The true cost of your car habit

Christ alive, people can be fucking stupid sometime.  Especially when it comes to the golden symbol of power, the car you drive.

Oi!  You!  Me?  Yeah you.  Sit down.  And listen to me while I preach.  Ummm, ok

So you need a new car do you?
Why do you need a brand new car?  Because my family needs protecting.  Selfish.  Because I’m a car person.  You’re not though, are you?  Because I drive to work 5 days a week and deserve to do this in comfort.  Bugger off.  I need the 300 brake horse power.  When was the last time you went to a track day?  It does 0-60 in 7 seconds.  Bravo, how often do you do that during your rush hour commute?  I didn’t get a degree so I could cycle or get the bus like a pauper.  You got a degree to buy a car?

Brand new cars, especially the so-called desirable ones, are ludicrously expensive.

They have these things called PCP contracts and they are ace
The thing is Finance Zombie, you pillock, you can get a brand new car on a PCP contract for a fraction of the price as a down payment.  Then pay a reasonable monthly payment.  And to top this superb deal off, at the end off it I can trade the car in for a brand new one.  Providing I haven’t gone over the annual mileage, or crashed it…And start the whole thing over.  I get a new car every few years while you drive round in your 15 year old Seat Ibiza with a wing mirror hanging off and crusty monkey poo on the roof from Longleat.  Whose the winner there.

You make a superbly misguided point there, my friend.  I suspect that you are a Level 0 finance zombie.

The thing is, it is easy to get blown away by the hype of it all.  A brand spanking new car every few years and a constant monthly payment.  That’s it.  But how much is this really going to cost you?

I’ve just had a payrise and I could get a BMW 3 Series, just like that.  I can afford the monthly payments.

Ok, let’s have a look at that as an example.

Going to, you can bring up a quote like this in a few swift mouse clicks;

This would get you a brand spanking new;

Make : BMW
Derivative : 320i M Sport 5dr [Professional Media]

Or, if you like pictures;

I like BMW 3 Series, they have big wheels.  A real car guy, huh?

The scenarios
Let’s assume you have only have two choices.

One.  Take the car on a PCP contract and renew it every 4 years, for the next 32 years, that’s 8 brand new cars.  Then buy the last car.  I like the sound of that.  A new car every few years, people would think I am real successful then.  

Or two.  Buy a car new second hand car for the deposit price every 4 years and save the rest.  So you are still getting a ‘new’ car every four years. Hmmmm, I’m not so sure that Barry down the street would be impressed….

With the deposit at £3,305 it could be something like…

With £305 to cover you for MOT’s and services for the next 4 years, your laughing.  Besides, it says that it is whiplash optimised.

Yeah the BMW is quicker, and has bigger wheels and alloys and blah shitting blah.

The outcome
At the end of the first scenario you’d end up with no cash savings and a car worth £11k if the final payment is to be believed.

At the end of the second…. well let’s start at the beginning with some assumptions;

-You use the initial deposit to buy a second hand car.  And every 4 years you’d replace your car with another 2nd hand car for the same amount.  To be prudent we’ll even assume you’ve run the other one into the ground.
– You invest all of the £381.65 monthly payment into a stocks and shares ISA
– You earn a real 5% return on this (after inflation)
– We’ll assume that the monthly repayment remains the same each time the contract is rolled on every 4 years, i.e. there is no inflation (seems fair as we are taking the investment return after inflation)
– We also invest the final payment, £11,273, right at the end of 32 years.
– I won’t take into account difference in fuel efficiency, MOT’s etc between the two cars.

So….. at the end of 32 years you would have a staggering £310k!

That seems like a lot of money for a few cars…

See, I even made a graph;

Compounded monthly car rental payments over 32 years

You can see the drop every 4 years for the purchase of another car and the jump at the end of the final payment you would pay on a PCP contract.

Decision time
This is really another lesson in the power of investing constantly over time and the incredible power that is compounding.  As Chuck Norris once famously said – “They only thing that Chuck Norris is scared of is the power of compounding.  It will literally compound your face off.”.

