How does everyone afford very expensive cars?

[Idratherbewithmycat]

Ok yes I live in an expensive area but I can’t help but notice that everyone seems to drive expensive SUVs. Some families I know have good but normal incomes (like us) and still drive massive cars (not BMW type but bug lovely peugeots or Kia etc). I was just googling prices as we could do with upgrading what we have and OMG, it’s a lot of money!
Do people usually buy their cars on finance or upfront? We only bought a car once, it was a second hand cheap-ish car we paid fully upfront. Don’t see how we would be able to fork out £25K + for a new car!

I get it, some people are uncomfortable with debt but by taking the capital I would spend on a car, I'm nearly covering half the lease in interest made from keeping the cash.

It's totally fine to do things the way that suits you but unfair to say financing a depreciating asset is a waste of money

I was referrring more to those who pay £300/400 per month leasing a car they’ll never own etc. It just seems such a lot of money per month, but if people can afford to and they want to obviously it’s individual choice. I couldn’t afford that in my monthly outgoings, and so it’s just not something I’d want to do and place such a big financial burden just to have a newer flashier vehicle.

I bought a car for 25k outright. The palaver of working out how I actually paid them for it suggests this is not a common thing to do!

We buy older 'luxury' cars. At least 10 years old usually, and for less than £10k. In 2021 bought a 2010 plate Audi A6 quattro for £7.5k. It was ~£80k new in 2010. Second car is a 2007 Audi A6, Japanese import in fab condition with very low mileage, for £5k last year. Both reliable and running well, touchwood! In the next couple of years hope to buy a 2015 Q7 for the space across the middle 3 seats. But we are lucky in that my DH maintains them well and can fix basically anything, so it's just MOT and any jobs he doesn't want/have time to do that we get the garage to do.

I think the point is that people don't want to own the car. They are quite happy to lease it and then upgrade every three years.

True, but it’s still a hell of an outgoing cost every month on your budget.

If I didn't drive though I'd have to pay for rail travel into London and taxi's locally. The cost is the same whichever mode of transport I use.

I think the point is that if someone wants a brand new car every three years, then leasing is the sensible option.

But it's still a far more expensive option than buying new and keeping it for most of it's life, say, 10-15 years, which is also what a lot of people do.

Horses for courses. One way is no better/worse than the other. Just personal preference whether they want to pay more and have a car that's never more than 3 years old, or pay less (for the lifetime) and keep a new car for many years.

The "drive off the forecourt" depreciation is utterly irrelevant if you're planning on keeping the car for 10 years - it's the depreciation over those 10 years that matters, not the initial depreciation, which only matters if you're going to sell/PX it within the first few years.

Depends on what you can afford. Not all leases cost that much. I had one a few years ago that was under £150 for a small car, without a deposit. To some people even £300 pm is very affordable.

Something that doesn't get mentioned on threads like this is the advantage of not owning the car when you want to change it. You just hand it back and sign up for a new one. Not having to go to the hassle of selling it and dealing with the second hand car market is such a relief - if you know, you know.

It is but we bought our cars outright. The one was 37k, say we keep that car for 10 years that's over £300 a month effectively not to mention the lost interest we'd have got on that 37k (eta that I know the car would hopefully be worth something at the end of 10 years but I have no idea how much).
Hopefully it might last for longer than 10 years but at that point running costs tend to be a lot higher as well so there's the cost of repairs and servicing/MOT to take into account which isn't a consideration when you're getting a brand new car every 3 years.
We were torn between leasing one and buying outright and I'm still not sure which is best.

i work for a multinational and receive a generous car allowance as part of my package. Obviously I don’t have to spend it all (or any) on a car but since I also get a tax incentive to lease an EV I’ve recently opted for an EQA.

My lease is less than the depreciation on my previous car I bought used at 4 years old.

Doing 20k miles per year certainly costs more in depreciation than the lease cost not to mention the cost of maintaining a car you own! It also has the bonus that I can put the £25k I would have spent on the car into a high interest savings account!

It is but we bought our cars outright. The one was 37k, say we keep that car for 10 years that's over £300 a month effectively not to mention the lost interest we'd have got on that 37k.

That's assuming it's worth zero after 10 years. I bought my previous car for 12k at 18 months old, kept it for 8.5 years (Toyota so under warranty all that time) and then part exchanged it for 3.5k. My current car was much more expensive and has probably lost 9k in value in the 6 years I've owned it. Nowhere near 300 a month

One of ours is 18 years old this Summer. I've got all the costs on a spreadsheet including servicing, repairs, MOT, and original purchase cost. Over the 18 years, the total costs (excluding fuel and insurance of course) are less than £75 per month. You'd not get a lease car for that. What's better is that it's still immaculate condition, no damage, and barely any wear and tear on the interior either. It's never needed anything more than servicing schedule replacements, i.e. battery, tyres, brake pads, spark plugs etc. All we've spent on it over the last year is a service and MOT, total cost £225!, so just £18.75 per month!! It's never needed anything major, no new clutch, no new gearbox, no new exhaust or suspension parts etc. I think the biggest cost was a new timing belt (replaced as per service schedule) which cost around £400.

