How much do you purchase your family car

[gavinc0328]

Just wonder how much you purchased for your family car, in terms of your annual salary.

I bought my first one on 10% of my (and my family as well) annual income, and already regarded it as a huge expense. I often see people driving luxury cars on the road and am so curious how much they can afford them.

I've just stopped leasing, I've driven a 30k + car for the past 9yrs.

I paid between £250 and £300 a month for it, doable for lots of people (well before the cost of living crisis) a 30k up front payment isn't doable for many!

We expect to pay just under £10k for a car that’s under 3 years old from a main dealer. We then expect to drive it for 10 years.

Of course there is maintenance, but in terms of the price of the car, it’s approx £1k per year, or about £85 per month. We have had cars last more like 13 years, so the price is more like £65 per month.

In terms of costs, thinking about insurance, a yearly service and MOT plus some replacements, I factor in about £600 per year, so £50 per month.

I have zero need to fee I have a brand new car and none if this panic about facing a bill from the garage if something goes wrong. It’s the latter that leads people to leasing as much as not having her upfront cash. So many people are living hand-to-mouth and couldn’t face a £800 car repair bill, even though they will have paid that over the last 3 months in terms of their monthly payments.

And one of the reasons why people never accumulate any savings which can pay for a replacement car outright or for the occasional repair bill that comes….is that monthly payment for the car (and possibly other stuff too) keeps them poor at the end of each month and tied to those monthly agreements.

What a boon for the car manufacturers and salesmen. I think they say 90% of new cars are sold on PCP or lease now. It’s the way of the world. Great for those who like to buy a nearly new car in good condition though…there’s a ready supply and although they are expensive at the moment, in normal times there can be great deals.

I guess the key to avoiding the finance trap (and it is a trap it’s hard to break free of) is to only buy a car you can afford once you’ve saved enough to buy it. Then expect to drive it for a good few years and make sure you’ve got some cash out aside for the occasional cost. The difficulty lies in when people buy their first car and buy something that really is beyond what they can afford….they buy brand new, even when on a very low salary. And then each time to the lease or PCP deal ends, they never have the lump sum to break free of it. It’s a trap. Lots of people are happy with it, because they believe that they need and deserve a new car and have bought into the myth that a car older than 3 years is a money pit and somehow they are saving money by having new. And instead of focusing on longer term value for money over time, they only think about monthly affordability.

I wonder over a motoring life of perhaps 60 years, how much more a motorist will pay by leasing/using PCP vs buying cars outright?

WombatChocolate
You are so right. Once you are in that circle it’s hard to break. I’ve drummed it into my kids yo save up and if you need to borrow use the cheapest way possible.
My partner bought his on 0% credit card then changed to another 0% when the deal finished.
I’m in my 50s and the car I’ve bought is the first I’ve had from new.

We bought my car outright but traded in my old car as part exchange. The cash we paid towards it was 14% of annual net income. We do save a lot.

DH has a few company vans which are on business lease.

@WombatChocolate Generally agree with you that the loans are traps to long term debts. I think most people manage the loans properly but I am just uncertain whatever I can in such scenarios. So my most straightforward way is just to avoid it.

@User843976 Not exactly in ULEZ but I am living near to it especially after the expansion recently. I am happy that currently I don't need to check whether my destination is within ULEZ as I am driving a petrol car. Just uncertain if the ULEZ will be expanded to my area and enforced with a stricter condition that only electric car can freely drive in the next 5-10 years.

I just bought a second car this week as hubby uses mine for work just paid £10k for it and I paid £10k for my other car what hubby uses (6years ago)
I don’t get credit I hate debt, I just save and buy out right then start saving again straight away x

We always have cars on finance and swap them every 5 years.

We currently spend £500 a month on the loan repayments for both cars. That’s about 10% of our monthly income.

Ours is a lease car, £300 a month. We paid off our mortgage and this is our one real luxury. I love having a new car and no worries re maintenance etc.

Previously had second hand cars for years and years and don’t miss the problems. Seem to have a knack of picking turkeys for cars in the past so never had a good experience with our second hand cars.

@User843976

Do you live in a place with ULEZ or visit a place with ULEZ as you will might need an electric car and can't have diesel

That's not true though. I have a diesel that is ULEZ compliant. It's to do with the emissions levels and newer diesels are ok.

Paid 7k five years ago, still going strong. Can't remember what the family income was back then to give you a percentage.

@tillyandmilly

Leased car here £300 a month - couldn’t afford to buy

Silly question but with leases what happens after 6 years or so?

You pay Some kind of lump sum?

@Queenie6655 there's 2 types of leases. One you make monthly payments for the agreed time (normally 3 or 4 years) and then give the car back and start again. So you get to drive a new car but have nothing to show for it at the end.

The other one you make the monthly payments and then have the option to make one larger balloon payment at the end of the lease period to keep the car.

We have always bought cars outright at about 2/3 years old for around 15% of household income. But then keep them for 10 years or so.

My (now) 20+ year old car was just over £1000 ten years ago. Diesel. I think I'm in for a shock when I next need to buy one!

13%

Are you asking to get an idea of what is reasonably affordable, OP? I’ve heard that the guideline is the 20/3/8 rule. Basically, no more than 20% down, 3 years financing, and repayments should be no more than 8% of your gross income.

Personally, we bought ours outright (secondhand). It cost just under 2 months’ salary.

We’ve always bought cars outright but we’ve just taken out a lease for a new electric car.
There’s no way we could justify the £55000 outlay but thanks to a great deal through work, the monthly repayments are not much more than we currently pay in diesel.

Insurance for myself and husband is also included so we save money there.

DH buys our car after careful research, and much searching to get what he wants to suit our needs and at the right price. Being a mechanic by training he can suss out a lemon. He does all the servicing and they simply pass MOT first time (our garage love our vehicles). I would say our total car cost of purchase and use (other than fuel) but incl insurance etc is less than £1-1.5k/year per car - tyres can be a killer as he's very specific about which tyres..., but then we do keep our cars for a very very long time (one we've had for 20+ years, but looks much newer).

My car is worth more more than my current income! I bought it when I was earning much much more, I can still easily afford it with DH's salary though.

PCP and hp are really common. My first car was pcp but kept it. Wanted to get my monies worth and didn't miss the monthly payments either

I think it depends what works for you - what sort of car you need, if you know about cars and reliability, budget.
Recently had to replace much loved 15yr old estate car as it died. Bought that at 2yrs old. Have bought another 2yr old estate - limited availability as not automatic and not SUV, but a decent package - 23k.
Hoping it will last up to 10yrs, but DH is great at maintenance and minor servicing - then will replace with an ev.
We also have a small car that is 12yrs old - we've had it 10! Cost us 9k. May last another couple of yrs.
So - I suppose the ownership will cost around 3k a year over its lifespan for the larger family car. Much less for the smaller one.
Leasing seems quite expensive but I can see the appeal. DH not keen on it

I’ve recently brought one for half my annual salary, I had my previous one for 10 years and during that time I put around £200 a month into an ISA to find it’s replacement… and so on.

@Musicalmaestro

Most people who drive new cars have them via PCPs unless they are pretty wealthy. Used luxury cars can be affordable to buy, but expensive to run due to high running costs. If you are on a family budget, you buy a used car that does what you want it to, and run it for years.

Not true

I but mine in cash but keep them for 8 plus years (so save for 8 years before buying)