How do people afford to PCP brand new cars?!

[JusWunderin]

DH recently mentioned looking into us getting the car I’ve had my eye on for many eyes now. But we’ve looked at prices for financing one and my good god alive it’s not what I expected!

I’m struggling to imagine someone having £400 a month to comfortable pay for a car, we had a budget of about £200 a month.. which I thought would get me something pretty nice!😂

My heart is a little sore, I’ve never really had anything ‘proper nice’ we don’t buy anything designer, branded/luxury. We live modestly, both work full time in what we thought were good jobs on relatively good money for where we live. this car was the one thing I just thought would be my little bit of luxury in life.. but it turns out it’s quite far out from ‘a little bit’ of luxury 😂 it’s big luxury and now I’m pretty gutted as I can’t imagine us ever having that sort of money to fork out every month for a car 😅

If you lease/brought a brand new car recently.. how? What job do you do? How much do you earn (if you don’t mind me asking)? I need to know where I’m going wrong 😂

If you want the deal on finance but don't want the finance, just sign up for it & pay it off straightaway.

I don't know if all dealers have the same t&c but ours told us they would get the deal regardless of how/when we pay it

Bought a new car for 4k off list price with the finance, when the paperwork came through a couple of days later we just paid the whole amount off through savings.

It's worth an ask.

@taxguru which cars please.
Also can you work out numbers on this, I have an extremely old car, it's about 230 a year to tax and 400 insurance.

This year I will be saving up to pay about 700 of work on it. Hopefully that will keep it going another year.

Surely that it still cheaper than buying a car like previous posters? It's still cheaper to keep it going then paying thousands up front and hundreds per month for leasing or pcp.

Re buying a new car in the guess best way then is to get as much deposit together as possible then get a bank loan? And haggle?

I love the look of these but they’re honestly the most uncomfortable and awful cars to drive.

People have vastly different driving needs. If you’re covering a lot of miles, you need full leather, as well as decent climate control, sat nav or phone integration, and good handling. Then there’s things like adaptive cruise control (would need be without it) and blind spot alert. If you do a lot of night driving, auto high beams are a godsend. You don’t get these features on old, non-luxury cars.

I used to do a weekly 10-hour round trip to work. I left home at 4.30 am on a Monday and arrived at 9.30 am ready to start a full day at work. If I had done that drive in a Fiat 500, I’d have been knackered by the time I started work.

DH has a daily 100-mile round trip to work. If the traffic is bad, it can take him two hours to get home. The comfort and economy of his car are important. He drives a high spec 3 series BMW and gets just over 600 miles to a tank.

If you spent 5 or more hours a week driving on UK motorways in UK traffic covering 3 or 400 miles a week would you feel more comfortable and relaxed, and be safer, in:

(a) a 10 year old Fiat 500
(b) a 10 year old Volvo SUV
(c) a 1 year old MINI
(d) a new Mercedes E class

Hint, not everyone is is looking for the same thing in a car as you :)

Agreed! I used to have a brand new Merc (on PCP), as I do lots of motorway driving. Aside from all the obvious comfort benefits, at the time, it was the highest ever NCAP rated car.

Oh god we are going through this right now. Spent last week on auto trader and yesterday looking. We have a budget of about £12k including a deposit of up to £4k, balance of £8k likely to be on a bank loan as that does seem cheaper than HP. We really struggled to find anything that we both agreed on.

We are down to a 7 year old Mini Cooper S with 30000 miles on the clock. Everything else has huge miles on it, or is in the other end of the country. We just wanted a smallish, sporty car. If anyone has any tips or a better way of doing this I’d be really grateful. My head is burst with it all.

I can see myself leasing when I'm closer to retirement if I'm still very active, need a safe car and have less of a mortgage to pay - if we're still in well paid jobs and no pension concerns. Although I suspect I'd still rather put the money in the bank for a rainy day or to give to my children as their financial future looks a lot less hopeful.

We currently earn well between us but no way would I get finance or lease. I appreciate it's a huge privilege to have money in the bank but I strongly feel I do because I don't borrow money (except mortgage). I've never had debt and the ridiculous, exploitative interest that goes along with it. Once you're in that trap with high repayment charges, it's hard to get out of it. Ie, you can't save for a car while paying a lease (the average person anyway).

I'm also not a car person though and am more than happy with a £5k-£10k car.

Having said all that, of course, if we had a huge excess of disposable money each month after saving, I'd possible lease. I can see the appeal of less faff.

I'm paying £900 per month nursery fee, hopefully when that's gone we can afford it, otherwise its stuck with 10+ year old car lol.

Er, you thought a Mercedes suv would be £200 a month. They are pretty expensive from new and hold on to their value for a bit. Perhaps a 10 year old one.

I pay around 270 a month for my Santa Fe. I got finance from the garage over a 5 year period. I think it was priced at 17k and that was 3 years ago, 66 plate. But interest rates were a lot lower then, I think I pay less than 5%. I’ve never bought anything brand new.

Read the small print very carefully before you do this. You can still get stung for interest fees if you pay off early (ie - the balance to settle isn't necessarily the same as the amout you borrow). Plus if you bought any 'extras' (service plan etc) they can be invalidated by early settlement in some instances.

