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.

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?

Because you could have negotiated/haggled a discount. Someone in the supply chain is paying for that 0% deal, someone is getting commission etc. I've just counted and we've had 10 cars over our driving lives (70 years between us) and neither of us have ever paid the asking price at any garage for either a new nor used car. I even got a hundred knocked off my first ancient wreck of a car when I just turned 18, from £700 to £600. Yes, there have been a few garages that won't negotiate, but plenty who will, so we just walk away and go elsewhere. (Knowing how the registration and dealer bonus system is also helpful ).

@MonkeyTrapMonkeyTrap

@AmateurSwami

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

That’s an excellent comeback, monkey. I want to drive an old car and cannot, you got me.

Im talking about my juniors at work, who drive better cars than me, then can’t afford a x, y and z. Who clearly don’t have £X for that car sat in the bank and are being savvy.

But it's up to them how they prioritise their spending and clearly they want a nice car more than x, y or z. If they don't have the money in the bank but can meet the finance payments then they can afford a car that they just don't have the cash for up front.

You just sound annoyed that the juniors at work have a nicer car than you.

But it seems ok to dispose of a half tonne (and often more than) box of plastic, fibre glass and metal every three years?

They are not disposed of! However when tech is new and getting better with regards to electric cars it really does make sense to lease! The range has gone up from just over 100 miles for the affordable cars recently to the newest ones offering a 500 mile range. Prices of the new tech is also coming down. And an electric car is good for the environment. No emissions. Power it off solar and renewables.

But it seems ok to dispose of a half tonne (and often more than) box of plastic, fibre glass and metal every three years?

Yeah, at the end of the lease it’s pet if the contract that you just dump the car in a local stream.

Hiding this thread now, no way op isn’t Katie Hopkins 😂

Have a good day all

Approaches and attitudes to finance and ownership in general have shifted a lot even in just the last 5-10 years. For instance, these days software is often on a subscription basis rather than buying a disc once and having that for your PC or laptop. Printer ink is the same. It used to be that you sold a machine cheap (like a printer or console) and the materials or software to use it were more costly. Now, you buy the machine still fairly cheap (depending on what it is!), and you subscribe, eg to software, printer ink refills etc. Same with things like tv subscription services.

I think mortgages are pretty wild. Borrowing hundreds of thousands of pounds, for something like 25 or 30 years, in order to own your own home. Most people don’t think like me, because culturally we’re a nation that likes home ownership (generally speaking) and most people think of this as a sensible investment. But surely it’s much more commitment (and therefore, risk) than leasing a car for a few years.

But yes, if people are taking out debt - any debt - that they can’t reasonably estimate to afford, it’s not wise. Otherwise, financing enables a certain flexibility and keeps the wheels of our market turning rather than everyone waiting 5-10 years to buy a car, 30 years to buy a house etc.

I love the comparison to Katie Hopkins. I think she can afford her own car. It’s probably flash too!

I’m ready for a new car. It’s 18 years old with about 80k on the clock. Toyota Corolla
Looking at a second hand auris.
I’m shocked at the prices of a 10 year old car.
I would never buy a new car

As a single parent, protecting my income is a priority. My 10 year old car was breaking down and costing me both in terms of fixing it but also in days lost working or having to take a taxi. In the end, it was cheaper for me to buy brand new on £0% finance than to get something a couple of years old and get a loan. I know I was judged (‘how can she afford that‘ overheard in the playground) but with three children, the smallest cars available just don’t cut it. It’s not a premium car, far from it, and no, I couldn’t afford it I. That I needed finance but what else would you have me do?

And an electric car is good for the environment.

So you're not worried about the mining of scarce rare earth metals to build the batteries? You're not worried about the mileage that the component parts are transported all over the world to assemble it?

For us, buying a brand new car on finance was a no-brainer. We got a significant discount by trading in our old banger for a well-researched reliable car. Might not be a 'cool' brand but it is reliable and safe with good reviews. Finance is well within our means so we feel comfortable and it was a very good deal. We are comfortable financially so it's just not a worry for us.

It made more sense to do that than PCP as we will own the car outright in a couple of years and plan on having the car for 10 years at least. So a significant portion of that time will have no to little monthly outgoing for it. Yes, we will have maintenance but as we have gone for 'sensible choice' and have 5 years warrenty/no Mots etc. So we feel fairly confident. It would be less than a constant monthly outgoing as we. At the end of 10 years, we hope to get a little money back for it too as it is likely to be fairly low mileage.

I imagine the situation would be different if you wanted a brand new car every couple of years or rent a car that is out of your normal price range.

We're just not bothered by the prestige of the car and much more concerned about not inheriting other people's problems, reliability and safety.

My first two cars were 10 year old hand me downs from my parents. I was very grateful as an eternal student, but both ended up costing me a fortune in maintenance. When I was finally in a position to buy my own car, my husband and I took out a loan, and bought a 3 yr old cheapish car. It will be 7 years old when we "own" it.

We won't have to pay the £168 a month on the loan, but I'm guessing it then moves into the territory of "wear and tear". Plus we continue to pay insurance, tax, MOT etc. I've read a number of these threads - and a couple of friends have done PCP recently. When we come to get a new car, I still can't decide whether we're being silly for not doing PCP, or silly for continuing to spend money on a depreciating asset!! Especially as no doubt we'll take out another loan to buy anyway. So we're going to keep borrowing money to finance a car somehow.