It is a sad fact that a lot of people will judge you by the car you drive, they will make assumptions about how successful you are in your career, how much money you are earning etc.  And once you are in the loop of caring what people on ShiteBook think about you, as a result of what car you drive, you are in a dangerous loop.  If you downgrade from your Beamer to 10 year old ‘banger’, people will assume that this is through money troubles (rather than recently becoming a PF badass and looking to retire early).  The trick to it all is to truly not care what people on the periphery of your life think.

No one is saying that taking out a car on finance is morally wrong, stupid maybe.  Or even that having a nice car is somehow a bad thing.  But at least make these decisions on your own terms, and not because Barry down the road is judging your car.

If you can commit that much a month, to what at the end of the day is just a car, then you could alternatively save that amount.  It’s just a mindset.  Can you really afford to miss out on the £310k boost to your retirement?  Would you hand over £310k right now to drive a new BMW every 4 years for the next 32 years.  I’m guessing not.

If so, great.  Hoon it about in that BMW, son.  But at least make this decision with the knowledge of the other uses that cash could have.  It could be working real hard for you!

And the example above assumes we are driving a car in the meantime, you could save a wedge more by cutting out cars altogether!

Good god, you really did preach.  Alright then, what car would you choose, almighty Z.

Thought you would never ask.  I would get this one;

Because it is an amazing colour, they are amazingly ugly cars, seem to last forever and are huge enough to act as a van if needed.  And the advert says that it drives spot on.

Or better yet, sack off the car and get a scooter or cycle.  It’s cheaper and if you are commuting, much quicker.

Spend less, save more & Escape the Horde

Mr Z

20 thoughts on “The true cost of your car habit

  1. weenie

    Nice post, illustrating just how ridiculously and insanely expensive it can be to buy those sorts of cars!

    However, as someone who knows nowt about fixing cars, I've always been adverse to buying second hand cars, having witnessed many of my friends who went down the cheap banger route forever having mechanical problems with said vehicles. I've preferred to pay for trouble-free motoring and since 99% of my driving is on the motorway, I need a reliable motor.

    I wrote a post on my cars here –

    I've never gone from one PCP straight to another brand new PCP, I've always bought the car at the end of the agreement, so I could enjoy a few years free of car payments.

    I hope to be able to hang onto my current car for as long as possible and hope that nothing/little goes wrong with it.

    Now that I'm aiming for FI/early retirement, I may have to reconsider my options for the next car I may have to get, depending on where I am compared to my goals.

  2. Mr Zombie

    Hi Weenie,

    Thanks for your thoughts.

    I know I am writing from the perspective of someone who really doesn't need one to get to work, so a bit biased maybe. It does surprise me the amount of people that commute to work in a car and are within a 40 minute walk! And a new car! Perhaps even a Range Rover if they are true nutters. Blows my mind.

    It is tough buying a second hand car, and I've been lucky with mine. If I was doing a lot of motorway driving I would want something reliable, not sure how my old beast would get on with that many miles.

    Although I would have thought a 5-6 year old Polo would be ok, and you could even purchase a warranty for it, and cancel after a year and any problems should have fallen out by then 🙂

    Or you could by a new Kia or Dacia as they seem so cheap!

    Mr Z

  3. Cerridwen

    As someone who doesn't drive and thinks we should all be using public transport/shanke's pony where ever possible (for the good of the planet and our own health) I feel ill qualified to comment. Except to say that if a person needs a car to wave some sort of "status" flag then they can't have very much going for them.

    My bus pass isn't cheap but it's a pittance compared to the price most people pay to move themselves around. Madness.

  4. weenie

    My office is 15 miles away and the only way there is to drive. Even if I took public transport, I'd still have to drive to the tram stop and the tram prices cost far more than my weekly petrol!

    Yes, I will need to look at other makes of cars next time, never considered the likes of Kia etc and they tend to have long warranties.

  5. Tawcan

    It's pretty crazy how much it costs to own these expensive cars. What's even crazier is how people think by breaking down the finance term to something ridiculous long they are paying less money monthly. Think again!

  6. ermine

    Great calculation of the alternative way of putting it!

    That's a mad way to buy a car. I've never ever bought a new car – I could never stomach the amount of value that falls off it when you drive it off the forecourt.

    Took a loan for the first car I ever owned. Then always paid up front, and started saving for the next one as soon as I bought a car so I could do it again.

