Be honest please.

Andyk said:

I think this maybe right. I don't know many people who have bought expensive cars out right. Plus when you can get deals at 0% surely it's better to leave your own money alone for a rainy day. After all your money will not depreciate where as the car you pay cash for will as soon as you drive it away so in some cases financing makes sense.

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The 0% deals are on brand new cars, which you loose thousands as soon as you drive it home for the first time!
You don't see 0% deals on their used cars, if you ever do, the price is inflated with no further discount, so not really 0% at all!
When I was buying my BMW as my 'company car' being second hand, every dealer was pushing their PCP deal, which even with BMW was around 10% APR!! Why should you, when if you have a decent credit score you can borrow the money at around 3% saving thousands of pounds and no tie-ins.

Saving 40k pa for the average family is a pipe dream. Given the average family income is c £25k pa having £10k to put in the bank each year is a dream once they have paid the bills, fed the family and got too and from their jobs... no wonder PCPs are used.

safrane said:

Saving 40k pa for the average family is a pipe dream. Given the average family income is c £25k pa having £10k to put in the bank each year is a dream once they have paid the bills, fed the family and got too and from their jobs... no wonder PCPs are used.

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The provisional estimate of median household disposable income for FYE 2018 is £28,400, an increase of £300 (1.2%) compared with FYE 2017 after accounting for inflation and household composition; this is slower than the 2.4% growth recorded in FYE 2017.

If your average disposable income is £25k per year I dont see why you cant easily save £10k per year?
Both my wife and I have 2 jobs each so we maybe work a little harder than your average family but it's not difficult to save, you might have to go without a big holiday one year but certainly doable IMHO.

Andyk said:

Christ I'm in the wrong job......Buying a Maserati outright...You lot must be sh1tting money......Fare play to you if you can do that.....Note to self should have worked harder at school....

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Finance just hides costs better, hence the reason it is pushed so much. Depreciation is the same however you acquire your car.

If you read the lower notes on the ONS data it states that 'No expenditure on housing costs (apart from council tax) is deducted from disposable income in this release.

Given the average house cost is £250k thats a £12k pa mortgage taking almost half...ao you would have to sacrifice more than a holiday.

Also the relationship to working hard/harder and earning more is a little simplistic... we value a footballers working day higher than a nurses working year... and I think they work rather hard in the NHS.

It is all the capitalist / debt syndrome. A friend has just bought a different house and it is ok but she got a quote from Wickes for a new kitchen (the full hit) for £15000. She has declined because her existing kitchen is just not what she wants in a family home so she will save up, which is exactly what I would do. I do have a cynical view that governments want you to go this way as it keeps money circulating and people in employment

mjheathcote said:

The 0% deals are on brand new cars, which you loose thousands as soon as you drive it home for the first time!
You don't see 0% deals on their used cars, if you ever do, the price is inflated with no further discount, so not really 0% at all!
When I was buying my BMW as my 'company car' being second hand, every dealer was pushing their PCP deal, which even with BMW was around 10% APR!! Why should you, when if you have a decent credit score you can borrow the money at around 3% saving thousands of pounds and no tie-ins.

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However you can’t get a balloon if you finance in the way you mention, which some people want to reduce the monthly payment. Your method is cheaper in the long run but will likely require a bigger payment each month.

rockits said:

A grand a month or 100k....jesus wept! Neither sound too attractive to me. You could probably run a new Ferarri for that same 1k per month. Even less if it appreciated.

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It's actually £1331 pm, classic case of an 'attractive' monthly price quoted with the deposit buried in the small print. Leasing used to work on 3+35 but now it is often on 6+23 as it makes the monthly look cheaper than it really is - the next mis-selling scandal.

