How do lots of people afford the brand new luxury cars ?

[Stroganoffo]

Keep seeing 22 plate Mercedes, Audi , BMW and tesla, when I was little these were quite rare as only the wealthy had them. Now it seems everyone has one considering the average wage isn't that high and the cost of one is 50k. I have a good wage and still don't want to fork out lots. How are people affording them. Is it all on credit ? Aren't people worried with everything else going up and the cost of living crisis ?.

I've got a 50k bought outright but I only paid 29 when it was 4 months old. Needed a ten k loan to pay 29k which I over paid off in a year, I will keep it forever til it dies.

@pebbles3004 I reckon most of us who aren't taking out debt to own a fancy car, are buying second hand cars. That way we actually own something. completely agree.

I mean this is a silly question isn't it because the answers could be so varying.

I have two friends who earn in excess of £100k and both love cars, so they treat themselves to a new Mercedes every couple of years.

Another friend only earns about £50k but has used an inheritance to buy himself an £85k sports car "because you only live once." This is despite him having two young DC with SEN. arsehole

Agree there is a big increase in the number of people leasing cars as you can rent something you couldn't afford to buy, similar to houses.

I love my little 8 year old runaround, no interest in cars at all, but other people would balk at the huge % of my income I spend on holidays.

Is there any car manufacturers near you? There is one near me and alot of people (myself included) use the staff leasing scheme. You lease directly from the manufacturer, it used to be for 12 months so a new car every year, theyve now changed it to 24 months. All your insurance, tax, services are included in the lease price. Each person can lease up to 3 cars. Thats why there is alot of that brand car near me.

Sorry, should have elaborated. I don't think people with DC with SEN cannot have nice things, but one of these children will never be able to live independently. I would have put money aside for my DC care rather than spend it on a luxury brand car, as would most parents I believe.

Exactly this after a string of big mechanic bills I sold my car and leased from then on. All servicing and maintenance is included even brakes and tyres so it's hassle free and works for me. I DO NOT EVER want to own a car again

My DH has a 50k car… company car. I drive a 5 yr old BMW which I own after paying it off (bank loan not car finance as lower interest) I will drive it until it dies…

We do our cars on pcp. We’ve been waiting for delivery of the next one for seven months now, latest projected delivery date is April. We’re getting so much trade in on the old one it exceeds the 35% allowable down payment on the new one and they’re giving us £2k back. It’s worked very well for us for over a decade.

Lots of people are willing and able to spend £500 a month on leasing a luxury car, but couldn’t pay £50k outright or get the full loan. Finance and leasing are obvious. Not dumb at all.

Our electric jag is on lease or Landrover is owned outright
We never used to buy anything on credit/ or lease but we have a lease on salary sacrifice and the maths make sense for us in this situation. It was a good deal - no choice of colour or spec but includes insurance, maintenance/servicing, tires & breakdown cover. It also meant we can upgrade at the end of the lease which was important as electric car tech is changing so rapidly.

Same here salary sacrifice so not paying tax on it makes it financially even more savvy

Yes but if your used car goes wrong you can lose all the money you put in to it. With a lease it’s not your problem if it’s faulty. I do a lot of miles so a £500 car won’t work. I’d be looking at £10k for something reliable enough.

We only have electric cars and they are very cost effective to lease. No-one wants to own old tech and because they are so cheap to run the lease cost is still cheaper than petrol.

I’ve not got anything luxury right now as took a super cheap VW on lease after mat leave. It’s under £200 a month inc home charging cost and insurance. I couldn’t run an old petrol car for that.

My electric BMW that went before it was just over £300. That was on par with an old petrol car in terms of cost but all the benefits of new car (plus environmental reasons). Win win.

We also have a new MG4, that’s under £200 a month on a PCP. Not luxury by any means but a lovely car. Far cheaper than anything petrol!

DH could get a 'nice car' on his company scheme.

Why, you would, boogles my mind though in terms of the financials. It doesn't even work that well in terms of taxation for him.

He looked at it for three or four years before deciding it was a mugs game, which tied you to a company. Thankfully since he didn't get one, it was easier for him to change jobs when problems started emerging there. He's paid better at his new place.

