How the hell do people afford cars these days?

[Pat H]

Lester H said:

There must be a cost effective compromise between true ' bangernomoics" and buying nearly new.

I tend to buy old low milers and then keep them forever.

I paid £3k for my present car, which is an ancient Peugeot 406 HDi . It had only done 37000 miles and had been owned by an old duffer from new.

Comfortable, reliable, 40mpg and £177 to insure for the year.

It won't impress anyone down the golf club. But as I don't play golf, that doesn't bother me too much.

It's just a workhorse, which gets me about cheaply and can move lots of stuff.

My wife runs a MK1 TT Roadster, which is almost as ancient as the Peugeot, also cost £3k and has done 50,000 miles. It is hardly the last word in performance, but it's nice for pottering around in when the sun it out.

They owe us nothing, aren't depreciating and cost sod all to maintain and run. It's hardly a sexy fleet of cars, but it works for us.

[Dave Hedgehog]

TREMAiNE said:

Dave Hedgehog said:

so what if they never own it

my train ticket is over £300 a month, i will never own the train, its just a mobility cost, same thing with a car

It's not the same with a car, as if you're spending that monthly figure on something you do/would own, then at the end you have an asset that can be sold allowing you to recoup some of what you have spent.

but you pay more to own it v leasing it

[Cant Find a Charger when I need one]

J4CKO said:

Oh, and OnlyFans and that kind of thing, show genitals, receive cash, buy shiny things.

I tried this but got thrown out of the dealership sadly

[TREMAiNE]

AngryPartsBloke said:

TREMAiNE said:

Dave Hedgehog said:

so what if they never own it

my train ticket is over £300 a month, i will never own the train, its just a mobility cost, same thing with a car

It's not the same with a car.

How is it any different?

It get's pulled out every time the subject of Car financing or leasing comes up and it's completely meaningless.

If you only buy cars with cash, good for you. Don't expect a medal for being one of the minority who would rather spend their own money upfront rather than the banks.

I literally explained why it is different in my post. Not sure why you left that part out and then asked why it's different.

I don't think the majority of cash buyers are expecting medals. There are pros and cons of buying with cash, finance or leasing. I'm not personally opposed to borrowing money to pay for (or rent) a car at all and actively encourage it in some instances, but what is stupid is people paying the "monthlies" for a car they categorically cannot afford - which is a large percentage of younger PCPers or leasers.

Cash buying has worked well for me personally, and it's what has enabled me to save up for my next car, over the years I've been able to increase my budget each time, thus being able to get into more expensive cars each time, something that may not be possible if I was stuck in the finance loop unless I was looking to pay significantly more on the monthly payments. Back in 2016 when I bought my Boxster S, a colleague PCP'd a Fiesta. I sold my Boxster S around the same time his PCP came to an end. Overall, taking servicing, consumables, depreciation etc all into account, my Boxster S had cost significantly less than his Fiesta had cost him over that same period. I ran sheds for a long time in able to save up and buy nicer cars which "got me going" - but a lot of people don't want sheds and want a new car. Monthly payments offer ways of always having a new car - but the drawback is in many cases its much more difficult to move forward - in the same way that it's harder to save up for a house deposit if you're already renting.

Everyone's situation is different and there are pros and cons for each method of buying a car, but undeniably there are some people out there financing cars (and other things) that really shouldn't be doing so.

[Hoofy]

You need to work out what you're wasting money on. £100k less tax should mean you're leading a pretty decent life without debt especially in the midlands!

If it helps, I live in SW London and up until recently stuck to cars under £2k for the last 15 years.

A petrolhead isn't defined by what car they drive but how much they enjoy driving and are interested in cars.

[dundarach]

Choose to save (and forced to wait) vs forced to repay (and have it now)

That's how I live, I can flex in and out of saving for capital stuff and get revenue spending whenever I want to.

