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?

People get to make different choices and have different priorities. That’s the joy of freedom. I don’t understand why it bothers you?
I’m not interested in cars so have a small but reliable runabout. Doesn’t bother me what other peopls choose to have.
We have a big family and a big house and therefore less to splurge on clothes& holidays& cars. Doesn’t mean I am better or worse than those who make other choices/ have different chances in life.

Leaving all your judgementalism aside my sister has a motability car and was offered the choice between a BMW and a Kia. The Kia was more expensive so obviously she chose the BMW.

The car industry wants us to get into leasing or PCH as it 'ties us in' and promotes a much higher turnover of newer cars.
It ties people in because when the lease period is up, we are left nothing to trade in, just 'renew' the deal all over again. It can be quite hard to break that cycle once you're in it.
Even those intending to buy the car at the end are often caught short and getting bored of their car anyway to actually pay the balloon payment, so elect to renew with a new car again.

How do you know that because they're living in an HA property they have a limited income?

It's as if bank statements are available to all

Each to their own, if it's a company car then fair enough. Although I do agree with your question somewhat. A lot of people have their priorities wrong, I know some people in their late 20s that still live with their parents but have bought £15k+ cars, that's more than enough for a deposit on a house where we live.

On the other hand, my DF says he would rather have an average house, nice car and be able to afford to go on nice holidays, follow football around the country, buy what he wants when he wants rather than a nice big house and be skint. Some people just have different preferences!

Because they work in the BMW factory and got it for cheap? I guessed that's why there were lots of BMWs where I used to live. If that's right, it's the savvy thing to do.

I suggest you ask them, no point asking us as we're not the persons concerned.

The changed nature of car purchases (PCPs etc.) has meant that more people are driving around in 'premium cars'. They are effectively sold, with a focus on the monthly outgoing (like a bill) rather than any ideas about owning a capital asset.

"According to the Society of Motor Manufacturers and Traders, about 80 per cent of new cars in the UK are sold on PCP."

"Leasing has been particularly good for premium marques. Because drivers only finance the depreciation, models that hold their value well work out only slightly more expensive than mass-market brands. The result has been big increases in sales for the likes of Audi, Mercedes, BMW and Jaguar Land Rover — Mercedes has doubled its UK sales since 2010".

www.ft.com/content/0e651206-0ee1-11e7-a88c-50ba212dce4d

As for company cars...

Once upon a time, company cars were for travelling salesmen.
Then they because a method of not paying you more money, but offering a car as an incentive (so lots of people who didn't need one had one). It worked out as a decent deal for the company and the employee.
Then, the government figured out what was happening (they're a bit dim, it took them ages). They decided to start taxing people, progressively more and more - first on mileage, then engine size etc.

Nowadays, a lot of people get an allowance, and hardly any folks are forced to have a company car. They call it a 'company car' because they do the leasing through their company, but they are still ultimately electing to choose that car instead of taking the money and doing their own thing.

Again, there's no universal rule, but an awful lot of people shrug their shoulders and say 'company car' to justify their personal choice.

I used to have a nice 5 bedroom house. An ok car.

I got divorced and bought an ex council house in a cheap area. I drive a better car now. I purposely bought a hous3 with a cheap mortgage so I could afford holidays and a better car. The ok cars always needed something doing and were a pain. I don't have time between work and the kids to be taking my car in every other month.

I am much happier with a small mortgage and spare money to spend.

TornFromTheInside
I wondered about PCP. It seems bonkers that an entire newly popular way of selling cars is being done because it is in the best interests of the consumer (But I don't know enough about it to warrant passing a full opinion).

The British like nice cars so it is cultural.
Go to mainland Europe and fancy cars are much less frequent. Paris in particular.

One of the board execs where I work drives very modest car whereas people who earn a lot less than him have very prestige cars. People are interested in spending their money on different things.

