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.

Because we can afford it and it’s a nice car which is enjoyable to drive.

I’m always baffled by people who seem to not expect that cars, homes etc cost them any money to have. Not everything in life is an asset, it’s normal that some of your outgoings pay for the things you need in life - like a car - and that you are not somehow making money off the situation. This is how the housing market ended up in such a mess. Of course it would be mad to haemorrhage money on a car you can’t afford but for many people can payments are in their budget and they feel it’s quite reasonable to pay money in order to have and use nice things.

Quite. Buying new and after a year you are lucky to get 45% of what you paid.

You could buy some cheapo car and keep,your fingers crossed that repairs are low. The car industry is fraught with fraud and no one really knows how much repairs cost or whether in fact they are necessary.

I used to have a company car for years then PCP. No MOT’s, any faults almost always under warranty and bar one lemon of a car I have never had any issues or breakdowns.

The difficulty now is that even 2nd hand cars aren't cheap. I got my first car for £5000 (luckily inheritance and job) but for anything similar now I'd be looking at double that.

For a cheap second hand car that I could afford outright it would have like 100,000+ miles on it and be many years old. Given I need my car for quite hefty work journeys its just not a reliable way for me.

You only pay a balloon payment if you want to keep the car. I bought myself a one year old Golf for my 40th birthday and was on a good salary but PCP worked as it was affordable while I knew we might be changing our main car in a few years so probably wouldn't keep it.

I don’t have one but my sister has one on lease because she’s useless at saving money and so would never get a car. The threat of the bill means she pays it, motivating herself seems to be impossible.

How far are you driving it?

When I was in a city I did the same with old cars. Now I live near the sea (so rust becomes a real issue) and have a commute of 65 miles.

Not yet had a car in finance but might consider it for the next one as reliability matters.

Because I don’t care about “owning” a car and would rather have a new car under warranty, no likelihood of repairs with the ability of changing it before problems arise.

Its just another monthly bill to me, I want a nice modern car to drive.

You know why op 😂

For many it's because they think a big/posh/brand new car is impressive. It's the same as those that wear clothes with huge logos and branding all over or any other crass displays of so called wealth.

To me (totally unintetested in cars) it's such a waste and it screams the exact opposite of wealth now. I'm so used to seeing the huge 2024 and 2025 electric monster trucks lined up around our local council estates that when I see them on the road now I think 'skint with something to prove' and not monied.

You could offer me a spaceship and I still wouldn't pay hundreds a month for it 😂

I am just paying for the depreciation, which I can easily afford. And the convenience. I prefer my money to be invested, which it is.

I don’t get the nicest car I could afford though, just middle of the range.

We used to say "fur coat, but no knickers"

We own both our cars currently and are approaching retirement age where we will have stable incomes. We will probably get lease cars when we come to replace them so that we don’t have to worry about servicing and repairs.

Because cars are very expensive of course. Some twat reserved into me in a car park and wrote my old car off, and the amount the insurance paid out would not have bought anything worth driving. So I took the insurance, topped with what I could afford from my savings, and took the rest on finance. I didn't want to clean myself out. I pay £89 on finance per month.

Ours are because it suits us to and we get car allowances as part of our employment packages.

I bought my first car for £800, the insurance was double that. That car ended up costing me about £2,000 in repairs and it was knackered so I got £300 scrap value. The cost of buying the car, insuring it and repairing it wiped out my savings so I had no choice but to finance a car.

We have mostly done finance since but that was with an aim of building up to nearly new car that didn’t need so much maintenance. We personally won’t buy a new car and we run ours until they start costing us money (roughly about 8-10 years old). We purposefully took a PCP recently because we anticipate our needs changing at the end of the lease and so we aren’t tied into selling that car.

For other people, they like having new things (like some people only live in new builds). For some people it’s about living beyond their means. Some people get theirs through work. Some people aren’t confident with older cars. Some people have decided la car is their priority. You were lucky to have your parents buy your first car, were to save and got really lucky reselling your cars. The rest, people just have different priorities and experiences to you.