[TREMAiNE]

Dave Hedgehog said:

TREMAiNE said:

Dave Hedgehog said:

so what if they never own it

my train ticket is over £300 a month, i will never own the train, its just a mobility cost, same thing with a car

It's not the same with a car, as if you're spending that monthly figure on something you do/would own, then at the end you have an asset that can be sold allowing you to recoup some of what you have spent.

but you pay more to own it v leasing it

That's very debatable. In some instances, leasing will be cheaper, in other instances buying will be cheaper.

Ultimately, how good your PCP or lease deal is in relation to how much a car depreciates over the payment period is the deciding factor, as running costs are the same regardless of your means of purchase.

I would wager that in most instances, buying outright will generally work out cheaper overall - however most people do not have the money to buy outright in the first place.

I looked at buying my phone SIM free and just having a SIM only contract, over the course of 2x years it only worked out about £50 cheaper. So even though it was more expensive over the 2x year term, I still went for the phone + SIM contract route because the £50 a month hit is more manageable than buying the phone in one go, and still having a monthly cost for the SIM. It's no different with cars but on a larger scale. If you can afford to buy outright in the first place, it is probably cheaper long term. Cheaper doesn't always mean better, mind.

[Shnozz]

TREMAiNE said:

I looked at buying my phone SIM free and just having a SIM only contract, over the course of 2x years it only worked out about £50 cheaper. So even though it was more expensive over the 2x year term, I still went for the phone + SIM contract route because the £50 a month hit is more manageable than buying the phone in one go, and still having a monthly cost for the SIM. It's no different with cars but on a larger scale. If you can afford to buy outright in the first place, it is probably cheaper long term. Cheaper doesn't always mean better, mind.

Fair analogy that, particularly when buying new. The option, like cars, is you could buy a second hand phone and a SIM only contract. Depends if you want new. For those who do, quite often a contract or financed route will often work out comparable or close to, car dependant.

[Olivera]

Joey Deacon said:

Absolutely, I live in Greater London so by the end of next year if I want to drive my diesel shed I will need to give £12.50 a day to comrade Khan. It will be going way before then, and between £3k and £5K is probably how much I will spend on it's replacement, possibly on a Petrol Kia Rio.

For an actual car enthusiast though your diesel shed and Kia Rio sound absolutely horrendous as an only car.

[Clivey]

Pat H said:

I paid £3k for my present car, which is an ancient Peugeot 406 HDi . It had only done 37000 miles and had been owned by an old duffer from new.

Comfortable, reliable, 40mpg and £177 to insure for the year.

It won't impress anyone down the golf club. But as I don't play golf, that doesn't bother me too much.

It's just a workhorse, which gets me about cheaply and can move lots of stuff.

And you know what? I'd honestly much rather drive that than most "affordable" new cars. Those 406s are more comfortable and ride better than a lot of modern stuff...and so much more tasteful than a crossover! I had a 2004 Volvo S60 as a beater for a year and it reminded me how bloody horrible a lot of the new dross actually is!

I'm a self-confessed car obsessive though and happily own brand new cars alongside old ones that most people appear to regard as beneath them. I don't play "keeping up with the Joneses" and I'm all the happier for it.

[kambites]

dundarach said:

An interesting comparison I've often wondered about is:

Value of car, vs Value of house.

I think we're at about 3% and 0.3% for our two cars.

Edited by kambites on Tuesday 8th March 14:10

[RDMcG]

Surely it is no different than (say) housing affordability. Life has become more expensive for many with inflation and supply chain shortages. Fewer products and higher demand just raise prices.

At various times in my life cars have been more or less affordable and I have adjusted. It is not always rational as I have a strong preference for new cars,fully aware that this is not the financially astute way to buy. In the event of some financial catastrophe I would simply get rid of my cars and buy a shed.

[Shnozz]

Olivera said:

Joey Deacon said:

Absolutely, I live in Greater London so by the end of next year if I want to drive my diesel shed I will need to give £12.50 a day to comrade Khan. It will be going way before then, and between £3k and £5K is probably how much I will spend on it's replacement, possibly on a Petrol Kia Rio.

For an actual car enthusiast though your diesel shed and Kia Rio sound absolutely horrendous as an only car.

