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What mugs actually buy cars these days? They’re depreciating assets…why would you put actual money into a depreciating asset?
I know this derived from a popular Getty quote but I don't think it's that simple. Car depreciation is well understood and, to an extent, very predictable. No one purchasing a car upfront should be surprised that in 2 or 3 years it will only be worth a certain percentage of what they paid. The thing is lease companies know this to and that's all factored into to the lease costs (plus a decent profit margin for them). So unless you're taking out a high interest loan that would work out more expensive over the term than a lease then you're saving money over 2-3 years by purchasing the asset out right. Sure, if the amount you would save by purchasing is minimal then I'd lease as something like a shift in market trend (e.g. dieselgate) might cause the car to depreciate more than expected and mean you're even worse off by purchasing.
It depends on many factors. I bought a car 5 years ago that was around 30% of my salary. It was a car that had already mostly depreciated and today is worth more than half what I paid for it despite age/mileage. It was the first time I had a car after bangeromics and I realised how much time I saved having a car that actually worked, and when it did have the occasional expensive fault it was actually worth repairing. I just want something comfortable to drive to go biking, faster than average and I can justify to keep well maintained.
When I bought my car is was about 1/7th of my annual sallary.
Today according to ebay sold prices its about 1/63!
The whole "why would you buy a depreciating asset" argument is incredibly flimsy. Almost everything is a depreciating asset, even your house would be worth less if you stopped maintaining it (the land its built on is a different matter). All leasing does is turn that depreciating asset into a financial liability in the form of a something that looks an awful lot like a loan on a depreciating asset.
The criteria for PCP working out in your favour is pretty tight,
1) You have to have that car (new, whatever) a car affordable outright is not an option at all.
2) You have a better use for the final value (the portion of its value that you never have to stump up). Could you put the cars residual value into your mortgage, pension or other investment and make more than the profit the finance company is going to make from your repayments.
We look at replacing the OH's ratty old fiesta every year when it goes for its mot. And every year it costs less than a couple of months finance (that was a bad year, most years it only needs a new pair of tyres, or brake pads) on a new car (and she does a lot of commuting miles on the motorway).
Paying a bit more a month to go on the motorway in a leather seat with a blhetooth massage function is good value to some people, but I dont think it can be be dressed up as financially savvy. Somewhere there's someone with a few £k in the bank saving up for a new car which in the meantime the bank is using to finance yours on pcp and pay them a small proffit.
It's easy to make statements like Getty's when your a billionaire.
Unfortunantly he is often misquoted by non billionaires
It totally depends.
Cars become dull when you finally realise nobody – absolutely nobody – cares what you drive. So you may as well save the money, drive a heap, and do something. Like buy a nice bike and do one of the aspirational journeys STW is so fond of….
Yeah, if you're doing it to impress the neighbours/as a clunge-wagon, don't bother.
Do think about whatever else you could spend it on.
But if it's a car you're personally very keen on, and you've saved up or budgeted the loan AND maintenance/insurance/tax on it, and it's affordable, it's nobody else's business how much you spend on it. Bear in mind that even if it is a non-depreciating car, the reason it doesn't depreciate is rarity, and that is boosted by all the people that can't afford the bills and are forced to sell for spares/repairs or take them off the road. (i.e. whatever cash you tie up in it is very much no longer liquid)
the question is wrong. The value of the car is irrelevant – within reason. there are so many different ways you can finance cars these day’s the car you drive doesn’t bear any resemblance to what you earn or your financial status. What mugs actually buy cars these days? They’re depreciating assets…why would you put actual money into a depreciating asset? The overwhelmingly majority of new cars on the road these days are leased or company cars or are under some form of finance arrangement. I read a while back that over 90% of mercs are leased.
Disagree with you here. Yes a car is a depreciating asset, but at the end of the day it's still an asset. If you lease it, you make monthly payments and at the end of the lease, what happens? You don't see any of that money back, or the car unless you start a new lease. If you buy the car outright then the car is yours, no question. Yes you lose money, but often less than you're paying for the lease (Why do you think dealers push you to lease rather than to buy? At the end of the day, they get your money AND the car back).
Besides, most people that Pcp their car are just idiots who want a big fancy German car on their driveway to keep up with the joneses, and would never, ever be able to afford to buy it outright.
Getting back to topic, I would say it doesn't matter how much you spend as long as you can afford it. Use your car a lot? Spend a bit more and get a decent one, vice versa if you don't use it much.
Why I don’t buy a depreciating asset is simple.
Despite not doing many business miles at all - I have a fairly generous company car allowance and have been lucky enough to have been in that position for most of the last 15 years.
For several of my employers this has meant a car less than 5 years old with 4 or 5 doors and the majority have stipulated it must be a reasonably ’premium’ brand e.g. BMW, VW, Audi, Mercedes, Saab (Once upon a time) or Land Rover. These are more expensive to ‘buy’ than lease/hire for the period of time I generally can have them and I would rather put that money elsewhere - e.g into our home, opportunities for the children etc.
Also, I don’t think buying a car is a mugs game. It’s a choice to finance cars as you choose as works best for you.
has OP revealed what the car is yet?! If I was a car guy, and I could afford it (i.e. had the cash in the bank) then I'd probably get a "dream car" as a 2nd car i.e. garage it, drive it but not as primary vehicle, in the hopes it'd appreciate or at least hold its value. But finance one as a daily driver to get trashed? No 😂
Either you love your job or you might be barmy ?
