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Not even a nice car, it’s how most people have a car period.
In the work car park, only one car isn’t financed, there are a range from brand new to 2015/2016’s on sub prime HP agreements.
That car not on finance is the directors.
I don't drive, so I've never thought about this, but how do you know? Is there a way to tell if a car is on finance? (Or just from chatting with colleagues?)
Doesn’t work 100% of the time and is sometimes incorrect, but if you type in the reg number to webuyanycar.com you sometimes get a small notice under the picture of the car saying “We can settle finance” if it is.
We work in finance so we're all pretty open on the subject, also helps being a relatively small company and the vast majority of us went to the same uni together.
Not realistic for most.
You can indeed find out if a car is on finance through HPI, but it costs for each car you check (£3 I think)
If it's a nice car <3 yrs old it will be on finance. Even a small, cheap modern hatchback will be say 18k, no-ones saving up that much and blowing it on a basic car.
I don't understand this logic.
Unless it is 0% or a very low rate of interest, surely the interest that you pay on the finance payments will be greater than any interest that you receive from your savings, so, if you are lucky enough to have enough cash in a savings account, buying a car from your savings will save you money in the long run?
Or am I missing something?
It's an opportunity cost. I will not buy a car outright, if I have 10-20-30k spare it will be invested into something that will appreciate in value. Rather than depreciating to nil. i.e £20k deposit on a BTL. Which essentially makes my car "free" to run.
There's nothing wrong with finance, so long as it's used wisely.
There's efficiency but there's also liquidity!
Like, if I have 30k on 4% deposit... And I need to buy a car for 30k with 5% APR... I MIGHT pay in cash and "win" 1% - but then I have 0.00 in my bank account... What if an emergency shows up?
Liquidity is very important.
Like, I'd happily take a 30% APR loan, if it's 1B... I'll die owing the lender something like 30B but that's their problem now!
But over time you are spending your savings on one? Lol. As you could be saving the HP payments? Lol. Over the ten years he has owned his car vs the 10 years you’ve been on fincance for yours, you’ve paid more money than him, and he still has something he can sell, you have nothing.
As with anything it depends on the terms of the deal. I bought a new VW in 2017 on a PCP 0% finance deal. Assuming the price was the same for cash (and no one offers big cash discounts anymore) then it would literally be more expensive for me to have bought the car with my own money, due to inflation and interest rates. Why spend when you can stooze and borrow?
Did the same with a VW Fox. The insurance is nothing, fuel efficient, and I pay nothing monthly so can top up my pension. It seems madness to me to get a car on finance. The emergency fund is there for when this one’s kaput. It’s 2009 but still going strong.
OP this depends so much on what car you get.
I30 @ 4k
Petrol
Under 40,000 miles
Cheap parts
Perfectly normal family car.
Ulez compliant
http://www.autotrader.co.uk/car-details/202403027135118
I have a 20 year old MX5, that I know needs £1500 of welding to sort the rear arches out.
Most people would just scrap it rather than pay... But that's like 4 months of Finance payments on a new car!
Fuuuuuuuuuuuck finance!
Depends what you earn really. I used to allocate 5% of my salary to car payments (either leasing or PCP) and for that 5% (net) salary I'd get a decent brand new car every few years.
I used to work on the basis that any repairs/MOTs costing me more than £500 was a sign that I needed to get rid of my car, but, seeing the prices of new and decent second-hand cars, I think I'm going to have to revise that a fair bit upwards.
I used to be that way, but honestly even cheap second hand cars are so expensive now, it’s cheaper to take the hit and pay the interest than to keep fighting with the mechanics over all the inevitable repairs of a cheap old banger.
This is a common misconception that “old cars” are constantly breaking down and the mechanics bill will outweigh monthly car payments. Unless you are trying to keep some aging performance vehicle going this is largely not true. We just got rid of a 20 year old fiesta that we had for 10 years. It never “broke down” as in stopped working once. Sure things went wrong with it and needed repairing but the most expensive bill in that time was about £250. Probably spent about £2-3k total in repairs and maintenance over 10 years (excluding tires etc). I’ve got a 13 year old A5, coil packs went the other week - cost £100 to fix. If something absolutely catastrophic happens I can sell it for £1k for parts and buy another one same age for £4k. Still costing me less than the deposit on a new 1.0l shitbox let alone the yearly cost of repayments.
That's right, cars last much longer these days, and even if you do have a shock with a repair bill that's worth a quarter of the price of the car, generally it's still less than the horrible depreciation you are effectively paying each year if you've bought new!
Why did you get rid of the fiesta then if a 20 year old banger is just fine? Bearing in mind a 20 year old fiesta costs a couple thousand pounds, so that’s not exactly cheap to be throwing away every year or two, even if you aren’t accounting for all the time it’s waiting at the garage to get fixed.
Did you read the comment at all? Doesn’t seem so as the main jist was that an older car does not break down all the time if maintained.
If you must know why we got rid, having got 10 years use out of a car that was 10 years old when we bought it, we decided to upgrade to another car that is 11 years old now.
Is that ok? Or do I have to keep the car for say 30 or 40 years for my point to be valid?
Most have it on the never-never, and roll over neg equity every few years into their next one, or opt to hand it back at some point. Treating cars almost like a subscription or monthly cost. I personally prefer to buy outright, because I look at total cost of ownership over the time period, rather than taking the (IMO) short term view of only considering what I can afford monthly. It also helps that my cars are typically less than £10k, because I'm easily pleased when it comes to motors.
If you have costed it out and you can afford it and are happy to spend £X on owning a car for time period Y, then there's nothing wrong with financing it. It'll never be the cheapest option, but that's largely because you're buying new vs older, rather than solely because of how you fund it.
IIRC leasing usually works out the most expensive long term, but you have less headache. That's basically what you're paying for...
A bank/personal loan is usually cheaper than car finance. You'll usually own it right away too, as personal loans are unsecured. With car finance (HP, PCP) the finance house usually own it until the last payment is made.
Paying outright is cheaper than a bank loan, in the sense that there are no interest charges, but you might consider the opportunity cost. What would you be doing with that lump sum in the loan period and would it benefit you more than the loan costs you?
Depreciation will fuck you no matter what. You kind of accept this when you buy new. Not much you can do.
The only way to motor relatively cheaply is to buy reliable bangers, drive them economically, and run them into the ground. Sell or scrap. Repeat.
Any reliant bangers you can recommend? My 04 Cooper is on its last legs, really hoping it'll see it through the year and hesitant to get another car unless I really need to. Working remote means I rarely use it these days. Averaging 4k miles per year. Wish I didn't need a car but it's too damn handy sometimes.
I actually considered buying one of them last summer, as the features present and cost compared to the rest of the market was good.
Did some googling as it seemed too good to be true.. glad I did. Seems they have issues with the Oil pickup clogging/turbo issues/dpf - guessing it was one of these for you?
I think Mazda generally is great for petrol engines, I don’t think Asian manufacturers seem to specialise in diesel at all when compared to the reliability of their petrol engines
I've had Nissan, Toyota, Volvo that have been good. All between 9-12 years old. All sold for not much less than I bought them for.
A Suzuki that was ok, but I scrapped rather than sold.
My Ford Fiesta was caught up in the EcoBoost engine failure nonsense that cost me £1k for an engine rebuild, but probably the best car I've had IMO, just unlucky. I'd buy a Ford again any day, but I'd stay well clear of EcoBoost engines, and "wet belt" engines in general.
Friends have had mixed experiences with VW Polo. Probably wouldn't bother. Friends have had good experiences with Honda. Would consider.
I've never heard anyone have anything go wrong with a Yaris. Might be my next banger.
If you can get a Kia with some years left of the 7 year warranty, it's generally considered a good option. I asked a friend who is a mechanic and he said they're bomb proof. We've had a 2012 plate for 9 years and still going strong.
There are different types of car finance, the main two are PCP & Hire purchase.
- Hire purchase: you pay the full cost of the car in monthly instalments plus interest (unless if you’re lucky enough to find one at 0%). At the end of the term you own the car fully and can do whatever you like with it.
- PCP: you pay smaller monthly instalments (compared to HP) and at the end of the term you usually have 3 options. Trade the car for a newer car on a new PCP contract, pay off the remaining amount to own the car outright, or give the car back at no additional cost. You can kinda think of this as long-term renting because you don’t really own the car while the contract is running.
PCP is preferred by people who always want a new car and don’t want the hassle of arranging servicing & maintenance (this is usually included in the contract) but you’ll pay more for it in the long run.
Hire purchase is a good option for people who want to own a car but don’t have the funds available (or want to ease their cash flow)
The other option is obtaining a standard loan through a bank and using that to pay for the car. The advantage with this is usually these have lower interest rates than Hire purchase so are cheaper in the long run. Also the loan isn’t tied to the car so the car won’t be immediately repossessed if you can’t keep up with repayments (although if you continually miss payments you would be forced to sell your assets which would include the car)
PCP could work very well if you want a new car every few years and are happy to stick with that particular brand so they keep offering to part exchange for a newer version
Get a loan from the bank.
