tool for the private (non-business) customer. It is very inflexible and trying to end an agreement early can prove to be incredibly expensive or impossible. There can be exceptions. (In my day, a BMW 7 series is a lease dream, as the total lease costs will be less than the depreciation the car will suffer over the term, so it becomes the cheapest way to drive the car.)
Cash or finance? Legally, the law doesn't allow a credit purchase to be penalized. In reality, it's the other way around. When selling finance, the dealer is missing out on a profit opportunity. Cash sales have less opportunity for profit. It really is a myth from the old days that a cash buyer is a dream customer. Many manufacturer backed finance options include deposit contributions... a discount... on top of what other discount can be negotiated off the retail price. If the interest rate is 0%, or lower than your money can earn elsewhere, cash is not king at all.
I expect to be in a position to get a new car in the summer.
Traditionally, I've always opted out of the company car and bought something 1 year old - BMW/Audi/Merc.
My most recent car last year was a salary-sacrifice but since that went back I've been in a rental.
Seriously considering just getting a cheap-ish EV through the company and buying myself a £10k latest-gen MX5 for weekend fun.
All my miles in the week are commuting and I just can't see the justification in spending 40 grand+ on a car to do that and do a few miles at the weekend.
I'd rather have something mid-range but comfortable for the commute and fun for the few miles on a weekend.
Traditionally, I've always opted out of the company car and bought something 1 year old - BMW/Audi/Merc.
My most recent car last year was a salary-sacrifice but since that went back I've been in a rental.
Seriously considering just getting a cheap-ish EV through the company and buying myself a £10k latest-gen MX5 for weekend fun.
All my miles in the week are commuting and I just can't see the justification in spending 40 grand+ on a car to do that and do a few miles at the weekend.
I'd rather have something mid-range but comfortable for the commute and fun for the few miles on a weekend.
I did similar last Feb and sold my 2018 a45. There were various reasons, I wanted out of the finance, it was sat outside the house 6 days a week and the main one for me I drive for my job and the opportunities to actually drive it as intended were getting fewer and fewer
Pottered around in a 53 reg Passat till June and bought a Honda civic tourer 1.6dtec on 65 plate
No real regrets unless I come across a quiet open a/b road it's free to tax and does 80mpg pretty much everywhere I drive it. It's paid for etc....
I did get the usual comments in 'downgrading' by the neighbours, people I knew but it doesn't really bother me tbf
Just preferred to get out of the finance rat race when the opportunity arose
Pottered around in a 53 reg Passat till June and bought a Honda civic tourer 1.6dtec on 65 plate
No real regrets unless I come across a quiet open a/b road it's free to tax and does 80mpg pretty much everywhere I drive it. It's paid for etc....
I did get the usual comments in 'downgrading' by the neighbours, people I knew but it doesn't really bother me tbf
Just preferred to get out of the finance rat race when the opportunity arose
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