How do you afford car finance?

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I feel like all I see on the roads nowadays are expensive and newer SUVs. If you have a car which is relatively new, did you buy it outright? If financed, what do you pay per month and which car do you have?

I’m in the market for a new car but i’m not sure how to fund it…

We lease through our company (DP and I own it as joint partners) as it's pretty tax efficient. Got a T-Roc on a 3yr lease @ £320/month. Driven to it after a couple of expensive years with both of our outright owned cars needing lots doing at the same time which was very painful so sold both and now share this! Lease cost includes annual servicing and tyre/windscreen replacements etc etc so got peace of mind

We bought outright, second hand 2 year old, traded our 6 year old car in, will likely keep this car for about 5 years and we’re already putting one cash away each month to pay the difference when we buy a new car. We looked at finance but you usually end up paying £5k+ in interest so you obviously end up paying more for it so not really cost effective unless you have no other option.

I have a new 50k car that I fund using a car allowance from work. I get 15k pa pre-tax allowance which is just enough to cover PCP + insurance + car tax.

I change every 3 or 4 years but when I’m no longer in receipt of a car allowance I’ll buy something outright.

I buy outright at about 3 years old and keep them until they start to need expensive work or die. I have never sold or part exchanged a car either as I keep them til dead or terminal.

A choice on what you want to spend your money on. I have a financed car, quite desirable. I work hard for my money and it costs far less per month than a child would cost me 😂

Bought outright. Second hand. We wouldn't be happy with paying for a car on tick.

I bought a second hand car, dealer approved with full service history for £9k in 2014. Adding on repairs etc by the time I sold it 2 years later it ended up costing me £4k a year for an 8 year old car. After that I switched to pcp on a brand new car for £323 a month - no repairs, no headache. cheaper than an 8 year old one.

I traded in my old car for a three year old SUV on interest free HP at £200 per month over five years - paid a small deposit too, to get me to the monthly amount I wanted to pay. This month is the last payment yay! so I will own my 8 year old car outright. I don’t like PCP because of the mileage restrictions and I just don’t bloody understand it. I need a car less and less so I’m hoping to hold on to this one for maybe 5 more years, we’ll see. For the first time in my life I can now afford to pay for a new car outright, but it seems wasteful to do that when this one works fine.

We always lease our family car. I like the certainty of knowing I won't need to fork out on repairs or servicing. For a number of years we had Qashqai's which were around £250-300 a month. Then a slightly fancier Volvo which was around £320. Now we have an EV through my work. Net cost is £420 including servicing, insurance, breakdown etc. Tend to take them on a 3 year lease,
We have one family car and that's affordable on our income.

Buy outright at 3 years old. Will keep as long as it runs well/cheaply. Not concerned about always having shiny new. Any other option just seems like money down drain.

We have 2 cars - one bought new on finance and one 4 years old cash + small loan. Payments for both are £500 combined and they have a combined list price of about £75k.

We dont find it much different buying new or a few years old with a loan. This is because a PCP has an optional balloon payment that is interest free, so monthly payment is typically similar to a 3 year old car with a loan. Key difference being you don’t own the car at the end of it though so only sensible if you intend to swap every 3-4 years.

How we afford it is the same as lots of people I expect, we have c.5k disposable income per month. We could spend a lot more on house/car if we wanted to but this feels about the right amount, though we plan to upgrade to a hybrid soon which will be £150 per month more.

We used to do a salary sacrifice via my company. At that stage I liked the fact we had a set payment that literally included everything car, insurance, servicing, breakdown, maintenance etc. They changed the scheme and it became too expensive (due to some tax implications) and we bought the car at the end of the last lease. Since then we have been buying a three year old car outright. They have been ex mobility cars so generally low mileage and maintained very well by mobility.

I have a 2006 Audi I bought with 90,000 miles on the clock in 2021. Never had any issues with it and passed its MOT first time since. I paid £3k for it and will sell it soon for £2k probably. Although on Autotrader the same spec is £5k. It’s automatic so the market made money here.

Our joint income is £200k and DH and I have never owned cars worth more than £5k. It’s just not a priority for us and I don’t drive much.

Now we have a baby, I will consider a newer car for my next one but I’ll think about it later, cars stress me out.

DH has a company car (worth about £30k I think) which is “free” as part of his job. Our other car is a “luxury” SUV which cost £50k at a year old, we paid for this in cash less the value of our trade in car (£10k). The reason we did this is because bonuses lined up well so we had the money and we want a car that will see us through the childcare years without a big monthly payment as I’m currently pregnant with our first. I also have a big commute so didn’t want to be worrying about mileage restrictions with a PCP. We plan to keep this car for another 6 years ish and then replace it. At this point we’re budgeting about £750 a month for a PCP, which is about 8% of our monthly income so feels affordable and I doubt we’ll want to lay out such a large sum of money in cash again.

We always buy at a year or so old from main dealers with cash. Never had any issues, and no, they don't break down. My Mini came with the balance over it's 5 year service pack.

DD's cars second hand from private sellers, also cash, but both were hobby dealers. Both excellent. No issues.

As is evident from this thread the answer seems to be high incomes! I though PCP meant you had to pay servicing and repair costs yourself. Is that not the case?

PCP isn't leasing. It's leasing where servicing and repairs are paid by the leasing company usually, because it's never your car, with a lease, you're just borrowing/hiring it. PCP is different. As is hire purchase or getting a loan. Even within the categories there can be differences, so you can't "assume" anything really. You really have to read the contract/lease and understand it so that you know exactly what you're getting, your liabilities, etc.

We have a high income and tend to finance, although have kept one of our financed cars since paying it off a few years ago but ready to trade it in now as it's getting to the stage of becoming unreliable.

When we were low income we paid outright for cheap cars and dreaded MOT time. I prefer the certainty of paying a certain amount every month for a newer, reliable car. We've always been better at paying off than saving up. Willing to pay the cost of interest and accept car depreciation, it's peace of mind, and it's the only debt we have alongside mortgage.

Oh we never buy brand new though, the sums on that never make sense for me, 2-3 year old car with low mileage, keep it for a 3-5 years, that tends to be our approach.

We always buy outright, usually 2-3 years old & keep it for as long as we can (until they start needing any work more than general wear & tear)

Paying list price doesn't make sense, that's true. But if you can shop around, aren't too fussy as to exact make/model/colour/spec, and don't need to buy a car immediately, you can usually find good deals.

We've bought four brand new cars over our lifetimes. Never paid list price, not even close. Best was a car with a £20k list price we got for £15k. The last one we bought earlier this year was a list price £18k we got for £14k. Neither are the colour we wanted, they were just what the dealers were needing to register and shift from their compound before the bonus quarter ended or the finance period ended (where they have to pay to buy them).

We've also tended to buy ex-demos, which are typically six months old with under 5k miles. They're called "ex demos" but are typically the cars given to the salemen, parts and service managers, so most of the miles will be staff commuting rather than randoms having test drives. The ones to avoid are much higher mileage ones which are more likely to have been courtesy cars handed out for the day to random customers when their car is in for service/repair, so more likely to have been driven badly etc.