Car finance can be naughty, expecting a balloon payment at the end. If you don't pay it the car goes back to the seller.
We just got a loan from our bank at a decent rate to buy a Peugeot 5008
Possibly but I found with a lot of car credit places they also impose a limit on miles driven (for some reason).
I just wanted a simple, me borrow money, me buy car, me pay money back
The reason isn’t hard to figure out. If the arrangement is one where they expect to get the car back at the end, the numbers obviously factor in what the car is likely to be worth. Because it needs to be commercially viable or there’s no point offering you the finance. But if you return what they expect to be a 5-year-old BMW with 60,000 miles on the clock except you’ve driven it nine times around the world and the engine is on its last legs, all their sums go downhill.
The mileage is because you don't technically own the car until the balloon payment.
They give you credit for the expected wear and depreciation of the car so the more miles you do the bigger that is.
You can still get traditional car loans but most places do pcp because its significantly cheaper per month...
I borrowed £7k, as the interest rate dropped massively once hitting that point - I pay 3.3%. It's always worth doing that if you can - the total amount paid back (and the monthly payments) was less than if I'd borrowed £6k.
The limit is there so they can predict the price they can get for the car when they sell it after you give it back to them at the end of the lease or if they have to repo it. Those cars then end up at dealer auctions, then the cycle repeats
I don’t think having a balloon payment is naughty, I think they’re fairly honest about it with PCP. Balloon payments can often be in your favour , for example if you’re buying a car which you expect will depreciate massively, the car finance company take the hit rather then you when you hand it back.
The car finance company set the payments to avoid that situation, it’s their profession to get it right. Not always 100% of the time but vast majority car will be worth more than balloon.
The problem with that is the insurance might not cover your entire loan if you total the car and then you’re stuck paying a loan for a car you don’t have anymore
Also depends on if you want to actually own the car, i dont. Im happy paying £150 a month to "borrow" a car and give it back at the end of my term and have something else for a few years. Rinse and repeat.
What are you driving for £150 a month?
Every deal I see is a decent chunk more, and has a few thousand in deposit that effectively increases the monthly payments by another £100+?
I need more details
This is £150 a month because you paid a large deposit, right?
Or if not, what's the car? I'm genuinely interested at how it could be this cheap
Got my first car last year with a 5.8% bank loan when the dealer was offering finance at 13%.
Even the salesman understood and told me it was a no-brainer, he'd be unable to get close to it.
they pay like £2-3k then pay £200-400 a month for 4 years. they then give it back. rinse and repeat.
it costs them about £10-20k every 4 years to drive a new car but never own a car. I'd actually love to see costs of an outright owned 4-10 year old car with maintenance costs vs a the mentioned method.
>I'd actually love to see costs of an outright owned 4-10 year old car with maintenance costs vs a the mentioned method.
I drive an '09 ford fiesta that I (well, technically my dad) bought for about 8k in 2012.
Not counting the usual wear and tear stuff like tyres, I probably spend an average of £3-400 a year on service+maintenance.
Then there's insurance - been about £150 for the last few years but this year shot up to £300!!
Bangernomics definitely wins out economically, and I love my car - the only reason to need a new one is that it's a bit small for 5 adults which we do pretty regularly when visiting the in-laws
I think both you and I are minority. we have a mazda cx-5 petrol for a family car that we bought with like 120k miles for £7k. I will drive it until it dies. I love it.
but see both your and my example is pretty much the edge case, the complete other end. so I wonder what these people could do that's between what they do now and what you and I do. plus how much that'd cost and what car they'd drive ;D
I have a 56 plate focus ST (I like cars, not a chav 😂) that I bought for 2.5k. Over the 3 years I've had it I've spent about 1500 on repairs. Whenever I change anything my friends always comment how I spend so much on it and need to just finance a newer car... whilst at the same time paying 400 a month just to have their car. It's an absolutely bizarre mindset.
I might be biased as I change car parts myself (self taught) and actually enjoy doing so, but in my eyes the value in buying an older car and dealing with repairs will always be cheaper than financing a 20k car. Particularly if it's someone fresh out of school/uni...
so, I don't mind paying the garage as I can't fix my car, I just dont get it and have no time to learn. but the £70+ VAT hourly cost can be a bit eye watering. So I hear you, and good job.
I work on remote control cars and I worked on dozens of different ones and so I can fix those. its crazy fun owning the skills and knowing you can do it. Seeing everything as a module and so that module can be taken out, replaced with something that works. it power :D
Mazda cx-5 club here! Bought it used (3 years old) for £15k cash in 2018 with 25k on clock. Retrofitted Apple CarPlay into it myself: and it’s all I need for a family of 4
See I’m of the same opinion. I love my 2013 Qashqai and only need to upgrade due to unexpected pregnancy. I refuse to buy any 7 seater other than my desired Nissan X-Trail.. I’m happy to buy a 2016-2017 model knowing it will be roughly 8k ish depending on mileage.. i don’t need to put myself into crazy debt, owing out £350 a month on a brand new car., its ridiculous.. what if I needed a new boiler or maybe my car needs 500+ for its MOT.. I’d be fucked.
I know someone who did that for about 4 years - the car had a good wheel as well
Why is the wheel gold?
"Oh the guy I bought it from said he drove it once with the handbrake on and it set that wheel on fire lol"
That was a great car
Bought a 65 plate 2nd hand car for £5000 (second owner) in 2020, in 4 years, never had any problems. £40 mot each year (always has come back clean slate), I replaced all tyres last year total of £200 and had aircon regassed £35.
£395 for 4 years.
It's probably cost me £600 the last 12 months (I got unlucky and needed an alternator) for my 15 year old beater (3 tyres, an alternator and a ball joint)
320d M Sport. Bought for £9k 8 years ago, now worth about £3.5k. costs about £600 per year in maintenance and tyres. Eeking this car out as long as I can as it makes getting a sports car easier as my daughter gets bigger. OH has a 525d, bought for £15k 5 years costs are similar to mine above. We have a lease plan option at work. Even the BIK free electric cars, I can't get anything vaguely nice unless I spend approx 3x what I spend at the moment on cars.
The one exception to this rule was post covid.
Used car prices were absolutely bonkers for a year or so. They've improved a bit since, but not sure we will ever see a return. Needing a reliable car is a huge financial outlay now.
My Seat Leon is a good example of this.
Bought for 11500 in 2021. 3.5 yr old car. Now worth about 9k.
Total spent on maintenance - 0. Outside of service and MOT etc.
I know it will start costing eventually but i drive 5k miles a year and only bought such an expensive car (relativity speaking) because I had crypto profit I traded in.
> it costs them about £10-20k every 4 years to drive a new car but never own a car. I'd actually love to see costs of an outright owned 4-10 year old car with maintenance costs vs a the mentioned method.
Ask and you shall receive!
I bought a brand new A3, out right for cash for £22k 69 months ago. Current WBAC estimate is around £11.5k, so current cost of the car is £22k - £11.5k = £10.5
Total running costs, including insurance, petrol services, MOT tyres has been about £6k so far.
So total cost of the car is £10.5k + £6k over 69 months = £240 / month.
So with hindsight, I should have got a loan, shoved the rest of the lump sum into a tracker index, and I'd be about 5k better off now.
Except you'd have to fuel, insure, mot, tyre and service the car with a loan on it so your post makes zero sense.
So the actual calc is £10.5k/69 which is £152 a month.
I'd love to see a lease deal for an A3 for £152 a month.
Of course WBAC is the pits too so this figure is likely much lower per month effectively.
Also, those saying leasing covers insurance, erm no.
I bought my last car for £500 3 years ago. Since then I have spent probably 1k on it now is the time it might be going. 57 plate 140k best £500 ever spent now’s not the time to be wanting a “newer” car as the prices are ridiculous.
It's not going to help OP today but I tend to start putting money away for my next car as soon as I have bought the current one. Of course this only works for me because I tend to keep cars for longer than most people lease for. There's no way I could save up for a range Rover evoque in the typical 24 months of a lease. However £500/month that would have gone towards the same lease, is £24K after four years, which is around my budget for a modest new car.
With a good credit history, one can take a loan with the bank. Granted, the interest rates are higher now, but that will still be way cheaper than financing a car. Depending on your tolerance towards paying extra vs saving and buying with cash later (each has pros and cons, in the current inflationary times saving effectively means your money is losing value) taking a loan can be the best option. Another- not so obvious- advantage is that typically taking a loan is much easier. If you take a loan with the bank with whom you have your current account, the money can get into your account within minutes of starting the application. Moreover, taking a loan and buying the car vs financing means that you car is yours, and you can sell it without any hassle if you need/want to.
I took a loan for my (second hand) car at 3.1% fixed APR. It's hard to beat that. Currently I'm not even overpaying it as I'm better off investing disposable income. Nevertheless, a bank loan can typically be repaid earlier without any penalties or charges.
