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.

Surely that depends what your leasing bill is? Ours works out at £350 per month when you take into account the tax breaks (electric car). No deposit/upfront payment. Because it’s electric, it costs less than half my old petrol car to fuel. I pay nothing for upkeep or maintenance. And I get to drive a new, comfortable, safe car. It’s a no brainer to me.

Something like 1 in 6 people in the uk have no savings
A large chunk - over 1/3 iirc - have less than 1k

So a large proportion of people simply could not buy even a banger outright.

Many who could buy a cheap second hand wouldn't for various reasons - required for work, long commutes, space, adapdations, preference for newer/particular type etc.

There is also the level of risk; on average maybe it works out cheaper - but there is a non-trivial risk of a huge repair bill with an older second hand car.

If you are in a position of borrowing to acquire then often it comes down to a question of monthly payments

• leases can be very reasonable if you are flexible about which car, as there are often cars which manufacturers want to get on the road. My last lease was a brand new EV, had it for 2 years, 1 month upfront, £250pcm. Was worth about 33k new - they depreciated like a rock and a 2 year old was worth £13k when I handed it back. Not my problem. And it cost me literally zero to run.

-pcp comes with a balloon payment which lowers the regular payments - can work very well if you like to change cars so know you will never keep it.

• HP has the right to voluntary terminate after 1/2 is paid.

The handback rights with HP and PCP offer you protection from value loss if the market shifts

Intetest rates are almost often lower on new vs used, often less than half. May be lower than you would earn on savings. This can mean if you are financing and focused on payments its often not much cheaper to buy second hand.

If you buy on finance they have responsibility if the car turns out to be a pup (ditto credit cards, even if you can buy outright pay the deposit on a credit card)

Lots of people have EV salary sacrifice schemes through work which are tax efficient.

There are a huge range of factors which should be weighed up when choosing how to fund a new car.

But then as a previous poster put it, this post is mostly judgement disguised as curiosity.

I wouldn't want to have to worry about a dint or scratch, a car is meant to be used. We always buy our cars outright, I wouldn't lease a car as I would be worried about scratching it

You’ve clearly never had a 10 year old Ford Focus ecoboost 🙈

I am dependent on my car for work as I cover the whole of the UK. I have a lease car as it’s one payment but includes everything apart from fuel and I get a larger, more comfortable car more reliable car. I have bought older cars before outright but by the time I paid to get them through MOTs, paid for tyres, break downs etc… I could not afford it, nor take the chance with work. It suits me so much better.

A third of your annual lease would be 1,400 - I've never had to spend that on garage repairs for my 15 year old car. Since last year's MOT, it's had a couple of new tyres only, so that's £250
I would love a shiny new car, don't get me wrong, but the math doesn't work.

my shitty cheap ass car dies on me only four months after getting it. My saving had all gone waiting to be onboarded onto the job I’d applied for and got six months earlier and I had no choice to get a loan to very a car as I had to have a car for my job - it’s in my contract.

Wait until you end up having to spend over 3000 in one year to keep it going -

Self employed, car is on a business lease so we are able to offset a large amount off our tax bill and recover 50% of the VAT too. Ultimate cost to ourselves from taxed income is circa £65/month. Would much rather have a nice new car than hand the cash to Rachel!

The decision isn’t just about “maths” though. I don’t live my life as cheaply as I can, I drive a nice car for the same reasons I book 5 hotels over 3 hotels, 1) because I can afford it and 2) because 5 hotels are better and more enjoyable than 3 hotels. So I’m happy to pay more for a nicer, newer car and the piece of mind that it doesn’t have the level of running costs an older car has (we have 3 cars, 1 of which is 10+ years old and a fucker but we’ve spent so much on it at this point we’re saving it for DC).

And just to preempt the narrow minded view that car leasing or financing means you can’t afford it, as others have said I could pay in cash but I have several
(boring to go into) reasons as to why I prefer to finance. It is a fraction of my income, it is no. big. deal.

Not sure why that randomly bolded some words!

Oh because of asterisks for stars!

I was not replying to someone who wants the car and can afford it, crack on.

I was replying to the comments that leasing a car is the same cost as paying for repairs on an older car. It might be sometimes, but it hasn't been for me.

