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.

We own 2 cars and lease one we had the leased one before I inherited one. And owned one before we leased. Both owned cars are doing really well for their age one is 14 years old and the other is 9.

We leased because I paid 5k for a car then over a year paid 2-3k on repairs then the blasted thing died anyway, good bye cash, so I went and leased a brand new car for what I was willing to pay a month. The pcp was cheaper than HP.

Once my pcp is up, I can buy the car which I probably will do and get rid of the 14 year old car.

At the time of the pcp I didn’t have the spare savings money as the other car ate into my savings. And I wanted something which was reliable and if anything happened it went straight back.

However of money starts getting tight I can send the car back now win win for me.

But then I don’t judge other people 🤷‍♀️ I don’t give a toss about what people can/can’t afford to drive.

Op, can you really not understand why people do it? Or are you just angry that people made a different choice to you, and therefore appear richer than you, when you know they’re probably not and that upsets you?

My reasons for leasing- a newer car is more reliable and has a warranty. I can comfortably afford the monthly repayments. There you go.

I’m not driving round a big 4x4 or anything, just a car that fits my family in and gets me to work. I didn’t know it would upset so many people on the internet

We lease an electric vehicle. The technology is moving on so quickly we will want to change it when the lease is up because we will get more range when the time comes. Because it is electric it is far cheaper than running and leasing a petrol or diesel car bought outright or on a PCP for us, especially you factor in the repairs for an older car but even without factoring in repairs it is still far cheaper. We get free electric off our solar panels too! Win win!

Lots of misinformation about leasing - it's not always about wanting a car you can't afford outright.

Leasing is zero hassle. If anything goes wrong, you call the lease company and they fix it. They pay the tax, the insurance. If it needs new tyres or a service, they pay. The monthly payment Is all your car costs you, apart from fuel.

Lots of people want that certainty. And are prepared to pay more for it.

We leased because I paid 5k for a car then over a year paid 2-3k on repairs then the blasted thing died anyway, good bye cash

This exactly describes my car experience @LittleGinBigGin

@applepieicecream agree.

PPs keep mentioning that having cars on finance is about "keeping up with the jones" and "flash cars" yet the top three most purchased new cars in 2019 are Focus, Golf and Corsa. I imagine most are leased or on PCP deals as most people don't have £10k lying around to purchase outright. They are hardly flash cars. In fact I'd consider these pretty bog standard, family cars and you can probably get a decent deal on PCP to buy new.

As @Greaterthanthesumoftheparts says often the cost of leasing is equal to shelling out a lump sum plus repairs etc. Some people will prioritise a new car for reliability or safety reasons and there's nothing wrong with that if you can afford it. People making poor financial choices and over stretching themselves is a problem but it's a bigger issue than just car purchases.

PPs keep mentioning that having cars on finance is about "keeping up with the jones" and "flash cars"

Not for us. It was because we wanted to try an electric vehicle and leasing makes sense with vastly developing new tech. Electric cars are very economical.

We have gone through so many cars over the years, and I can safely say I would rather spend a few extra pounds on a car that will last longer after some bad experienced.

In the mid 2000s we bought an early 1990s Honda, crapped out on us less than two years later (didn't have heaps of kms on it). We also had some shitty 90s Subaru Skyline which didn't last very long either before we flicked it, followed by a crappy Toyota Carib. All were bought out right. DH was a van driver so he had his own vehicle on finance.

Enough was enough and I persuaded DH to buy a nice new Mazda, the relief of not worrying about breaking down road side, or dreading spend £££ on repairs. I once had to get these two men to push my bloody Toyota when it stopped at an inter-section, so embarrassing.

Keeping up with the jones’. I’ve got the car I’ve wanted for years and got 40% of it on finance the rest I paid for outright. Because that is what I could afford. I went for an older car, but still in brilliant condition and I can afford it love it it’s what I’ve wanted since I first passed my test and it is flash a lil flashy. Whereas people around me are getting £300-£400 pm cars and that isn’t including insurance. And at the end of this u do own the car, when you lease them if you go over the annual mileage, fuck the exterior interior I believe there’s quite a price to pay? There’s nothing wrong with finance if you can afford it.

@bingbongnoise

You're wrong about mileage limits. Offers will be on lower mileage as this will be a lower monthly payment. You can get a PCP on up to 30000 miles a year, but your payment will be higher (a car coming back with 24000 miles on will be worth much more than one with 90000 miles so the GMFV will be lower).

Mileage penalties only apply if you hand the car back at the end. Finance companies don't care about your mileage if you pay it off or you part exchange as they're getting their money back. If you hand it back, they care because they're going to have to sell it on.