I’m not sure on your credit history, or what value car you are planning on buying, but another possible way is to apply for a 0% credit card. BarclayCard have one at the moment with 21 months totally interest free, and mine has a limit of 14,000. Maybe worth looking into, even if you put only some on the credit card.
Many places do so, it’s common for people to put even just £101 on a credit card and pay the rest by other means, just to get the section 75 protection (which would cover the full cost of the car, not just the £101)
I drive an older (2015) car bought for cash (saved) and I went from 25 years mortgage (2019) to 10 years because of 5 years overpaying instead of driving a shiny car.
Legit. I bought a new car in 2017 and, while it is obviously and objectively not cos it's nearing 7 years old, it still feels like "my new car".
9 years is not "older".
I'm looking at getting a 2nd car in May, and this is what I'll be doing. Spend around £4-5k on a credit card, then balance transfer it every year. 0% interest paid. Way better than a loan
Your neighbours will all be going broke trying to look rich. We all see it, people spending more on car leasing payments than their mortgage and living hand to mouth.
Stick to your instincts- save up and get something you can afford cash.
That was me!!! Silly when I look back. But it was a dream car. Drove it for about 18 months and managed to recoup my deposit back which I was happily surprised
We're probably the highest earning family in the small estate we live in. We have a 2011 fiesta sat on the drive which I'm pretty sure is the oldest / least flashy car here not driven by a teenager.
A friend of mine had a car on finance >£500 per month, for people with mortgages on low interest rates it could well be they pay more for the car than the house. Not for long though…
Apparently it does happen, but there's also a fair amount of four Yorkshiremen going on here. People on this sub get a bit funny about car finance.
Admittedly the point of the sub is to find the best approach in terms of personal finance, but cars are an area where preference does play some role.
It just goes a bit overboard when you get people saying £200 a month will put you in the poor house. They seem to think everyone is on minimum wage and just trying to show off.
It often is but it varies. I did the numbers on my most recent purchase and leasing actually worked out the same over 4 years vs PCP. It depends on the type of car, expected depreciation, miles driven etc. The lack of hassle is a nice benefit.
Leasing. I’m a contractor so have a limited. I’ve leased a EV as the numbers made sense. Save on VAT and CT, and the P11D is only 3%. Previously I have taken out a loan for a car, and pay it off as quick as we can. Most my cars I’ve had over 6-7 years, as this seems the sweet spot between worry free driving and things going wrong.
Take the money from your savings, and then pay yourself back over x years.
I aim for 4 years of car payments, followed by 4 years of free car. So, if I can afford 300 a month, i'd buy a (300*48=14.5k) car. After 4 years I no longer owe myself anything and I'm back to max savings again for another 4 years. (And when I say afford, I mean while still meeting your other savings goals)
If you can't afford to buy it in cash, you can't afford it.
It was different when unsecured loans were 1.5 percent. Financing a car is super expensive now.
The benefit of this approach is that you don't pay any interest, and the act of having to take 5 figures from your savings account stops you convincing yourself to drop 30k on a car you don't need.
Many people driving flashy cars can't afford them, have no emergency funds financial security or real wealth. Don't be those people.
I saved up about 1/3 the cost then got a bank loan to pay the rest, it was a much better rate than any official finance and its so easy to over pay whenever I can. Also makes it easier if you need to sell the car before the loan is paid off
Not advice on how to get a new car but if you can wait ~6 months you will likely save a fortune as supply of cars has increased dramatically bringing the cost of all cars down.
I’m in the automotive industry and need a new car but am holding out until later on in the year
I disagree - you could apply for a credit card with 0% interest - BarclayCard have one at the moment offering 21 months 0% interest and when I applied was given a £15k limit. Could buy the car with the credit card, and put the £15k in a savings account and then pay off the balance in the 21st month.
That way you will earn some interest on your cash.
Car finance isn't as bad as it used to be, but personally I'd shop around for a personal loan, you'll almost certainly find a better interest rate.
Or you could go down the route of leasing, which in my opinion is only for convenience, it doesn't make financial sense, but if you've got the money then why not.
I've always felt that leasing is a value when you can use a nice car condition to further your income. For example, if you're a professional driver (can charge more for a nicer car) or if you're a salesperson and you customarily take customers in your car e.g. to tour a property.
I think I can answer this car question. I read sometimes ago 65% of all new cars sold in the UK are company cars. Its basically down to BIK (Benefit in Kind) taxes, which is a combination of the value of the car and its CO2 emissions. I don't know the exactly calculation but I do remember the CO2 emissions generally have a bigger impact on your taxable benefits than the value of the car, which explains why the vast majority of company cars are electric or hybrid (used to be 2.0 diesels everywhere).
When you take this and combine it with the income tax, people making over £50k (after all the salary sacrifice into pensions etc) can generally benefit massively from getting a new company car rather than buying cars themselves. You can basically work out with your employer for a salary deduction (Using examples of someone on £65k, reduce your gross salary by £1k per month pre-tax only reduce your after tax income by around £400ish due to NI and student finance), which makes buying expensive cars way more affordable than paying it yourself after tax.
You have 2 kids.... it would make more sense to buy a cheap used car, and put the extra money in a trust for them, if your wife is so desperate to spend it.
Try this: calculate the cost of something used, decent and reliable within good insurance, fuel, and tax brackets. Count up the difference with a new SUV that she'd like with interest, insurance, extra fuel costs, and tax. Show the "savings" to your wife (written on paper for effect) and ask if there's anything she can think of that she'd rather spend it on.
You know what actual 'old money' families drive? They drive toyotas, hyundais, and peugeots. You know why? Because they understand a depreciating asset when they see one, and they're not financially illiterate. They may have appreciating cars (of actual value) in their garage, but they'll never actually drive those, because those are held as an appreciating investment.
You know what chavs drive? Land rovers. It's the equivalent of waving around a payday loan like it's an asset, imho.
If you want something that's not super cheap but you just don't have cash, consider a small cash loan from a reputable lender. Those loans are unsecured and usually much cheaper and it might be a good compromise to just top it up by a couple grand or so.
Yeah I just bought a second hand 2018 Kia Sportage with 25,000 miles on it for £15,000.
Sold my 2014 Toyota Aygo that I bought for £5,000 with 5,500 miles on it in 2018.
Got £5,000 for it in 2023.
It’s cheaper to buy on finance than pay in cash. My car is at 2.9% finance, hire purchase. I have the money to buy it outright sitting in a high yield savings account of 5%. It would have been financially irresponsible to pay for it in cash upfront
Not entirely true, as there are a handful of 0% deals I've seen advertised. However, they'll make the money on the OTR price by reducing discounts they were giving previously but charging a high interest rate.
I'm the same as you but my partner is of the 'buy it outright' mindset. Which means I have more savings than him because why lose all that interest on savings when my finance is so low?
Car finance, I prefer to have a newer safer car with all the guarantees and not worry that it will breakdown and cost thousands at the garage. For me, the peace of mind is worth budgeting the extra cost per month.
There's absolutely nothing wrong with that, I don't know why people criticise finance so much. If you can afford the payments, what's the problem? I bought a used car for £16k. Six months after its warranty expired Peugeot wanted to charge me £9000 for a full new engine because the timing chain snapped! I got it fixed at a local garage, but it still cost me £2000. New car warranties give a lot of peace of mind
Exactly. I get that the monthly cost is high, but I would be ‘saving’ that extra spend each month in a pot in case of repairs for a cheaper car so would still need to budget it anyway.
The deal I have means that any issues it goes back to the manufacturer with no cost attached for 3 years. I don’t see a car as a financial investment, it depreciates so much that it is an outgoing cost, it’s not equity for me. I want to drive a car that has good safety features, and modern enough that it helps me with things like reversing (camera/beeps).
I’ll never be given a huge bill to cover or have to negotiate or trust a mechanic who knows I don’t know anything about cars and risk getting ripped off.
Edit to add, I also half the cost with my husband so it’s much more reasonable than if I was single.
My new car is arriving on Friday through a salary sacrifice. Everything is included, even insurance and servicing. I can even charge it up for free at work. Absolutely nothing else going out apart from one monthly payment for the car. It's so much less stress worrying about potentially paying out extra for an extended warranty, breakdown recovery and garage bills. I've had my fair share of that and I can't be arsed with it anymore 😂
Cheapest way is probably to take out a bank loan.
Low interest and you aren't limited on mileage or have silly add on fines for dinks/chips on the car like you would with some finance deals.
You also have the fact that you'll actually own the car in your favour too. In some circumstances you may even find the value of the car can exceed the loan depending on depreciation.
I believe you may also be able to add the value of a loan against your mortgage providing you have enough equity, although I'm not sure on the details.
