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.

Yes because I want to, it’s 0% finance!

Because people like driving nice cars. Some people like designer clothes. I’m happy with high street. I like holidays abroad. Some people are happy with a caravan in Clacton. People are different. Is it that hard to understand?

I bought my last car which was 3 years old for 12k, paid cash. That was 9 years ago. Equivalent car now would be around 25k. I don’t have the cash for that. They’ve shot up in value massively.

My friend had one on a lease and her mileage was capped and when the three years was up she had to pay a few thousand for extra miles plus the usual chips and scuffs that you get from wear and tear. It put me off ever leasing one, but now she’s in a never ending cycle because she can’t save for a car when she’s got to pay for the one she has every month. One thing I noticed is when you go to a garage and they find out you want to pay outright they are less helpful, they also assume that everyone is going to go down the pcp route so it must be common.

Couldn’t afford it without, I’ve previously had cheap bangers and the amount I’ve spent on them, both money and time is ridiculous and then they ended up as scrap, both ways I’ve had nothing to show for it at the end both ways but currently not having to dick about at the garage as much.

I’ve always owed my own cars (small older ones) but my work does salary sacrifice car schemes, and I’m (just) a higher rate tax payer so I’m thinking it might be worth it now and I’d love to treat myself to a nice car for a couple of years. Need to do some maths!

Also my mindset, but whereas in 2017 I bought a nice little car that was 6 years old with 28000 miles on the clock for £6k that I had saved, last month I had to replace it as it had done 160 000 miles and wasn't going to get through the MOT without a big expense. This time I bought a slightly less nice car that was 7 years old with 35 000 miles on the clock for £10.5k, after much shopping around. It was fortunate that we had inherited a bit in the meantime so could buy it with cash, but second-hand cars that are still good are really not cheap any more. It did occur to me that finance might be my only option if I wanted a car that was going to be reliable for my commute. I think to buy even second-hand cars outright nowadays, you need to have more money than most people have.

What I tend to do is buy one of the cheapest approved used examples of what I'm after with a decent chunk of cash and the rest with a bank loan (so I never owe more than the value of the car), and then keep it for a very long time. I'm not remotely bothered about having a new new car, but I do want them to just work for as long as possible and this seems a good way of achieving that. I could buy outright but I just like having the cash in savings just in case.

I budget a set amount for a car. I know how much I’m prepared to pay and like having a new car every 3 years. Over 9 years I’ve spent about half as I would have paid had I bought brand new.
I believe you get what you pay for in the world of cars

I’ve had terrible luck with cars. The second I’ve paid them off or bought them outright they have started costing.

I prefer to pay per month and get a new one every couple of years. I don’t think it’s worked out much more expensive than spending say £5k on an old one then maintenance.

I bought my first (and probably only) brand new car out of some inheritance money, for 25k, 8 years ago. It's still in fantastic condition and all I've had to pay out is an annual service and MOT. Prior to that we saved up and bought 4-6 year old cars outright and drove them till they weren't economical to repair. During those driving years we saved up towards the next car.

25k over 8 years is what, £260 a month. I own the car and it's still worth about 10k if I were to sell it now. So if I sold it tomorrow, I would have spent 15k to drive a nice car for 8 years, which is £156 a month. I don't think that's bad really for a very reliable car which is nice to drive.

Obviously the inheritance money is not a normal situation for lots of people, but plenty of people do get large bonuses in work, or a high enough income to be able to save a large amount over a few years, enough to buy a new car outright.

But I suppose it depends what you're buying. I'm not interested in a "badge" car. There are people who won't consider anything else even if it means they can only do it with a huge loan costing hundreds a month. That's complete madness to me, especially when they prove to be unreliable with huge repair costs. It's common practice in the city I live in though, amongst a certain demographic. Men in their late 30s with footballer's haircuts with their wannabe wag other halves with false nails, tan, hair, eyelashes, turkey teeth, driving aggressively in their black audis.....yuck.

I dont see it as madness... if people prefer to pay £200/month constantly for a brand new car under warranty where nothing goes wrong and trade it in for same every 3 yrs how is that madness? Depending on your circumstances sometimes thats a perfectly rational output for reliability

Well we got a 10 year old Citroen 3 years ago for £2000 and it's done 3 Mots and only ever needed 1 new tyre and a set of wipers in that time. It's Mot is due to run out this January so we started searching for another and got a Peugeot for £1300 last Friday it's 9year old just thru MOT ..sold Citroen to a local garage for £400 and it got picked up yesterday...Sometimes its luck of the draw on older cheaper cars and sometimes your lucky to have retired mechanics in the family to take with you to check them before buying as I would always go on outer looks haha...but I've never wanted to finance a car, could go and buy a new one if I wanted but Im not bothered by the mod cons etc just want to get to work and trips out

I keep my cars for around 12-15 years so am happy to pay finance for a new car and then know it's been properly maintained. Usually they have 250-300,000+ kms on them. I think the Hyundai Excel was around 350,000 - that was a great little first new car.

