Are all new cars bought on finance?
Discussion
From the news over the past few days. only 85% of the population earn less than 44K per year. Only 15% to be affected by the child tax allowance of a household plus 44K.
How is it then that if the vast majority of the population earn less than 44K a year the streets are all full of new BMWs and Mercs.
I must say I've never bought anything on finance apart from a house of course, and my cars are all ten years old, but its a bit of an eye opener if the figures are to be believed that it seems like every new car out there must be financed to the hilt and have a significant cost to the average uk houshold every year. It must be right up there with the size of the mortgage payments?
How is it then that if the vast majority of the population earn less than 44K a year the streets are all full of new BMWs and Mercs.
I must say I've never bought anything on finance apart from a house of course, and my cars are all ten years old, but its a bit of an eye opener if the figures are to be believed that it seems like every new car out there must be financed to the hilt and have a significant cost to the average uk houshold every year. It must be right up there with the size of the mortgage payments?
Also curious is that if this is the case, all of those cars would in monthly payment terms consume a third or more of the average monthly pay-packet of those earning about £45k a year. Considering a mortgage or equivalent rent to match the status of the car would probably take nearly all or the entire of the remainder, do people have life in perspective?
this is very much a circular argument on PH, but for 99.999% it is the case.
you will get the odd one who is trying to keep up appearances that says that they would rather have their millions in the bank, but mostly it is either company boxes or keeping up with the joneses.
some of the gearing that people seem prepared to accept in the name of showing off are truly terrifying
Greg
you will get the odd one who is trying to keep up appearances that says that they would rather have their millions in the bank, but mostly it is either company boxes or keeping up with the joneses.
some of the gearing that people seem prepared to accept in the name of showing off are truly terrifying
Greg
Greg_D said:
this is very much a circular argument on PH, but for 99.999% it is the case.
you will get the odd one who is trying to keep up appearances that says that they would rather have their millions in the bank, but mostly it is either company boxes or keeping up with the joneses.
some of the gearing that people seem prepared to accept in the name of showing off are truly terrifying
Greg
I find the comments on this thread refreshing. It seems that, at least between the PH population, there is some common sense. you will get the odd one who is trying to keep up appearances that says that they would rather have their millions in the bank, but mostly it is either company boxes or keeping up with the joneses.
some of the gearing that people seem prepared to accept in the name of showing off are truly terrifying
Greg
In my opinion it is mostly the "keep up with the Joneses" attitude.
Whom will buy the range rover victoria Beckam with Credit Crunch 2 coming?
As long as people can sign their name, and car companies need to carry on producing there will always be a scheme to get you in something you can't afford.
Most people are of the "l'oreal" make up......"because I'm worth it", therefore they will hock themselves to the eyeballs to have the latest must have toy/gadget.
Funny thing is when you go past really huge houses, very few of them have the 60 reg RRS, 'cause they know the value of real wealth not finance.
Most people who live like this are 2 paychecks away from it all going south.
Most people are of the "l'oreal" make up......"because I'm worth it", therefore they will hock themselves to the eyeballs to have the latest must have toy/gadget.
Funny thing is when you go past really huge houses, very few of them have the 60 reg RRS, 'cause they know the value of real wealth not finance.
Most people who live like this are 2 paychecks away from it all going south.
Edited by mercfunder on Wednesday 6th October 10:05
t themselves at the money it costs to run these cars. I genuinely believe that these people think if I can afford the monthly repayments for the next 10 years I can afford this car.Gaz. said:
I was wondering this myself the other day when I was sat in a traffic jam on the M25 with cars that had an average base price of well over £40k.
I've often pondered this whilst out on the road.
Whilst I don't yet have a salary starting with a four, and I'm definitely at the junior end of the property ladder with a small house & whacking great mortgage, unlike people a couple of decades older, I always do a little mental arithmetic to see what everyone else has got / manages.
I'd hope that this isn't done in a green eyed way, rather just some anonymous market research ...... A family wagon people carrier of 3 years old or less must surely be costing the majority of owners the thick end of £600 a month by the time it's financed, fuelled, taxed and tested, for example.
Despite getting a loan for a proportion of the cost of my car, I'm pleased to say that its all mine now, and bought and paid for.
