If you have a car on finance, why?

[Cupboarddoorknob]

Genuinely curious and not a dig.
I’ve only ever owned three cars, my first car my parents bought for me was an old banger, then the other two I’ve bought myself one for £6k which I saved for and then ran it until I realised repairs were silly and sold it on for £3k to cut my losses, I used that £3k and a bit of savings to buy my now car which cost between £3 and £4k and seems to be doing well so far. DH has always bought his cars cash as well.
We have friends who have up to £1k a month going out for car payments, all the while they are stressing about their outgoings, not able to save, not living in poverty obviously but it strikes me as total madness to have this monthly expense on a depreciating asset, even if it does bring a level of enjoyment.

Read the thread and see peoples posts then you will understand.

When you buy a car outright it’s still coming out of your finances - it’s not free money, unless someone has handed you £30k.
It’s either £30k outright or much smaller amounts monthly for a few years and then you can either keep, return or exchange the car.

i had 3 cars in 2 years breakdown, and honestly couldn’t afford to buy another outright so ended up leasing. It’s been amazing, got a brand new car, includes servicing, 2 sets of tire changes a year, breakdown cover, tax etc for £300ish a month. I’ve got 2 kids under 2 and knowing the reliability of having this set up has been fantastic after the last car disaster! It’s a lot but I budget hard for this luxury and now don’t even think anything of it

To be fair I think most people are living in a different world to me. I bought my car 5 years ago for £4k.... which works out at less than £100 per month over that period of time. I've since saved enough to buy a new one when mine dies. Its done 200k and has been faultless, apart from usually maintainance costs. I don't have a particularly rubbish job, but come from a family who always paid outright for not particularly exciting second hand cars.

I always get cars on finance. I like paying a set amount every month that I can afford, that means I get a reliable new car that is the size I need and I never have to MOT it. Always get a service plan as part of the deal. I've been doing this 15yr and never had to pay a deposit beyond what I paid with the original car I traded in to get into the finance deal. (A 2003 Nissan Micra that had been my first car, inherited from my nan). I think I've had to replace tyres once.

I am totally unbothered about actually owning the car. And this way I get to change cars as my work/family circumstances change. At the moment I have something big for the pram in the boot, bulky car seats etc. When the littlest is out of the pram stage I might rethink.
Also cars are fun, I like driving and I like technology. It's like getting the latest phone or games console on finance just physically bigger.

was there a significant downpayment?

Nope, none! I have it for 2 years, then can change it for a new one or hand it back

May be EV specific but the last Tesla we owned for 4 years we lost an eye watering amount on depreciation. More than what lease payments would have been. I now lease, at least I know what the 4 year cost will be.

But not meant to be an asset. It’s depreciating, I’d rather use the money on something appreciating. We have electric cars and lease. We put a lot of mileage on them. My husband expenses his mileage when he sees clients. The new price of both cars new would be high (£140k). We could afford to buy them outright, but keeping it in a sinking asset doesn’t make sense for us.

A salary sacrifice car scheme can reduce the tax you pay if you earn just over £100k. It works because the payments come out before tax which lowers your taxable income and can help you keep more of your personal allowance.

The numbers do need checking, but for someone earning just above the £100k mark, an electric car through salary sacrifice can be a more efficient use of income than taking the same salary in cash.

was there a significant downpayment?

There is no downpayment for leasing. You seem to be confused with just getting finance (e.g. via bank loan) vs leasing. If it’s just finance, then you would need the equivalent of a deposit and the loan comes in on top, none of that is relevant to leasing. Weirdly, you seem to hold strong opinions on things you don’t understand at all.

I think you are right and that some can’t understand that people have different tastes and priorities. I’m probably a long way from being financially illiterate too.
edited - quote history has gone awry, this is in response to the use who said people who use finance are not financially illiterate.

I think I know what you mean. My car recently needed replacing, I needed something reliable. It was only 9 years old but after having multiple things fixed it still wouldn’t start in the winter and the heating was bust again! I got a three year old family car. We didn’t have the cash to buy it, but we were more thoughtful of how to purchase it. We sold our car to ‘we buy any car’ as they offered us more than the garage. We took out a loan from the bank as the interest was considerably lower than finance. We took it over 3 years as that was the shortest period we could afford, the shorter the period the less interest. We put a little of our savings towards it. We pay about £300 a month but obviously no balloon payment. We intend to keep the car as long as we can after the loan ends.
I do also think you have been lucky with cars. I usually have to sell mine once they are around 10 years old as they are littered with issues. I start paying for things to be fixed but then there is always something else.
A lot of my colleagues pay £400+ for a car but never own it, Just an endless cycle of payments and cars. Wouldn’t be for me, I enjoy the 5 ish years we can get payment free too much!

My dp was going to pay cash for his

he went on PCP because if he wanted to trade it in, or keep it, the minimum buy/back would have been greater than the car was worth

in the end he kept it, but the final payment was very little. If he’d have traded it in, due to Covid second hand car prices went ballistic and the dealer was prepared to give him an extra £10k to trade it

its a safety net for depreciation

the finance deals where you’re only leasing the car and max out the payments so you’re driving around in something crazy expensive to buy are where people come unstuck.