I bought a 13 plate astra in 2020. £20k miles and it cost me 2k. Its not had any issues and still only done 40k miles. Ill drive it til it dies

Mine is on salary sacrifice so it saves me money overall

I have a salary sacrifice car through work (I get a use it or lose it monthly amount towards it as well) and the savings is incredible. My work scheme includes:
Tyres
Mot
Servicing
Insurance plus excess
Breakdown cover
Road tax

It really is a no brainer. Only thing I need to pay for is fuel, and as I opted for an EV, it's 5p per kWh of I charge at home!

However I probably look like a fur coat and no knickers person 😁 living in a small house with a vulgar 'flashy' car.

My car was 8.5k and only £140 a month to pay back. As this was a very manageable amount for me it made more sense to leave the money in my savings for a holiday or in case my job situ goes Pete tong 🤷‍♀️ I would never have an expensive car finance payment though. Like you I know people paying nearly a grand a month for a flash car and it seems like a colossal waste of money to me.

For comparison, a friend and I both got new cars at the same time.

She spent £2k on a second hand car. It was a piece of shit. Over the course of the year, she spent hundreds keeping it on the road, and at the end of the year it died a death.

I leased a car, and over the course of the year spend about £2k. (EV, salary sacrifice)

Neither of us had an asset at the end of the year. I spent less overall, saved a fortune in petrol, and drove a brand new reliable car. She spent more and drove an unreliable piece of shit that was off the road as often as working.

She was unlucky, and there is obviously a middle ground. I have bought outright in the past. But, in a lot of cases, it makes financial sense.

How much do you pay a month? That does sound like it could be a good deal.

I kind of have a car through finance... But it's from my work and it works out ridiculously cheap compared to owning my own as they cover everything, insurance, tax, etc.

However, I once worked in collections for a bank, including their mortgages, and I would never sign up to a personal car finance. We didn't do car finance, but it literally stopped people paying their mortgages sometimes. You don't own it, but you have to pay for everything that goes wrong. If you lose your job you still have to pay. If you don't pay, not only do you not have a car, you wouldn't be able to get a traditional loan to finance one because you've just defaulted on your payments. You can get to the end and owe thousands.

I spoke to so many people who had to choose to pay £4/500 a month rather than their mortgage because they felt if they didn't pay it they couldn't find more work as easily. I also spoke to people who had serious credit card debt because they got to the end and had to pay a huge fee because they'd gone over their miles/ damaged the car and they'd not budgeted for the deposit on the next car.

If you can't afford to buy outright, a personal loan on the cheapest car that won't break down is the best bet. Then if you can't pay, they can't take your car and have to put you on £1/month payments until your finances improve.

We have 2 cars: one owned outright and one leased. Our leased car is an electric one, and we wanted the flexibility to give it back, should electric turn out to not be right for us.

Additionally, it's cheaper than if we were buying it on HP or a loan (we don't have £20k+ lying around to buy things), and the payment includes tax, maintenance and servicing. We pay nothing more than the monthly payment and then don't worry about it.

It's right for us. If/when we need to upgrade the car we do own, we will finance it because, again, we don't have thousands of pounds sat around, unfortunately.

That said, we do like to have one we actually own, so whilst we're happy to lease a secondary car, we will always be paying loan/HP finance for the other if we choose to upgrade it.

We are for the first time financing a newish car. I previously had a car we’d bought outright with a repetitive fault that cost a grand a time to fix. When the light came on last time I got rid.
since then we have struggled using DH’s car (totally impractical sporty type with 2 doors and no space for dog / giant kids in the back).
I have bought a lovely car that I love - we popped a few grand down on it - and are paying about £300 for the next 3 years. We will then drive it until it dies and continue to hire when going on business or on long trips.

I like my fancy car as well but I wouldn’t pay £70k for it so it’s on lease. I also have a little run around which costs nowt to run and is about 11 years old. Fur coat and no knickers indeed - some people need to keep their snobby beaks to themselves.

We got a car on finance in 2016 - we had a baby and our car was broken beyond repair. The deposit for the car on finance was £850 and monthly payments £175. We didnt have any savings as baby was a surprise. Not all finance cars are vanity/extremely expensive. It wasnt affordable to spend £6k on a modest car and we needed an actually reliable car and not another banger due to DH job.

I should add - we paid the balloon payment when it was due and still have the same car 10 years later - so its done us well!