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.

I don’t want to own a car. I don’t want to be responsible for the upkeep and maintenance. I’d rather lease (rent) one. I drive it, if something goes wrong, they take it away; fix it and bring it back. After 3 years, I give it back and get a new one. Suits me perfectly.
I am not struggling for money though, or moaning about the payments.

I own my current vehicle outright but will probably finance the next

Even if you buy a new car, it can still turn out to be a lemon or be turned into one by a software update.

I am hoping that leasing will give me the flexibility to either hand it back or, if it proves good, to buy it outright after 3 years and keep

Sadly don’t know enough about cars to buy them used.

Have always bought older cars outright, though trying to get a bargain now is nay on impossible! Apart from once, starting out in my career, finance deal of 0pc interest for 3 years. From then on i saved and did part ex.

Because different people like different things, I expect. And also have different requirements of a car.

I don't drive, but DP has a lease car. It's only a mid-range car and doesn't cost him anything like £1K a month, but he drives around 12,000 miles a year and does a lot of very long journeys. He would rather have a car that will be considerably more comfortable, reliable and enjoyable to drive than any car that we could afford to buy outright. Might be different if we just used a car for a school run and popping to Sainsbury's, but that's not our lifestyle.

Well quite.
i bought my car on finance ten years ago because it was the only way i could afford it. Still running it as it goes and i cannot afford another. It is a genuine position of privilege to wonder why people might need to use credit.

I don’t pay anything like £1k a month for mine though. Not even half that.

I've had the choice of an allowance or company car for years now as I have a role that takes me all over the country! This week alone I've had meetings in Newcastle, York, Windsor and Nottingham 😬 I always opt for the allowance though as I look after my cars so keep them for as long as possible and pay the loan off as quickly as possible so I get a few years between each car without any finance at all, but still get the allowance.

Because there is a tax break for leasing electric cars via salary sacrifice

I have a brand new car on finance because that’s what I want to do. It’s lovely with all the gadgets I want but certainly not a luxury brand.
I traded my 3 year old car in because I didn’t want the hassle of another major service and it’s first MOT. No large upfront payment just the trade in car as deposit plus £250, it was cheaper to do that than keep my previous one. I negotiated the price down significantly until it fell within the monthly budget I was happy to pay. I get a reliable car which doesn’t break down and affect my job and it’s got the latest safety features too.
Never had issues with the mileage when handing a car back, that’s only an issue if you vastly underestimate the miles you’ll do.

My cousin does this. Changes cars regularly and wastes so much money on the decreasing value as well as huge monthly payments whilst complaining about not being able to afford a mortgage 🤨
He's extremely interested in cars and seems to think it impresses other people. I guess its a way of trying to look rich if appearance matters more to someone than actual financial state.

I can afford to buy outright but I’d rather have that in savings. I like a new car, I lease one for 3years and then get a new one. I’ve done this for most of my adult life. First car was about 5 years old and I bought it outright. After that I did brand new and financed either a loan or pcp but the last 3 have been leased. There is a difference. The benefit of a lease is it’s cheaper than a pcp and they pay the car tax. I just service it every year. It’s not as flexible as a pcp or regular finance deal as in I can’t trade the car in etc.

I did consider buying one outright this time and keep it longer term as it was an upgrade but I know I’d end up wanting a new one in a few years time. I am not doing without anything I want in life to fund it so why not.

How much per month does it cost (if you dont mind sharing)?

I've owned 5 cars in the 40 years since I passed my driving test. They were all bought outright, from savings.

As soon as I buy a car, I start setting aside savings for the next one.

I do 12-15k miles a year and a significant chunk of that is my commute and (a lot) of work miles. Unfortunately there's no car allowance, or salary sacrifice schemes, because I'm public sector and years ago someone did a FOI request and sent a rant to a public newspaper claiming the Good Working People were 'bankrolling the council fatcats'. So the council scrapped the lot. Instead we get 45p a mile, and if there's any damage to our car in work (which happens, we get targeted sometimes) we have to claim it off our own insurance or suck up the cost. Needless to say, if I did have the option of a company leasing scheme I would jump at the chance! Not going to happen but I can dream...

Approx £350. It’s an electric car and I get tax breaks for it. The cost of charging it is less than half the amount I was paying in petrol in my previous car.

I understand that and no offence was meant, honestly

Yes, for me, the biggest benefit of owning a car is, if you lose your job at least you have a car. If you only have a lease car and lose your job and can't get a new job immediately then how are you going to pay hundreds of pounds a month on a lease car? It would be bad enough keeping up with mortgage payments. You might need a car to go for job interviews, or to a new job further away than you can do on public transport. What if you got sick and had to give up work, you're stuck without any car at all if you cant' afford the lease payment.

I would rather have an older less fancy car that is mine no matter what than shell out hundreds every month on a lease car that I'll never own, and risk being left with no transport at all if I lost my job.

It’s almost always the best way to finance a car- you get to use the asset but pay minimum for it. The goal is never to own it.

Your maths is off. This only works if you want to constantly own a newer car eg one maximum 3-4 years old. There have been lots of studies showing that cost per annum is lowest over time if you buy outright a nearly new car, and keep it for a long time (eg run into the ground).

Also anyone here quoting low monthly costs is probably forgetting to mention what they have put in as a deposit.

Yes, because husband gets a large car allowance as part of his employment package and he doesn’t really spend big money on himself outside of enjoying having a nice car that he also doesn’t need to worry about mot-ing or having to sell off his own back when he’s finished with it.

He’ll have a car for 2 or 3 years and then use it as collateral for the next trade-up. I didn’t even know that was a ‘thing’ you could do.

No deposit on mine as it’s leased through my work scheme.

I'm another 2nd hand car buyer, but what I'm currently doing is putting £120 a month into a savings account, and then I'll use that to buy my next car. It's currently got about £4,000 in it, but my current car (which is 10 years old) has only 52,000 miles on the clock. Hopefully it'll last long enough for me to build up the savings pot to pay £7-£8,000 for my next car.

I got a car on finance 2 weeks ago. My old car recently broke down and I couldn't afford to repair it/it was too old to invest in (14 years old). I didn't have £7k to buy a new car outright but I can afford £150 pm over the next 5 years until the car is officially mine. Same reason that people get a mortgage for a house - most people don't have to money to hand at the outset, particularly when they need to get a new car urgently.

It’s strange how you believe you understand people’s finances better than them.

I have one because I can’t see the point of buying a car outright. For me it makes more sense to lease and replace every 3 years. I can afford pretty much any car I would like but haven’t even considered it