I genuinely thought there was a downpayment, I looked at a couple of leasing websites (e.g select car leasing) that suggest that there is.
i genuinely am not meaning to be rude. I was curious, and many posters on this thread have given an insight into their (perfectly logical) reasons for leading or financing their vehicles.

We lease our car and have done for the past few years. We only have one car, really enjoy having a new car every couple of years and we can afford it!

We have had our years of scrimping and driving shit heaps, our mortgage is paid off, this is hassle free for us. Yes, it comes at a cost but it’s entirely affordable for us thankfully.

Yes this makes sense and yes with my latest car I have definitely been lucky I suppose. I do think annual servicing is warranted but can be pricey depending on the make/model. My last car however was a nightmare I did cost me!

Yes, luck is the thing.

I'd guess that if everyone knew a 2nd hand 4k loads on the clock could be relied on to last them a set period of time, some of the people currently getting cars on finance or leasing would choose that option instead. But it's more of a risk. You might end up quids in doing it your way, but you could also really not. Sometimes people want or need to pay more in order to hedge, if you like. The same as how they might choose a fixed rate mortgage for the certainty, even if they know there's a greater than 50% chance it'll cost them more than a tracker.

Why does anyone buy anything not everything is an investment ? but generally a half decent car is over 10k snd most people don’t have that to hand

This is a bit of a worry. Mechanics can be so unpredictable too. Mine failed its MOT this year. Garage who did the MOT quoted me £1400. I rang a different garage who quoted me around £600. Then a friend of mine said he knew a mechanic who'd do it cheaper
Ended up paying £180, MOT included!

Surely it’s obvious? Older cars need maintenance, moreso as they age. Their ncaps have generally expired and don’t have modern safety equipment or ratings, very important for most people if you have kids especially. There are difficulties getting parts for them, finding specialist garages, all the time you then have to be without a car, and all the while ensuring you’re not getting ripped off.
Add on top the way people drive nowadays, up your backside constantly breaking, poor clutch control, sitting with foot on break at lights, can’t park for sh*t so dents all and scrapes all over the car. Cheaper mass produced parts and more wear and tear due to the way people treat their vehicles/modern driving conditions. People generally will fleece you, happened with almost every second hand car I’ve owned that something wasn’t declared at time of sale (private and large name dealers) that I’ve then had to sort out myself. One car even broke down on motorway with head gasket gone after a week (5 year old car). I know a bit about cars and mechanic friend had checked it over.
This isn’t anecdotal it’s the reality of second hand cars.
Decent new cars cost upwards of 15-20k + at lower end, most people don’t have that money. PCP makes a lot of sense, “rent” a decent, safe car for a few years get the use of it and don’t have to worry about unexpected costs as it’s under warranty, how the previous owner treated it or what they’ve hidden from you. HP I don’t understand so much now unless you’re keeping it forever and know a lot about checking it all over.
The question should really be why on earth would you buy an old car outright?!

It would be nice to not worry about being ripped off by garages.
DD is doing driving practice in my (old) car so I can't have a leased one anyway

If you look on those sites, you typically can choose whether you put one month as your first payment or up to 12. Whatever the amount down just reduces monthly payment moving forward. There’s also no balloon payment at the end, as you mentioned earlier. It’s essentially renting the car.

I've never owned a vehicle less than 6 years old, bought low mileage ex-demos or older camper vans still with fairly low mileage. Would rather spend on other things!

So instead of an expensive land / Range Rover I chose a Jaecoo which is a Chinese car shipped to U.K. beginning of 2025 and the monthly lease I pay is £365 a month includes maintenance and it’s brand new with all the tech. This is a 3 year deal and in my opinion great value. Chery own 25% of Land Rover and of course the Chinese have copied the design. So you get a similar styled car, plus all the tech for a 3 rd of the price.
Deposit was around £2500.

I earn 6 figures and could easily afford a Land Rover or other prestige car but for me it’s a waste of money and I’m not bothered about labels. I used to enjoy turning up at my daughter’s private in a battered 13 year old golf.

I had this car which I bought outright 6 months old off the show room floor ex demo so I got a great deal and kept it 14 years.

However towards the end you do end up paying out loads for repairs and I couldn’t be bothered anymore so switched to lease or pcp deals. Initial deposits are so high and decent cars now cost so much new or nearly new.

I’d rather invest the money and grow wealth. Focus income towards getting next generation sorted and with cars! I think those that do have credit and high outgoings on a prestige car have either more more money than sense and can afford it and want the label or, they can’t afford it, live beyond their means and want the label regardless and but on top they don’t really understand how money works. Perhaps they have a high salary that they think will last forever and don’t realise redundancy can always be around the corner. Either way if you live beyond your means like that you dob by really have a right to complain when it all goes wrong and you can’t afford life