Cash.

Would only consider finance if it was a productive business asset, ie its use earned income.

Interesting stance, though if your putting your business head on has to be if the cost is worth it, finance for something now that will probably be cheaper than waiting until you have the cash. My ful finance was on a demo bike – offered it at a price, none left but didn’t have the cash, price was really good for the finance total so a better deal than trying to wait until I had the cash.

Cash

If I don’t have cash I don’t buy it, simple really.

My car was £5k in 2011 (second hand 06 plate c-max), still have it, still service it on the driveway.

My bikes tend towards reliable rather than bling, singlespeeds and road bikes feature a lot as the latter can be justified against commuting miles.

I cant stand the idea of debt, or credit, or finance, or whatever you want to call it. Yes you could work out your monthly disposable income and buy everything with debt so you could afford the repayments but that only works if your income stays the same long term or increases.

What happens if you lose your job, or you have another big expense (new boiler, new roof, car repair bills, insurance excess). Even jury duty can really f*** with your personal finances.

Or what happens if your mates decide on a trip to Budapest for the weekend, but you can’t go because 27 months ago you took out a loan on a Fiat 500 rather than just buying an old fiesta. Buy that fiesta and you’ve got financial freedom to spend that £200/months however you like for the next 3 years. Yea it might break down, but as I keep pointing out to my OH, it owes nothing and a £300 bill every blue moon is still less than a new car would cost every month.

I bought my mondeo, paid it off in 4 years, then drove it for another 4.5 years without making any payments, In the entire time i owned it, i spent a total of £1200 maintaining it, that includes all the mot tests, tyres, and everything that went wrong with it. The total of paying for it and maintaining it was c£12,240.

Just a few things to consider. Firstly you are comparing a 2nd hand Mondeo to a new Corsa? So if you compared a Corsa to a new Mondeo the maths would be different.

I also can’t see an inclusion of car tax. There is no car tax to pay on a lease for the end user.

Also at the end of the 8.5 years you would have to start again and buy another Mondeo or at least at some point whereas each time the Corsa guy pays out he gets a new one.

With lease you don’t often front load money so you get to spread your capital better. My latest car I effectively paid 100 deposit for a new lease car thus leaving the rest in the bank over the lease period (say 22,000) minus the lease payments. That’s a quite a bit of interest.

Most lease cars also include 3 years breakdown or whatever over the period too.

Mates rates clearly is not a fair comparison too as you’ve acknowledged.

Also worth bearing in mind someone ultimately had to buy or lease your car new for a used one to exist at all.

No right or wrong –  horses for Corsas.

Previously,

most cars were at the bangernomic to 3k range, so paid out in cash. Bikes similarly bought with cash/credit card (when I have the cash to pay off immediately).

Wife has a company car, so thats our nice car. We may look at a van at some point, and whilst we will have the cash to buy, if it works out cheaper to take finance then we may look at that.

(Similarly, currently looking at mortgage overpayments vs investment – Since rates are still so low!)

Love how some people make themselves out to be heroes because they don’t finance anything.

…or that they seem to have £3k-£10k cash floating about to hand to buy these cars, which surely is not the norm?  And yet, the asset they buy with it depreciates hugely.

Thing is, unless you’re mortgage free everything you buy is financed anyway (as the money could alternatively have gone to reducing your mortgage debt), the only difference is what the money is secured on and the rate of interest is lower.

I’m a bangernomics kinda guy, both with bikes and cars (although I use c2w to save tax on bikes), because the total cost of ownership is always lower. Current car (signum) was £1500 at 7 years old, has done 50,000 miles over 5 years since. Probably cost £500 in repairs/maintenance over that time and the same again in tyres. Worth £500 now so approx £30/month for the lot (plus fuel tax and insurance, but they’d be paid regardless of finance method)

Done bangernomics for 10 years and only got stung once. And tbh alarm bells should have wrung it was too cheap.

The main driver for me buying nearly new is I wanted curtain airbags , isofix and esp/abs all the berlingos/partners with that in the bangernomics range had moon and back milage as they were too new to be cheap.

