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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To wonder why people finance cars they can’t afford?

267 replies

MonkeyTrap · 10/07/2019 08:41

Just that really. I saved hard to buy my car, to replace a car over ten years old with 150k miles on the clock. Nothing flash, just reliable and 18 months old. Which was luxury to me.

But it seems so many people finance their cars and ironically, those that can’t afford it drive out a sleek brand new one and those that want to pay outright rein it in.

Think the option to finance everything, sofas, holidays, cars, home improvements is just pushing up the prices where people seem focused on the monthly and not overall price.

OP posts:
alohadaisy · 10/07/2019 08:42

What about 0% finance?

AllTheCakes · 10/07/2019 08:45

A lot of people lease cars now, which is a completely different thing altogether. More brand new cars are now on lease, than on finance as it is a cheaper way to own a car than buying brand new as you don’t suffer from the immediate depreciation when you drive it off the forecourt.

Ellabella989 · 10/07/2019 08:46

My sister and her partner both finance expensive cars (they are already in debt) and they struggle every month to find the money for them. Total insanity!

Original poster
MonkeyTrap · 10/07/2019 08:46

As far as I’m aware, and I stand to be corrected, 0% finance was readily available a few years ago but less so now? That makes sense if you can otherwise afford it. But IMO if it encourages you to buy something beyond your means then it’s still something you can’t afford.

OP posts:
Original poster
MonkeyTrap · 10/07/2019 08:48

My sister and her partner both finance expensive cars (they are already in debt) and they struggle every month to find the money for them. Total insanity!

This is what I’m talking about. A friend was buying my second hand baby stuff of me because she’s struggling and worried how she’ll cope on mat leave. But has a brand new luxury car???

OP posts:
WhoKnewBeefStew · 10/07/2019 08:49

I think you shouldn't judge.

You don't absolutely know their financial situation, how do you know they can't afford it?

I finance my car as I do 1000's of miles for business and get a car allowance

My df finances a car as he likes a new car every 3 years and doesn't have to worry about servicing and running costs

It's horses for courses. You prefer not to spend each month and have a cheaper car. You may like to spend 1000s on handbags or make up for all I know. Some people like new cars and not holidays. Up to them tbh

MashedSpud · 10/07/2019 08:50

To pretend they can afford them.

Ellabella989 · 10/07/2019 08:50

@monkeytrap between them they are spending over £600 a month on finance and they are barely able to pay their rent and live off credit cards. I really don’t understand the logic of not wanting to just buy two cheap reliable cars outright

Yaflamingalah · 10/07/2019 08:50

I’ve made a decision that when I eventually get rid of my (17 year old!) car I will lease one. The main reason is that I don’t trust new cars with all the bells and whistles - meaning that once the warranty runs out a whole myriad of things will start to go wrong with it, which I wouldn’t be able to afford to replace. At least with a lease car I can give it back after 3 years (when most warranties end) and it is the garages problem.

Hadalifeonce · 10/07/2019 08:52

We recently bought a newer car, with a bank loan. We had owned our old car for over 10 years, it had well over 100,000 miles on the clock. We needed a car which would last, and was reliable as we have to travel long distances. The only way to be able to do this was by borrowing money, we made sure that the repayments are achievable, and didn't go overboard on the spec.
This was the first time we had borrowed to buy a car, but knew we needed a better car than we could pay cash for.

EssentialHummus · 10/07/2019 08:52

People aren’t always rational (understatement of the year). They aren’t always financially savvy enough, especially in the face of sleek marketing. They don’t always understand the terms of what they’re signing up to. They see the Joneses doing x and want to do the same.

(Fwiw we’re on a high income and our car is worth, at a push, £200. Not per month.)

applepieicecream · 10/07/2019 08:53

I lease my car. I set a budget I can afford and I find a car in that budget. I don’t see any point in owning a depreciating asset. I get a new car every 3-4 years and no costs associated with an older car.

MyOpinionIsValid · 10/07/2019 08:54

People tend to go to finance when they dont have a large deposit or outright balance to purchase the goods.

If I go to DFS and buy a sofa, with the offer of 0% interest, I do not get discount for paying up front. The money is better in my account that theirs.

People when they buy a car, want a reliable one, yes? After all you wouldnt buy an unreliable one. People dont want one that has been in previous accidents. That generally takes you to newer models, and you tend to have a guarantee/warranty from a dealership that you wont be getting from My Mate Gary In The Pub Car Park. Depending on your vehicle need, it will generally be cheaper than public transport.

HeronLanyon · 10/07/2019 08:54

There are good reasons for car finance and very bad reasons. It’s unlikely you’d know which apply to a random car/person combo so always think it’s not right to judge.