A one year old Golf is a hell of a lot more reliable than many older cars. It wasn't big and flash, it was just nice. Our other car was a ten year old Renault estate. I hadn't saved up for a car as I had a career break when DDs were little and I'd just gone back to work and got a well-paid job. Plus at 40 I'd never bought my own car and I fancied treating myself.

£3600 a year isn't a huge amount, so fair enough, but there's no way I pay that much to fuel and maintain my 17 year old Lexus.

We do around 4000 miles a year. Based upon current petrol prices, that's around £800 a year on fuel.

10,000 miles would be £2,000 a year, but electricity would only cost £200 a year if you're charging on the cheapest tariff, so £1800 cheaper. If you're public charging, you'd be spending £3,000 a year.

That leaves £1800 for maintenance and I doubt I spend more than £500 on servicing, tyres, etc.

There's not a huge amount in it, and you get to drive a brand new car, but I think I'm still saving compared to your monthly costs.

You say no judgement but then when people give you their responses, you agree with them that they are the “sensible ones” and therefore you want to hear from the rest of the hoi polloi who in your view must be financially irresponsible. Does seem pretty judgemental to me 🤷‍♀️

Absolutely, that’s good. As I said you get to use the asset. But it belongs to someone else. It’s never your responsibility. I don’t understand why that is hard to grasp

I do at least 15,000 miles.
Live rurally, drive a lot including commuting and visiting family.

Full service on my EV with MOT was £120. Only other money spent is tyres and about £60-80pm to charge at home and about £100 a year public charging.

When I had a petrol or diesel I did £200pm easily just in fuel, then road tax and maintenance. An EV is much better. My current deal is £172pm which was an absolute bargain and ends soon. It will have about £600 in additional mileage to add. But still cheap. Also I am not killing people with car fumes.

I lease because I’m a community nurse and rely on a car that isn’t going to break down. I owned a mini outright a few years ago and there was always something expensive wrong with it that it cost me as much as the lease. I pay £210 for a small Peugeot all in.

But you also constantly have a new car that's within warranty and repairs are covered.

I'm about to get a new car on finance, I was paying 150 quid a month for a loan on mine and it's 6 years old and I was starting to face expensive repairs - 1000 pounds a couple of months ago was the latest. I can get a new one for little more than that monthly and it will be fully covered for all repairs for the entire of the finance period, after which I will probably swap it for another. It helps me know my budget and not face unexpected costs for basically the same price, and have a new car. To me that's a no brainer.

If you can afford costly unexpected repairs then great, but not everyone can.

(Edited to make clear similar monthly payment).

My BIL tried to explain this to me, but I couldn't quite grasp it and I don't care enough about cars so took out a bank loan for a 2nd hand one.

I think it was along the lines of - if I bought a car for £6k, it wouldn't be a great car, I might have to spend £2k on repairs on it over 4 years and at the end only get scrap value. So it's cost me £8k in 4 years = £2k a year.

I couldn't find a decent sized newer finance car for that and the mileage charges and charges for scraping the wheel rims etc made me worried.

I think if you're talking about spending £40k on a car then it might work out the other way. But that wasn't going to be a priority for me.

well, I have a car on finance, and this is the first time I've leased.

It has allowed me to get a newer, more reliable car than I could afford if I bought outright, or paid it off to own. I have kids and need a reliable car to get me places. Last car did well, but then it starts rattling and needing expensive repairs - it's stressful.
This way I have a car that I can afford (paying monthly helps me budget) and I can be pretty certain won't conk out on me. I set the budget that worked for me and the car showroom found me what I wanted in budget. A nice little Corsa only about a year and a bit old when I got it.

My 18year old just bought his first car which was £3K with savings (I'd saved for him, and handed over when he was 18) and it's a much older corsa. He can't do monthly finance.

basically, different people have different requirements and needs for their cars, and different amounts of disposable cash.

We did for the first time ever, almost 2 years ago. It isn’t ideal, but neither of us could work without it and we didn’t (and still don’t) have the money to buy outright. It was a old-ish car in very good condition with extremely low mileage. It’s the best car we’ve ever had! We’re paying over 4 years, so just over 2 more years to go.

It certainly sounds like a dig. Faux curiosity/naivety is really annoying on MN 🙄