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?

There seem to be quite a lot of these arsey threads around at the moment. Sort of, why oh why don't people know their station in life.

Why is it embarrassing? Really? Because people bragging about wealth is very crass and bragging without wealth is even worse. It's the same as the people who must have a Dior handbag or whatever on a credit card.

Company car.

Maybe they’ve acquired wealth/a better job since moving into said house.

No idea, none of your business really though.

Agree midsomer folk do love to look down on others but live on credit cards themselves

I live in a HA flat and drive a 17 plate limited edition Mini which I got brand new.
My money, my car, my business.

And sadly, marketing of loans and leases combined with instant gratification and an entitlement to have the latest lifestyle needs.

I was surprised when my SDD 'purchased' a new car rather than her 10 year old one.
The explanation was " we have changed the car to a new one because it is saving us money every month ".

Ehhh?

So her explanation is - the loan on our 10 year old car was costing £250 per month; we have bought a new £27,000 car which is now only costing us £220 per month"
She is delighted that it is saving them money????

There seem to be quite a lot of these arsey threads around at the moment.
My OP was in no way intended to be arsey but I inadvertently seem to have touched a raw nerve.

We have a rather flashy merc. People probably question it. We actually inherited it and kept it because it feels nice to drive.

I think it’s a reasonable question OP.

I often wonder about this too. I used to live in an area which was very deprived, low average income and there were people there in a small house/flat in not very nice area, but with a very flash, new, expensive car.

I realise now a lot of them are leased, which makes them affordable. I had an old banger at the time, still do actually, although now live in a much nicer area in a much bigger house.

I think that there can be many reasons;

• status anxiety
• having more spare money as their rent is cheaper in an HA house than buying a house
• might be more affordable paying monthly than buying a second hand car outright.

Tbh I only realised a few months ago that cars were actually status symbols. I know people with little money who prioritise a nice car over having a house. We are not rich but not poor either. We don’t have a prestige car, as most of our money is in our house. But I don’t care what other folk spend their money on

There are reasons why Audi and Merc are popular - they can be good fleet deals for lots of companies (it's complicated, but some car firms really do well in the fleet / leasing market).

But again on status - seriously seen this happen so many times...

Bunch of different grade managers choosing their cars, back in the day when a lot of company cars were all one brand, and you had a specific 'L', or 'LX' or 'GLX' model. Managers would go crazy if their 'L' or 'LX' car didn't reflect their status. Such a bloody ego thing.

Now it's more complicated as most company car drivers have more choice over a leased vehicle, so the status thing is a little bit more blurred (someone wants a hot hatch, and another wants a bigger exec car) but hot hatch can cost more than the exec etc.

Quite a few folks also have private lease deals for themselves, or they get an allowance from work.

Lease deals allow people to drive a much higher value car then they could afford to buy. Effectively they are paying 'a little bit over the odds' in order to drive a car that is 'a lot over the odds' of affordability. They are paying the depreciation costs of the car.

That way, you can drive a 50K car, that loses 20K in 2 years, just pay the 20K in leasing. However, when they get their next lease car, they pay another 20K over the next 2 years etc etc.
(The figures are hypothetical examples).

It's the insurance that makes driving so unaffordable to me. If you are driving a newer car the insurance CAN be less than if the car was 8+ years old.

I agree OP, fucks me right off when I see these poor people think they're something special driving a car I have no idea how they afforded. An explanation is needed without haste, have you tried your local MP?

SHAKES FIST AT THE POORS AS THEY ZOOM PAST!

How do you know what they do for a living, what they earn and whether they own or rent their homes seeing as you don't know them personally?

I live in an ex LA house that we own with a tiny, almost interest free mortgage. It looks quite scruffy because I have very little interest in decorating and remodeling houses.

I drive a brand new car that is a company car and I have quite a good job that pays very well for the area and I'm at home quite a lot because sometimes I work from home and sometimes I do a week's worth of hours by Wednesday so can take the rest of the week off.

Most of the time I look quite scruffy and ungroomed because that's something else I'm not particularly interested in. At first glance without the car people might assume I'm quite poor, but if they knew about my savings and investments and salary they would think differently.

In short, just because someone lives in a modest house that could be HA, doesn't mean they don't have the means to buy a flashy car or are making poor financial choices.

As is a home, but the car is usually the most visible high-value status symbol we'll ever own (in terms of number of people who see it / price).
I agree.
We went in the middle. Average cars which will get used until they die. Best house we could afford in a middle area. We don't value superficial designer possessions and flash cars so don't care to have the cash for them. If we were more image conscious then maybe we'd have made different choices.

With the rise of social media there seems to be a much bigger focus on consumerism and projected image. (E.g. I went for drinks and friends of friends we openly discussing how they won't outfit repeat for events or big nights out. Items get worn, snapped and then sold online. Another friend of mine has an entire bedroom as a walk in wardrobe, but says we are much luckier than her because we have a 4 bed house and she has a 2 bed. Another friend replaces her car every 2 years and it's a big deal shared online, new from factory, custom interiors etc.)

They obviously don't know their place. Perhaps you should knock on their doors and tell them.

It’s the same reason that so many middle-income families drive round in Range Rovers. The cars are either company vehicles or they are leased. They don’t own them.

The difference in monthly payments on a PCP between, eg, an Audi A3 vs a Vauxhal Astra is likely to be negligible because the Audi depreciates significantly less.

We PCP’d ours. £166 for the car and insurance. Nice new car too, but, we don’t have to pay for an MOT, any fixes to the car, general wear and tear so it’s one fixed bill each month.

No scary surprises when the clutch goes, trying to budget the money together.

I remember reading somewhere that in times of hardship, spending on small luxuries went up while spending on large items went down. The examples it gave were things like buying a Chanel lipstick instead of a designer suit. It's a way of people feeling that they're still doing OK, because they bought themselves something that they could afford, and that somehow negates that they couldn't afford something bigger.

Maybe this is a scaled-up version of that?

Housing is now so expensive, a lot of people will never be able to afford to buy a home. The next-biggest purchase for most people would be a car. Car manufacturers and dealerships are desperate to keep sales figures up, and offer all sort of leasing and finance deals just to shift the units. So, a car on finance could be the affordable smaller luxury that soothes the unhappiness at not being able to afford to own their own home?

My friend lives in a council house and drives an Audi TT. It's a company car, and comes with her job.

Why do you care? Haven't you read any of the posts that explain why someone might have a nice car yet live in a council house.

It’s a complete myth, by the way, that ‘posh’ German cars are more reliable than other models. Modern Premium cars are loaded with all manner of electronic gadgets and gizmos which can, and do, go wrong. Also, problems with Diesel Particulate Filters are common on cars which are driven inappropriately, ie lots of short journeys around town.

If you want a reliable car, buy Japanese or Korean, with a petrol engine and a basic spec.

Love the assumption that people only drive premium brand cars because they are keeping up with the Joneses or concerned about status! I drive a premium brand car because it is really nice to drive, it is a brand that we have found to be reliable over many years and it is v safe. I'm sure many other cars of many other brands are the same. But of the ones we tested, we felt ours was the nicest drive and best value for what we were looking for, even though it is not the cheapest option. Couldn't care less about others' reverse snobbery tbh!

If you are leasing, premium brand cars often work out the same/ cheaper per month despite far higher OTR price because of the higher residual value so that's probably a reason why people choose them.

I’d say the most likely option is that it’s leased or on pcp. Much easier to get finance for those options since you never own the car and they can take it back if you don’t pay. Banks are a lot more risk averse to giving out loans nowadays which means you can’t afford to pay even £2-3k outright for an older car if you have no savings