So you're not worried about the mining of scarce rare earth metals to build the batteries?

Battery technology is advancing all the time. They can be produced in various ways.

You're not worried about the mileage that the component parts are transported all over the world to assemble it?

You could say the same for any piece of tech. Yes, we should manufacture in this country but that will only happen when there is a market for it. Avoiding buying electric does not help.

Why do you think running inefficient fossil fuel cars belching out particulates is preferable? You are supporting the oil business. You are creating pollution every time you run the thing. The type of pollution that we see the effects of very close to home and immediately.

Not this AGAIN there have been multiple threads on the same topic.

I lease a car via salary sacrifice, a model that I couldn’t afford to buy outright. However, as this model holds its value well it works out a similar monthly payment to other cheaper cars that would be more affordable to me if buying outright. You might look and wonder how I’m affording it (I’m assuming you probably would given your OP) but without knowing the details of my agreement you could never know.

My reasons for leasing a car (not that it is anyone else’s business) are

• convenience. I chose what I wanted. It was delivered to my door. I know exactly how much it will cost me every month. No unexpected bills. I don’t need to sort out insurance, tax, breakdown cover. The nice lease company do it all for me.

• reliability. It’s new and under warranty. It’s unlikely to conk out on me but if it does, it’s sorted for me.

• after 3 years I get a new one. I can try something different. I don’t need to worry about when the run into the ground stage is going to hit and when I’ll have to buy a new one.

• shoot me now but... I love it. I love how comfortable it is, how it drives, how it looks.

Yes I could have saved some money in the long run and saved up and bought outright as you chose to do, but for the reasons above I haven’t. I don’t judge you for your choice, please don’t judge me for mine.

If I choose to allocate more of my budget than is strictly necessary to my car while shopping at Aldi and buying second hand elsewhere than I well - buying second hand toys for my daughter isn’t because I can’t afford to buy new, it’s because it’s better for the environment and makes financial sense whilst still being convenient. An old car run into the ground isn’t convenient to me.

PPs have mentioned the environmental impact and yes, new cars all the time aren’t great. However it’s not going on to the scrap heap at the end of the agreement. It’s been well looked after and will no doubt be snapped up by someone like OP who is buying outright to run into the ground... if we all did that we’d soon run out of cars.

Oh and also, I always have it in the back of my mind that if something went really really wrong, we could always sell it as a relatively new car for instant cash in an emergency.

It doesn’t make sense to finance/lease a car if you then struggle to afford it and have to cut back elsewhere. Same for any other purchase.

But people who can afford it could opt for finance/lease. I’m trying to buy a car and could pay cash. But if it’s more than £15-20k I’d look at finance to keep the cash in the bank and potentially future proof - if diesels get mega taxed I could swap to an electric car in a few years.

I think they do it to look like they can afford these things and are well off.
I think easy credit was the first move to eradicating social class.
before credit it was so easy to tell someone's class by the standard of living they have.

I think easy credit was the first move to eradicating social class.
before credit it was so easy to tell someone's class by the standard of living they have.

This is true and social mobility is a good thing. Until you’re working past pension age and can’t afford to retire...

I think they do it to look like they can afford these things and are well off.
Really?? Most of us don't even speak to our neighbours let alone give a flying fuck what their views on our perceived financial status is! I like to drive a nice car because I love nice cars. I'm totally indifferent to holidays and have to wear uniform at work so don't give a shit about clothes. So every 3 or 4 years I have a nice new car on PCP, and bloody love driving it. Get a warm glow every time I look out onto the drive and see it parked there and a tingle when I start her up, even to drive to work.

The same reason a lot of people "lease" their phone, which is effectively what a contract is. 45 quid a month for 2/3 years. Then get a new phone and contract.

Getting a mortgage means you "own" a property you can't afford in outright cash terms.

So a car is no different, you pay your £300 a month for a brand new car and after 2/3 years, it goes back and you start again. What's the problem?

We've done it slightly differently.... we took advantage of 0% to buy both our cars. One is now 8 years old and the other nearly 4. If you're willing to buy and keep the car for a prolonged period the yearly cost comes right down.

For instance when our Volvo hits ten years old (8 now) it'll have cost 18k divided by 10 equals £1800 per year to own, plus servicing and consumables, about another 200/250 so all in it's a couple of grand a year.

If we'd leased the equivalent, it would be at least £300 a month plus initial deposit so you're talking well over 3k if not 4K a year to lease.
But you have to be willing to drive an older car and lots of people want a new one fairly often.

And an electric car is good for the environment

Depends how you do the sums. The majority of emissions from vehicles comes from their manufacture.

Electric cars do produce particulate pollution, too just not out of a tailpipe.

Driving an electric car is not saving the planet.

Oh and that's if the cars are worthless after ten years which obviously they won't be... so it's even more cost effective.

@letsrunfar

You own your house and phone at the end of the term.

Driving an electric car is not saving the planet

It is far preferable to driving a petrol or diesel car, though. Why do think environmentalists are going for electric? You'll be talking about the earth being flat next....