Mid range you were paying 60% of the cost of  a near new one for 60k miles so I bought 3 year old with 5k miles  for little under 1/2 the price of new.

Made sense at the time significant amounts of depreciation done and still essentially a new motor inside

And if I/some carpark ninja scratch it I don’t worry 🙂

I don’t like changing cars , I hate dealing with dealers /salesmen /got to speak to my manager etc and leases on berlingos are terrible value

But equally if I needed a company car that was of a certain age as our co used to stipulate then I’d consider leasing . As it was I didn’t need a company car so opted out of the payment as it was a net loss to me

I don’t get the anti finance brigade.  I borrowed £10,000 over 5 years for my current car and the interest is something like £150 a year with a repayment of £180 per month.

I could save the £180 per month and then buy a car in 5 years time but what do I drive for the next 5 years and what do I gain as the £800 I save in interest would be less that the increased price of the new car in 5 years time.

Based on that I would suggest the stupidest approach is to save up and pay cash….

Bikes and bits are paid for in cash.

Cars I’ve done the rounds with, company car, van paid for with a loan (T5, possibly my shrewdest purchase ever, sold it for more than I paid for it 4 years later!), Bangernomics, to varying degrees of success and more recently a PCP deal as I have a car allowance through work.

I think someone else summed it up nicely earlier, having had my fingers burnt a couple of times with big bills, the sub £3k car market is a total lottery. You either stay there & treat cars as total disposable items, accepting that every once in a while you would get a bad luck moment, or you go nearly new & keep changing.

For me, I have a 3 month old car now, I couldn’t quite have paid for it in cash, which is fine, as I didn’t want to. Tie up all my money in a depreciating asset doesn’t make sense. I have a fixed outgoing, which covers all the servicing costs. I insure it, tax it & put diesel in it, and give it back after 3 years & start again.

At 30k miles a year, I have literally zero interest in fixing my car myself, or changing brakes, oil etc. My weekends are precious, and I don’t want to spend then under a car, fixing something else that’s gone wrong, wasting time, guessing how to fix things, dealing with various rusted, seized parts.

And it always happens in winter.

Current one aconbonof carefull requested Christmas presents 😂 I got a Bar from my wife for Christmas, my mum got me a rear mech… and saving like a mad man….this was especially difficult when the object if my affections went up in price twice in about three months, due to the sterling euro fluctuation.

Im just short wheels, cassette, cranks headset and a dropper now! 😂

perviously Ive Just 0%ed them, but I’m not getting into debit for bikes again, I make the kids save so I will too!!!

<div class=”bbp-reply-author”>Kryton57
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…or that they seem to have £3k-£10k cash floating about to hand to buy these cars, which surely is not the norm?  And yet, the asset they buy with it depreciates hugely.

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Well, you start with £0 and then you put some aside and then you spend it. Of course, it takes a certain amount of discipline and self-control not to spend it on something else in the mean time.

And avoid the huge depreciation by not buying new.

I can perfectly understand that it might be necessary to obtain credit if, for instance, you need a car to get to/from work and you’ve not saved enough but prioritising expenditure should help to minimise this.

I have an aversion to credit, passed on to me from my mother who had a terrible time with my grandmother being in debt. I’ve no doubt that colours my judgement.

What happens if you lose your job, or you have another big expense (new boiler, new roof, car repair bills, insurance excess). Even jury duty can really f*** with your personal finances.

Or what happens if your mates decide on a trip to Budapest for the weekend, but you can’t go because 27 months ago you took out a loan on a Fiat 500 rather than just buying an old fiesta. Buy that fiesta and you’ve got financial freedom to spend that £200/months however you like for the next 3 years. Yea it might break down, but as I keep pointing out to my OH, it owes nothing and a £300 bill every blue moon is still less than a new car would cost every month.

It’s all about balance.

There are, believe it or not, safeguards for all this stuff.

If you lose your job, or have a ‘meaningful lifestyle event’ as the Banks call it, as long as you’re open and honest, it won’t hurt a bit. Honestly as long as it’s justifiable, they are incredibly flexible these days (because they have to be).