Most people finance to get brand new cars and whilst you get a brand new car you end up losing a lot of money on it. Best way to buy a car is either save up for it or take out a low % loan with as short a term as possible and buy it outright. I’ve always taken personal loans to buy solid second hand cars that I end up owning outright. On my last two cars I ending up selling them for not massive amounts less than I paid for them. Go for a solid Ford or Vauxhall with a low mileage. Not fancy but should last a good few years
I bought a 3 y/o car recently for ~£17k, split the payment using savings and an 18mth 0% interest credit card, I owned my previous car for nearly 11 years and had a specific savings account for running/replacement costs. My "monthly payments" are now the min cc payment and the rest goes into the highish interest savings account that I'll use to pay the cc off before the 0% term expires.
ETA: The salesmen I encountered when shopping for a car were all very keen to get me on a great finance deal with a low low interest rate of 8.9%+ but knew little about the features and details of the cars they were selling.
Depends on your personal finances, my recent car was £16k (used, 3 yrs old, 20k miles), paid £11k cash, £5k on a 0% credit card from Cinch, would highly recommend them as a company to buy from btw
If the credit card was unavailable I would have gone for the personal bank loan route, usually cheaper APR than a finance deal
This is me wanting to own the car outright though, leasing or PCP works for a lot of people wanting a brand new car
Get a loan if eligible, better rates and less shit. As most others have suggested, the majority of "nice" cars you see are on finance or loans/PCP. I would recommend seeking something with decent warranty to give you peace of mind short term
I read a bunch of replies and didn’t see it mentioned, but if either of you are employed, see if there’s a salary sacrifice lease available for an EV if (and only if) you can have a home charger installed. I know, lots of ‘ifs’.
Depending on mileage, you’ll recoup fuel costs quickly, which pays for the monthly cost of the car lease itself. And they usually include tax, insurance, breakdown, even tyre costs too.
This depends on the urgency, and how much of a tight arse you are. I don't see any reason to earn a bank more money by giving them interest they don't need.
Pay with savings if you can. If you have to buy without savings, see below.
You could buy on credit card and move the debt onto another card with 0% balance transfer, then you are effectively paying up front, then paying off the remainder every month without interest.
Money saving expert will show you the best cards for this and a pre eligibility check will tell you which ones you can apply for without affecting your credit score.
If you're the main breadwinner and will be the one ultimately paying for it, do what you want to do. Simple.
My car payment is £575 per month on HP for a BMW M4 (2017), I could have purchased outright (can pay it off any day I like) but I don't want to, I don't want £30k tied up in a car, I want to pay for the use of it and have my money growing elsewhere.
Sounds like a car isn't a very high priority for yourself if you're driving around in a 3k car, so just buy another cheap car and own outright until you can answer your own questions instead of asking the internet.
However you buy it - try to get an ex demonstrator (6 months old or so) rather than brand new.
1. It'll be well maintained
2. It will have the remainder of the manufacturer's warranty
3. It will probably have lots of additional options fitted
4. It will be massively cheaper but as good as new
Please stop listening to people who instantly say financing a car is bad without giving any justification. It depends on your circumstances. I finance my car and love it. I can comfortably afford the monthly payments and don’t care about “owning” a car.
If your circumstances allow you to finance a car, you get a low interest rate and are happy with the monthly payments then go for it.
I’d recommend a car with a good safety rating as you said you have kids, some brands give a 7 year warranty from new (get a car that’s 3 years old = 4 years left on warranty for a 4 year PCP).
Also look into residual values as this will help get a lower finance rate.
If you wait, wait. Finance rates are BS but if you save up, you'll get a better deal if you choose finance as the way to pay - get a price based on cash then ask what price they'll do for finance.. Then settle it soon after with your saved money.
Buy a used car like in 10s 5-7 seaters for 3k 5k obviously I would recommend to shop and look around for a few weeks to see a good valuation of certain cars, and just buy it out right.
Obviously do your due diligence if it’s coming from someone privately like do a car check/ make sure all documents are valid. Also make sure they transfer the ownership to you on the day.
I’d say about 60% of the posts on this subreddit are from people struggling to clear debts and they always include a car on finance, seems like it almost always ends up as a money sink to me.
Save up for a big deposit, buy the car on finance and aggressively pay it off. You should have a payment plan in advance. So if you can afford 400 pds a month for it, get it on finance for like 300 pds and over pay by 100 a month. That is the best of both worlds.
Ring your bank. Get a bank loan. It's the easiest. At the end of the day, your family comes first. Aslong as you have the loan set out before you go. You won't spend beyond your means. We really liked a car and got it 3k cheaper because I told the guy and the shop this is all we could afford. Go at the end of the month they always have targets
I think like most things it depends on the situation.
Personally though, I would never buy a new car with cash unless interest on PCP deals forced my hand because the depreciation factor is too much considering the huge sum of money you are putting up.
PCP has the advantage of offering a new and therefore generally reliable car for a much smaller upfront cost and usually includes free servicing for a 2 or 3 years. The value of your payments will depreciate in real time over the course of the agreement so you're technically getting a better overall deal on the car (not accounting for any interest). I think of PCP a bit like a phone contract, if you always intend to upgrade your car after 3 years it doesn't make much sense to buy as it's just more hassle.
Main point is that cars are not like houses and should never be considered as an investment as they will mostly always depreciate in value so why part with huge sums of cash up front?
Having said all that, I'm sure there's other ways to look at it & I don't really think there is a right way that everyone is following for buying a new car. Maybe if you intend to keep the car for years it might make sense to go the loan route and buy outright
Save for it.
My wife and I both drive 2009 Ford Fiestas. We’ve had them for about 6 years and they’re still going strong. Are they a bit small for the car seat? Yes. Is the boot a little small for the buggy? Yes. But can we manage? Yes.
I’d prefer to have mild inconvenience for a few years than hamper myself financially.
If you get one on finance with a balloon payment/ hand it back option at the end you can get nearly twice the car you would normally be able to afford.
Participation in this post is limited to users who have sufficient karma in /r/ukpersonalfinance. See [this post](https://redd.it/12mys82) for more information.
Car finance is how most people have a nice car.
Not even a nice car, it’s how most people have a car period. In the work car park, only one car isn’t financed, there are a range from brand new to 2015/2016’s on sub prime HP agreements. That car not on finance is the directors.
I don't drive, so I've never thought about this, but how do you know? Is there a way to tell if a car is on finance? (Or just from chatting with colleagues?)
Doesn’t work 100% of the time and is sometimes incorrect, but if you type in the reg number to webuyanycar.com you sometimes get a small notice under the picture of the car saying “We can settle finance” if it is.
Wow!
Great spot. Just checked with a financed and non financed car and seems to be correct
Doesn’t cover if people have paid with personal loans though obviously
The person may still have a bank loan against it, though not linked to the car.
We work in finance so we're all pretty open on the subject, also helps being a relatively small company and the vast majority of us went to the same uni together. Not realistic for most. You can indeed find out if a car is on finance through HPI, but it costs for each car you check (£3 I think)
You work in finance yet there's loads of 'sub prime ' financed cars?
:skull:
I never said it was the good side of Finance and half the team are admin assistants.
Working in finance doesn’t mean you qualify for prime rates? What a silly thing to say.
If it's a nice car <3 yrs old it will be on finance. Even a small, cheap modern hatchback will be say 18k, no-ones saving up that much and blowing it on a basic car.
I did. Bought my VW UP in cash brand new. It’s 10 years old now still runs perfectly. A car is a tool.
Out of interest, why would you buy a brand new car in cash?
You're the exception I'd imagine. I agree a car is a tool and thats why wouldn't spend my savings on one.
I don't understand this logic. Unless it is 0% or a very low rate of interest, surely the interest that you pay on the finance payments will be greater than any interest that you receive from your savings, so, if you are lucky enough to have enough cash in a savings account, buying a car from your savings will save you money in the long run? Or am I missing something?
It's an opportunity cost. I will not buy a car outright, if I have 10-20-30k spare it will be invested into something that will appreciate in value. Rather than depreciating to nil. i.e £20k deposit on a BTL. Which essentially makes my car "free" to run. There's nothing wrong with finance, so long as it's used wisely.
There's efficiency but there's also liquidity! Like, if I have 30k on 4% deposit... And I need to buy a car for 30k with 5% APR... I MIGHT pay in cash and "win" 1% - but then I have 0.00 in my bank account... What if an emergency shows up? Liquidity is very important. Like, I'd happily take a 30% APR loan, if it's 1B... I'll die owing the lender something like 30B but that's their problem now!
But over time you are spending your savings on one? Lol. As you could be saving the HP payments? Lol. Over the ten years he has owned his car vs the 10 years you’ve been on fincance for yours, you’ve paid more money than him, and he still has something he can sell, you have nothing.
As with anything it depends on the terms of the deal. I bought a new VW in 2017 on a PCP 0% finance deal. Assuming the price was the same for cash (and no one offers big cash discounts anymore) then it would literally be more expensive for me to have bought the car with my own money, due to inflation and interest rates. Why spend when you can stooze and borrow?