Because some people just love cars, others love to pose and pretend to be rich.
I remember watching a programme years ago the guy lived in a very modest house but insisted on top of the range cars. He borrowed his girlfriends car for the day and complained "no one's looking at me"

I'm more concerned with boy racers with their loud exhausts who think they look cool. They look & sound like knobs.

Biologifemini

I agree. Obsessive car snobbery is a very British thing. In France, Italy or Spain it’s perfectly normal to see a well-dressed professional person get out of a battered old Clio or Punto, or a well-heeled family drinking an old people-carrier.

Germans drive German cars because they believe the best cars are ‘Made in Germany’.

Actually I'd love an Audi, and could afford to buy one too, but I can't justify it to myself - I'd essentially be paying £35k to stroke my ego when I should save that money for DCs' university fees or to help them with a house deposit. Doesn't stop me lusting after one though! Shallow? Maybe. Human? Definitely.

Funnily enough op, I've bought my last few cars nearly new and have kept them for ten years due to living in London, children's sticky fingers etc. My present car will need replacing next year and I can have something smaller. I can buy a new car outright if I like. I don't fancy keeping another car for ten years and I've seriously looked at a golf SV.

I can get a good deal on something like an Audi A3 and have done the calculations. Taking into account the depreciation and loss of interest it''s a smarter move than meets the eye and I don't particularly want to commit to a Honda HRV for ten years now my car will be for me. I also have a good income and v limited outgoings.

I scruff about most of the time, drive a scruffy ford, and couldn't really give two hoots about what anyone thinks because the house(s) are paid for.

An awful lot of car showrooms now say '199.00 per month' (for instance), but that's meaningless without context. The small print might require a £2000 deposit, or a balloon payment at the end etc.

They could just as easily sell a 20K car say £1.00 per month (19,988 deposit required).

In many parts of the country owning your own home has just become so unattainable.

So, people spend their money on items which make them feel the slog and hard work is worth something. To some that's a car, which in comparison to housing is 1) achievable and 2) attainable. Rock bottom interest rates mean car finance be it a loan or lease is affordable. Yes of course people could make that 10-15 year plan to save and afford a deposit for a starter 1 bed flat but how depressing is that? If you don't have inheritance or parents to help with your deposit why bother, it's not going to happen.

Also, some people just enjoy cars. They don't care for new clothes or "nice" holidays or going out drinking. Their money goes towards a car something they enjoy and also serves a practical purpose. Each to their own.

Why don't you ask directly on the thread OP, instead of musing about them as if they wouldn't be on mumsnet? There is something rude about your thread.

waterSpider - I’d vaguely wondered why there were so many expensive brands on the road and that explains it! I still find it a bit strange that people would be happy to pay still fairly chunky sums monthly unless their companies are paying for them but I guess the point is the sums are similar to those of less ‘desirable’ brands. We have very non premium cars and I guess a reasonable household income for out of London. I would really resent paying anything much on cars because I’d rather have other things and make other choices for the family but it’s because neither DH nor I see premium brands as desirable! Obviously lots of people think differently though!

Maybe thats the car they like.

Also in a HA property the rents are normally relatively cheap. Around here the rent on a HA house 2 bed is only £115 weekly, so £460 per month. A private rented 2 bed would set you back between £900-£1000 per month. So when you live in HA you have more disposable income and if they are choosing to stay there they don't need to worry about buying a property so why not have a nice car.

But the point is, if you add it up over the years, you can actually pay more for a car owned outright that costs a few thousand up front but needs MOT, tax, servicing, the odd thing repairing versus a £25k car on PCP where the dealer pays for some of the above/or they are not needed e.g. no MOT for 1st three years and unlikely to go wrong.

Better deals to get a German car than a Ford for example sometimes due to much less depreciation on a German car.

For those that haven't done it, the upfront payment often only £1k-£2k plus the monthly payment of £200 say which is actually more affordable if you don't have savings but do have a monthly income.

Of course you could get a loan to buy outright but using the examples above, I can absolutely see how it is more affordable to have a nice car than a mortgage on a house!