And you’re quite right, if you save that £200 a month for 27 months you’ll have cash ready to drop on that weekend break which is great, but other people would prefer that nicer, newer car.The rules set out since the 2009 bank crisis (which, in fairness were in place before) mean that if you are the type of idiot to borrow away 50% of your disposable income each month,  then however good your ‘credit score’ is – you won’t be able to borrow another penny.

But none of this is really about right and wrong, or even financial acumen – its all physiological. I sit on your side of the fence, I’d much rather have an older, but serviceable car and money in the bank,  I also prefer the Yari / SLX / Brand X style of bike 99% of the performance, 50% of the cost type bike.

When I worked in finance they used to say, “some people spend like there’s no tomorrow, some people save like they’re going to live forever – neither are right”.

I don’t get the anti finance brigade.  I borrowed £10,000 over 5 years for my current car and the interest is something like £150 a year with a repayment of £180 per month.

Are you sure about that? What rate of interest do you think you secured your loan at? £180pm for 5 years indicates an interest rate of around 1.6% which to be honest is pretty incredible.

I could save the £180 per month and then buy a car in 5 years time

The trick is to always be ahead of the game. Start saving the moment you buy the car ready for the next car.

Dividends, taken every quarter pay for pretty much everything.

My L200 is on finance and going through the books as my Work van, so that’s how I pay for that.

Save up and buy what you can afford.

I’m one of these people that sees anything else as an alien concept. Live within your means and it’s a very simple philosophy.

…or that they seem to have £3k-£10k cash floating about to hand to buy these cars, which surely is not the norm?

I would say that it’s probably not unusual amongst people who don’t have the burden of debt. That said, you don’t actually need anywhere near that amount to buy a car. Driving a new or nearly new car seems to be a very modern  concept.

And yet, the asset they buy with it depreciates hugely.

An older car will depreciate a lot less than a newer one. I bought mine privately 2 years ago and I’m fairly certain I could sell it now for at least the price I paid for it.

However, let’s say you do have a wedge in the bank, and you wanted something more modern. A little flash even. Want to treat yourself. The lease companies are making money from us, so it stands to reason that if you were to buy new and sell every 3 years, aside from the initial outlay, you’d still be better off than those leasing.

The trick is to always be ahead of the game. Start saving the moment you buy the car ready for the next car.

I’m not making my decision until I secure a significant commission based deal next week.  This would give me a large deposit on a PCP vehicle.  I then have enough in my pipeline to hopefully secure the Balloon within the next 8 months and store it away until year 4.  On that basis I only have the monthly’s to consider, and thats £200 for the new car vs £178 for a bank loan for the old car.

Of course, I can buy the old car outright with the “deposit” from my comp, run it for 4 years while saving for a new car in 4 years time, whilst using the aforementioned “balloon” money to pay some off the mortgage.

Hmm, I’m talking myself into running the old car!!

.”The lease companies are making money from us, so it stands to reason that if you were to buy new and sell every 3 years, aside from the initial outlay, you’d still be better off than those leasing.”

Judging by the penalties for adding on extras i assume that lease companies make their money on bulk buying and volume transactions – sure you might score a deal going round the doors looking for a pre reg new car and playing lots of go see your manager and walking away games but poke doing that every 3 years – but then some people do like shopping.

Finance made sense to me at the time as i was paying XXX a year in interest and earning XXX+300 a year on the money i was keeping in my savings(which were physically there not just hypothetical) by taking the finance – something like 2.3 or 2.6% iirc over 3 years with a couple of K down  – although his first offer on the finance was comical and nearly had me putting the whole lot on my CCand paying it off the next month. he wanted something like 7% over 5 years with 100 quid down. – worked out astronomic.

Kept banging on about it only being XXX a month and how it was less every month than my suggested figures. uhuh but who wants to pay an extra 4 grand overall for the privilege of paying less for longer ?

I live in a modest house.

Titchy house with mortgage paid off as I should have moved years ago to something bigger but couldn’t be arsed with it. Result is loadsamoney! waving a wodge of cash for my bike/car/etc 😀 (kind of).

Problem is though, there’s not enough space for all the bikes and I need a bigger house.