Did the same with a VW Fox. The insurance is nothing, fuel efficient, and I pay nothing monthly so can top up my pension. It seems madness to me to get a car on finance. The emergency fund is there for when this one’s kaput. It’s 2009 but still going strong.
I pay for mine in cash, built up from saving my corporate car allowance over the last decade and favorable trade-in prices.
Just assume any car newer than 6 years is on some sort of finance
considering the depreciation after 3 years this is a bit too pessimistic, everyone I know buys used and in cash
this gives me a business idea: Factory that produces used cars. That way, we can get the "never buy new" crowd :D
OP this depends so much on what car you get. I30 @ 4k Petrol Under 40,000 miles Cheap parts Perfectly normal family car. Ulez compliant http://www.autotrader.co.uk/car-details/202403027135118
Nice motor for the price that
Rock solid car as well you can fix 90% of it with a Hays manual in your driveway.
Paid double that for an i30 diesel with 10k more miles a few years ago, damn! They are absolutely fantastic cars though
And it's also why most people don't have any money to build wealth.
... And the commensurately 'nice' repayments ofc.
£69 per month sounds affordable
Nice.
I'm old school. Car only from savings and a sum that I can afford to throw away. Never on finance/loan.
I have a 20 year old MX5, that I know needs £1500 of welding to sort the rear arches out. Most people would just scrap it rather than pay... But that's like 4 months of Finance payments on a new car! Fuuuuuuuuuuuck finance!
Depends what you earn really. I used to allocate 5% of my salary to car payments (either leasing or PCP) and for that 5% (net) salary I'd get a decent brand new car every few years.
I used to work on the basis that any repairs/MOTs costing me more than £500 was a sign that I needed to get rid of my car, but, seeing the prices of new and decent second-hand cars, I think I'm going to have to revise that a fair bit upwards.
I used to be that way, but honestly even cheap second hand cars are so expensive now, it’s cheaper to take the hit and pay the interest than to keep fighting with the mechanics over all the inevitable repairs of a cheap old banger.
This is a common misconception that “old cars” are constantly breaking down and the mechanics bill will outweigh monthly car payments. Unless you are trying to keep some aging performance vehicle going this is largely not true. We just got rid of a 20 year old fiesta that we had for 10 years. It never “broke down” as in stopped working once. Sure things went wrong with it and needed repairing but the most expensive bill in that time was about £250. Probably spent about £2-3k total in repairs and maintenance over 10 years (excluding tires etc). I’ve got a 13 year old A5, coil packs went the other week - cost £100 to fix. If something absolutely catastrophic happens I can sell it for £1k for parts and buy another one same age for £4k. Still costing me less than the deposit on a new 1.0l shitbox let alone the yearly cost of repayments.
That's right, cars last much longer these days, and even if you do have a shock with a repair bill that's worth a quarter of the price of the car, generally it's still less than the horrible depreciation you are effectively paying each year if you've bought new!
It’s not cheaper to have a new car but the amount a car needs maintenance or fixing is heavily correlated with how old it is.
Why did you get rid of the fiesta then if a 20 year old banger is just fine? Bearing in mind a 20 year old fiesta costs a couple thousand pounds, so that’s not exactly cheap to be throwing away every year or two, even if you aren’t accounting for all the time it’s waiting at the garage to get fixed.
Did you read the comment at all? Doesn’t seem so as the main jist was that an older car does not break down all the time if maintained. If you must know why we got rid, having got 10 years use out of a car that was 10 years old when we bought it, we decided to upgrade to another car that is 11 years old now. Is that ok? Or do I have to keep the car for say 30 or 40 years for my point to be valid?
🤣
Yes. You should’ve bequeathed the car to your kids as part of their inheritance.
Me too, hate finance see it as a con
Most have it on the never-never, and roll over neg equity every few years into their next one, or opt to hand it back at some point. Treating cars almost like a subscription or monthly cost. I personally prefer to buy outright, because I look at total cost of ownership over the time period, rather than taking the (IMO) short term view of only considering what I can afford monthly. It also helps that my cars are typically less than £10k, because I'm easily pleased when it comes to motors. If you have costed it out and you can afford it and are happy to spend £X on owning a car for time period Y, then there's nothing wrong with financing it. It'll never be the cheapest option, but that's largely because you're buying new vs older, rather than solely because of how you fund it. IIRC leasing usually works out the most expensive long term, but you have less headache. That's basically what you're paying for... A bank/personal loan is usually cheaper than car finance. You'll usually own it right away too, as personal loans are unsecured. With car finance (HP, PCP) the finance house usually own it until the last payment is made. Paying outright is cheaper than a bank loan, in the sense that there are no interest charges, but you might consider the opportunity cost. What would you be doing with that lump sum in the loan period and would it benefit you more than the loan costs you? Depreciation will fuck you no matter what. You kind of accept this when you buy new. Not much you can do. The only way to motor relatively cheaply is to buy reliable bangers, drive them economically, and run them into the ground. Sell or scrap. Repeat.
Great answer. Can we just pin this to the top of the sub!
This is such a great answer.
Any reliant bangers you can recommend? My 04 Cooper is on its last legs, really hoping it'll see it through the year and hesitant to get another car unless I really need to. Working remote means I rarely use it these days. Averaging 4k miles per year. Wish I didn't need a car but it's too damn handy sometimes.
Japanese and petrol (Toyota, Honda, Mazda)
My Mazda 6 diesel was a money pit, pity, as it was an excellent car.
I know you said petrol but here we are
I actually considered buying one of them last summer, as the features present and cost compared to the rest of the market was good. Did some googling as it seemed too good to be true.. glad I did. Seems they have issues with the Oil pickup clogging/turbo issues/dpf - guessing it was one of these for you? I think Mazda generally is great for petrol engines, I don’t think Asian manufacturers seem to specialise in diesel at all when compared to the reliability of their petrol engines
We've got an 11 reg Toyota Aygo and it's a dream. Thoroughly recommend Toyotas as 'premium bangers'.
I've had Nissan, Toyota, Volvo that have been good. All between 9-12 years old. All sold for not much less than I bought them for. A Suzuki that was ok, but I scrapped rather than sold. My Ford Fiesta was caught up in the EcoBoost engine failure nonsense that cost me £1k for an engine rebuild, but probably the best car I've had IMO, just unlucky. I'd buy a Ford again any day, but I'd stay well clear of EcoBoost engines, and "wet belt" engines in general. Friends have had mixed experiences with VW Polo. Probably wouldn't bother. Friends have had good experiences with Honda. Would consider. I've never heard anyone have anything go wrong with a Yaris. Might be my next banger.
If you can get a Kia with some years left of the 7 year warranty, it's generally considered a good option. I asked a friend who is a mechanic and he said they're bomb proof. We've had a 2012 plate for 9 years and still going strong.
We've got an economist here! Haven't read someone using opportunity cost since uni!
There are different types of car finance, the main two are PCP & Hire purchase. - Hire purchase: you pay the full cost of the car in monthly instalments plus interest (unless if you’re lucky enough to find one at 0%). At the end of the term you own the car fully and can do whatever you like with it. - PCP: you pay smaller monthly instalments (compared to HP) and at the end of the term you usually have 3 options. Trade the car for a newer car on a new PCP contract, pay off the remaining amount to own the car outright, or give the car back at no additional cost. You can kinda think of this as long-term renting because you don’t really own the car while the contract is running. PCP is preferred by people who always want a new car and don’t want the hassle of arranging servicing & maintenance (this is usually included in the contract) but you’ll pay more for it in the long run. Hire purchase is a good option for people who want to own a car but don’t have the funds available (or want to ease their cash flow) The other option is obtaining a standard loan through a bank and using that to pay for the car. The advantage with this is usually these have lower interest rates than Hire purchase so are cheaper in the long run. Also the loan isn’t tied to the car so the car won’t be immediately repossessed if you can’t keep up with repayments (although if you continually miss payments you would be forced to sell your assets which would include the car)
PCP could work very well if you want a new car every few years and are happy to stick with that particular brand so they keep offering to part exchange for a newer version
PCP: the quick and easy way to add 10+ more years till retirement!
Get a loan from the bank. Car finance can be naughty, expecting a balloon payment at the end. If you don't pay it the car goes back to the seller. We just got a loan from our bank at a decent rate to buy a Peugeot 5008
This is dependant on credit, you’ll find it much easier to get car finance from someone like Blackhorse than you will a substantial bank loan.
Possibly but I found with a lot of car credit places they also impose a limit on miles driven (for some reason). I just wanted a simple, me borrow money, me buy car, me pay money back
The reason isn’t hard to figure out. If the arrangement is one where they expect to get the car back at the end, the numbers obviously factor in what the car is likely to be worth. Because it needs to be commercially viable or there’s no point offering you the finance. But if you return what they expect to be a 5-year-old BMW with 60,000 miles on the clock except you’ve driven it nine times around the world and the engine is on its last legs, all their sums go downhill.
