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.

Why is an electric car good for the environment? I've never seen a power station that is particularly clean. It's powered on filth that doesnt come out of the car instead of filth that does.

Toyota do a car called the Mirai - hydrogen hybrid. Water comes out of the exhaust. Hydrogen is an infinite resource. Electricity is self generated so it's the cleanest option around.

Easy to fuel (when hydrogen filling stations are in decent quantities)
Fuel can be taxed in a way that electricity can't.
Don't need millions of charging ports.

You'll be talking about the earth being flat next....
So no answer to the reality that the manufacturing emissions largely cancel the advantages of no tailpipe emissions, just a pathetically jibe about the flat earth. OK then.

Why is an electric car good for the environment? I've never seen a power station that is particularly clean. It's powered on filth that doesnt come out of the car instead of filth that does.

The production of electricity does not rely on fossil fuels. It can be produced from renewables. We produce solar at home. It is enough to charge our car. When house batteries come down in price we will seriously consider getting one.

Electricity is self generated so it's the cleanest option around.

Most electric cars do self generate through regenerative breaking.

Fuel can be taxed in a way that electricity can't

And you want to pay more money to this government?

I needed something that was under warranty and unlikely to have things go wrong with it because I drive between 300 and 1000 miles a week and therefore will be running up miles a lot quicker than the average person. A brand new car I pay for monthly (including servicing package) is worth the cost - which isn't much, about £110 a month including the servicing.

When I get to the end of my payment term - about 2 years left - I'll have a car which won't be worth much at all due to the ridiculous mileage, but by then I'm hoping I'll be driving much less and can just keep it until it dies.

If I'd had to buy a car outright I'd have had to buy something older and potentially less reliable than I currently have, without the benefit of a servicing package and no MOTs. In 3 years all that's needed doing to my car is new tyres (again, mileage).

the manufacturing emissions largely cancel the advantages of no tailpipe emissions, just a pathetically jibe about the flat earth. OK then.

People still are buying new cars. Electric or not. Manufacturing advances will happen which will reduce these emissions.

@MonkeyTrap
You are correct, but the general point on financing is valid, I think?

Leasing a car is very similar to a phone as most people "upgrade" at the end of their contract which is the same with a car.

You won't be surprised to find out I don't contract a phone!
I crunched the numbers and worked out I could save ten quid a month by buying my iPhone and going pay as you go. Giffgaff is life!

@letsrunfar

Savvy financing is different to buying a car way outside of your means because it’s financed. You obviously make your money work for you, which is sensible.

But if they can pay the financing then it's not outside of their means is it?

@PCohle

That’s exactly what I was saying... I don’t have a blanket issue with finance. I was talking about people financing flash cars beyond their means. Which I think most people on this post have got a grip of.

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?

While I agree that leasing a car isn't necessarily always a bad idea, I can see a few difference/problems in your various examples.

Firstly, if it were true that finance always has a non-zero costs, and it mostly is, then borrowing is always more expensive. But no-one can afford to buy a house out of one month's salary, whereas many could buy a phone or even a car. So housing is different just because of the size of the amount.

Secondly, with both phones and cars, I think people struggle to analyse value-for-money and buy something shinier and more expensive than they would, if they were paying cash. That's true even if they can afford to pay cash up-front. I think the easier payments do result in people signing up to worse value-for-money.

Especially with phones, there's a competitive market in phones sold directly (not contract) and there's a competitive market in mobile contracts to cater to those phones, so what possible advantage can there be in rolling the two things into one contract, other than to pull the wool over the customers eyes or get them to sign up for more than they really want/need.

I have a prejudict that anyone who has a contract phone is not the sharpest at managing their money. I'm probably being unfair, because there's a somewhat competitive market in contact phones. Having said that, it's fragmented by the fact that different people have different telecom needs, making each groups market small than than the markets for phones and contracts in isolation from each other.