Wrt the new Ferrari comment, dealer margin of £30k, average options specified of £30k so buying a new Ferrari for a couple of years is a great way of losing loads....

daverichardson said:

It is all the capitalist / debt syndrome. A friend has just bought a different house and it is ok but she got a quote from Wickes for a new kitchen (the full hit) for £15000. She has declined because her existing kitchen is just not what she wants in a family home so she will save up, which is exactly what I would do. I do have a cynical view that governments want you to go this way as it keeps money circulating and people in employment

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They definitely want us spending, that’s ehat keeps the wheels moving. Low interest rates and QE all part of it. We live in strange financial times where banks are on one hand encourage to lend to keep everything moving then publically criticised for lending to the wrong people.

bigbob said:

Finance just hides costs better, hence the reason it is pushed so much. Depreciation is the same however you acquire your car.

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Depreciation plus finance costs can be scary...

As per other comments, whilst 0% deals tend only to be on new cars, I'd sooner take a higher interest rate on a car which had already lost 20-30% of its initial list price. 5-7% on a PCP-type deal is easily bargained from an indie finance broker. I haven't done the maths because I think I know the answer already.

Given the choice between leasing the aforementioned M5 for >£1,300 / month, buying it on a PCP (or similar) deal or buying it outright for £100k or thereabouts I'd take the finance option with a deposit of around 30%. I'd have some equity in the car, keep some cash in reserve for a rainy day (same as if I bought the car and could sell if necessary, but more liquid) and would have a manageable monthly outgoings.

As almost everyone else has said, you do what suits.

PS, @Wanderer, jeez, fella, that's a rough ride. I'm glad to see you're back on your feet now. Stay on them! Life throws some weird and unexpected stuff round at times.

safrane said:

Also the relationship to working hard/harder and earning more is a little simplistic... we value a footballers working day higher than a nurses working year... and I think they work rather hard in the NHS.

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Yes sorry I should have said work longer hours. I'm sure some NHS staff do work hard but the few times I've had to visit a hospital there are a lot of staff stood round propping up the walls.
I'm also used to northern house prices which I didn't take into consideration.

You'd need to put more then 30k into an M5 to have equity. It will lose 30k in the first 6 months easily. You'd need to be crazy to buy a new one without at least a 20% discount.

I always finance high value cars and buy lower value ones. I once lost £40k on a 996 turbo that I bought and swore not to tie up the money in a depreciating asset again. I try to put in a good deposit, a sum that I am willing to "lose" over my ownership period but hope not to. That way, as Adam said above, you have some equity in the car and are unlikely to ever be in negative equity. So, if circumstances change, I can get out without it costing me any further money. I also want the monthlies to be low enough that I don't begrudge owning the expensive car that I don't drive as much as I should. If the payment coming out have a heavy impact on the rest of your life, it's probably not the best place to be spending that money.

outrun said:

You'd need to put more then 30k into an M5 to have equity. It will lose 30k in the first 6 months easily. You'd need to be crazy to buy a new one without at least a 20% discount.

I always finance high value cars and buy lower value ones. I once lost £40k on a 996 turbo that I bought and swore not to tie up the money in a depreciating asset again. I try to put in a good deposit, a sum that I am willing to "lose" over my ownership period but hope not to. That way, as Adam said above, you have some equity in the car and are unlikely to ever be in negative equity. So, if circumstances change, I can get out without it costing me any further money. I also want the monthlies to be low enough that I don't begrudge owning the expensive car that I don't drive as much as I should. If the payment coming out have a heavy impact on the rest of your life, it's probably not the best place to be spending that money.

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But it only works if the finance house have mis-priced their product? i.e if a 911 is going to drop £40k then they are in at least a good enough place as you or I before the event to know this? The only upside I can see of finance other than getting people into cars earlier than saving would allow is the GFV which is a free (ish) option of downside protection. Together with the ability to hand back a car once you have paid more than 50% of the total finance there is a good way out if the economy crashes but otherwise it's priced in the monthlies so it's just relative cost of capital.

outrun said:

I try to put in a good deposit, a sum that I am willing to "lose" over my ownership period but hope not to.

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Exactly this!

The deposit I put on my old GTS almost doubled by the time I bought the Vantage. So, reasons my man maths, it was a cracking investment, right??

Contigo said:

View attachment 51174

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For me this list is very sad. The last 3 things that are actually at the top of my list are the things people are putting at the bottom?

