How do people afford new cars?

Evil_elvis said:
Yes of course!
Renting is dead money, amen!
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May be so but it's so hard these days for young people to buy a home - we bought our first home in 1974 for £10k with a grand deposit - nowadays you need £20k plus . My eldest son is 44 and owns ( mortgaged ) a home - my eldest daughter lives in SE London and pays an enormous rent because there is no alternative - my other two also rent by necessity .

The only way they will ever manage to " get on the ladder " is when we snuff it and they " inherit ".
 
gov said:
- we bought our first home in 1974 for £10k with a grand deposit .
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Same as us and probably like us, you were interviewed by the Building Society branch manager to ensure you were in a financially decent position to pay the loan each month?

i.e. Income v Expenditure.
 
ronk said:
gov said:
- we bought our first home in 1974 for £10k with a grand deposit .
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Same as us and probably like us, you were interviewed by the Building Society branch manager to ensure you were in a financially decent position to pay the loan each month?

i.e. Income v Expenditure.
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Yes - mortgages were scarce - had to buy a life insurance as well or they wouldn't let me have a mortgage - all I wanted was a straightforward repayment mortgage - not an endowment. Kept the life insurance up for 12 months then binned it !
 
Yeah, I also agree with this! :)

Buying these days is very hard, but I'd be happier in a cheap studio out side of London than paying a landlords mortgage. I'd even take out a loan to pay for a deposit if I had too (and not own a car).

Studios where I live are £90-95k and it's commutable to the City (sq mile) in 45 mins station to office. So when you say "no alternative", I'd argue commuting is the exact alternative. And I should know! ;)
 
The rates varied between 10 and 15% as I remember.
Yes things are tough for young people today - they were for us as well!
Try telling them that Mum and Dad as a Teacher and A Draughtsman were getting about £600 a month between them!
 
I've owned 3 new cars in 20ish years - the first was awful (a Vectra) replaced )by Vauxhall) with an Astra SRi (which was great and the third (a Leon) was also pretty good.

The 2nd and third I got new as the spec I wanted wasn't available secondhand.

Everything else bought has been 'pre-enjoyed' - some more than others, but all have been fine (to varying degrees.

I could afford to buy some pretty nice new cars now, but just don't want to mostly due to the depreciation (one of my current stable lost 60% of its value in 2 years/6k miles prior to me being it :o )
 
Depreciation is finally what turned me off new cars, and towards the Z4.
Though I had owned some good ones (ok one!)
[Edit: almost] 80% retained value after 18 months was my record and that's invoice price to trade-in not RRP.

I couldn't repeat it though, despite trying :(
 
Evil_elvis said:
Depreciation is finally what turned me off new cars, and towards the Z4.
Though I had owned some good ones (ok one!)
[Edit: almost] 80% retained value after 18 months was my record and that's invoice price to trade-in not RRP.

I couldn't repeat it though, despite trying :(
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I got the wife a Jimny via Broadspeed about 8 years ago - cost £7,300 brand new (£3k off RRP).

She drove the car for 5 years and then it was written off.

The first offer from the insurance was pretty poor and wasn't anywhere near the current market value (got 5 ads from exchange & mart and sent them to the insurers).

Finally settled the claim for £6,500.

£800 depreciation for 5 years :)

Depreciation on my cars has been less pleasant - but then the cars have been less shite too :)
 
Paul Getty once said "If It Appreciates, Buy It. If It Depreciates, Lease It" and I've been leasing my primary car for the past 11 years and had some cracking deals on 2 x A6's, an X3, an ML, an A7 and finally my M135i.

I bought my Z3 3 years ago and sold it for the same amount when I switched to the Z4. Not sure if the Z4 depreciation will be so kind as it was a newer car (Z3 was a '98 and depreciation had pretty much bottomed out).
 
As the accountants will no doubt tell you, one thing that seems to have been overlooked in this debate so far is opportunity cost. What is the OC of buying outright for example? £40k on a Z4 could be used for other things - ie a deposit for a buy-to-let where I live, for a guaranteed rental income of £600 a month. There is of course the same argument for financing? What is the OC for paying the monthly costs of the loan? I suppose the point of this is just to remind people there is no black and white answer to this question, it's down to the individual and their own circumstances and what their priorities in life are.
 
original guvnor said:
As the accountants will no doubt tell you, one thing that seems to have been overlooked in this debate so far is opportunity cost. What is the OC of buying outright for example? £40k on a Z4 could be used for other things - ie a deposit for a buy-to-let where I live, for a guaranteed rental income of £600 a month. There is of course the same argument for financing? What is the OC for paying the monthly costs of the loan? I suppose the point of this is just to remind people there is no black and white answer to this question, it's down to the individual and their own circumstances and what their priorities in life are.
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+1

I think personal financial standing can have a huge affect on this decision. Any lump sum monies i have, or monthly savings - go towards a house fund, so any car purchase is based on monthly spare income only (and having no kids or mortgage probably makes that easier for me). I have made the conscious decision to try and build up equity in any car i purchase though, rather than hiring/pcp etc where theoretically you could end up with no cash value to your asset... as it's not your asset.
 