  7. Retirement Investing Today

    Nice rant Mr Z. It demonstrates nicely just how much many people throw away over a lifetime because they stay consumers and/or don't calculate what things really cost.

    Personally to maximise my Savings I have an absolute monster of a commute which makes weenie's 15 miles look like a commute across a junction in your local village. My calculation is therefore about total cost of ownership with fuel economy being a big part of that calculation. So that Volvo wouldn't work for me. I did however have a Bluemotion version of the VW Polo you show for a time (it's a long story why I no longer have it) and I must say a fabulous car. A 3 cylinder 1.2L engine that couldn't pull the skin off a rice pudding but as a commuting car it ran off the smell of an oily rag and was very comfortable.


  8. No More Waffles


    Good job explaining how ridiculously expensive cars are and how idiotic car payments are. Personally I don't own a car because I don't need one, don't like using them, and because I just find it way too expensive.


  9. Theres Value

    Fantastic post Mr Z. You really lay out how it's properly ridiculous to buy these new cars. It's really sad that people feel that they need them just to impress their friends or family.

    We actually did the missing number 3 from your post – buy a an old BMW with a decent service history. We paid £820 for it almost a year ago, and we put £100 a month aside for repairs/MOT/servicing. So far, we've spent about £100 (new battery, auto transmission fluid, windscreen fluid) on it since we got it. It's a top of the range model, but from 1996! Still looks like a really nice car, and super cheap. After the last pile of French crap we paid over £2000 for, I never want to buy anything that pricey ever again.


  10. Mr Zombie

    Yeah, I'm in a good situation I guess, where if my car breaks its no big deal, so reliability isn't too much of a concern.

    A tram sounds pretty cool! But driving to take another form of transport is never fun, I did that for a while in my first proper job after uni. Properly ground me down!

  11. Mr Zombie

    I had to google Shanke's pony 🙂

    I've tried to get myself in a position where I don't need to drive to work, by living near work. I commuted a while back and then had a job that required a lot of travel by car. Being sat in traffic jams really did my head in!

    That said I do have a car and a motorbike (both are pretty old though and don't see too many miles).

    It is weird though, I hardly use my car, but I wouldn't want to be without it. Getting to the coast or across the country to see my parents is a real pain without a car!

    Mr Z

  12. Mr Zombie

    Yeah – the advertising can be pretty powerful as well. "Your's for ONLY £269 per month…"

    If the APR on the loan is something you'd be happy getting in dividends or on your investment portfolio, then stay away!

    You should see the APR they charge on unsecured loans here, 100%+, sometimes in the thousands of %…!

  13. Mr Zombie

    Hi Ermine,

    Same here, the bonus of knowing that you are the first person to drive it pales in comparison to the loss of value!

    I ended up taking out a loan for my first proper motorbike, because I wanted it soon after passing the test so I didn't forget everything. Bad planning on my part.

    Mr Z

  14. Mr Zombie

    Hi RIT,

    Haha thanks, it's good to rant every now and then.

    Yeah, the Volvo would struggle with a daily grind and probably be pretty noisy on a motorway. But it would work for me at the moment.

    In a few years I could have to opportunity to do some contracting work (after a few years post qualified experience) which can be lucrative. Thing is, it's unlikely that it would consistently be in my home town. So I would probably look for something like the Polo if I do ever go down that route…

    Mr Z

  15. Mr Zombie

    Hi NMW,

    The costs do rack up, even for a cheap one like mine. But if you are willing to have something a bit older that's not cool then you can pick up some bargains, even with as little knowledge as me!

    Mr Z

  16. Mr Zombie

    Hi TV,

    Thanks 🙂

    Good work on finding a car that cheap with full service! Any ideal why it was so cheap? Should run onto 200k with regular servicing. A proper lifetime for a car, haha.

    Yeah, I've had a few friends that had Peugeot's and weren't impressed with them at all.

    Thanks for the comment

    Mr Z

  17. Mr Zombie

    @all thanks for the comments!

    Apologies for delay in replying to them all, wifi has been down at home, no data left on my phone this month (buying a bolt on isn't frugal now, is it?), no wifi at work blah blah blah. (I should have gone to McDonalds!

    But Chateau Zombie is back on the grid!

    Mr Z

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