I buy older cars and run them til they die 😂
Current one is 23 years old and still going strong!

Fair enough, apologies. I agree it’s not always literally cheaper and I question that a tad also, but I think for many it’s that the peace of mind of not having car repairs is worth the monthly commitment, but that extra cost isn’t really ‘felt’ because you’re paying a set amount each month and know where you are, whereas when dealing with an older car you’re usually either having to save for the day it breaks down, or getting surprise costs. Great if your car isn’t like that, but I’ve found every car I have decided to keep for as long as I can does eventually get to the point where the costs start increasing, it’s inevitable with wear and tear even if things don’t break.

We needed a car and wanted a new reliable one. We didn’t have enough so had to get £10k of it on finance over 2 years. Better than a beat up old banger without any risk.

But you had to pay for the car in the first place. And insure it, and MOT it…
The maths works for me.

I worked up from an old banger costing a couple of hundred pounds (paid outright!!) when I first start working (after having saved 6 months to buy it). But I continued saving every month, even after I bought it, an a couple of years' later I PX'd it for one costing around £900. Another few years later, PX'd that for one costing around £2,000 (pay rises helped save), then just rinse and repeat every few years, longer intervals as younger cars were lasting longer so I didn't need to change as often and could go 4-5 years, getting newer and newer each time. Eventually, could afford a brand new one outright, just by saving an amount equivalent to what would have been the lease/loan/HP repayment had I bought each on finance. By saving the equivalent amount, not only do you not pay the inherent interest on loans/leases, but you grow a sizable lump sum to use along with your PX, and can work your way up to brand new over several cars, in my case, I think it was around 10-12 years from scratch of having nothing.

Our new cars typically last 10-20 years, so plenty of time to save up for the next new one!

OH did the same and saved up for a brand new one a bit quicker than me as he had a better paying job, and we've basically "leap frogged" eachother with new cars over the nearly 40 years we've been together.

We will have saved tens of thousands over the years in not paying interest and keeping cars for relatively long periods of time.

We couldn’t afford to take on any finance. £150-200 a month would wipe out any money for treats.

We just buy an old car every 8 years or so. I was dead chuffed with the most recent, it’s 10 years old so the “newest” car we’ve had, I was over the moon 🤣

We do have savings though, so 3k on a car every 8 years or so is manageable.

I have a car on finance because I have a mortgage and two children. My children are the size of grown men - both 6 ft tall and need leg room. Then all the equipment we cart around on weekends for football and rugby, golf, fishing etc … a car isn’t going to cut it - we have an SUV (I don’t care what people think of them it’s necessary for my life right now).

When we go on holiday - we drive, I’m not driving a banger for 10 hours and risking breaking down in foreign countries. We also tow a box trailer for luggage, ski’s fishing gear etc.

I spend £488 a month on the car and £850 for the mortgage. Then bills including council tax, energy, phones and subscriptions I spend another £800. Perfectly sustainable on my income with a husband who also works and makes similar money.

I bought current car on finance but repaid it in full within a month. Taking the finance gave me an additional £5k for my trade-in, 1yr free insurance and roadside assistance, 3yrs alloy insurance (free and unlimited repairs), rubber mats/bootliner. I’d not have gotten any of that if I’d used my lump sum to buy outright initially.

very lucky then. I've driven plenty of old bangers that spent more time in garage than out. Last car I bought outright (a higher end brand as well) served me fine for 10 years and then suddenly needed 2K spent on it.
After that I lease. The convenience is worth a lot as well.

Our car would have cost over £20k second hand - it isn’t a flashy model but a very reliable make and model. We will pay approx £9000 to use it for 4 years and then can hand it back, refinance or upgrade to a newer or different model. Service is covered.
We could pay it in full but don’t see the point. We won’t have the hassle of resale or upkeep.

Absolutely.
We needed REALLY reliable car so "any old banger" wouldn't do. And newer cars seem to have xxx issues.
Imho last durable cars were made pre 1990.
So we had pcp and after covod even made money on it. There is a lot between 6k car and 1k a month car.

I had a look at some cars for under 10k around and honestly can't see how they wouldn't be permanent issue in our life.

When waa the last time you bought a car @Cupboarddoorknob the one for under 4k?