I feel a lot of it is about keeping up with the Jones’s.

Why if you can’t afford it do you need a brand new BMW?

I have never bought a car on finance. But then I am lucky to have a fairly good wage.

But still I like to save and not waste money. There will always be a rainy day. Plus having children now means there are other costs.

However I do believe you need to enjoy life. I won’t be here for ever, but still you need to be sensible.

However I am now trying to set ourselves up for retirement and achieve some sort of passive income. Doesn’t have to huge I am not someone who relies on luxury.


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hoyin said:

For me this list is very sad. The last 3 things that are actually at the top of my list are the things people are putting at the bottom?

I feel a lot of it is about keeping up with the Jones’s.

Why if you can’t afford it do you need a brand new BMW?

I have never bought a car on finance. But then I am lucky to have a fairly good wage.

But still I like to save and not waste money. There will always be a rainy day. Plus having children now means there are other costs.

However I do believe you need to enjoy life. I won’t be here for ever, but still you need to be sensible.

However I am now trying to set ourselves up for retirement and achieve some sort of passive income. Doesn’t have to huge I am not someone who relies on luxury.


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In my case Ho Yin, I can pay for these cars but I choose not to. I think that makes it different. I'm making a choice to use liquid funds for other things or just to keep aside for the rainy days you mention. Given that you've admitted to stoozing, I'm surprised you can't see the attraction of other ways to pay. I agree with what you're saying about being sensible though. You shouldn't load up massive amounts of credit thinking it's just about maintaining the monthly payments and it's that attraction that really causes people huge issues. Credit card limits that are often more than annual incomes can't be sensible and should probably be clamped down on. Virtual debt doesn't seem like real debt to many.

For me, it's about keeping within boundaries that don't cause any serious impact on the rest of my life responsibilities. Everyone makes their own choices and when it comes to expensive cars, most of us make choices that aren't very sensible!!

I think the point is we all have differing opinions and generally seem to understand our own reasons for that choice.

However there a lot of people out there that are being tempted into taking finance deals, lease or PCP on new cars that maybe they cannot really afford especially if there is any downturn in their circumstances,

I think this is a point I make quite a lot as well & I agree. It shouldn't really matter how you buy or pay for your car. The affordability decision should be the same regardless. Just because a lease deal or rental 'seems' to make it more affordable it is still the same.

Often means people overspend or don't save enough or at all then just spend all they earn. Each to their own & we are all different....but don't moan when you can't afford to buy a house or have no savings or lose your job. I will have little to no sympathy....as choices were made.

It often seems to me that some of the more efficient or most frugal people are often not the lowest earners.

Chrisb2015 said:

However you can’t get a balloon if you finance in the way you mention, which some people want to reduce the monthly payment. Your method is cheaper in the long run but will likely require a bigger payment each month.

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Actually, you 'can make your own balloon payment' if you want to keep the monthly payment down.
Say you were buying a car on PCP for 3 years at X per month, with a Y balloon payment, at say 10% apr (typical dealer used car rate)
Instead you take a personal loan for the same amount but over say 5 years, the payment per month is the same X per month as the PCP, but at a lower say 3% apr (typical personal loan rate with good credit score)
Then after 3 years, the same as the end of the PCP agreement, the balance owing on the loan will be less than the Y balloon payment on the PCP deal because you have been paying interest at 3% instead of 10%.
Remember with a personal loan from a bank you can pay-off the balance at any time, usually with just one months interest charge, which is peanuts with a rate at only 3%.
So after 3 years with a PCP, you are lucky if the car is worth more than the balloon, so many hand them back.
After 3 year with the 'DIY bank loan PCP', the car will be worth more than the outstanding balance, due to less interest paid, so either keep, and continue paying for a further 2 years, or sell, and have some equity, or trade-in and start another 'DIY bank loan PCP'.
In conclusion, I would never buy a new car on PCP, even with good low or zero interest rates, because you are paying for the initial heavy depreciation anyway, and never a used car on PCP because the interest rates are always higher than a personal loan.