I looked into all this last month when I was buying my car, and it wasn't as simple as just being able to pay it off.

We had a look recently. A £25k would end up costing 3x that.

utter madness. Been trying to buy a car with £25k cash and dealerships don’t want it.

i have concluded they don’t want to sell you a car, what they want is to sell you finance and the car is just a vehicle (excuse the pun) for that.

A £25k would end up costing 3x that

Of course it wouldn't.

A £27k VW Golf on PCP over 4 years at 6.9% would cost £31k including deposit, monthly payments and the balloon payment that would mean you'd own the car outright at the end.

Unless there is family wealth, most 28 year olds won't drive premium luxury SUVS and those that do will have massive debts include f mortgages, credit cards and Klarna.

It may seem "everyone" has them, But they don't.

I have an Audi A3 my first new luxury car at the age of 40. And it's a lease. FWIW I pay £199 per month including servicing three years ago and I extended it for. A year.

Next year I will had to work more hours (in a professional job) to get a new car.

When I was 28 I had a 10 year old Corsa.

This is one of those mean, envious threads. Probably best avoided on this lovely sunny Sunday morning.

I have an Audi A3 my first new luxury car at the age of 40. And it's a lease. FWIW I pay £199 per month including servicing three years ago and I extended it for. A year.

An A3 is NOT a luxury car, it’s just generic VAG white goods motoring.

@decionsdecisions62 I’m not being mean, I am absolutely jealous of people who drive round in the car I want, that’s obvious. I want what they have. But I’m not turning my nose up at anyone or judging. The cars themself are more of an undertone to this thread. I guess the main point is I genuinely didn’t realise the pure expense of some things.

I thought 200/250 a month was going to be middle/top end on the price tags of most cars.. which feels really naive now after reading this thread, but we’ve always had super cheap run around so I’ve never really looked into the cost of a newer car until now so I was clueless 😂

Only on MN would someone claim that a brand new car from a premium marque wasn't a luxury.

I thought 200/250 a month was going to be middle/top end on the price tags of most cars

Look at it rationally. £250 pm for 3 years is £9000, which isn't going to go anywhere near covering the amount that a brand new Mercedes is going to depreciate over the first three years of its life, plus servicing and interest on the finance.

Which is why getting a loan to buy a 3 YO version of the same car could be a good idea. £250 pm for five years will give you a budget of £15k, which will buy you a 3 YO Mercedes A Class from a car supermarket, eg:

https://www.bigmotoringworld.co.uk/used-cars/mercedes-benz/?maxFullPrice=15000&maximumAge=3

And after the 5 years, you'll own an 8 YO Mercedes that should be good for another 5-10 years at least without any car payments to make.

Yes I agree it's premium brand but not luxury. And an A3 3o TSI is the crappest model. But it's not a 10 year old corsa.

To be fair it's Sunday morning and I'm idly on social media - I didn't realise I had to use the exact language.

The OP is talking about PCP, not HP. PCP isn’t a payment system for paying off a car; it’s a payment system for paying off the first few years of having the car.

It did used to be about £200-250 for a decent car (10years ago) but they've skyrocketed in price.

I had a brand new all singing all facing mid sized car, paid it off, kept it and am now looking to swap as it's 10 years old and WOW... !! Madness!!

Also don't forget a lot of new cars you see are company cars! I had a new car every 6 months at one point - though those days are long gone!!

I wasn't talking about HP either

I was also talking about PCP, where the payment is basically paying the cost of the depreciation but it can also be a way of paying for the whole car.

You have the option to buy the car at the end, which is something people have done quite well with over the last few years as they've found they have a contract to buy a 3 YO car worth £15k for £10k or whatever.

That's an advantage of PCP. You don't have to commit to anything at the beginning except your deposit and monthly payments. Then at the end you're free to give the car back, pay the balloon and keep it, so swap it for another car and keep on with monthly payments.

@PotatoPudding

People have vastly different driving needs. If you’re covering a lot of miles, you need full leather, as well as decent climate control, sat nav or phone integration, and good handling. Then there’s things like adaptive cruise control (would need be without it) and blind spot alert. If you do a lot of night driving, auto high beams are a godsend. You don’t get these features on old, non-luxury cars.

Those are wants, not needs. You don't "Need" full leather nor adaptive cruise control, etc. You may want it or prefer it, but don't need it.

I drove 191,000 miles in an Austin Allegro back in the early 80s! It barely had a functional heater let alone climate control. Sticky plastic seats. Bottom of the range basic level, no bells and whistles. Guess what? I survived! I didn't know any different at the time.

If you "want" all the bells and whistles, then fine, fill your boots (and pay for it), but it's not a "need" at all.

You can get a PCP on a used model. The monthly installments will be less as the highest rate of depreciation is usually in years 1 to 3. You can also reduce the monthly payments by paying a bigger deposit.

Younger people who are not on housing ladder and do not have mortgages often seem to to be able to afford pCP installments. I'd rather be pay off mortgage on an appreciating asset myself than a depreciating asset. . We always had used cars when we had young family and a mortgage as we were both PAYE players, not in self employment where the car cost can often be offset against tax.

Nowadays I'm mortgage free but I buy a quality brand 3 year old returned low mileage PCP cars with my own cash savings in preference to any monthly deal.