@PooWillyBumBum

*@BurningTheToast we have a very rich friend who says if it floats, fucks or flies...rent it.

Although he has a ridiculous racehorse habit and admits he’s terrible with money.*

I was trying to be more delicate... But I can see his point - racehorses run so that doesn't count as one of the Fs!

My car (fully paid for) is now 7 years old.

Tax, insurance and servicing costs me around £600 a year. That's one or maybe 2 monthly payments were I to lease a new one.

I know which I prefer.

Then why are so judgmental about it? If people can't afford a car outright but are happy to pay a bit more over the long run for the convenience of being able to pay monthly then great.

There's surely no need to tut about "juniors at work who drive a better car than me" and "park it on their mum's drive". Maybe focus a bit less on other people's spending choices?

Pondering about other people’s choices isn’t a crime is it?

Yes, if you are rich, rent it. I think Simon Cowell said similar.

The point for those people though, is they use their capital to facilitate the rental... ie invest 1 million and the return pays for you 250k car lease.

Most people's disposable income if invested wouldn't pay their car finance.

No of course not, but unless every one of your office juniors is regularly having their car repossessed they quite clearly fall into the camp of people whose financing is within their means. So your "pondering" comes across as weird back-patting of your own choices.

I lease my car through the motability scheme, I give up the mobility part of my disability allowance to have a car that I know will always be reliable, means I can get out to appointments & don't have to worry that the car wont start or needs an MOT or repairs. I get a new car every 3 years & my only expense is for petrol, its insured, has full breakdown cover, gets serviced every year, tyres are replaced when needed. Without my car I would be housebound, it's my lifeline that allows me a bit of normality in my otherwise dysfunctional life.

@PCohle

without wanting to get dragged into more mundane detail, same people often discuss not being able to buy their own home so it does all have a knock on effect. When I first bought a house I budgeted to my last £1. If I’d had a flash Mercedes it wouldn’t have been possible at all.

But choosing to prioritise a nice car over being able to afford home ownership sooner is a perfectly valid choice. You sound really judgmental and over invested in other people's choices.

Good for you budgeting to your last pound. It doesn't make you morally superior to those that don't.

@PCohle

I don’t think I’m the gold standard for moral choices. Again, I was just pondering. You seem overly invested in your judgement of me with a desire to infer things for the same purpose.

I'm sorry you feel like that. If you're sensitive about feeling judged posting in AIBU is a brave choice!

I have always said I don't understand why people buy a car on finance. Live within your means.

I understand some people can't afford to save loads of money and if there's a 0% interest option then may be it's ok but only if you can comfortable afford the repayments.

Those saying that buying a car on finance and paying interest means living beyond your means, I took my mortgage out over a longer term in order to have my dream home but keep the payments at a more comfortable level as we were planning on starting a family. Obviously this will cost me more in interest. Does this mean I’m living beyond my means? I don’t think it does.

I’m paying my mortgage, car and bills with money left over for spending and saving. If I was paying finance instead of a lease and therefore paying interest I would still be living within my means. Just costing myself a bit more money in the long run. My choice surely? Why do people seem to think they are superior for making different financial decisions? I personally have never paid a penny interest on a credit card. Always paid off in full or had a 0% deal. I don’t question those who choose to use a credit card differently and pay interest on it.

We have one we own and one we lease. The one we own is a 6 year old big family car that we use for long trips and to ferry the kids around. The lease is a 1 year old small, economical car that DH uses for work. We look at it like renting. A cat is a depreciating asset, so unlike property, it's not an investment which pays off in the future. We get a brand new car every 3 years with no MOT or road tax to worry about. Can't see the issue with that tbh. We can afford the payments so we pay them.

Those saying that buying a car on finance and paying interest means living beyond your means,

It's not paying interest that is living beyond your means, it's financing a brand new car when you can't afford to do so. The interest bit though does make sense, the most credit worthy people who usually qualify for totally unrest free are ironically the people who can afford it anyway.