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Comment by helij | Hacker News Reader

Our car was £40k new. We've been paying £400/month for 2.5 years now. It's a 4 year lease. We still owe £22k. They gave us £7k for our old car - that was the difference between how much we owed and how much previous car was worth. Now the latest one we can buy for around £18k once the lease is up I think. Currently I'm being offered £31k for it. So, rough calculation is that the car cost us £120/month in the last 2.5 years if we sell it today. Pretty good deal I think.

Of course we realise we're paying for depreciation but I consider a car to be a fixed expense and honestly if you take a look at the numbers above it's not that bad and we drive a new, safe, no issues (free servicing) car every 3-4 years.

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> if you take a look at the numbers above it's not that bad and we drive a new, safe, no issues (free servicing) car every 3-4 years.

Driving a new car every few years is incredibly decadent.

If you bought a car, paid it off in 5 years and drove it for another 10, you’d be saving thousands every year. Repeat that cycle every 15 years and invest the savings, and you’re talking about hundreds of thousands of dollars in trade-off costs over the course of a lifetime. That might be a reasonable trade-off for folks who are in great shape financially (I’ll certainly be doing it once retirement is funded!), but it’s pure foolishness for the average household.

> drove it for another 10

What about maintenance? There's a lot of moving parts (often the labor to get to the part costs more than the part itself) and a stroke of bad luck can quickly balloon into 4-digit sums.

Paying a flat monthly fee for transport sounds like an attractive option to not have to worry about any of that.

This is exactly it. Worry free transport option. We have a set monthly budget for transport and we get whatever car is we think best available for our budget when lease is up. I never have to worry about service, the car is always in warranty, etc.

I'm driving a 900£ focus, cost me 200£ to service once a year, otherwise it's just ticking a long great...

Maintenance costs are easily managed by avoiding brands which generally require frequent or expensive maintenance. Regardless, they don’t hold a candle to the long term savings.

If one lacks the rainy-day savings to afford a hypothetical thousand-dollar repair bill, one certainly cannot afford to throw away thousands of dollars every year “to not have to worry” about one’s precarious finances.

> one certainly cannot afford to throw away thousands of dollars every year “to not have to worry” about one’s precarious finances.

There are plenty of people who live near paycheck-to-paycheck who also need a car to get to work, where a stroke of bad luck like engine + transmission damage would not only be a significant financial hit but the downtime of the car being unavailable might compound the problem as they can't get to work.

While it's not a great financial situation and ideally nobody should be in it, in reality these people don't have a choice and budgeting away a fixed percentage of their salary on a vehicle that guarantees them to be able to get to work (to pocket the remaining percentage of salary) is a better option than not paying a monthly fee but gambling on the fact that a significant breakdown might completely wipe them out financially and jeopardize the transportation they use to get to work.

It's a bit like insurance - technically it should always be cheaper to self-insure, but insurance exists because for many people perpetually paying the premium is still better than a single event wiping them out completely.

> While it's not a great financial situation and ideally nobody should be in it, in reality these people don't have a choice and budgeting away a fixed percentage of their salary on a vehicle that guarantees them to be able to get to work (to pocket the remaining percentage of salary) is a better option than not paying a monthly fee but gambling on the fact that a significant breakdown might completely wipe them out financially and jeopardize the transportation they use to get to work.

This makes sense so long as it isn't used as an argument for leasing a new car on an ongoing basis. If one actually finds themselves in this situation, the responsible approach would be to find the cheapest possible lease and to save aggressively until they can take the more economical approach.

Leasing is like credit card debt. It makes sense in some rare cases, but in most cases it is wasteful and the average consumer should avoid it.

And yet so many people "can afford" £300 pcm but "couldn't afford" a yearly unexpected maintenance bill of £2000. Even though the latter is half the cost. It's inability to financially plan over more than a monthly horizon. I think it's because financial literacy is not taught. Or is it just human nature that it's harder to choose to put £200 aside every month for future possible repairs than to pay a £300 monthly bill you have no choice over.

As per my calculations our two latest cars cost us around £200/month. That is £2400 per year or £24000 per 10 years. Pretty good for cars costing £30k and £40k new. Buying the same cars and driving them for 15 years would actually cost the same or more. We were lucky as prices of second hand cars were good so we actually came ahead. This might change in the future.

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