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 😂

I lease my cars and I’m perfectly happy to do so. I have a budget I know I can afford and I shop around to find a car I’m happy with that comes in that budget. I currently pay £315 a month on my car which is a very nice automatic, leather seats, all bells etc. I can afford it. I’m happy to pay it. I like to replace my car regularly, I like a nice new car, I don’t want to drive an old car, I can afford it so I don’t ever think about whether I own the car or not

There's a lot more margin in a new car than a used one!

I tried without success to haggle on the used car I just bought (DH and I were both speaking to different dealerships and neither of us got anywhere). It didn't help that we didn't want the finance (they'll always do a better deal on finance), but they barely budged on the price. Both places were simply adamant that the cars we were looking at were a great price and that wasn't changing.

One of the places offered a ridiculous (high) price for the car we were trading in, so we took that as our 'win' as we knew we wouldn't get anything like that for it anywhere else (it was over £1k more than the other dealer was offering, on a 10 year old Polo). I managed to get a couple of 'extras' included, but the headline price didn't shift - despite doing the deal right at the end of the quarter. Maybe they'd met all their quotas!

DP’s car cost £800 18 months ago and is still going (although it cost us the same again to get it through its MOT this year!) I don’t understand people’s obsession with cars. Lucky me, as I couldn’t afford a good one anyway.

Some people get extra money in their wages to cover the cost of this. Something that was implemented a few years ago with the demise of the ‘company car’ benefit

We had a bmw on a 5 year finance plan,£328 a month,we had 15 months left to go,we had to sell it unfortunately,with the increase in mortgage costs and everything else plus car insurance doubled without ever claiming on it!

Our car is on a salary sacrifice scheme through DH's work. He is a higher rate tax payer. I would historically have bought a used runaround but we regularly carry 5 including 2 in car seats so wanted something bigger in the short term.

Tax, insurance, services and fixing it are all included which I used to set aside £100 a month for.

Still feels like throwing money away so ill go back to outright purchasing once everyone's out of the car seats and will fit in something I can afford.

The cheapest I could find in 2018 was a Skoda citigo. I got the nicer model with some upgrades for £150 a month. Other similarly sized cars were more like £180+

We have never gone down the PCP/finance route and have always paid cash from savings, if you can do that with your first car it means you can immediately start saving for the next one.
Since our 30's we have always bought new, looked after them and never had a problem getting a good trade-in or sale price.

If you look at the small print on the adverts for this sort of stuff tends to be a cheaper PCP amount (which for a BMW this would be) but you need to put 7-10k down as a deposit to get those monthly payments. Plus the balloon payment at the end of the term.

We have recently got our first lease car (always bought outright before that- second hand). We are paying about £300 a month. I work part-time as a fitness instructor, DH works for himself as a graphic/website designer and earns a really good salary. His earnings vary as do mine but we average probably about 60-80k a year between us.

The biggest factor for us is that we don’t have a mortgage or rent to pay so that obviously allows us more expendable income to play with.

I'm always bemused by people who will happily pay a fortune every month just to blend in with everyone else in their Audis/BMWs/Mercs. They're as common as muck yet so many people seem oblivious to it.

If I'm going to be paying that much I would want my car to be something special that stands out from the crowd rather than follows it.

We buy rarely and keep the cars till they fall apart. Usually buy demonstrators but last car (Dec 23) we ordered new. It was a whisker under £50k and we paid in full. We’re both petrol heads and like rare cars so it works for us. (One of our cars is 19 years old and we’ve had it since new.)

We bought our forever home 20 years ago so mortgage is tiny and almost paid off.

The answer is the same as always, people earn more than you or have lower outgoings so can afford it. We lease two cars and pay over £500 a month. We can easily afford this even though we have high nursery costs and mortgage (we live in the South East), we earn £110k a year. We have friends who lease and pay similar amounts, and others who save that sort of amount a month so they can buy new cars when theirs needs to be replaced, all of them can afford it too.

The thing is that this country has become pretty polarised in terms of wages.