More seriously agree with others, but I can't see why I'd be working if I could afford to not work for 18mo (or whatever it works out after tax) to buy a car?
has OP revealed what the car is yet?! If I was a car guy, and I could afford it (i.e. had the cash in the bank) then I’d probably get a “dream car” as a 2nd car i.e. garage it, drive it but not as primary vehicle, in the hopes it’d appreciate or at least hold its value. But finance one as a daily driver to get trashed? No 😂
Depends on spares availability and pricing, but for the £300 a month some are quoting you could probably maintain something pretty nice as long as you could afford it outright to start with.
I mean even a Lancia Delta, probably the pinnacle of "if it ain't broke, wait five minutes" motoring, you could blow the engine up annually and still have change for tyre consumption at a rate consomethinge with driving like youre blowing engines up annually.
Lancia Detonation, nice car when working.
Anyway.
Max I've ever spent was 5 months gross, when it was just me myself and I, and not gone that high ever since. Current cars are 1 months gross (mine, the older ratbag runaround) and 2 months gross (the "nice" one, mrsm's).
Concur with buying not being a mugs game.
Current car valuation - 0.5% annual salary
If I was to buy a new-to-me car I'd probably not want to spend much more than 10% or 12%.
When I bought the Veyron it was actually more than my annual income, and it was second hand. I think that is acceptable, if not actually true.
When I bought the Veyron it was actually more than my annual income, and it was second hand. I think that is acceptable, if not actually true.
😆
Personally I think spending a year's gross on a car is madness, but each to their own. This year I've spent a couple of K on my music hobby - save that up for a few years and I could maybe have had quite a posh car if that was my chosen money pit!
Our car cost about 10% of our gross annual household income and we'd probably go similar next time.
I'm keen to know the car...probably because I'd then agree to throw all my own sensibilities out the window and say buy it!
I'm just amazed that people still lust after cars any more.
Last episode of the grand tour showed even for clarkson and may it was about a schoolboy type crush on the sierra rs cosworth.
With the ubiquitousness of "premium" brands across every chav estate in blighty the only car bling left is the unattainable supercar.
Nowadays more people want greater utility out of their vehicles. Lusting after cars as trinkets is now a nichr, not majority obsession.
I’m just amazed that people still lust after cars any more.
In a western consumerist and capitalist society of course they do. And if it isn't cars it is something else
Must have more and more expensive things as that is what brings true happiness...
Live and let live I say.
I would imagine there are one or two people out there who consider spending thousands to ride a bike in circles around the woods a strange use of money.
I’m just amazed that people still lust after cars any more.
People lust after the latest telephone.
You know things are ****ed when it's considered totally normal to spend £1000 on a telephone.
I’m just amazed that people still lust after cars any more.
Why be amazed, you only need to look at our bikes but scale that up to yachts and private jets.
If you were rich enough to buy any car without thinking then there is a yacht for you.
You know things are **** when it’s considered totally normal to spend £1000 on a telephone
Apart from the fact they're actually pretty powerful computers/communication devices, the primary use isn't as a telephone for a lot of people these days. Not saying I think £1000+ is a sensible amount to pay for one but I can see why it is for some people.
For several of my employers this has meant a car less than 5 years old with 4 or 5 doors and the majority have stipulated it must be a reasonably ’premium’ brand e.g. BMW, VW, Audi, Mercedes, Saab (Once upon a time) or Land Rover.
Ahh - the old 'Peacock's Feathers' in the carpark.
Has anyone noticed yet the complete lack of the OP on his own 100 post thread? 🙂
Apart from the fact they’re actually pretty powerful computers/communication devices, the primary use isn’t as a telephone for a lot of people these days.
They are powerful computers. However most of what they do is fairly pointless tech.
The most important thing I do with my phone is speak to people. Most of the other stuff is pretty pointless. The only exception I would make is the convenience of email when travelling and "smart" GPS navigation.
I wouldn't pay a lot for a smart phone, I have decent one supplied by work, but it does little more than than £120 refurb I got the Mrs off Ebay.
gobuchul
They are powerful computers. However most of what they do is fairly pointless tech.
The most important thing I do with my phone is speak to people. Most of the other stuff is pretty pointless. The only exception I would make is the convenience of email when travelling and “smart” GPS navigation.
I wouldn’t pay a lot for a smart phone, I have decent one supplied by work, but it does little more than than £120 refurb I got the Mrs off Ebay.
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Afternoon,
Responses were generally what I expected but It's made me realise that maybe the question wasn't worth asking as 1) it didn't provide enough context and 2) I shouldn't be looking at it as a straight forward car purchase as it isn't.
To add a little context, I am a 'car guy' so this is the realisation of a life-long ambition to own. I already have (may or may not be keeping) my standard-issue, diesel, German car which set me back circa 10% of gross; the car will not be sat outside a modest house (it won't be sat outside of any house, we are city centre dwellers) and will be driven once a week at most (I walk to work). I will not be cracking open the house deposit piggy bank or taking food from the mouths of my yet-to-be-conceived children.
And the car you’re buying is a..........???
It's a DeLorean isn't it 😂
To add a little context, I am a ‘car guy’ so this is the realisation of a life-long ambition to own.
Its been ages since I've been on here. I've been frequenting various car forums (true story)
I bought a really old car (over 20 years) for circa 10% gross and then spent another 33% rebuilding it with new OEM or upgraded bits myself. Its still only worth maybe 10% but the satisfaction and enjoyment it's brought me is immeasurable.
I fly a desk for a living...messing about with anything (but preferably cars) is a total release for me.
OP...my point being: if it gives you a nice warm feeling and you know you'll enjoy it...crack on, when you die you can't bring it with you.
if it gives you a nice warm feeling
hmmm, heated seats