Why do people on limited incomes choose upmarket cars?

[SirGawain]

Not really an AIBU, nor a criticism of peoples lifestyle choices, but I'm genuinely curious.
I live in an estate of mostly starter type homes built about thirty years ago. Many of the houses have been aquired peicemeal by different housing associations. The neigbours are generally very nice and most seem to be employed in decent, if not well paid, jobs.
As they are living in housing association properties I assume that they are not particulary affluent. What puzzles me is that the car of choice for many is a BMW or an Audi. Why would people spend there money on an expensive car which depreciates rather than investing it in a homes which will rise in value?

speaking of cars, what's the difference between a "car of your choice", and a hedgehog?

Answer. With a hedgehog the pricks are on the outside.

Car finance.

I buy a nearly new car every 3 to 4 years. About a year old, probably costing 12-15K. At the end of 4 years, without a lot of miles, the car is still only worth about 4K trade in, so my car has cost me 8K or so, or about 2K a year. I could keep it longer, which would improve the average cost per year. I think this cost is cheaper than buying new on any finance deal.

The trouble is, it's hard get back the true value of a used car. The trade-ins are often derisory, considering.

Now the more you pay for the car, the more you lose when you sell it on. A 25K car is worth about 7.5 after 3/4 years, so it costs you 17.5K. a 50K is worth 15K, so it costs you 35K.

A few cars might depreciate a bit slower, or a bit quicker, but that's how it goes in general.

@duckling84

eh? If you didn't spend your money on cars and holidays, you WOULD be able to buy a house. It's just your choice.

PositivelyPERF

I'll see your 15 years and raise you: my car is 21 this year. I can't, hand on heart, say that I've ever been poor; I just love the car

If we're talking old cars, mine's 22. It's on its way to becoming a classic

@Gth erm not quite. Our cars were about 10k each (both 5yrs old now and we are not getting rid for a while), we spend about 2k a year on holidays. Going without a car and the holidays and putting that money into a home would allow us to buy in about 100years.......
30k annual income, 300k for a 2 bed flat with a mortgage repayment of over £1000 a month. We pay £400 a month rent on a 4bed house which comes with a lifetime tenancy.
I'll stick with my nice holidays and cars thank you.

Oh and doing the maths, if I was to continue to rent until I'm 100years old, I'd be paying 336k so only 36k more for a 4 bed house then a 2 bed flat (obvs I know house prices and rent increase but assuming the increased at a similar rate - there isnt much cost difference).
I don't get what the big deal is over owning a house. It seems a very old fashioned idea now

@duckling84 Not everyone is lucky enough to live in a secure HA property. Owning your own property provides security in your old age when your income is reduced. Nowadays it also provides the funding should you need to go into care. Some of us need to pay our way so that the state can afford to support those who can't.

Oh and doing the maths, if I was to continue to rent until I'm 100years old, I'd be paying 336k so only 36k more for a 4 bed house then a 2 bed flat (obvs I know house prices and rent increase but assuming the increased at a similar rate - there isnt much cost difference).

You've made a seriously flawed assumption here. House prices go up, but not the price of a house you've already bought - which is why mortgage payments decrease in relative value over time, but rent doesn't. I pay £975 a month in mortgage, just as I did when we bought the house five years ago. If I rented it then, based on almost identical properties in the same row, it would have cost £1000 pcm five years ago, but around £1200 now. Obviously it depends to an extent on what interest rates do, but over the long term it is near certain that that gap will widen.

Also, unless your plan is to buy a house, pay off the mortgage and then burn it to the ground then there's quite a big difference between paying the same sum in buying or renting a house.

People buy brand new audis and BMWs as a status symbol. There are loads where I live and the drivers often seem to think that traffic laws do not apply to them. Whenever I see someone driving one (and a few other cars) I think that they are probably pricks.

Round here we have people with massive Porsches / Discoveries / Velars outside 4 bed houses on fairly cramped newbuild estates.

Houses cost £600k - £800k and car costs £100k give or take so it’s kinda in the ballpark for the job/lifestyle they have/aspire to.

The difference between 20/30 years ago and today is the availability of credit and the realisation by car manufacturers that if they keep building cars, they have to find ways for consumers to meet their supply or factories start shutting

I agree that there is a credit bubble that will definitely burst soon