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 😂

Totally agree. I got a really decent Volvo that was 4 years old. 2K in cash, 2K for battered old VW golf and then Got a bank loan for 10K which is £135 a month. The car will last me at least 10 years.
Would never dream of getting sucked into those awful finance deals.

We pay £500 a month on a lease. Just started. Our last car was bought for cash and lasted 10 years. But its less than 10% of our take home pay and we are mortgage free.

I literally can’t put into words how much I don’t care if I own a car or not. I need a safe reliable car which costs me next to nothing to maintain and I don’t want to drive an old banger and neither do I want to pay out a massive lump sum on a depreciating asset. It’s not a con to get pcp or a lease if you understand the terms

I don’t understand why some people are saying, ‘I’ve got a bank loan and will never take out a car on finance.’ How much of a difference does it really make? At the end of the day, you still owe money to someone

With a bank loan, the car is legally yours. You can do what you want with it, i.e. sell it, sue the supplier/retailer, etc. There are also no "excess mileage" charges nor additional charges for every scratch and dent at the end of the term. Usually fewer "administration" fees, etc.

With a lease, you, personally don't have those rights, you're in hock to the finance company whether the car works or not, and it's the finance company who have to take action against the supplier/retailer if the car is a dud, and unsurprisingly, they're usually not that interested as they know they'll get the money from the poor sod who leased the car. Classic legal triangle conundrum which also happens with other "dodgy" things bought via credit agreements such as faulty furniture, faulty kitchen appliances, etc. It's a real problem!

Having seen lots of car leases/PCP contracts in my job, I'd not touch one with a bargepole. Getting a bank loan is so much simpler/transparent without all the tricks, smokes and mirrors that are often included in leases/PCPs.

I guess that kind of makes sense @taxguru what about people who aren’t eligible for a bank loan though? This thread has made me think of what I’ll do when getting a car

We have a car on pcp, just over £500 a month. Put down £10k deposit too. The more you can put down on a deposit, the lower the monthly payments become.

It does make sense but as with all things there are pros and cons and some of the pros of PCP are the fact you have a guaranteed value at the end (assuming you've stuck to the terms) and your payments are based on 2/3 of the value so have smaller payments which make it more affordable. We've done pretty much every which way you can get a car apart from straight leasing and there are pros and cons to them all, PCP tends to be our preferred (barring a lottery win and paying in cash, obvs).

We’ve always saved and bought outright, trading in our previous car in the process.
dh earns a high income though

everyone I know who drives a fancy car pays an extortionate (IMO) monthly amount for it, and wil have to carry on paying several hundred pounds a month for a car, for ever!

I pay £400 for my car, I have no mortgage and save every month. I’m delighted at no longer having to worry about noises and rumblings coming off my car and having to deal with mechanics and happy to pay for that. I also love how luxurious my new car is, it’s a treat to myself.

Brand new cars and SUVs are for fools of rich fools only imo 😁 I just do not see the point, a car is just a vehicle to get you from a to b

I never understand how/why people go for brand new

Not all PCPs are high interest. We have just signed up to one for the first time ever because it is a 0% deal and came with various other enticements which made it cheaper than buying a nearly new but second hand which was our original intention. It’s probably not our most sound financial investment but it will be enjoyable and we can afford it alongside also saving and investing so we have made an informed decision to go for it. The comparison with houses makes no sense for the reasons described by plenty of PPs.

So much sneery judgement and reverse snobbery on this thread, it’s quite unpleasant. For plenty of people, PCP is affordable and makes perfectly good sense. And heaven forbid anyone spends money that they can well afford on something that brings them pleasure and they enjoy and make good practical use of every day, just because it’s a depreciating asset. Not everything in life has to be about making a sound financial investment.

How do you get a second hand car if they don’t?

Our 4x4 on PCP is £378 pm
We part ex'd our previous car for the deposit.
I earn £40k, DH earns around 50.
All comes out the joint so we basically put halves. At £190 each a month I don't feel this is bad tbf
We have done PCP on our cars for around the last 7y now. We have a new car around every 2-3y. Works for us

I pay £300 pcm for an Audi a3 on salary sacrifice - includes all maintenance and insurance for 5 people. I use it for work

I had a car on finance for about £170 a month but sold the car and broke even plus a little bit more on my payments about 3 years in.

I actually have a hideously expensive car on paper right not, equivalent to 1/3 my original mortgage in value but pay pennies for it due to it being a company car and an incentive to go green. People aren't always paying what you think I don't think

I’ve stopped leasing due to a longer commute, but we latterly paid £550 a month for an Audi Q7 (we put a larger deposit down to bring payments lower). I loved the reliability of a new car.

Tbh to buy outright is harder and you need more money upfront; I understand why people lease. DH gets substantial bonuses at work which was the only reason we were able to buy.

We leased a brand new seat Leon in 2020 at 218 a month. It’s due to go back in July. If we want we can keep it but still pay the same amount! I’ve just bought a Skoda fabia from 2019 with low mileage and it’s costing me 187 a month on my own. It’s a nice car though

We leased a brand new seat Leon in 2020 at 218 a month. It’s due to go back in July. If we want we can keep it but still pay the same amount! I’ve just bought a Skoda fabia from 2019 with low mileage and it’s costing me 187 a month on my own. It’s a nice car though

I’d always bought cars with a small bank loan and cash from the sale of a previous one. ~8 yrs ago when I last bought a car you could get a 4yr old 5 series or E class (I’ve had both) for £15k ish, perfectly coverable with a bank loan plus selling your old car covering over half. When I looked this time for a 3-5ye old large estate car they were sitting in the £28-30k and by the time you’ve covered that with a loan the monthly payments on that were extortionate. Went PCP on 0% and it’s better to have a new car with all the warranties etc than a 4yr old one if monthly it’s going to cost you a similar amount, or in my case somewhat less!

in my case how do I afford a brand new car. I don’t have kids and I have a small mortgage. My car is probably 15% of my income also factoring in insurance (but not fuel) but my mortgage is only another 15%. Give the rule of thumb to max 35% of salary on mortgage I’m not worried on affordability.

salary sacrifice lease scheme (NHS) for around £320 out of my salary I have a new ford kuga plug in Hybrid. I chose the car and spec as if I was buying it. It includes tax, insurance, service and repairs, tyres, breakdown. I think thats a good deal for no stress. Ive had car loans for second hand cars for years before and found that as soon as I paid the loan off they started to cost me more and more in repairs, I could do without the hassle and fear of the MOT failure. The fear if being ripped off by a garage if I report a funny noise

We have always had old cars but I’ve also had terrible luck recently. They seem to need work on a monthly basis at the moment.

Thinking of going back to a PCP but £300 a month minimum has me feeling the same as you OP!

The simple answer is a lot don't, including those who are leading the cars. The number of repossessions of vehicles seems to have increased so much recently.

Two neighbours have brand new cars often. With one it’s his company car and the others are as far as I’m aware are just very well off.

The last car we bought cost 25k and was two years old, we always buy outright.

OMG stop saying brought when you mean bought!