How do lots of people afford the brand new luxury cars ?

I'd never lease a car, no matter how convenient.

Even my shittest cheap 2nd hand car didn't cost anything like £500 a month to maintain.

From the people I know this is how they afford them;

1. one car household so one car payment
2. both people working - high household income
3. self employed household so cars are an expense
4. not huge earners but car is a priority so the payment makes up a large portion of monthly expenditure

The monthly payments go on forever, but your car is never more than 3 or 4 years old. So new features, less obsolescence. Its nice to have adaptive cruise control, assisted parking, heated seats etc... I can't afford to buy a car with all that, and all the nice extras. But by trading up on pcp you don't need to worry.

Last time we traded diesel for petrol, next time we'll trade petrol for electric... by the time we do that, electric cars with the features we want will have been around for a bit. And who knows what the trade up after that will bring...

I'd rather still be paying and sitting in a car with all the bells and whistles, than in a 16 year old, falling apart, money pit mondeo like my brother.

Seems to be some confusion on here about company schemes that allow cars to be leased under advantageous terms, financing a car via company car allowance and receiving a company car. If you can get a fleet car from your company as part of your package it’s usually a very good deal. For electric cars I can’t see how any other means of running a car could match the advantages financially, and that includes cars far in excess of £50k.

My apologies, I should have said having a Tesla is good tax wise.

We pay cash when we buy new cars, then drive them until the wheels fall off. I guess we're financial idiots.

• Leasing vs. Buying a New Car - Comparing the two major finance choices

• In the end, leasing usually costs you more than an equivalent loan because you’re paying for the car during the time when it is most rapidly depreciating.

• If you lease one car after another, monthly payments go on forever. By contrast, the longer you keep a vehicle after the loan is paid off, the more value you get out of it. Over the long term, the cheapest way to drive is to buy a car and keep it until it’s uneconomical to repair.

• Lease contracts specify a limited number of miles. If you go over that limit, you’ll have to pay an excess mileage penalty. That can range from 10 cents to as much as 50 cents for every additional mile. So be sure to calculate how much you plan to drive. You don’t get a credit for unused miles.

We lease one car and own one car.

Prior to leasing we owned outright, but when a lorry ploughed into it and wrote it off, we got £2000 paid out to us. We couldn't buy a car for £2000, and we needed a car soon, so couldnt spend much time saving up, so we used it as initial payment on a brand new lease. No MOT / Tax / Service costs and if something goes wrong it gets sorted. Not like the one we own outright that cost us £1300 in repairs last year.

Saying that, it's not a 'luxury' car because that would have cost between £100-£200 more pcm which makes no sense purely for the badge. It's mid-range I would say.

Exactly. Owning a depreciating asset is a mug’s game. I never want to own a car again.

We get about £1300 a month (pre tax) in car allowances between us… that goes some way to cover it

The tax breaks with a Tesla very good.

We pcp a 1 year old car over 4 years and trade it up after 3. Never paid more than £300 a month. Servicing and extended warranty included.

We own a little ka+ that we use as a runaround. The pcp is on a nice VW that's big enough to transport the kids stuff to and from uni,to go away on decent trips and back and fore to mil who is ailing.

Works for us.

Generally speaking there is no point in owning a car outright as it will depreciate in value - unlike property, which will generally appreciate over a long period of time.
If you can afford to, you would be better of putting down a deposit of, for example, £3k and paying £200/month for 3 years and then trading it in for a better model. This is particularly useful for electric cars where technology may improve a lot in a 3 year period and so you can trade it in for one with better mileage etc.

There are a lot of variables, but very often lease/pcp.

For example you can get a brand new Range Rover on pcp with a 13k deposit and it will cost you only £200 a month (4 years). Of course that £200 a month needs to have the £3k deposit added so is costing more like £450 a month in reality but still.

Electric cars - mostly company cars due to BIK tax breaks.

Many people see leasing of depreciating assets the sensible way to go. I knew a young man 25 years ago on a regular wage (I was his line manager) who drove a nice merc - paid £200 a month to lease it - so it’s not a new phenomenon.