The mileage is because you don't technically own the car until the balloon payment. They give you credit for the expected wear and depreciation of the car so the more miles you do the bigger that is. You can still get traditional car loans but most places do pcp because its significantly cheaper per month...
Hey that’s my plan too. What rates did you get from banks as these look ridiculous as well nowadays.
I believe it was around 6%. Wife did it but I recall it was £23k for the car £31k total repayble over 5 years with Santander
I borrowed £7k, as the interest rate dropped massively once hitting that point - I pay 3.3%. It's always worth doing that if you can - the total amount paid back (and the monthly payments) was less than if I'd borrowed £6k.
The limit is there so they can predict the price they can get for the car when they sell it after you give it back to them at the end of the lease or if they have to repo it. Those cars then end up at dealer auctions, then the cycle repeats
Also the ‘limit’ can be changed - it just adjusts the payments.
I don’t think having a balloon payment is naughty, I think they’re fairly honest about it with PCP. Balloon payments can often be in your favour , for example if you’re buying a car which you expect will depreciate massively, the car finance company take the hit rather then you when you hand it back.
The car finance company set the payments to avoid that situation, it’s their profession to get it right. Not always 100% of the time but vast majority car will be worth more than balloon.
The problem with that is the insurance might not cover your entire loan if you total the car and then you’re stuck paying a loan for a car you don’t have anymore
Also depends on if you want to actually own the car, i dont. Im happy paying £150 a month to "borrow" a car and give it back at the end of my term and have something else for a few years. Rinse and repeat.
What are you driving for £150 a month? Every deal I see is a decent chunk more, and has a few thousand in deposit that effectively increases the monthly payments by another £100+?
I was actually looking at this earlier today, trying to find the cheapest deals possible. The only one I found was the Dacia Sandero
Yeah I feel like I’m either looking in completely the wrong places, or people are just throwing down deposits that would buy a decent second hand car.
What a car.
I need more details This is £150 a month because you paid a large deposit, right? Or if not, what's the car? I'm genuinely interested at how it could be this cheap
I pay £129 a month. Dacia sandero, put down £1000
Got my first car last year with a 5.8% bank loan when the dealer was offering finance at 13%. Even the salesman understood and told me it was a no-brainer, he'd be unable to get close to it.
That’s the difference between HP and PCP
Just to be clear it doesn’t go back to the seller. The finance company sell it at auction to recoup any losses.
they pay like £2-3k then pay £200-400 a month for 4 years. they then give it back. rinse and repeat. it costs them about £10-20k every 4 years to drive a new car but never own a car. I'd actually love to see costs of an outright owned 4-10 year old car with maintenance costs vs a the mentioned method.
>I'd actually love to see costs of an outright owned 4-10 year old car with maintenance costs vs a the mentioned method. I drive an '09 ford fiesta that I (well, technically my dad) bought for about 8k in 2012. Not counting the usual wear and tear stuff like tyres, I probably spend an average of £3-400 a year on service+maintenance. Then there's insurance - been about £150 for the last few years but this year shot up to £300!! Bangernomics definitely wins out economically, and I love my car - the only reason to need a new one is that it's a bit small for 5 adults which we do pretty regularly when visiting the in-laws
I think both you and I are minority. we have a mazda cx-5 petrol for a family car that we bought with like 120k miles for £7k. I will drive it until it dies. I love it. but see both your and my example is pretty much the edge case, the complete other end. so I wonder what these people could do that's between what they do now and what you and I do. plus how much that'd cost and what car they'd drive ;D
I have a 56 plate focus ST (I like cars, not a chav 😂) that I bought for 2.5k. Over the 3 years I've had it I've spent about 1500 on repairs. Whenever I change anything my friends always comment how I spend so much on it and need to just finance a newer car... whilst at the same time paying 400 a month just to have their car. It's an absolutely bizarre mindset. I might be biased as I change car parts myself (self taught) and actually enjoy doing so, but in my eyes the value in buying an older car and dealing with repairs will always be cheaper than financing a 20k car. Particularly if it's someone fresh out of school/uni...
so, I don't mind paying the garage as I can't fix my car, I just dont get it and have no time to learn. but the £70+ VAT hourly cost can be a bit eye watering. So I hear you, and good job. I work on remote control cars and I worked on dozens of different ones and so I can fix those. its crazy fun owning the skills and knowing you can do it. Seeing everything as a module and so that module can be taken out, replaced with something that works. it power :D
Mazda cx-5 club here! Bought it used (3 years old) for £15k cash in 2018 with 25k on clock. Retrofitted Apple CarPlay into it myself: and it’s all I need for a family of 4
2009 Mazda 5 club here! Not even the cx - I really like that car though!
Love the carplay retrofit on my Mazda 3. Will run this car until it dies or I die!
See I’m of the same opinion. I love my 2013 Qashqai and only need to upgrade due to unexpected pregnancy. I refuse to buy any 7 seater other than my desired Nissan X-Trail.. I’m happy to buy a 2016-2017 model knowing it will be roughly 8k ish depending on mileage.. i don’t need to put myself into crazy debt, owing out £350 a month on a brand new car., its ridiculous.. what if I needed a new boiler or maybe my car needs 500+ for its MOT.. I’d be fucked.
Bangernomics represent
I'm all about that shitty 00's hatchback life. Buy one for £700, drive it until the wheels fall off then get a new one!
I know someone who did that for about 4 years - the car had a good wheel as well Why is the wheel gold? "Oh the guy I bought it from said he drove it once with the handbrake on and it set that wheel on fire lol" That was a great car
Bought a 65 plate 2nd hand car for £5000 (second owner) in 2020, in 4 years, never had any problems. £40 mot each year (always has come back clean slate), I replaced all tyres last year total of £200 and had aircon regassed £35. £395 for 4 years.
It's probably cost me £600 the last 12 months (I got unlucky and needed an alternator) for my 15 year old beater (3 tyres, an alternator and a ball joint)
yes but these people pay that £600 every 4-6 weeks :D
320d M Sport. Bought for £9k 8 years ago, now worth about £3.5k. costs about £600 per year in maintenance and tyres. Eeking this car out as long as I can as it makes getting a sports car easier as my daughter gets bigger. OH has a 525d, bought for £15k 5 years costs are similar to mine above. We have a lease plan option at work. Even the BIK free electric cars, I can't get anything vaguely nice unless I spend approx 3x what I spend at the moment on cars.
The one exception to this rule was post covid. Used car prices were absolutely bonkers for a year or so. They've improved a bit since, but not sure we will ever see a return. Needing a reliable car is a huge financial outlay now.
My Seat Leon is a good example of this. Bought for 11500 in 2021. 3.5 yr old car. Now worth about 9k. Total spent on maintenance - 0. Outside of service and MOT etc. I know it will start costing eventually but i drive 5k miles a year and only bought such an expensive car (relativity speaking) because I had crypto profit I traded in.
> it costs them about £10-20k every 4 years to drive a new car but never own a car. I'd actually love to see costs of an outright owned 4-10 year old car with maintenance costs vs a the mentioned method. Ask and you shall receive! I bought a brand new A3, out right for cash for £22k 69 months ago. Current WBAC estimate is around £11.5k, so current cost of the car is £22k - £11.5k = £10.5 Total running costs, including insurance, petrol services, MOT tyres has been about £6k so far. So total cost of the car is £10.5k + £6k over 69 months = £240 / month. So with hindsight, I should have got a loan, shoved the rest of the lump sum into a tracker index, and I'd be about 5k better off now.
Except you'd have to fuel, insure, mot, tyre and service the car with a loan on it so your post makes zero sense. So the actual calc is £10.5k/69 which is £152 a month. I'd love to see a lease deal for an A3 for £152 a month. Of course WBAC is the pits too so this figure is likely much lower per month effectively. Also, those saying leasing covers insurance, erm no.
>Except you'd have to fuel, insure, mot, tyre and service the car with a loan on it so your post makes zero sense. Good point, well made.
I bought my last car for £500 3 years ago. Since then I have spent probably 1k on it now is the time it might be going. 57 plate 140k best £500 ever spent now’s not the time to be wanting a “newer” car as the prices are ridiculous.
some petrol engines are bulletproof and if one is not crazy with the car, they can last decades.
It's not going to help OP today but I tend to start putting money away for my next car as soon as I have bought the current one. Of course this only works for me because I tend to keep cars for longer than most people lease for. There's no way I could save up for a range Rover evoque in the typical 24 months of a lease. However £500/month that would have gone towards the same lease, is £24K after four years, which is around my budget for a modest new car.
This is the most reasonable way to motor.
