How the hell do people afford cars these days?
Discussion
Hi all
Recently I've been wondering how the hell people finance their cars. It's not a question of, do you use PCP or personal loans? More a question affordability in general. Let me set the scene. As a two income household we earn a smidge over 100k. We're very lucky and both work hard.
I run a Merc E350 Diesel Estate 2010. She runs an Puma ST on a lease deal. Fuel is currently ~£1.53L by me in the midlands.
I bought my car for around 10k second hand. I split that between cash deposit and small personal loan. A rough payment of £150 per month sorts the loan. A nice round figure in my mind. Not breaking the bank but not cheap either.
With tax and insurance on top it's around £200 pm just to put the car on the road, by the time fuel is added on it's quite an expensive ordeal each month. I don't do huge mileage, perhaps below average per year. The Mrs does quite a bit more than me. Above average I'd say.
The idea of having something plug in hybrid or electric really appeals to me as it would cover 90% of my journeys in EV. Plus the Mrs could use it for the school runs too. I've never had anything than a small personal loan for a car.
So I venture to the usual places to check for second hand cars and perhaps even lease deals, just to see what sort of prices are knocking about.
I'm absolutely shocked at the money it would cost to get something even remotely new. I've never had a new car in my life and I'm fine with that. However, £400pm for a Honda E, £500pm for a Tesla model3, £700+ for Jag I pace, £900pm for a Merc EV. Seriously that's more than my mortgage.
So I'm sat here wondering, for the average joe like me, who would like to get into something a little more modern than a 12yr old merc, how on earth do people afford these things? Surely people don't pay £500-1000pm on a lease do they? Are people really paying more than a mortgage for a car?
Do people take out huge loans to buy a second hand car for 20k and have monthly payments of £400+
Personally I think a 100k household is a very fortunate position to be in but paying such vast amounts of money for these deals seems madness, or is it just me?!
Recently I've been wondering how the hell people finance their cars. It's not a question of, do you use PCP or personal loans? More a question affordability in general. Let me set the scene. As a two income household we earn a smidge over 100k. We're very lucky and both work hard.
I run a Merc E350 Diesel Estate 2010. She runs an Puma ST on a lease deal. Fuel is currently ~£1.53L by me in the midlands.
I bought my car for around 10k second hand. I split that between cash deposit and small personal loan. A rough payment of £150 per month sorts the loan. A nice round figure in my mind. Not breaking the bank but not cheap either.
With tax and insurance on top it's around £200 pm just to put the car on the road, by the time fuel is added on it's quite an expensive ordeal each month. I don't do huge mileage, perhaps below average per year. The Mrs does quite a bit more than me. Above average I'd say.
The idea of having something plug in hybrid or electric really appeals to me as it would cover 90% of my journeys in EV. Plus the Mrs could use it for the school runs too. I've never had anything than a small personal loan for a car.
So I venture to the usual places to check for second hand cars and perhaps even lease deals, just to see what sort of prices are knocking about.
I'm absolutely shocked at the money it would cost to get something even remotely new. I've never had a new car in my life and I'm fine with that. However, £400pm for a Honda E, £500pm for a Tesla model3, £700+ for Jag I pace, £900pm for a Merc EV. Seriously that's more than my mortgage.
So I'm sat here wondering, for the average joe like me, who would like to get into something a little more modern than a 12yr old merc, how on earth do people afford these things? Surely people don't pay £500-1000pm on a lease do they? Are people really paying more than a mortgage for a car?
Do people take out huge loans to buy a second hand car for 20k and have monthly payments of £400+
Personally I think a 100k household is a very fortunate position to be in but paying such vast amounts of money for these deals seems madness, or is it just me?!
Some interesting feedback and comments.
Thanks for contributing.
In my mind it seems like madness having PCP deals that are close to a mortgage payment is just crazy. Not wrong by any stretch but not for me!
At heart I'm a bit tight and I'm not bothered about impressing anyone with my car choices. On the other hand, I'm a car fan and I like to have something interesting for myself, by interesting I don't mean top of the line AMG, RS, M range. Honda E is interesting to me as much as a C63 is for different reasons.
Both of which are expensive no matter how you finance them.
I'm also making an assumption that some people have a company car allowance that they must spend on a car so they go and max out their allowance. I don't have that so my willingness to drop minimum £400 on a car each month is exceedingly low.
I also don't like to end the month with no money left, essentially living pay check to pay check. That's not comfortable for me, I live well within my means. I guess that philosophy isn't shared by all.
Thanks for contributing.
In my mind it seems like madness having PCP deals that are close to a mortgage payment is just crazy. Not wrong by any stretch but not for me!
At heart I'm a bit tight and I'm not bothered about impressing anyone with my car choices. On the other hand, I'm a car fan and I like to have something interesting for myself, by interesting I don't mean top of the line AMG, RS, M range. Honda E is interesting to me as much as a C63 is for different reasons.
Both of which are expensive no matter how you finance them.
I'm also making an assumption that some people have a company car allowance that they must spend on a car so they go and max out their allowance. I don't have that so my willingness to drop minimum £400 on a car each month is exceedingly low.
I also don't like to end the month with no money left, essentially living pay check to pay check. That's not comfortable for me, I live well within my means. I guess that philosophy isn't shared by all.
Saudade said:
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.
Yes exactly, It's not as if im looking at my bank account and wondering where my money is going, its justifying the expenditure on something that in my opinion isnt worth the money, eg a Honda E for £400 pm with x amount down at the start with limited mileage as an example. 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.
I can afford that, i just don't think it represents value for money.
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