I don’t do number plate snobbery, I’m more financially literate lol

@Baconand have you tried buying a car for £500 recently? Not even sure you’d get an insurance write off for that. My secondhand petrol car we bought a year ago was less than 2 years old and it’s “top of the range”. It costs less than £60pm to run including tax, insurance, annual service, plus fuel (we don’t do many miles). Yes we had to buy it but I own it and can sell if I need or wanted to.

We have our cars on lease.
Have done leases for years and it works for us.
We could afford to pay for them but don't see the point as we've always changed our cars after 3-4 years anyway, always buying new. Obviously we have to have a certain income level to be able to get the lease for the higher value cars anyway so it's not a case if having cars we couldn't afford ordinarily.
It's just a system which works for our circumstances.

We buy quality cars at around 1-2 years old, much cheaper than new, and still with some manufacturer guarantee on them. We trade in old car, put some of our own money towards the new one one plus get a bank loan payable over 3 years to plug any gap. A loan from our own bank has always been much cheaper than any finance company loan operated by dealerships etc.
We keep the car for five or even six years so we have a year or two without any car repayments going out each month. We buy 'luxury' cars so they're still worth a decent amount when we sell them on. Works for us.
There are a few pitfalls with PCPs etc which would probably not suit as well. Mileage, for example.

Good salary
PCP
Company car

Leasing
Company cars
Bank of "Mummy or Daddy"
Drug dealing
Tax evasion

We bought second hand uncool cars. It's served us well. No monthly payments on cars, would never buy a new one outright. It means I'm a bit less worried about energy bills and the mortgage.

I’ve been looking at cars recently.
Audi A1 starts at around £20k
Mercedes A class is £31k
BMW 118 is £27k

in comparison a top of the range or electric Vauxhall corsa is £35k, a peugeot 208 £34k, and Ford fiesta £27k.

”normal” car prices seem to have increased far quicker then luxury car prices so they are now pretty similar

I love a nice car, get £650 car allowance a month and my car loan is £500 a month, with free service and car insurance thrown in., was a better deal than a new Skoda.

We prefer to buy second hand and run them into the ground but it’s perfectly reasonable to lease given the deals you can get these days, if that’s people’s preference.

We just have high income.

One is on hire purchase so will own it by the end. Plan was to keep it but will most likely sell and buy the same but newer model.

One is owned outright.

The other is a company car, no cost to us.

Combined cost of buying the cars new is £320k so from an outsider view people probably look and wonder but one is a company car.

DH could get a 'nice car' on his company scheme.

Why, you would, boogles my mind though in terms of the financials. It doesn't even work that well in terms of taxation for him.

He looked at it for three or four years before deciding it was a mugs game, which tied you to a company. Thankfully since he didn't get one, it was easier for him to change jobs when problems started emerging there. He's paid better at his new place.

He was relieved and he's been massively put off the company car handcuffs. Instead we're saving for a new car of his choosing which we will own and not have the spectre of debt having over us (which in theory could affect remortgaging in future too). It's theoretically an asset, which although it depreciates, you still have something tangible rather than just throwing money at thin air. Indeed because the second hand market has been so inflated, the amount his current car has depreciated is a lot less than we factored. Its functional and gets him from a to b.

Every so often he wistfully dreams of having the flash badge with all the gadgets. Then looks at the numbers and goes 'fuck that, I could do x, y and z for that'. It makes no sense except for ego or status.

DH is reinforced by the experience of someone else. A friend of his at his last place is single and bought a fancy car. He's stuck with it, it's woeful fuel efficiency (at one point last year it got to the point he was avoiding going into the office). He loves his car but he'd never get something similar again.

Yes but if your used car goes wrong you can lose all the money you put in to it. With a lease it’s not your problem if it’s faulty. I do a lot of miles so a £500 car won’t work. I’d be looking at £10k for something reliable enough.

We only have electric cars and they are very cost effective to lease. No-one wants to own old tech and because they are so cheap to run the lease cost is still cheaper than petrol.

I’ve not got anything luxury right now as took a super cheap VW on lease after mat leave. It’s under £200 a month inc home charging cost and insurance. I couldn’t run an old petrol car for that.

My electric BMW that went before it was just over £300. That was on par with an old petrol car in terms of cost but all the benefits of new car (plus environmental reasons). Win win.

We also have a new MG4, that’s under £200 a month on a PCP. Not luxury by any means but a lovely car. Far cheaper than anything petrol!