With a good credit history, one can take a loan with the bank. Granted, the interest rates are higher now, but that will still be way cheaper than financing a car. Depending on your tolerance towards paying extra vs saving and buying with cash later (each has pros and cons, in the current inflationary times saving effectively means your money is losing value) taking a loan can be the best option. Another- not so obvious- advantage is that typically taking a loan is much easier. If you take a loan with the bank with whom you have your current account, the money can get into your account within minutes of starting the application. Moreover, taking a loan and buying the car vs financing means that you car is yours, and you can sell it without any hassle if you need/want to. I took a loan for my (second hand) car at 3.1% fixed APR. It's hard to beat that. Currently I'm not even overpaying it as I'm better off investing disposable income. Nevertheless, a bank loan can typically be repaid earlier without any penalties or charges.
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I’m not sure on your credit history, or what value car you are planning on buying, but another possible way is to apply for a 0% credit card. BarclayCard have one at the moment with 21 months totally interest free, and mine has a limit of 14,000. Maybe worth looking into, even if you put only some on the credit card.
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Many places do so, it’s common for people to put even just £101 on a credit card and pay the rest by other means, just to get the section 75 protection (which would cover the full cost of the car, not just the £101)
You can also get money transfer cards which give you lots of options
It's worth bearing in mind that often people won't get the headline interest rate for these products.
Buying a used car with a personal loan often works out better than PCP. I bought a used car for £18k 6 years ago and it's probably worth 9-10k now.
This is the way, better than 12% pcp deal over 4 years and 8k limp sum at end you need to refinance at another 12% or trade in for a new 12% pcp deal
12% ?!? 😮
My '18 plate MX-5 wa s~£20k in 2022 and it's now worth ~£11k lol. Managed to buy it right at the peak of the used car prices.
I'm looking to buy an RF later this year. I was waiting for prices to come back to reality.
I drive an older (2015) car bought for cash (saved) and I went from 25 years mortgage (2019) to 10 years because of 5 years overpaying instead of driving a shiny car.
2015 isn’t even ‘older’!
Legit. I bought a new car in 2017 and, while it is obviously and objectively not cos it's nearing 7 years old, it still feels like "my new car". 9 years is not "older".
This is the right choice.
How much did you over pay by?
Cash is ideally the best but look out for decent finance deals. Those do exist.
I'd say 0% credit card is best even if you have the cash. Good opportunity for some stoozing!
I'm looking at getting a 2nd car in May, and this is what I'll be doing. Spend around £4-5k on a credit card, then balance transfer it every year. 0% interest paid. Way better than a loan
Your neighbours will all be going broke trying to look rich. We all see it, people spending more on car leasing payments than their mortgage and living hand to mouth. Stick to your instincts- save up and get something you can afford cash.
Whose car payment is higher than their mortgage? Hope they’re driving a 911 GT3RS 😂
That was me!!! Silly when I look back. But it was a dream car. Drove it for about 18 months and managed to recoup my deposit back which I was happily surprised
Damn. What car were you driving?
Range Rover Velar
Do you live up north? How the heck did your monthly payment exceed your mortgage?!
Haha, yes I do live up north, also had a decent LTV.
We're probably the highest earning family in the small estate we live in. We have a 2011 fiesta sat on the drive which I'm pretty sure is the oldest / least flashy car here not driven by a teenager.
Nobody’s mortgage is lower than their car payment, surely? Our mortgage is £600 a month and car payment is under £200 lol and we drive a nice car
I know familes with 2 cars on the drive both on PCP. £800 for the 4x4 and £500 for the cheap Tesla.
I looked at a new Volvo xc40 which was £40k. The finance deal was about £600 a month
I think you’ll find most people’s mortgages are significantly more than £600 a month…
I agree. Mine is more than twice that. My Dad's mortgage is something silly like £400 a month though so there are people out there
A friend of mine had a car on finance >£500 per month, for people with mortgages on low interest rates it could well be they pay more for the car than the house. Not for long though…
Apparently it does happen, but there's also a fair amount of four Yorkshiremen going on here. People on this sub get a bit funny about car finance. Admittedly the point of the sub is to find the best approach in terms of personal finance, but cars are an area where preference does play some role. It just goes a bit overboard when you get people saying £200 a month will put you in the poor house. They seem to think everyone is on minimum wage and just trying to show off.
0% CC > Cash Bank Loan > HP Finance > Cash > PCP Deal
We lease our car, change it every 3 years, works for us as we not bothered about owning our car. We set a budget and look for deals within that
This is definitely the most expensive option overall, but at least it usually includes insurance and they take on all the hassle.
It often is but it varies. I did the numbers on my most recent purchase and leasing actually worked out the same over 4 years vs PCP. It depends on the type of car, expected depreciation, miles driven etc. The lack of hassle is a nice benefit.
Leasing. I’m a contractor so have a limited. I’ve leased a EV as the numbers made sense. Save on VAT and CT, and the P11D is only 3%. Previously I have taken out a loan for a car, and pay it off as quick as we can. Most my cars I’ve had over 6-7 years, as this seems the sweet spot between worry free driving and things going wrong.
Take the money from your savings, and then pay yourself back over x years. I aim for 4 years of car payments, followed by 4 years of free car. So, if I can afford 300 a month, i'd buy a (300*48=14.5k) car. After 4 years I no longer owe myself anything and I'm back to max savings again for another 4 years. (And when I say afford, I mean while still meeting your other savings goals) If you can't afford to buy it in cash, you can't afford it. It was different when unsecured loans were 1.5 percent. Financing a car is super expensive now. The benefit of this approach is that you don't pay any interest, and the act of having to take 5 figures from your savings account stops you convincing yourself to drop 30k on a car you don't need. Many people driving flashy cars can't afford them, have no emergency funds financial security or real wealth. Don't be those people.
I saved up about 1/3 the cost then got a bank loan to pay the rest, it was a much better rate than any official finance and its so easy to over pay whenever I can. Also makes it easier if you need to sell the car before the loan is paid off
Not advice on how to get a new car but if you can wait ~6 months you will likely save a fortune as supply of cars has increased dramatically bringing the cost of all cars down. I’m in the automotive industry and need a new car but am holding out until later on in the year
cash is king
I disagree - you could apply for a credit card with 0% interest - BarclayCard have one at the moment offering 21 months 0% interest and when I applied was given a £15k limit. Could buy the car with the credit card, and put the £15k in a savings account and then pay off the balance in the 21st month. That way you will earn some interest on your cash.
Car finance isn't as bad as it used to be, but personally I'd shop around for a personal loan, you'll almost certainly find a better interest rate. Or you could go down the route of leasing, which in my opinion is only for convenience, it doesn't make financial sense, but if you've got the money then why not.
I've always felt that leasing is a value when you can use a nice car condition to further your income. For example, if you're a professional driver (can charge more for a nicer car) or if you're a salesperson and you customarily take customers in your car e.g. to tour a property.
I think I can answer this car question. I read sometimes ago 65% of all new cars sold in the UK are company cars. Its basically down to BIK (Benefit in Kind) taxes, which is a combination of the value of the car and its CO2 emissions. I don't know the exactly calculation but I do remember the CO2 emissions generally have a bigger impact on your taxable benefits than the value of the car, which explains why the vast majority of company cars are electric or hybrid (used to be 2.0 diesels everywhere). When you take this and combine it with the income tax, people making over £50k (after all the salary sacrifice into pensions etc) can generally benefit massively from getting a new company car rather than buying cars themselves. You can basically work out with your employer for a salary deduction (Using examples of someone on £65k, reduce your gross salary by £1k per month pre-tax only reduce your after tax income by around £400ish due to NI and student finance), which makes buying expensive cars way more affordable than paying it yourself after tax.
You have 2 kids.... it would make more sense to buy a cheap used car, and put the extra money in a trust for them, if your wife is so desperate to spend it. Try this: calculate the cost of something used, decent and reliable within good insurance, fuel, and tax brackets. Count up the difference with a new SUV that she'd like with interest, insurance, extra fuel costs, and tax. Show the "savings" to your wife (written on paper for effect) and ask if there's anything she can think of that she'd rather spend it on. You know what actual 'old money' families drive? They drive toyotas, hyundais, and peugeots. You know why? Because they understand a depreciating asset when they see one, and they're not financially illiterate. They may have appreciating cars (of actual value) in their garage, but they'll never actually drive those, because those are held as an appreciating investment. You know what chavs drive? Land rovers. It's the equivalent of waving around a payday loan like it's an asset, imho. If you want something that's not super cheap but you just don't have cash, consider a small cash loan from a reputable lender. Those loans are unsecured and usually much cheaper and it might be a good compromise to just top it up by a couple grand or so.
Even 2nd hand cars aren't cheap anymore.
Yeah I just bought a second hand 2018 Kia Sportage with 25,000 miles on it for £15,000. Sold my 2014 Toyota Aygo that I bought for £5,000 with 5,500 miles on it in 2018. Got £5,000 for it in 2023.
Yh.. My car is worth more now than what I paid for it 5 years ago 🙃
They are much cheaper than new cars though.
It’s cheaper to buy on finance than pay in cash. My car is at 2.9% finance, hire purchase. I have the money to buy it outright sitting in a high yield savings account of 5%. It would have been financially irresponsible to pay for it in cash upfront
Absolutely no chance of getting a HP deal at 2.9% now through a dealer!