Anyway, cars last me 10 years or so, from nearly new to falling apart. Save up in between. Bikes take priority however.

Stats are

Some 86% of all new car registrations use some form of credit, with PCP arrangements featuring prominently.

https://www.theguardian.com/money/2017/sep/19/car-finance-debt-dealers-consumer-credit

Wife’s company car is financed through a sort of PCP as it’s more tax efficient. Due to the ridiculously complex tax system, HMRC actually subside the car, so she makes a net profit from it.

£1200 on running a car over 8 years for repairs and maintenance? Tyres alone would take a chunk out of that.

depends on the milage you do i guess.

my car did less than 1000 miles between MOTs last year due to my job at the moment and sure i could get rid of it and it would cost me nothing  – how ever that would mean no family/biking trips when I’m home – which would suck and i could hire when i needed it how ever  id probably end up spending the same if not more to hire for extended short periods at short notice.

£1200 on running a car over 8 years for repairs and maintenance? Tyres alone would take a chunk out of that.

Many cars now come with such huge wheels (mainly for aesthetic purposes) that this is often true. I usually look for smaller wheels when buying, because it can mean the difference between paying £40 for a tyre, or paying £140 for a tyre. Little considerations like that go a long way.

I do a lot of my own repairs which is a massive financial saving (not so much for my sanity), and I’d be very surprised if I had spent as much as £1200 in 8 years on repairs and maintenance. In fact my car cost not a lot more than that (which I would get back on sale). My only significant losses are on fuel, insurance, etc.

I was doing 15k miles per year until recently.

Cash for bikes and normally for cars, but the recent one (electric car) we went with finance as we didn’t want the risk associated with electric car development and future value on a £15 purchase.  We went newer as a result 15 months rather than 3 years in order to get a longer manufacturer warranty and the ability to extend it.

Cars are now 14 years old (owned since 14 months old) and paid £22k cash and 16 months old and paid £3k + £220pm over 4 years, but more than £130 of that is offset by not having to buy fuel and road tax for the previous (10 year old, cash bought) car.

Car – sale of last car + interest free loan from parents (I offered to pay an interest half way between what they get in saving account and what a bank loan interest rate would be but they insisted…)

Bike – either credit card or savings (I don’t actually save into a bank account but 7% of my salary goes into company shares and they match 3% so it builds up a nice amount for big purchases and not being in a bank account means I don’t fritter it away regularly).

Next car I’ll think seriously about a lease, although the amount of dents and scratches on my current car put me off (some self-inflicted but many by others when the car’s been parked with no one fessing up), I’d struggle to afford paying for lease company mandated body repairs…

going back to the original post i found myself looking around baltby at the weekend with people pulling 6k bikes off of 60k cars

ive no idea how you afford that sort of thing. they cant all be IT managers can they?

If you read a  lot of ‘rich people books’ (IE: rags to riches story autobiography type stuff) they all say never to buy when you can rent. Planes, boats, cars, jewellery, the lot

Those types of people would say it’s absolute insanity to put your cash into a depreciating asset (a car, whatever the age) when you could rent it and have your cash appreciating in an investment elsewhere.

Personally I would rather spend the £200 a month knowing that if the gearbox goes I just get it picked up and replaced. I’ve had one ‘near miss’ with a fully owned car (mechatronics went… £2k repair on a car that cost £5k) that luckily VW good willed as it was a known fault.

Bike i’d probably buy in cash or on 0% credit card and pay off in my own time, but that’s mainly because I’d never buy a bike over £2k. Probably.

What happens if you lose your job, or you have another big expense (new boiler, new roof, car repair bills, insurance excess). Even jury duty can really f*** with your personal finances.

You sell the car, clear the finance and buy a cheap run around.  You only owe interest up to the point of repayment.  This is partially why I put in a larger deposit and also look for a car at the bottom of the market. This way the car is always in positive equity no matter what happens.

Cash.

Never borrowed money, never had a credit card, never used an overdraft.

but equally plyphon the people who dont make it to rich who rented everything and had a great time while they did dont write books so its a very biased point of view

i agree with it to a point but im not living for the short term and trying to make it big.