Some people just like a nice car, can afford it and don’t want to drive something 10/15 years old

We have two cars, like most families these days. We stagger when we replace, so we always have one that is pretty new and one that is fairly old. For long/family journeys, we just use the newer one. At the moment, the one I drive is 11 years old, the one my OH drives is 5 years old, neither looks old or battered - both have nearly perfect bodywork & interiors.

People don’t want to save up for the things they want, they want them now and they want want they perceive as the best.

My sister qualified as a social worker and leased a car to be able to get to her countless appointments. She couldn’t accept the job without a car. I’ll text her now and let her know she should have just “saved really hard” and not been so “greedy”

There’d have been no use in her buying a £300 runaround to then get stuck in the arse end of nowhere between her rural appts because the fucker gives in, just so people like the op could be like “good for her, driving the heap of shit she deserves” 😂😂

We have a new kitchen. It cost about £20k. We had the option to pay the whole lot up front or take 0% finance. Why WOULDN'T you choose to spread the cost??

If I could afford to pay up front I would be looking for a discount of 5-10%, my mother used to use electrical and furniture shops that offered 'free' credit and haggled a discount. Nothing like a person walking to the door to change the minds of the staff!
A friend used to ask for a discount for cash on almost everything and he usually got it or some other incentive.

I have financed cars for over 10 years. I never purchase anything that is more than I can afford but I always get a car that comes with a servicing plan, a years tax and in my most recent experience a years free insurance. I don't have to pay MOT for 3 years and the peace of mind I get that my car won't break down leaving me stranded with 2 young children is great.

I agree that some people go over the top and are paying silly money for cars.

I give mine back at the end of the term and can choose another one if I wish.

But that's not the way kitchen finance works. The finance is arranged through a financial services company - think its Barclays. So on the day the kitchen is paid for, the kitchen company gets the money whether you're paying in cash or taking finance. There is no advantage to them in me paying by cash or bank transfer.

Same with sofas or similar purchases. Supplier gets their money immediately.

@oldwhyno You're both right and wrong about 0%. No-one will lend you thousands for nothing.

Manufacturer finance will do genuine 0% on new cars as they'll make the money from the actual selling of the car to the dealer.

Used cars will never be genuine 0%. We've been offered a 0% package to offer customers, but we have to pay the finance company £250 per deal because, as I say, who's going to lend you thousands for nothing? This means there is much less wriggle room on the price, because not only are we not making any finance commission which we could have used to sweeten the deal, but we're actually paying for you to take the finance.

The garage over the road from where I work offers 0% over 5 year HP, subject to Ts and Cs.

The Ts and Cs are: minimum 60% deposit, can only fund £5000 at 0% and anything else is 13.9%.

So on a £20k car, you need £12k deposit and are being charged 13.9% on £3k to get £5k at 0%, yet there are flags and signs all over advertising 0%!

Different priorities in life.
Buying secondhand cars and paying for them outright of course reduces your cost of motoring. Some people love their cars though and are happy to spend up on them.

@LadyRannaldini, we would let your mother walk away if she asked for a discount for cash. We're not allowed to offer incentives for cash or finance. Finance companies can offer incentives as "deposit" contributions, but a customer walking in saying they're cash customers won't get anything more than any other customer (despite the usual arrogance they display).

I think the used car market is changing. The emissions rules are getting tighter - most 10 yo + diesels will be banned/suffer higher charges in city as clean air zones kick in. Euro 5 is probably 3 years or so... Also to reach emissions targets cars are getting more complicated and temperamental - DPFs being the obvious one. We spent 2k+ on a DPF sensor on DH's car - fortunately it didn't kill the DPF ( another K at least).

Certainly sofas are less good quality than they were - impossible to get decent 2nd hand ones now - they're all knackered while 5 years ago 2nd hand sofas were built so much better!

We both lease, however DH runs his through his business.

After spending nearly £5k on a VW Golf that was a few months out of warranty, we said we'd never buy again.

This way, we have a monthly amount, service usually once during the 3 years and replace tyres. Stress free motoring. We could afford to buy outright but we chose not to.

The thing is, I can afford to buy a new car. But why would I use my own money if they’re offering finance at 0% apr?

Yes BIL is like this- madness to me!

@AmateurSwami

You sound far more upset than me, are you projecting?

I don’t think anyone is “upset” just pondering... there’s a marked difference.

We leased because I paid 5k for a car then over a year paid 2-3k on repairs then the blasted thing died anyway, good bye cash

So if you could have found a one year lease, that would have been 666 a month equivalent. The only difference with the lease is certainty - you are still waving goodbye to cash - you just know in advance how much.

Also interesting that if I came on MN to declare my love of wet wipes or single serving cheese, I’d probably get shot down. But it seems ok to dispose of a half tonne (and often more than) box of plastic, fibre glass and metal every three years?