He was relieved and he's been massively put off the company car handcuffs. Instead we're saving for a new car of his choosing which we will own and not have the spectre of debt having over us (which in theory could affect remortgaging in future too). It's theoretically an asset, which although it depreciates, you still have something tangible rather than just throwing money at thin air. Indeed because the second hand market has been so inflated, the amount his current car has depreciated is a lot less than we factored. Its functional and gets him from a to b.

Every so often he wistfully dreams of having the flash badge with all the gadgets. Then looks at the numbers and goes 'fuck that, I could do x, y and z for that'. It makes no sense except for ego or status.

DH is reinforced by the experience of someone else. A friend of his at his last place is single and bought a fancy car. He's stuck with it, it's woeful fuel efficiency (at one point last year it got to the point he was avoiding going into the office). He loves his car but he'd never get something similar again.

We just have high income.

One is on hire purchase so will own it by the end. Plan was to keep it but will most likely sell and buy the same but newer model.

One is owned outright.

The other is a company car, no cost to us.

Combined cost of buying the cars new is £320k so from an outsider view people probably look and wonder but one is a company car.

We prefer to buy second hand and run them into the ground but it’s perfectly reasonable to lease given the deals you can get these days, if that’s people’s preference.

I love a nice car, get £650 car allowance a month and my car loan is £500 a month, with free service and car insurance thrown in., was a better deal than a new Skoda.

I’ve been looking at cars recently.
Audi A1 starts at around £20k
Mercedes A class is £31k
BMW 118 is £27k

in comparison a top of the range or electric Vauxhall corsa is £35k, a peugeot 208 £34k, and Ford fiesta £27k.

”normal” car prices seem to have increased far quicker then luxury car prices so they are now pretty similar

We bought second hand uncool cars. It's served us well. No monthly payments on cars, would never buy a new one outright. It means I'm a bit less worried about energy bills and the mortgage.

Leasing
Company cars
Bank of "Mummy or Daddy"
Drug dealing
Tax evasion

Good salary
PCP
Company car

We buy quality cars at around 1-2 years old, much cheaper than new, and still with some manufacturer guarantee on them. We trade in old car, put some of our own money towards the new one one plus get a bank loan payable over 3 years to plug any gap. A loan from our own bank has always been much cheaper than any finance company loan operated by dealerships etc.
We keep the car for five or even six years so we have a year or two without any car repayments going out each month. We buy 'luxury' cars so they're still worth a decent amount when we sell them on. Works for us.
There are a few pitfalls with PCPs etc which would probably not suit as well. Mileage, for example.

We have our cars on lease.
Have done leases for years and it works for us.
We could afford to pay for them but don't see the point as we've always changed our cars after 3-4 years anyway, always buying new. Obviously we have to have a certain income level to be able to get the lease for the higher value cars anyway so it's not a case if having cars we couldn't afford ordinarily.
It's just a system which works for our circumstances.

@Baconand have you tried buying a car for £500 recently? Not even sure you’d get an insurance write off for that. My secondhand petrol car we bought a year ago was less than 2 years old and it’s “top of the range”. It costs less than £60pm to run including tax, insurance, annual service, plus fuel (we don’t do many miles). Yes we had to buy it but I own it and can sell if I need or wanted to.

There are a lot of variables, but very often lease/pcp.

For example you can get a brand new Range Rover on pcp with a 13k deposit and it will cost you only £200 a month (4 years). Of course that £200 a month needs to have the £3k deposit added so is costing more like £450 a month in reality but still.

Electric cars - mostly company cars due to BIK tax breaks.

Many people see leasing of depreciating assets the sensible way to go. I knew a young man 25 years ago on a regular wage (I was his line manager) who drove a nice merc - paid £200 a month to lease it - so it’s not a new phenomenon.

I don’t do number plate snobbery, I’m more financially literate lol

Generally speaking there is no point in owning a car outright as it will depreciate in value - unlike property, which will generally appreciate over a long period of time.
If you can afford to, you would be better of putting down a deposit of, for example, £3k and paying £200/month for 3 years and then trading it in for a better model. This is particularly useful for electric cars where technology may improve a lot in a 3 year period and so you can trade it in for one with better mileage etc.