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 😂

@Bjorkdidit

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.

Highly unlikely to ever happen again. It only happened because of Covid, the Suez blockage and the car chip manufacturing factory fire which caused a major shortage of new cars, thus triggering higher demand for second hand ones which, due to supply and demand, caused using prices to rise. It was a one-off unusual situation that's highly unlikely to ever happen again. To those who benefitted it was a windfall, a bit like endowment mortgages in the 80s and 90s, never repeated since!

You can't assume that something will happen again in the future just because it happened in the past.

Can you squeeze a little more? A few Citroen dealerships have a basic brand new (delivery mileage) pre-registered C3 for £12,995 and a slightly higher spec one for £13,995. Many dealerships pre-registered them at the end of March as the manufacturer was giving incentives for dealers to register them. Stocks are moving fast. Our local dealership had 10 a week ago, and now down to the last 1, (we bought one of them!!).

The C3 is a 4 door, small family car, easily comparable with a Mini in terms of size etc., if it's a small family car you're looking for.

@Seajaye

not in self employment where the car cost can often be offset against tax.

Only 100% electric cars can be fully written off, there are pretty low capital allowance rates for petrol/diesel cars, and if a sole trader or partnership, it's only the business use proportion of that. You can't claim 100% if you use a car or van as a family car or for private use!

If a limited company, you have to pay benefit in kind tax and NIC on the BIK value, again, pretty low for electrics or vans, but quite steep for petrols/diesels.

The reason there are so many crew cab pick ups and Teslas is because of the tax relief and low BIK tax/nic. That doesn't apply to "normal" petrol/diesel cars where the tax breaks are no where near as generous as "pub talk" has you believe.

We don’t ‘need’ washing machines either, but their a damn site better than taking our clothes down to the stream.

But a bog standard bottom of the range washing machine does basically the same job as the top of the range most expensive one!

Wrong analogy really. If you're comparing a washing machine against the stream, you should be comparing a car against walking or a horse and cart!!

A bottom of the range washing machine washes your clothes, yes. Just like a top end or bottom end car will get you to your destination. It’s how you get there, though. I want a quiet washing machine with a timer mode, as all my laundry is done through the night. I also want an eco mode and bubble soak so that it doesn’t use much water.

My brand new top range Polo costs £200 per month. I don't feel that is too much for a new car, under warranty with loads of extras. I love it.

We lease a new car every 3 years. Typically pay around £370is per month for it. Not a luxury car but a nice car with decent tech. Currently a Kia Sportage. We can afford it, we like to know it’s not going to break down, no hassle of sorting MOT and worrying about repairs. After 3 years we give it back and get another new car. It’s just what works for us.

i don’t understand paying £700-£800 a month for a fancy car but lots of our friends do. It’s just what they like and if they can afford it and it’s what they want to spend their money on then that’s up to them. We spend loads of money on holidays which some people think is madness, but it’s our financial priority!

PCP is more expensive due to interest rate rises and the cost of the cars themselves has gone up in recent years.

I bought my current car on PCP nearly 2 years ago and the only ways I found to reduce the cost were:

1. The car was 18 months old and had depreciated already quite a bit compared to a new car.
2. I didn't take the dealer PCP deal and instead shopped around. I went through a broker Forza Finance who in turn put the deal out to the market and we got the PCP through Santander at a much lower rate. The dealer said that only about 1 buyer a year do that, but he can understand why as the finance is a commodity. Forza were good and I'd recommend them, very efficient and easy to deal with. I have no personal connection to Forza btw and there are probably other agents who operate in the same way.

Yes, but all that is "want" rather than "need" which was my point in the earlier post.

It’s subjective. I need a car with adaptive cruise control so I don’t get leg cramp on a five-hour drive.

Some people pay eye watering amounts a month. I guess if you can afford it, that's great but I do think it's far more sensible to buy a nearly new car (i.e. 6 months old) and take a bank loan out to pay it off instead. At least at the end of the loan, it's yours. And in all honesty with the state of the roads right now, I'd really think twice about buying a new car and spending huge amounts every month.

You should be stopping every couple of hours to prevent that and loss of concentration etc. Not healthy to be driving so long continuously!

You only have to look at loads of other posts on here and other social media about people "trapped" in lease/PCP deals that they can't get out of if they lose their licence, or can't drive due to health reasons, or lose their jobs, etc. They often can't hand their cars back without huge penalties, if at all.

At least with a bank loan, you are free to sell the car and can just carry on paying the monthly repayment as the bank have no "hold" over the car itself and won't even know you've sold it.

I can assure you jealousy is the last emotion I feel when I see an Audi. The same goes for the multitude of BMWs and Mercs on the roads. Why would I be jealous of someone who drives something that's so common? They display a complete lack of imagination.

Just for the record, I drive a Lexus LC. Barely a day goes by without me seeing someone admiring it. And, of course, you get Toyota's outstanding build quality, unlike the sheepmobiles.

Don't follow the crowd, dare to be different!

True. And some people live way beyond their means and are storing up financial problems for the future.

Audi is not a premium marque, far from it. They're VWs for the gullible.

Lots of posters saying buy second hand outright or with a bank loan and yes that clearly makes the most financial sense - but what it doesn’t factor in is that a) not everyone who needs a car has a chunk of cash (and realistically if you do a lot of driving, these days you’re looking at £5k minimum for a car in decent condition that’ll do the mileage) and b) banks have harsher lending criteria than car finance companies IME who’ll basically lend anyone as much as they want (a problem in its own right!)

Much like the cost of housing, the cost of even a basic car has far outstripped earning multipliers - probably because of the availability of credit driving up prices - but most people need a car, and not everyone can afford to pay upfront or are eligible for a bank loan. So you’re left with PCP or HP.

Plenty of posters here piling in with poorly disguised bragging “oh who needs PCP when you can put £30k cash down” or even just £5-10k cash, completely failing to realise how few people can do that, and how few cars of a good enough quality are available for less than that.

Wow. If you are so unfit to drive tgat you have to rely on ACC, I would evaluate whether you SHOULD be doing 5hr drives or whether you should be looking at a different mode of transport for the longer journeys.
This scares me.

Cramps or not, adaptive cruise control is an excellent feature. It also keeps you good in average speed check zones.

I am not denying it is great but I am deeply concerned about someone needing and relying on it.

It’s fine to rely on a smart feature as long as you remain as alert about your surroundings as you would without it. I haven’t manually put on my wipers, headlights or high beams for years either, but I am still aware of whether they or on or not and would still drive to turn my high beams on or off if necessary.

We were quoted £1690 for a Volvo 90!!!

I see those all the time in the roads!

Absolutely you need to be alert but you also need to be physically capable of reacting.