Lots of people are on between minimum wage and average wage (roughly £20-£30k) so will probably struggle, especially if they have high housing costs, most will be running old cars and won't be able to afford £200/£300/£400 for a monthly lease/PCP.

At the same time, a lot of people earn £50k plus, many even £100k plus, who will be more likely to pay a few hundred per car per month.

If you look at statistics, the majority of cars on the road are over 3-5 years old, so won't be on lease/PCP contracts. Lots of "old bangers" on the road which are 10-20 years old. The average lifespan of a car today is 13/14 years old!

We bought a new car through a combination of cash from previous car and interest free credit cards. We've kept switching to new zero deals and have literally paid zero interest on about £20k of initial debt which is now almost paid off.

It's clearly not just that people have higher incomes though. How much you can afford is very subjective because unless you're living month to month it depends on how much you are putting into savings, your pension etc. I have colleagues who I know earn less than me, have partners who earn less or similar to mine and who pay a similar mortgage to me but pay far more for their cars than I think is necessarily financially responsible. We just all have our own priorities.

When you say just bought it, do you mean very recently? Hoping we might still be able to take advantage of this, this year or are we too late? Thank you

I agree, it's a bonkers amount to spend on a car that, often, you'll never even own.

I wish people would prioritise their pensions instead!

My preference is to save up (all the time) and buy a nearly new car outright then keep until things start going wrong (often about 8 years), by which time my savings pot plus the second hand value is enough for another nearly new car. And if we lost jobs or something material changed in our circumstances, we have full flexibility to change our car.

I have a new car on pcp, I need a decent reliable car, no savings as it all went on divorce, I haggled for over a week with the dealer & came out with a price I’m comfortable paying, & a tank of fuel 😉

I never buy a car on credit, but they always try to sell it to me. The car I'm about to buy for £30k is £248pm on PCP. That seems affordable to me. I wouldn't do it because I don't do credit, but I can see how expensive cars can be in reach, for many people this way.

I put aside £300/month for my car. Not including fuel. That covers annual costs of around 1000. Tax, MOT and insurance. Then around 2.5k annual contribution towards next car.
I buy a 3 year old car and trade in every 5 years so have around 13k when it’s time to change. No loans or PCP.
Factor in depreciation when looking at costs. It can be cheaper to run a Merc for a few years than a cheap car! I buy boring mass produced cars. Currently a Golf. Easy enough to sell on.

For £186/month I have a 2018 Ford Focus estate from Cinch.

4 Yr contract, £3k down and £5k to buy it at the end if I want it.

Cheapest by a long long way when I was hunting! Same car from Ford was about twice the price.

We bring in about £6500 a month and have 1 old car paid in full and the other £450 on PCP, it's not especially fancy though, think the price tag of the car was only about £25,000.

Where I live it appears you are a nobody if you don’t have a new BMW/Audi/Mercedes/ Range Rover or ugly Tesla.

Many of the young people dh works with has one of the above on pcp and admit it skints them out, that’s madness imo. Many don’t have savings or a pension pot.

SM drives this desire. Dd16 thinks she’s getting a Merc or RR for her first car. She thinks it’s as simple as ‘just’ paying for it monthly like everyone else does. She’s got one hell of a shock coming when she gets her brothers 15 year old Fiesta.

I drive a 13 year old bright blue metallic Mini, she’s paid for, costs me next to nothing to run and I simply adore her. I just can imagine spending £300+ per month for a car I’ll never own.

I have an EV on the company car scheme and it's about £600 per month, but I get a car allowance that more than covers it and I don't have to pay for anything: no insurance, servicing, tyres, just the electricity. I think it's worth it. A new car, virtually no hassle (apart from EV range anxiety). It's on a salary sacrifice scheme so paid before tax and as it's EV the benefits tax is very low.

I don't see cars as an asset, unlike a house, all they do is cost money and stress. I'm happy to pay it. However I might opt out next time as I need a car DD can learn to drive in so may have to enter the world of car ownership again.