Does "everyone" really buy their posh cars on credit?

[Bottleplant]

Or using some sort of lease arrangement?

A colleague recently bought a £30k car and paid cash. Our boss, (privately and I guess unprofessionally) was having a little jealous bitch about it saying who earth pays cash for a car.

Now, I wouldn't dream of telling anyone such details about my financial situation and I earn less than either of them, but I have a broadly equivalent car and I've never had a car on credit in my life.

To me it seems odd to "buy" a luxury car you can't afford, which I would consider I can't if I can't pay for it.

I understand sometimes people will need to get a car for work etc by whatever means possible, but I was surprised at the suggestion that it's what "everyone" does.

I know quite a few people who have got expensive electric cars on salary sacrifice lease deals, which are very tax efficient.

I think generally people finance buying cars because they don’t have the cash lying around.

We own our car outright but most people I know have either financed it or have cars they could never afford on pcp

I paid for my nice car in full by bank transfer but then I’m older so can afford it . People buy using a variety of ways .

No, not everyone does, just as not everyone runs a clapped out motor.

People have different priorities and use their funds in the manner that best suits them.

I know of a couple that go on expensive holidays and are away about six times a year. They have a small house, costing less money, so that’s what they prefer. It wouldn’t suit me; spending 50k a year on holidays is something I wouldn’t do, even if I could afford it.

I think even people with “normal” cars are mainly on finance. It’s a big outlay for most people who don’t have tens of thousands of pounds in the bank.

OP you are very fortunate indeed however your situation is not necessarily the norm.

We have always bought our cars using savings rather than a loan/finance/lease etc.
Buying our first car this way meant we were immediately able to save for its replacement.
Even our MoHo's are paid for this way.

I have no idea what everyone does. But I imagine it's fairly common to use finance to purchase an expensive car, because few people would have access to that amount of cash. And most of those who do would probably not choose to spend it on a depreciating "asset", but rather utilise credit or take out a lease and free up cash for other uses.

Small sample size though, because I can only speak for the wealthy people in my friends and family circle. No idea what others do, or why.

Depending on finance rates it can be much more efficient to keep your capital invested. It’s harder at the moment but when finance was available at 0-3% only a complete moron would’ve paid outright.

I buy cars new on lease purchase over 4 years with no balloon payment, do about 20k miles per year so need something reliable. At the end of the term I run it another year or 2 then start again, so always got a nice fresh car without tying up all my capital that I need for running the business

I only bought my first car with a loan, every other one has been bought with money I had (I did shock one dealer by buying with my credit card but I got lots of points and it was quicker than waiting for the cash to transfer from my savings account, obviously I paid it off that month so paid no interest). At work (well paid professional role) half of us have lease cars and half buy outright. I've looked into getting a lease car but it's not cheaper than buying a car a few years old outright and driving it into the ground. I think people like the convenience of not worrying about garage bills. Or are obsessed with cars. Or are at a stage of life where they have lots of spare cash.

Financially speaking it can be daft to buy a new car in cash. You lose thousands in depreciation as soon as you drive it off the forecourt.

You can be better off investing 30k and then leasing it.

My car was 11k, I had the cash I got finance because I would rather that the 11k was in my bank account bringing in returns or there for an emergency than in the car dealers account .

is £30k for a car considered expensive in the UK? What do you get for that sort of money.

Most car financing is 0%, isn’t it? I know some people aren’t comfortable with debt at all, it depends on attitude rather than ability to pay. I would never lay out 30k cash for a car, for example. The money is better in my bank account rather than theirs.

I’m not sure why, but lately I’ve noticed quite a few threads here and on Facebook where people are being criticised for driving new cars — whether they bought them on credit, PCP, salary sacrifice, or even outright with cash. There’s a lot of speculation about where people get their money from, which honestly seems unnecessary. The reality is, plenty of people earn decent money, many take advantage of salary sacrifice schemes, some use savings or inheritance, and others trade in cars with good equity. Im in FB group for early retirement and some people user their lump sum to finance new cars. I think it’s naive to think that majority of new/high end cars are almost always on some kind of finance. I’m genuinely surprised by how much attention the general public pays to what other people drive.

I agree my financial situation is fortunate, but I don't think that's entirely why I have always paid cash for cars.

I bought my first car (a one year old mini metro) with cash I saved from my first job.

Since then it's only been replaced when I've saved enough to do so. I buy new or newly new cars, have them serviced regularly and keep them until they start letting me down.

We’ve always bought our cars outright but have now switched to leasing as got a good deal. With depreciation just not worth the outlay.

years ago i worked at a dealership for jaguar and Land Rover, we generally had at least 3 cash purchasers every month - and I mean cash - that was always a fun rush to the bank before closing, and cheque purchases outright were very common.

It might not be about affordability but value for money. I could buy an expensive car in cash, for example, or lease it for three years and return it being quids in because I know (say) that I'm only going to be 3000 miles on it per year, I won't do any motorway driving, I'm a careful owner, this make/model retains its value, I bought a neutral colour etc etc.

I've always bought my cars outright, but am about to switch to leasing. I totted up how much I'd spent on my "reliable" car over the years and was shocked. I've basically bought it again a couple of times.

No, most car financing is definitely not 0%.

Until recently I’ve always bought my cars outright.
However, I could only afford very basic, older cars. The last one became a money pit. So we decided to get a better car, still used, and took out a loan with a low interest rate.
It is so worth it. The car is so much better than anything else I’ve had and far more reliable. We also need a car for work, it’s not an option.

For 3000 miles per year wouldn't it just be cheaper to get taxis when you need to go somewhere?

£30k is the bottom end of the 'expensive' market range of cars. I paid a tenth of that for my last second-hand car. Gets me from A to B.

Pay cash and you own it. Take out finance and you're paying through the nose for it and still don't own the thing at the end of the contract. Daft.

It is never a good idea to buy a brand new car, the drop in value over the first year is huge.

Yes, most of the newer cars are in some kind of hire purchase or lease agreement, sometimes via salary sacrifice sometimes direct from dealer. I paid for my car with my debit card which confused the sales person no end, he couldn’t understand why i wouldn’t get a new car instead using the £12k I paid for my second hand car for a substantial deposit. I couldn’t convince him outright is better!

Not better for him though - your purchase earned him a lot less commission than if you bought a new one.

I have to agree I never really got the whole PCP thing. I know my brother in law constantly swaps their car (think every 2/3 years) on a pcp contract. It’s madness. but I wouldn’t say 30k isn’t a luxury car