The thing with buying brand new and keeping is that you know how the car has been driven, so no risk of some boy racer type knackering the suspension by mounting kerbs or knackering the brakes by harsh acceleration/harsh braking etc, so if you're a careful driver yourself, your car will repay you over time by not needing as many major repairs, not breaking down, etc. If you buy a car even just a couple of years old, you don't know what kind of lunatic has been driving it, so even if it "passes" an AA inspection, there's still a much higher risk of "wear and tear" meaning more expensive repair bills in years to come.

That’s not strictly true is it, you may not be doing it but you do know how people buy expensive cars as you must be aware of the concept of loans and savings if not how leasing works.

@Badbadbunny Some of that is luck though. We bought a previous car from new and we had all sorts of problems despite driving it really carefully, some were fixed under warranty but they only got worse once the warranty expired. Really expensive repairs and problems and by the time we sold it, it wasn't worth much due to all the problems. In depreciation and repairs it cost us well over £500 every month that we owned it for, which would have gotten us a much better car had we been leasing one.

Well yes, there's always the risk of the odd car being a "wrong un" but the vast majority don't have inherent problems.

On the rare occasion that we've had a car with a "major" problem, we've just had it fixed if necessary and then PX'd it quickly as the thing we've found with cars is that once the garage starts messing around, changing big things, things that aren't part of the normal servicing schedule, etc., they do tend to disturb other things which can cause other failures. Most of the time, they have to at least partially dismantle whole assemblies to get at the individual part that needs replacement and in doing so (and putting it back together) they can be cack-handed and either damage other components or not put everything back properly, which causes strains in other things, leading to further failures. It's why we never buy anything more than "ex demo" age these days as you really don't know what's been messed about with by the garage(s) on cars more than a few months old, even main dealerships can bugger things up (in fact they're more likely to in our experience).

It's why we've kept our 18 year old one for so long. We know with 100% certainty that it's not been "messed" around with as we've not needed anything major done to it. It's probably why it's still going strong with minimal costs/repairs.

Our worst car was one where we should have bit the bullet and got rid, but it was involved in a collision with a cow (yes a cow) and had a damaged front end and passenger side front wing. Repaired under insurance, but it was never the same again. Just one thing after another, always something at the front, problem with gearbox/clutch, problems with suspension components both sides, problems with front brake calipers/disks etc. We got one thing fixed and then a few months later, something else failed. It was never ending. It was a low mileage car at that time, so those components shouldn't have been failing - it was just that it had been "messed about with" so much and obviously components weren't "settled" properly with each other or mis-fitted causing damage to other components etc. We wished we'd just PX'd it as soon as it came back from the body shop and if something like that happened again, that's what we'd do.

Lots of people get PCP, we have two cars on PCP. We can’t afford the upfront costs for new and there is a peace of mind with new cars, no MOT etc.

We are currently looking at buying our own car at the end of the lease, and the monthly loan payments would be more than just getting another similar PCP.

it is absolutely more expensive in the long term, but it works for us, and we have a (not flashy) but very comfortable car we couldn’t afford otherwise.

This is absolutely what we should have done with our problem cars. It's just once you've paid 3k to get something fixed you think it's a waste to then just px it. But I think you're right that at that point more seems to start going wrong.
Though we've had more problem cars than non-problem cars - even without anything being messed about with and I think we are just inherently unlucky with cars which probably biases me.
Bu what people don't take into account is the charges if something isn't perfect. I have a friend who had some very minor scratches but some were longer than what was allowed and they charged a fortune to fix all these once she came to hand the car back and upgrade it.

Yup. We once had a car where the heater blower fan failed. We took it to our local/village garage where the owner/mechanic messed around with it for a bit and told us it was "f*cked" and said best to PX it rather than get the blower replaced.

It was a nice car that we liked and we weren't ready to get rid, so we spent nearly £2k on getting it replaced at the dealership (local garage guy said he wouldn't touch it with a bargepole with it needing the dashboard to be removed to access the fan!). The dealership buggered up so much it was back to them several times, i.e. they broke off the wiper arm and stuck it back with superglue (not visible as the break was within the steering wheel assembly) but it snapped off the first time we used it, some of the dashboard lighting didn't work which turned out they'd damaged the lighting circuit board that they then had to replace, and so it went on. A couple of years later, the blower fan failed again! That time, we just PX'd it - the garage who took it in didn't even check whether the fan worked or not!

When we told the local garage guy, he just gave us a knowing "told you so" smirk (in a nice way).

The same guy also gave us good advice when another (much older) car was hit whilst parked and unattended and the insurance firm wrote it off. He told us the damage was an "easy fix" and that he could do it very cheaply by buying a cheap identical car (with much higher mileage and maybe damage elsewhere) and he'd cannibalise the parts off it to replace all the damaged bits, which was basically the entire rear wheels/brakes/axle assembly, the bodywork was an "easy fix" of just "straightening out and filling and respraying" he said and he could easily swap the rear windscreen and rear doors! His price (all in including the spare part car) was less than half what the insurance firm paid us! He basically said that because the "front" wasn't damaged, there'd be no damage to the steering, engine, transmission etc and the "back end" didn't have so much to go wrong so a "high mileage" rear axle wasn't detrimental! Never a single problem with it ever since!