How many people actually "own" cars any more? When people "buy" their next car, how many will ever completely pay off their car? Will they complete the finance term, and just chop it in on they next
Most importantly ..... Does it actually matter? By working hard and paying off my car to have a paid for asset on the drive, am I actually any better off in the long term as it depreciates away? Where to the cost curves cross? - At what point is the cost of owning and maintaining your own car a futile expense where we'd be better off joining the
that statistic is skewed. it comes from PAYE data, therefore misses
self employed
company directors
contractors
all these are sectors of employment with average earnings well into the 40% bracket
The other thing is company cars. I know a lot of people who are on, say £25k basic yet drive round the country in a paid for mid-spec bimmer. I remember reading a while ago (I think it was from the 80s, when company cars were a bigger tax break) that 85% of cars at the time were company cars. I guess that figure has dropped, but it's probably over 50% now.
self employed
company directors
contractors
all these are sectors of employment with average earnings well into the 40% bracket
The other thing is company cars. I know a lot of people who are on, say £25k basic yet drive round the country in a paid for mid-spec bimmer. I remember reading a while ago (I think it was from the 80s, when company cars were a bigger tax break) that 85% of cars at the time were company cars. I guess that figure has dropped, but it's probably over 50% now.
Mate who works in a Bentley showroom tells me, 90% of the big ticket car sales in there are cash.
If you do try and get finance for these sort of cars, especially a secondhand one, you'll most likely be refused by the finance company on the grounds that if you needed finance you probably wouldn't be able to pay the servicing costs.
So if you see someone breezing around in a GT its probably not financed to the hilt. But there is always an exception to the rule (before any PH pedants jump all over me!)
If you do try and get finance for these sort of cars, especially a secondhand one, you'll most likely be refused by the finance company on the grounds that if you needed finance you probably wouldn't be able to pay the servicing costs.
So if you see someone breezing around in a GT its probably not financed to the hilt. But there is always an exception to the rule (before any PH pedants jump all over me!)
Because 2 people earning 43k each, already heavily favoured by the tax system and get to keep the child benefit, have more than twice as much net income as the family with one earning 44k and the other 0k, but are "poorer" by that measure because they are only basic rate tax payers.
The second family with 2 earners can happily buy shiny new cars for cash, and still pay for their petrol with the child benefit
The second family with 2 earners can happily buy shiny new cars for cash, and still pay for their petrol with the child benefit
Everybody I know who has a car made this decade bought it on finance of some sort. Either bought new and then kept, or replaced on a regular basis.
Those who replace them every couple of years do the 'agreed future value' thing and stay within a particular marque. One who was tied into MGs got into quite a bit of trouble when they went bust and he owed more than the new cost of his ZS.
Those with the nicest cars (5 series etc) were added to the mortgage (or guaranteed with the house) a few years ago, and now are unable to organise additional finance for a replacement.
One or two have company cars.
I personally have a mixture, one car is finance, the rest and the bikes were all cash. I did briefly own another bike on finance, but it was nicked after 16 days and I haven't replaced it.
Those who replace them every couple of years do the 'agreed future value' thing and stay within a particular marque. One who was tied into MGs got into quite a bit of trouble when they went bust and he owed more than the new cost of his ZS.
Those with the nicest cars (5 series etc) were added to the mortgage (or guaranteed with the house) a few years ago, and now are unable to organise additional finance for a replacement.
One or two have company cars.
I personally have a mixture, one car is finance, the rest and the bikes were all cash. I did briefly own another bike on finance, but it was nicked after 16 days and I haven't replaced it.
Gaz. said:
I was wondering this myself the other day when I was sat in a traffic jam on the M25 with cars that had an average base price of well over £40k.
Often wondered the same. I dont have a bad job but cant honestly justify the sort of money it would take to buy a lot of cars new. Still it's fun picking up decent cars a couple of years down the depreciation graph.
Hitch78 said:
Paying cash to a dealer does not always mean that the buyer is paying out from their own reserves.
It usually doesn't, in fact, because most people have mortgages. Even if the mortgage hasn't been extended to buy the car, it's still money that could have been put into making the mortgage smaller. pilchardthecat said:
Because 2 people earning 43k each, already heavily favoured by the tax system and get to keep the child benefit, have more than twice as much net income as the family with one earning 44k and the other 0k, but are "poorer" by that measure because they are only basic rate tax payers.
The second family with 2 earners can happily buy shiny new cars for cash, and still pay for their petrol with the child benefit
Satire?The second family with 2 earners can happily buy shiny new cars for cash, and still pay for their petrol with the child benefit
Sour grapes?
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