What also seems to be overlooked is depreciation, especially when buying new.
Take for example a car purchased for £20k. After 3 years typically it will retain around half it's value, so that is £10k. So if you want to trade in after 3 years for another for £20k, that's £10k you need to find in those 3 years along with your trade in. That equates to putting aside roughly £280 per month. No cash buyer can avoid that scenario :wink:
 
Very true.
But you can pick your car well (I.e. Don't buy a Mondeo or Citroen) and you can minimise it.

My own record was 75+% retained at trade-in time (NOT 3 years though).
And I've known others occasionally swap the car after 6-12 months for little to no cost (350z when new, TT, Cayman)

Obviously this is unusual, but if you're savvy.
 
Depreciation is there if you pay cash or lease !
It's just a fact of car owning life.
It's only very obvious if a cash buyer or it's hidden in the monthly payments.
 
If anyone's an expert on PCP/Lease/HirePurchase/Finance/Personal Loans - i'd be interesting to see some examples of the cost over time of an example car we can use as a benchmark.. funnily enough being a Z4 forum - maybe based around a Z4? :)
 
There is no right or wrong answer. Depreciation always always comes from the drivers end, not the financial services end....so whether you buy new, second hand, or lease....bang, it hits you.

No best thing to do though, in any event, unless you have millions of squid, is buy 2 years old, low miles, and if you can, buy outright, and keep for 4 plus years plus.....you should be ok.

But if you like a new car every 3 years, then lease
 
I know someone who is just about to order a Golf R via a PCP deal, he can afford to buy it outright, but doesn't want to tie £30k up in one hit. Obviously the R is the top model, yet it works out cheaper than a GTi version!!! The depreciation on the R is low.....very low. When he first worked the figures out he thought he had messed them up somewhere, he contacted the dealer to check and he laughed at him!!! (in a polite way). Yes that is correct, the reasons why: 1) The R is made to order and not a stock car so that will always keep the price up as people don't wish to wait 4 months. 2) Golfs especially the performance version have a very strong enthusiast following so it keeps prices high, most of the performance owners sell their cars via enthusiasts forums where they all know each other.

Off the top of my head I think he said he was getting his 3 door DSG with Lapis blue on a 3 years PCP deal for £357 down and £357 per month, the car came in at around £31k, but he got around £3k off = £28k and after 3 years the GFV was just over £20K :o You can work it out for your individual needs direct from the VW site http://www.volkswagen.co.uk/new/golf-gti-vii/which-model/r/overview The other trick he said people fail to make the most of is the 'How many miles do you do' question, the difference between 5000 and 10000 on the monthly payments is big, the only time you get stung by excess milage charges are if you don't buy another car off them at the end!

To be honest when he told me about his deal I was tempted myself...but I'd be going for exactly the same spec and two big blokes with the same spec cars just doesn't look right lol :D I've already told him that when I get the Zed he's not coming in it with the roof down :P

I think that with cars you have to look at it as your passion, just work out how much you wish to spend/lose on your passion each month and go from there. I know guys that easily spend £100 every weekend going to watch a 90 minute game of football, for £100 a week you've got your car 24/7.
Another way to look at it: To get your £30k back you'd need to put away over £800 per month for 3 years to save another £30k...which then makes a £400 per month PCP deal look attractive keeping your £30k in the bank.

£30k gone from your account on your first car and then put away £400 per month to save £15k + trade in to buy your next £30k car...still zero in the bank. Or keep the £30k in your bank and just keep paying £400 per month on a new car and switch every 3 years

Edit* Thanks Ronk for pointing out my mistake :)
 
xpar1 said:
Another way to look at it: If you want to change your car every 3 years and spend £30k each time, you need to put away over £800 per month for 3 years to save another £30k to buy the next one...which then makes a £400 per month PCP deal look attractive.[/b]
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Will you need to save another £30k ? Surely you have value in the existing car?
Ie. approx half of its original cost.

So you will (only) need £15k to replace the £30k car you bought three years ago?
 
I still think we should set up a car club, 10 enthusiasts with 10K each to spend, and we buy 3 cars......each getting a 100 days a year over 3 cars.....whatever depreciation is swallowed by the 10 people......and even if after 3 years that comes down to 50%, you still get £5k back each.....

Golf R to start, any other ideas?

8)
 
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