Bikes – Some cash, the expensive ones on 0% credit with a big deposit. I’m happy with that, keeps some money in my bank and cost me nothing to pay it off over a few months.

Cars – See above, I have a cargo bike and a train pass. I also hire a car when I need one which is surprisingly rare, it works out very well indeed.

Bikes: I workout how much cash an existing part will generate 2nd hand and and in what spare cash I have – if I can’t afford the new part I dont buy it. Generally I don’t buy complete bikes, rather I do a constant stream of upgrading. On average I recon I don’t keep any part (from frame to gears etc) more than about 3, may be 4, years.

Cars: in the past through finance, now I save up.

Those types of people would say it’s absolute insanity to put your cash into a depreciating asset (a car, whatever the age) when you could rent it and have your cash appreciating in an investment elsewhere.

This does make sense assuming you could afford to buy the thing anyway, and have access to low interest finance.

e.g. buying a new bike on 0% finance makes a lot more sense than emptying your savings account to buy it, but if you choose to finance an expensive new car you can barely afford, you’re losing out on the potential interest from saving/investing the money you’re spending on the car, as well as the risk of your circumstances changing.

I’m a bit of a traditionalist when it comes to money matters, if I don’t have it in my pocket then I don’t buy stuff.  Each of my bikes has been paid for fully up front (except for a frame bought via cyclescheme a few years back).  Cars are a slightly different matter, as I buy secondhand with as large a cash deposit as I can muster and small monthly payments for as brief a period as possible.

Plyphon – if you rent someone else’s assets you are paying their depreciation plus interest plus profit plus service/handling charge. It only works if you are in the business of wanting replacement new stuff all the time  or part of a structured deal like PCP where lease companies are able to compete through economies of scale not available to the individual

Back to the original question – I buy pre-registered ( my van was £8k cheaper with only 10miles on the clock) or nearly new – less than a year. I pay cash – or actually use CC for deposit (pay off in full every month) to get protection and balance by debit card. I aim to keep for minimum of 10ish years

If I wanted new cars every three years – PCP would be the choice – but shop around. When I was younger and more into cars I would have been using this route.

Bikes on CC paid off in full every month – so basically cash with added consumer protection.

Drug deals and payday loans.

i’ve bought all stuff cash, but with cars I’m considering using some kind of finance next time.

I just don’t have time to hunt around for bangernomics cars or maintain stuff now i’ve got kids. Time is precious!

As lots of other people point out, all savings go out the window if you get unlucky with 2nd hand car too, and it’s not that easy to spot which ones are lemons.

Not sure about leasing, just seems so expensive, maybe a loan and 2-3 year old car with maufacturers warranty.

Current (and next) car on lease (PCH, not PCP) as I caught a couple of good deals. There’s no right or wrong way, just need to catch the right deal at the right time. There are plenty of stories of each way working out cheaper when people do their homework. Cash in hand definitely isn’t as powerful as it used to be though as the dealer makes money out of finance deals. For good PCH lease deals there’s a thread on Pistonheads under the Car Buying forum section that’s great for pointing out the good deals.

Current van was cash, shopped about for a lease but as I keep vans for longer the maths didn’t work out.

Previous car got stung with a bad one and lost £2.5k in under six months. Now driving a diesel Civic on a two year deal, brand new at the time, 60+mpg easily, plenty of gadgets, £188 per month (plus insurance and a couple of services).

Also heard a few stories of dealer supported brand new cars being cheaper that delivery mileage ones, especially when using Carwow pricing.

now i’m not a snob, but a corsa ain’t exactly in the same league as a mondeo.

No but how old was your Mondeo when you bought it?

A nw Mondeo would be £20k + that’s over £400 per month over 4 years

Nor sure how yours works out better unless you bought a really old Mondeo to start with

As above with Steve. Agreed.

I respect the savers, it was/is the proper way to do things perhaps. But with piss poor savings returns and inflation eroding your cash I like to opt for the asset before I pay(rent)  it if the deal is a good one.

I also don’t like giving up chunks of cash these days which sort of contractdicts my logic but I’ve a business to run so there are always places to stick capital.