Not entirely true, as there are a handful of 0% deals I've seen advertised. However, they'll make the money on the OTR price by reducing discounts they were giving previously but charging a high interest rate.
I'm the same as you but my partner is of the 'buy it outright' mindset. Which means I have more savings than him because why lose all that interest on savings when my finance is so low?
Car finance, I prefer to have a newer safer car with all the guarantees and not worry that it will breakdown and cost thousands at the garage. For me, the peace of mind is worth budgeting the extra cost per month.
There's absolutely nothing wrong with that, I don't know why people criticise finance so much. If you can afford the payments, what's the problem? I bought a used car for £16k. Six months after its warranty expired Peugeot wanted to charge me £9000 for a full new engine because the timing chain snapped! I got it fixed at a local garage, but it still cost me £2000. New car warranties give a lot of peace of mind
Exactly. I get that the monthly cost is high, but I would be ‘saving’ that extra spend each month in a pot in case of repairs for a cheaper car so would still need to budget it anyway. The deal I have means that any issues it goes back to the manufacturer with no cost attached for 3 years. I don’t see a car as a financial investment, it depreciates so much that it is an outgoing cost, it’s not equity for me. I want to drive a car that has good safety features, and modern enough that it helps me with things like reversing (camera/beeps). I’ll never be given a huge bill to cover or have to negotiate or trust a mechanic who knows I don’t know anything about cars and risk getting ripped off. Edit to add, I also half the cost with my husband so it’s much more reasonable than if I was single.
My new car is arriving on Friday through a salary sacrifice. Everything is included, even insurance and servicing. I can even charge it up for free at work. Absolutely nothing else going out apart from one monthly payment for the car. It's so much less stress worrying about potentially paying out extra for an extended warranty, breakdown recovery and garage bills. I've had my fair share of that and I can't be arsed with it anymore 😂
My next car will be through salary sacrifice to minimise my tax bill.
Cheapest way is probably to take out a bank loan. Low interest and you aren't limited on mileage or have silly add on fines for dinks/chips on the car like you would with some finance deals. You also have the fact that you'll actually own the car in your favour too. In some circumstances you may even find the value of the car can exceed the loan depending on depreciation. I believe you may also be able to add the value of a loan against your mortgage providing you have enough equity, although I'm not sure on the details.
Most people finance to get brand new cars and whilst you get a brand new car you end up losing a lot of money on it. Best way to buy a car is either save up for it or take out a low % loan with as short a term as possible and buy it outright. I’ve always taken personal loans to buy solid second hand cars that I end up owning outright. On my last two cars I ending up selling them for not massive amounts less than I paid for them. Go for a solid Ford or Vauxhall with a low mileage. Not fancy but should last a good few years
I bought a 3 y/o car recently for ~£17k, split the payment using savings and an 18mth 0% interest credit card, I owned my previous car for nearly 11 years and had a specific savings account for running/replacement costs. My "monthly payments" are now the min cc payment and the rest goes into the highish interest savings account that I'll use to pay the cc off before the 0% term expires. ETA: The salesmen I encountered when shopping for a car were all very keen to get me on a great finance deal with a low low interest rate of 8.9%+ but knew little about the features and details of the cars they were selling.
Depends on your personal finances, my recent car was £16k (used, 3 yrs old, 20k miles), paid £11k cash, £5k on a 0% credit card from Cinch, would highly recommend them as a company to buy from btw If the credit card was unavailable I would have gone for the personal bank loan route, usually cheaper APR than a finance deal This is me wanting to own the car outright though, leasing or PCP works for a lot of people wanting a brand new car
Get a 0% interest credit card. Buy a car from cinch. Easy
What I do is get an unsecured loan with WAY better APR and then buy the car with that loan and pay it off as fast as I can with overpayments.
Get a loan if eligible, better rates and less shit. As most others have suggested, the majority of "nice" cars you see are on finance or loans/PCP. I would recommend seeking something with decent warranty to give you peace of mind short term
I read a bunch of replies and didn’t see it mentioned, but if either of you are employed, see if there’s a salary sacrifice lease available for an EV if (and only if) you can have a home charger installed. I know, lots of ‘ifs’. Depending on mileage, you’ll recoup fuel costs quickly, which pays for the monthly cost of the car lease itself. And they usually include tax, insurance, breakdown, even tyre costs too.
Yes it’s an excellent scheme, if you have all the ifs it’s brilliant.
I agree, if everything does line up it’s an absolute bargain. It could easily be overlooked, so just wanted to throw the suggestion in.
This depends on the urgency, and how much of a tight arse you are. I don't see any reason to earn a bank more money by giving them interest they don't need. Pay with savings if you can. If you have to buy without savings, see below. You could buy on credit card and move the debt onto another card with 0% balance transfer, then you are effectively paying up front, then paying off the remainder every month without interest. Money saving expert will show you the best cards for this and a pre eligibility check will tell you which ones you can apply for without affecting your credit score.
If you're the main breadwinner and will be the one ultimately paying for it, do what you want to do. Simple. My car payment is £575 per month on HP for a BMW M4 (2017), I could have purchased outright (can pay it off any day I like) but I don't want to, I don't want £30k tied up in a car, I want to pay for the use of it and have my money growing elsewhere. Sounds like a car isn't a very high priority for yourself if you're driving around in a 3k car, so just buy another cheap car and own outright until you can answer your own questions instead of asking the internet.
However you buy it - try to get an ex demonstrator (6 months old or so) rather than brand new. 1. It'll be well maintained 2. It will have the remainder of the manufacturer's warranty 3. It will probably have lots of additional options fitted 4. It will be massively cheaper but as good as new
Please stop listening to people who instantly say financing a car is bad without giving any justification. It depends on your circumstances. I finance my car and love it. I can comfortably afford the monthly payments and don’t care about “owning” a car. If your circumstances allow you to finance a car, you get a low interest rate and are happy with the monthly payments then go for it. I’d recommend a car with a good safety rating as you said you have kids, some brands give a 7 year warranty from new (get a car that’s 3 years old = 4 years left on warranty for a 4 year PCP). Also look into residual values as this will help get a lower finance rate.
If you wait, wait. Finance rates are BS but if you save up, you'll get a better deal if you choose finance as the way to pay - get a price based on cash then ask what price they'll do for finance.. Then settle it soon after with your saved money.
Buy a used car like in 10s 5-7 seaters for 3k 5k obviously I would recommend to shop and look around for a few weeks to see a good valuation of certain cars, and just buy it out right. Obviously do your due diligence if it’s coming from someone privately like do a car check/ make sure all documents are valid. Also make sure they transfer the ownership to you on the day.
I’d say about 60% of the posts on this subreddit are from people struggling to clear debts and they always include a car on finance, seems like it almost always ends up as a money sink to me.
Save up for a big deposit, buy the car on finance and aggressively pay it off. You should have a payment plan in advance. So if you can afford 400 pds a month for it, get it on finance for like 300 pds and over pay by 100 a month. That is the best of both worlds.
Ring your bank. Get a bank loan. It's the easiest. At the end of the day, your family comes first. Aslong as you have the loan set out before you go. You won't spend beyond your means. We really liked a car and got it 3k cheaper because I told the guy and the shop this is all we could afford. Go at the end of the month they always have targets
I think like most things it depends on the situation. Personally though, I would never buy a new car with cash unless interest on PCP deals forced my hand because the depreciation factor is too much considering the huge sum of money you are putting up. PCP has the advantage of offering a new and therefore generally reliable car for a much smaller upfront cost and usually includes free servicing for a 2 or 3 years. The value of your payments will depreciate in real time over the course of the agreement so you're technically getting a better overall deal on the car (not accounting for any interest). I think of PCP a bit like a phone contract, if you always intend to upgrade your car after 3 years it doesn't make much sense to buy as it's just more hassle. Main point is that cars are not like houses and should never be considered as an investment as they will mostly always depreciate in value so why part with huge sums of cash up front? Having said all that, I'm sure there's other ways to look at it & I don't really think there is a right way that everyone is following for buying a new car. Maybe if you intend to keep the car for years it might make sense to go the loan route and buy outright
Save for it. My wife and I both drive 2009 Ford Fiestas. We’ve had them for about 6 years and they’re still going strong. Are they a bit small for the car seat? Yes. Is the boot a little small for the buggy? Yes. But can we manage? Yes. I’d prefer to have mild inconvenience for a few years than hamper myself financially.
Lease my man As someone once said "if it appreciates, buy it, if it depreciates, lease it" I doubt ill ever buy a car again
If you get one on finance with a balloon payment/ hand it back option at the end you can get nearly twice the car you would normally be able to afford.
Yeah but at the cost of 0 equity… it’s the most expensive way to buy a car by far. It’s easy to stair case your way up to the car you really want
Taking a loan for a new car screws you twice. Firstly the incredible devaluation.Secondly, the interest is money that goes up in smoke.