Where you do know then of course some do this for the most awful striving aspirational reasons, surrounded by, and themselves probably, shallow worried about surface appearance over everything.

We’re all influenced by outside influences - sometimes just becomes way out of line and often with cars - often with particular marques I think.

FudgeBrownie2019 · 10/07/2019 08:55

People live how they live and the fault is really with the lenders if they're loaning money to people who'll struggle to meet repayments. Anyone buying a brand new car will know the value will depreciate immediately, and generalising about "those that can't afford it" is a little rude since you can't possibly know everyone with a brand new car has it on finance. They might have saved up just as you have.

However, buying cars is always a bit of a provocative conversation because for some people a nice car is important and for others they see it as something not worth spending on. Both sides can judge the other but I find it hard to get worked up over something entirely unconnected with me; most of our neighbours drive Range Rovers and Jags because a huge amount of the local population works for JLR (little Warwickshire village) and the amount of threads on here moaning about them is unreal.

Cazziebo · 10/07/2019 08:55

We lease because DH's work offer a really good deal. We get a new high spec car every three years with no worry about maintenance/repairs etc.

Buying cheap cars outright is often a false economy.

Inferiorbeing · 10/07/2019 08:55

I leased a car because I was tired of issues on my old one, this one is covered by warranty until I hand it back. I also have the option to buy it out and have saved up to enough to buy it if i wish.. what i dont get is people paying £400 a month for an amazing car which is unnecessary

Pipandmum · 10/07/2019 08:55

I lease a car. It made sense as cars depreciate so fast. I can afford it - I also bargained hard. I did the figures and I would have come out about even (at the end of three years I could buy the car with a lump sum, if I had paid for it with a finance package my monthly payments would have been more and for longer, the value of the car would be the same - though in reality a lot less as it’s diesel). I now will get a new car after three years and my monthly payments are affordable.
It’s up to the individual how much financial pressure they want to take on - some people mortgage themselves to the max, some people don’t. Some people will do the same with cars.

MyOpinionIsValid · 10/07/2019 08:56

A friend was buying my second hand baby stuff of me because she’s struggling and worried how she’ll cope on mat leave. But has a brand new luxury car???

Second hand baby clothes wont kill a child. A second hand old banger very well might. A car would always be the priority for most familys, the need to get to work, to safely transport the children.

ParrotsForLife · 10/07/2019 08:56

I had to get my car on finance (0% mins you) as I didn’t have the funds to buy a car outright and needed to get to and from work. There is no connecting public transport. Cheap car on finance costs me £90 a month.

Geminijes · 10/07/2019 08:59

The poor spend like they are rich and the rich spend like they are poor.

Generally....the very wealthy people are very careful with money when the not so well off tend to be rather careless with money.

Obviously, there are exceptions to this.

Jayaywhynot · 10/07/2019 09:04

We have a car on finance, could afford to buy one but there are benefits to finance, we have a brand new car, no mot, no road tax, free service, no depreciation of value, we hand it back within 3 years and get another new one, works for us. Had a few cars we owned previously which were just money pits

PooWillyBumBum · 10/07/2019 09:06

YANBU. My current car was bought on PCP almost four years ago and I can’t wait to buy a 3 year old Honda Jazz cash, pay myself the “car payment” monthly to use towards repairs and ultimately replacement. Whichever way you cut it, it’s very very rarely economical to get a brand new car or a car on finance and if you’re willing to get decent secondhand cars the monthly cost even inclusive of normal repairs, services and replacement savings far undercut car payments...plus you end up with cash towards your next car rather than nothing!

At a push if we had no cash I’d consider financing a second hand car through a low interest bank loan.

DP gets a hefty car allowance but doesn’t actually drive (they don’t seem to care about that bit!) so we treat it as part of his salary and it gets spent on overpaying the mortgage, pension contributions or lovely holidays rather than ferrying me up and down the A404.

PooWillyBumBum · 10/07/2019 09:07

We have a car on finance, could afford to buy one but there are benefits to finance, we have a brand new car, no mot, no road tax, free service, no depreciation of value, we hand it back within 3 years and get another new one, works for us. Had a few cars we owned previously which were just money pits

You do pay depreciation if you’ve got a PCP, that’s exactly what you’re paying for.

BurningTheToast · 10/07/2019 09:09

One of the best bits of financial advice I was given when I was young was that you borrow money for things that increase in value such as property and live within your means for things that depreciate such as cars and boats. I've never felt the need to buy a yacht but on the whole that's stood me in good stead.