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

[MonkeyTrap]

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.

Bluntness, great!

@silverystream is it a pain in the arse to charge though? How long does your battery last and how long does it take to charge? We have a charging point a few streets down and in the market for a new car soon so would be interested in how you find it.

It’a just a different way of doing things. What’s the difference between paying an amount per month for a car that you drive or saving an amount per month (while you drive what?) in order to buy a car in a few months or years.

I don’t see car finance as being different from any other bill. I make a choice about what things I want in life and whether I’m prepared to pay for them eg sky tv, expensive holidays, phone contracts etc and if the price is acceptable to me for what I’m getting then I’ll have it. If not, I won’t.

panda, no, not a pain in the arse. We've got a 170 mile range which means we mainly charge at home. We have a charger at home but you can charge overnight on a 3 pin if you want. On longer journeys we stop for about an hour to charge on a rapid charger at the service station, usually have lunch read a book a bit etc and then we get going again. Tbh we pretty much always stopped on longer journeys anyway. The newer models have more range so you would need to stop even less frequently.

What’s the point in being a martyr just so you can say you own your car?

I think there’s more reasons than just being “able to say it”.

Nobody IRL knows I own my car because it don’t tend to discuss it.

Monkey, would you consider leasing a new electric vehicle?

Can't afford to buy a car outright, at least not something which would be reliable and safe. Very cheap cars need you to have a bit of an interest in cars IME to maintain them etc,otherwise they are more of a money drain than they give you in utility. We don't, so it's an area we'd prefer to spend money on to make sure what we have is suitable.

Then if we're getting finance on it anyway, we might as well go for exactly what we want in terms of size, safety, new features etc. With a brand new car you have the warranty which does make a difference to running costs too.

Essentially though, we're going to have to spend out on it anyway. Why not spend out for longer to get exactly what we want?

@silverystream

I’d only lease if it didn’t cost me anymore money than cash. I have a thing about minimising monthly outgoings. I think from when I was single and every penny was accounted for before I had even got it!

An electric car would be ideal for me at the moment. I do very few miles probably 5-6k per year.

Why do people take out loans for hundreds of thousands of pounds on relatively high interest that they will be tied to for thirty years in order to purchase a wasting asset with a fundamentally unstable underlying value? Because all of their friends have mortgages 🤷‍♀️

@RubaiyatOfAnyone - I do a higher mileage too & have more or less ruled out a PCP, as they seem to cover only 8-10K miles a year.

I'm planning to buy an ex-demo or pre-registered car in the next couple of months (max 2 years old), using a low APR loan (I can get 2.9% from M&S bank).

I like the idea of electric cars, but they are really expensive eg 20K plus for a 2-year old Prius. I do at least 20 miles a day & work for the NHS in the community, so don't have regular access to charging points.

Hopefully by the next time I change my car (about 5 years), an electric one will be a viable option.

Well it would be worth you doing some sums, Monkey. If you were to get a new electric you might find leasing cheaper than buying a petrol or diesel second hand. It depends on what you need it for and which model you choose. It was worth it for us as my DH uses it to commute to work which is 30 miles away. So we really save compared to the petrol/diesel costs. We do need a reliable car and do do long journeys several times a year to see family. An old banger is just not good long term for us.

Thanks Silverystream.

My car is not a banger though

More, it might well be viable for you now. The ranges are going up all the time. We have been leasing brand new and look at cars worth about 30k brand new. Some plug in hybrids have a 30 mile range which might also be viable. It would mean if you are only travelling 20 miles you could use mainly electric and charge at home at a cost of about £1 for a 30 mile charge. Only use the petrol/diesel if you go further. The deals are changing all the time it is worth a look at them.

My dh works in car sales and he says that increasingly people are leasing cars rather than the more traditional pcp etc. He also reckons that with the increase in electric cars in the future we are going to see less and less people owning cars and more leasing. It's the future.
We are paying for our car on finance, we could have bought it outright but the payments were reasonable, low interest rate etc and we wanted our savings to go towards home improvements instead.
Lots of people like the security if pcp etc as they dont have to worry about servicing, parts etc. Half my dh customers are older people who like having a new car that they dont have to worry about breaking down and having to pay for servicing etc.

@silverystream - 20 miles a day is my absolute minimum. It's generally 40+ & just too risky to be caught out. I have childcare pickups to do & can't be late due to having to charge up.

It sounds like the technology is changing all the time though. If I change jobs (unlikely) it works be a good option. I really like the idea of a hybrid.

getting anything on finance is a marketing genius! Think about it... If everyone had to save money for years to buy a new car? Economy would slow right down...
So, someone came up with the brilliant idea to tap into the populations future earnings! Guaranteed income every month, no waiting around. Can increase the price of the item - thanks to sold first paid later! Fines if you don't pay ... 80% success rate of you factor the odd rouge in. 💰💰💰 !!!
It's also a time bomb fuelled by inflation.

We have cars on lease. We could afford to pay outright but prefer to have the money in savings, and choose to finance the cars instead, or more likely these days - lease. We set a monthly budget for leasehold and select a car accordingly. We change our cars every 3 years approximately.

I have an electric car - at present I would never buy one outright. The future is still a little uncertain, especially regarding the batteries and all the second hand market. DH has a large car but will change to electric next year. He could afford to pay out in full but chooses to lease too.

We've no desire to have an older car personally and would never keep one for decades, especially not newer build cars and definitely not electric ones. Lease works well for us - its just a monthly expenditure that covers our car 'ownership' not an investment.

Fake it til you make it is certainly a big factor with everyone I know who finances car, tele etc.

I’d only lease if it didn’t cost me anymore money than cash.

It's very unlikely that is going to be the case.

@applepieicecream says it perfectly for me.

silverystream - 20 miles a day is my absolute minimum. It's generally 40+ & just too risky to be caught out. I have childcare pickups to do & can't be late due to having to charge up.

You would be fine with a plug in hybrid. After you have used the electric up (typically 30 miles) it automatically switches to the diesel/petrol tank. So you don't have to charge unless you want to.

A pure electric with a range like ours would be fine (170 miles). A battery that size costs about £4 to charge fully. You only need to charge after you have used most of it up. So 170 miles costs you £4 in fuel. However the new models have a range upwards of 300miles depending on the model.

Worth looking at the sums.

Aragog, it can cost less due to the savings you make with a new electric vehicle.

Not really your business tbh. And I say that as someone who drove her old car for years and bought her next new car outright

I agree OP seems mad to me. I know loads of people will swear it's cheaper to lease etc but lol. Of course it is not cheaper long term to only ever drive cars under 3 years old and be constantly replacing them & never actually own them.

However I love all these fools driving round in brand new cars on finance.... every year that passes there are more and more good condition 2 & 3 year old cars on the market! The excess supply of them is pushing the prices down so lucky old me gets a bargain