An honest/experienced mechanic is very handy to know!

Oh I know, the point I was making was that a lot of the new cars people are seeing out and about or driven by people they know may be motability cars and they would never know as I never tell anyone mine is.

I did the sums once but chose not to PCP. There wasn’t a lot of difference between monthly depreciation calculated over three years and monthly PCP cost. I didn’t want to have to think about my mileage or costs being deducted for what I might think was normal wear and tear.

I have a Tesla model Y that was brand new when I got it but it is my company car so costs me only in my benefit in kind. Prior to this, we had old £5k cars that we kept for a few years. DH worked somewhere in walking distance for 15yrs and I worked a few miles away then wfh so an old car for pottering around was fine for us. He got a new job with a motorway commute so needed something a bit more reliable. We bought an electric Hyundai Ioniq in decent nick that was 3yrs old for £11k.
We've never bought a brand new car, I work in finance and would always want someone else to absorb the early steep depreciation.

@Iwantmybed

We've never bought a brand new car, I work in finance and would always want someone else to absorb the early steep depreciation.

We've never paid anywhere near list price for a brand new car so havn't "suffered" the "drive off the forecourt" depreciation. We're never desperate so can wait a few months to "haggle" and can usually get something in the dealer's compound that's been sat there a while and shortly coming off the dealer's finance plan (so they have to buy it!), or there's often the manufacturer extra discounts/incentives for dealers to push a particular model or colour etc if they've got surplus stock at the factory, or a model coming up to end of production. We just keep in contact with the dealership that we fancy at the time, phone them up every few weeks to see if anything's coming up for discounting, and just sit back and wait really to see if they come up with anything.

Best was a 25% discount for a mid size family car! We'd been to view an ex-demo on their forecourt, test drove it, etc., but decided we didn't like the colour. The salesman said he could do a different colour, exact same model and spec, at the same price, but it was brand new (been in their compound for a few months!).

Another time, we'd been looking around for months for a particular make/model of a small car, ex-demo preferred or at least under a year old with low mileage, we'd been to our nearest dealership a few times, and also been to a few others a lot further away in different towns, but couldn't get the make/model/colour/price/Fuel combo that we wanted. The closest had been a diesel instead of petrol at our local dealership which was absolutely perfect except it was a diesel. The salesman, who we'd got to know quite well as we'd been a few times and spoken on the phone a few times, kept phoning us back every few weeks to give an update as to what they had in, but nothing hit the spot for us. Then one day, after about six months, he called with a manufacturer's offer in that they were having a "national" incentive to shift a particular make/model in a particular colour - the make/model was right, but it wasn't a colour we wanted, but it was 20% under list price for brand new, mileage less than 5! We initially said no, due to the colour. He rang back a few days later "just to check" we didn't want one as they'd had 10 and only had 1 left as the others had all been sold, so we asked him to hold it back and we'd go to view it the next day. In the event, the colour wasn't too bad, and for 20% off list price, we could live with that, so we took their last one!

Another time, we got a very low mileage ex-demo (under six months old, 2k on the clock) for 20% under list price. We were on a UK holiday and on a rainy day, we thought we'd check out a local dealership as we were in the market for a specific make/model of car. We wandered around the forecourt, but couldn't see the make/model/colour we were looking for, so were ready to walk away, but a salesman came out and started talking to us, asking what we were wanting, and took on board straight away the make/model/spec we were looking for, didn't try to persuade us to look at something else as he understood why we wanted what we did (some of the spec/trim were unpopular for obvious reasons to us and him - horrible interior colour scheme which he agreed with!). He went away to check the system as they had 3 other dealerships in different towns, but came back to say none had the spec/age/mileage we wanted. As we were walking away, he ran up to us and "remembered" that one of the other salesmen had the exact spec of car and that as we were close to the new registration date, it would be coming up for sale as a ex-demo in the next couple of weeks and asked if we'd be interested. We said yes, so he went to try to find it, but he couldn't and the other salesman wasn't around. He promised he'd have it back and "well presented" for us if we came back the next day. So we went back, and there it was, pride of place right in front of the showroom, newly valetted, perfect condition, we test drove it, and bought it there and then, took it away the next day - 20% off list price, never even been advertised.

The key is communication, making a friendly relationship with a good salesman (walk away from the bad ones!), and just sit back and wait for them to call! As I've said, we've never paid list price, or even anywhere near list price, worst has been 10% under list. If you're willing to be less fussy, not in a rush, you can wait for deals to come along, even in this "brave new World" where dealerships tell you there's no haggling anymore!!!

You can work out which cars are on finance as most of them will be replaced by another brand new one every three years. We both have decent cars, not super new but fairly low mileage, but around the 40/50k mark that we bought outright and in the time we’ve had them the neighbours either side and one down have rotated their cars at least twice if not three times 🤣. The car transporter comes, brand new cars roll off to great fanfare and the miserable four year old car is karted off. Be gone with you!