AIBU to wonder how on earth do people afford new cars ?

[CarsAreExpensive]

OK, so I'm probably BU here but I really do wonder. I'm a single parent but earn what a lot of people consider a good salary of 100k. I rent, as its hard to get on the property ladder living in big city and can't move away as rely on family to help with childcare a bit.

Today I have driven through few areas / towns that are seen as deprived areas, full of council homes, refugees etc. I won't name the areas, but those areas are known for poverty. Anyway, every other driveway there was a brand new car on and I'm talking about Mercedes, bmw, audi, range rover. Houses and driveways looked terrible.

How on earth can people afford those cars ? Even HP agreements, those cars would be at least 400-500 per month if not more !

My car is getting old. 10 yrs old and I'd like better car but simply can't afford to spend that much money a month for something I won't own. Am I going somewhere wrong and missing the trick?

This thread and all of the 200k earners who can't afford cars is cracking me up...only on MN

I wish it was mythical place 🤣 I was utterly gobsmacked 🙈 but lots of responses make sense. I haven't even knew the difference between HP, lease and PCP!

I wish I could afford one, but as explained I need something with bigger boot to fit beast of a dog in and 2 DC. 100k doesn't go a long way in big city even when living on the outskirts as the tax you pay is huge, then I'm paying back my student loan which on this salary is huge and they don't take into account whether you are a single parent or not. The dog ex left costs money but can't get rid as DC love and adore and the dog has been massive support post split with ex. Can't rely on proper CMS from ex either. Rental market is crazy, bills are crazy, food prices are crazy. I guess without the dog and student loan new car on one of those schemes would have been affordable but it really shows that even when you are seen as a high earner, sometimes you don't actually have much money left over 😬

If you live in a city could you use public transport etc

I do on the outskirts but with dog and DC car is needed. They attend cubs /scouts that often have meetings out of town in woods / fields etc. I WFH mainly but do have to visit clients and public transport doesn't always work with lots of folders etc. Need a car, no 2 questions about it. I'd gladly get rid of it if I could - insurance, fuel, repairs cost a fair bit but needs must

pcp, 4 years, 8000 miles, though I normally trade every 3 years ish

I'm struggling a bit with how you can't afford a new car. DH and I earn £170k jointly. I put quite a lot into my pension so that's nets us £7500 a month after tax too. Of that we pay £400 for a car (EV through a work salary sacrifice). We also have a mortgage, school fees etc but don't see the car has a huge outgoing compared to our salaries. We could get a cheaper one if we wanted too. In the past we've had a couple of HP deals at under £300 (Qashqai type thing).

What you describe I see a lot where I live too. Council houses with a huge Range Rover Defender parked outside. Weirdly in my nice suburban street it's the opposite in the driveways! I think cars are seen as a badge of success in some areas more than others and that reflects how they prioritise their money.

Yes but how much of it is declared for mortgage purposes?

I don’t know about you but I don’t know any tradesmen living in poverty whatsoever - the vast majority have gorgeous houses in MC areas. Not everyone is a tax dodger.

You are correct, not everyone is a tax dodger, but lots of people are. I didn't say they lived in poverty

@Strictlymad so its not just the cheap monthly cost then is it? Money up front and money at the end. Plus a low mileage limit.

I've never seen the point of borrowing to buy or leasing a depreciating asset, such as a car.

One of our neighbours pays something like £600 or so a month for a Tesla. He can afford it, but even with an income similar to his, I'd still prefer to invest that £600pm - and that's what we do to fund our cars; invest, drive our vehicles into the ground such that the repair bill would be silly, then dip into our investments or savings to buy a nearly new car when the time comes.

I know - I was referring to a previous poster.

But that’s exactly what the finance does if you get it right, you just pay the depreciation. It is absolute madness to buy outright a depreciating asset, and with EV’s particularly the tech changes so fast you don’t want to be saddled with something dated.

Most EV leases are virtually maintenance free apart from tyres, I have saved an absolute fortune leasing EV’s instead of driving old ICE cars. I used to do £180pm in fuel, plus tax, plus maintenance costs on my last old car. My EV was £250pm lease with £25pm charging at home. Not worrying about breaking down or having to MOT.

Besides, if you have a business leasing is a tax write off, no financial advisor would ever recommend putting cash in to a car. Houses and pensions yes, not vehicles unless they are classics.

Of course you can afford one, you just choose to spend your money on other things. It surprises me when people who presumably have the intelligence to earn a lot say things like this.

Nope I don’t pay up front, I make sure the car I’m handing in is in positive equity- that’s my deposit, and I switch out before the end payment, again using the equity as my next deposit

I did lay down a deposit first time round but I’ve been doing it 12 years now, 5 cars in my original deposit carries through

@Strictlymad so how do you make sure its positive equity? And what happens if you can't make a payment due to circumstance change and you are locked into a contract, what are the exit penalties?

The depreciation isn’t linear, there are more advantageous and less advantageous points to trade it in (usually the best point is about 2.5 years in as a car under three years old is ‘attractive’ to resell as approved used but you’ve paid a lot of months by this point) also wait for an offer at the dealer- bank holiday deposit contributions etc. exit fees- you would have to hand the car in and be responsible for any negative equity at that point in the cycle- it’s generally in negative when you’ve not had it long, but as you move through the months moves to positive