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.

Very few, and none reliably - that’s the point. Most people who say “I’d rather lease my car and invest the money” are deluding themselves.

For me cash was fine even for my new car I bought once as if you plan to keep the car, depreciation isn't that relevant. I kept that one for sixteen years. I guess if someone writes it off the the insurance value would be a downer.

They would have to invest the money for many years to see a good return.

Every time I've sat down and done the sums, the cheapest way seems to be to buy a 3-5 year old car outright (much of the depreciation has already happened) and grind the thing into the ground. Cars are so much more reliable than they used to be. I got rid of one recently that was 21 years old, and was still repairable, but the cost of repairs was mounting at that point. I had a few things fixed over the years but it never actually left me stranded anywhere.

I bought its replacement in cash, 4 years old, and hope to keep it for at least 10 years.

On finance through business in the norm for my friend group

My current car is £172/month for 3 years and £5k deposit. It would’ve been £35k new, worth about £15k if I’m lucky after 3 years. I’m paying about £11k in finance rather than £20k cash. No brainer for me.

What car is that that lost nearly 60% of its value in 3 years?

Depreciation really depends on the car. I have a toyota. Honestly, 3 year old Toyotas aren't far off the price of a new one. The only reason i guess people buy them is because you can drive it home immediately rather than waiting months for factory delivery.

On the other hand, I was looking at a 3-year-old ford fiesta, which had lost over half its value.

But I guess if you always want a new car, it doesn't matter if it will run properly up to the 10 year mark. Getting a dodgy one on finance makes sense.

@platypusdiver so over three years your car costs about £11k including deposit. That's £3666 per annum. Pay £35k for a new car and if you keep it for 10 years with a trade in value of £5k that's £3000 pa. You have therefore spent the equivalent of £6600 more. Buy that same car at two.years old for £25k and keep it for eight years with the same £5k trade in value and it will cost you £2500 pa, £1166 pa less than your finance deal.

Which bit of that is a no-brainer? To me your version is bonkers

My apologies because Platypusdiver might not be the poster chosing to use financing deals.

It felt a bit annoying that we were giving them £70k outright and they were obviously put out that we weren’t taking out some expensive finance agreement 😐

How does it work with mileage limits on leased cars? I was out with a friend recently who mentioned this. As a family we don’t actually drive that many miles a year, but I find it odd that you’d have a car but only be able to go so far before you then get charged more. Are tbe allowances quite generous?

You aren’t limited to the mileage in the agreement, you just pay a charge for additional at the end. Sometimes it is cheaper to lease on the lowest mileage and pay the extra, sometimes it’s not. My current one is 5p/mile plus VAT for additional. Contract is 8k per year and I’ll have 15k to pay roughly so about £900

I leased my last 2 cars but got fed up with the changeover process and waiting for cars to be built. So this time we bought outright, cash. It was £32k, 2 years old with 10k miles on the clock and I've got a much better spec than I could have afforded new. Intention is to keep it for 10 years or so - I only do about 10k miles a year for work and we tend to use DH's truck at the weekends as it's better on the village bumpy and potholed roads. Mine is more of a motorway car.

These are usually people that have to pay a 'stealer' £600 to change a spark plug. In sensible times people learnt some basics and did minor repairs themselves.