That is the thing, PH is understandably often skewed by a love of cars and a disproportionate spend. The poster who earlier said about % value car to home is probably very different among this demographic to the public as a whole. Same as those into any hobby, but cars are a particularly expensive one and increasingly so.

[Recalcitrant]

It also all depends on your priorities.

I know people who will scoff at an expensive car and then blow £10k on a holiday like it's nothing. To me that's crazy.

[dundarach]

My love for seeing other people's expensive cars is endless.

I'm happy to make them feel great by letting me drool over them and when offered sit in them and smear my greasy sticky hands all over them.

However I'm also extremely tight and would worry excessively that tts like me, driving free bangers, would park next to my shiny expensive new toy.

Hence, I drive the banger and just dribble over the shiny metal.

It's win win the way I see it!

[kambites]

RDMcG said:

Surely it is no different than (say) housing affordability. Life has become more expensive for many with inflation and supply chain shortages. Fewer products and higher demand just raise prices.

I guess the difference is that property has generally been considered an appreciating asset so people have been more willing to stretch their borrowing capacity to buy them, knowing that negative equity is unlikely (although of course unlikely isn't the same as impossible!) where as cars almost always depreciate heavily, especially when nearly new.

A lot of people dislike the idea of renting a house for this very reason - it's generally just as expensive but there's no capital investment to appreciate.

[Saudade]

I think if you're on a combined income of £100k and can't afford a car you want something is very wrong or doesn't add up.

We're on about 60k and while we don't go on holiday abroad, we have 2 dogs (both cost a lot of money, their 4 beds are close to 2k, nevermind food, vet bills and the rest - one has a lifelong medical problem and the other is 14), we pay for the best internet, have good phones, don't have a water meter and don't worry about elec/gas, we could easily spend 600pm on a car and not really worry about it, I won't do that because it isn't a smart financial decision.

I think that is maybe what OP and everyone else is saying - they can afford the car, but it doesn't make sense to actually pay for one, especially in the current market.

[dave_s13]

Dave Hedgehog said:

TREMAiNE said:

Dave Hedgehog said:

so what if they never own it

my train ticket is over £300 a month, i will never own the train, its just a mobility cost, same thing with a car

It's not the same with a car, as if you're spending that monthly figure on something you do/would own, then at the end you have an asset that can be sold allowing you to recoup some of what you have spent.

but you pay more to own it v leasing it

Depends on the car and where it is in it's depreciation curve.

I've got no problem with PCP, I've had a couple. But if you are trying to reduce outgoings and save some cash it's hard to see how they are better than a used car on finance (see 1st sentence though).

Nobody can say the current market isn't fooked though, the most sensible thing at the moment would be to sell up and get a bicycle.

I still think the current sweet spot is a car you actually want/need and a cheap EV. It's worked brilliantly for us so far.

[Clivey]

Also, one of the main problems for most is that wages over the last 20 or so years haven't come close to matching inflation, especially when it comes to car prices.

I've pointed this out before on other threads but my 2004 Discovery 2 was the top-of-the-range diesel when it was new and cost the original owner about £37,000. Nowadays, the top-spec diesel Discovery is £70k+. I wonder how many new 2004 Discovery buyers (that are still doing the same / an equivalent job) can afford the equivalent new car 18 years later?

I strongly suspect many people that bought new cars 5-ish years ago couldn't afford to replace them like-for-like without resorting to taking-on more debt.

[anonymous-user]

Olivera said:

Joey Deacon said:

Absolutely, I live in Greater London so by the end of next year if I want to drive my diesel shed I will need to give £12.50 a day to comrade Khan. It will be going way before then, and between £3k and £5K is probably how much I will spend on it's replacement, possibly on a Petrol Kia Rio.

For an actual car enthusiast though your diesel shed and Kia Rio sound absolutely horrendous as an only car.

I am extremely tight, the short lived pleasure of picking up a nice car is very shortly replaced with the much longer term displeasure of having to work to pay for it.

I have had nice cars, to me it isn't worth the bother and I get more pleasure out of running something essentially worthless.

I would much rather own multiple properties and drive a shed, if people think I am poor because of this (and I don't actually believe any strangers care what car another person drives) then so much the better.