I have never bought a car on finance

[AdventureBe]

DH & I have always taken the view that if you can't pay for it you can't afford it and our cars have been modest family cars changed when we have enough cash saved to do so.

As a result of decent careers over 25 years, never taking on debts except a mortgage and overpaying that so it was cleared quickly, we now have some surplus income and savings.

We could buy a luxury car outright but I'm having trouble justifying that (to myself). However, there are loads of finance and lease deals out there that mean for a modest deposit and a monthly payment of less than we "should" be paying on a mortgage, we could have a really very nice car. The ones where you're effectively leasing it for 3 years, then hand it back for a new one (after paying another deposit) appeal.

What are the pros and cons?

We bought a new car last year, saved up and could have bought it outright. The salesman offered us an extra £1000 off if we took the finance! We were completely upfront that we would pay it off early and he said that was fine, as long as we kept it for at least 3m. The interest on that was around £100 so it was a no brainer and we paid it off after the first 3m. They earn so much commission that it may be worth taking the finance for a short period of time to get some money off.

It's already lost that £1000 in value as soon as it's driven off the forecourt, electionfatigue!

I'm wondering what the pros and cons are, too. We've had our current car (low mileage ex-fleet) a couple of years and there are marks inside from some plasterboard that DH carried in the car. How much wear and tear is acceptable before you incur a great big penalty when you hand the car back?

I like straightforward finance. Pay deposit, pay remainder over set period of time, pay no interest. Commonly called 0% Finance.
There can be a mileage limit but it can be high, I have a 25,000 mile per year limit. This mileage limit thing seems something new, as 10+ years ago it was not even asked for this type of finance. It did not seem to change the repayments in anyway, so I expect it may just be to give the finance company an idea of vehicle value if you were to default on the loan.

I dislike products I do not understand. These lease agreements with strict small mileage limits I feel are a waste, why buy a car and not drive it? Maybe it is different for those who live in a city but for me in more rural area, I drive a lot.

If you have the money to buy outright, then 0% finance seems a reasonable option to consider, so you pay say half the cost and do the other half over 3 years. That way you still have the cash sitting in a bank account hopefully earning some interest.

I don't know if I'd bother, how reliable is your current car? If not very, i would change it for something more reliable, but if you're happy without a 'luxury car, I don't know if you would really get the enjoyment from spending money on one. The upkeep is also often very expensive - fil's bmw tyres are £400 each!!

It's already lost that £1000 in value as soon as it's driven off the forecourt, electionfatigue!

With another £3000 off because it was right at the end of the year, a 7 year warranty and the plan that we will keep it for at least 10 years I think it is good value. Clearly if you want to change your car every few years then buying new is throwing money away.

As there is virtually no interest on bank accounts these days you might as well just pay the cash upfront so it's not hanging over you as a debt or to be declared on mortgage applications or if you fall on hard times is an issue.

Also never buy a brand new car - complete waste of money.

Do you actually want a luxury car? What's your motivation?
Just trying to understand whether it's a good car or a new car that is more important. I would be very loathe to buy/lease a new car. It loses so much value once it leaves the showroom. Most good cars these days will still feel great and be reliable at a couple of years old. Approved schemes give some peace of mind.
Having said that I know someone who did lease a luxury car after years of driving things that were more affordable. I think it might be their bucket list - own a brand new sports car before I die.

Buying a new car isn't a waste of money.

Models, designs and tech change regularly. If somebody wants the latest models then why not? After all, people normally buy new clothes not second hand. That could be seen as a waste of money too

We spent over 30k cash on a new car recently. We plan to keep at at least 5 years maybe 10. If we were going to change it more regularly then leasing might be a better idea

My partner bought a car recently on finance and it's impacted really badly on his credit rating, something we hadn't considered. He would have paid for it differently if he'd known.