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.

@BellatrixLestat

For a moment I thought you were going to turn it around onto pets

Horses for courses. I didn’t want a monthly payment so mat leave is more manageable. As people say it’s all choices.

its financing a brand new car when you can’t afford to do so

Yes, if you can’t afford the monthly payments then obviously that is living beyond your means. But a PP said I’ve never understood why people buy a car on finance. Live within your means. My point is that using credit to buy something you couldn’t afford to buy outright isn’t living beyond your means. It’s using an option available to you buy something there and then rather than having to save over several years. If you can afford the monthly repayment it isn’t living beyond your means.

The OP is making a judgement that her ‘friend’ who is buying second hand baby items can’t afford to pay the monthly amount on her car. Unless her friend has told her she can’t afford to eat or is about to lose her home than that is entirely the OP’s opinion and her friends choice on how she chooses to spend her money. I couldn’t afford to buy my current car outright without saving for years. I can easily afford my lease payments. Can’t see a problem.

Whether they can afford it or not is up to them. They are paying for it...and as long as they are able to pay their rent/mortgage, feed and cloth themselves... then they've covered their basic needs.

Some people don't like old cars and can only afford newer ones on finance.

As long as these ppl aren't begging me for food...then it's up to them.

Dave Ramsey says leasing a car is the most expensive way to own a car. He also says if you can't pay for it there and then in cash then you cannot afford it. This is why you are left with payments...

This has baffled me for ages. I earn a decent whack but I can't afford to splash out on a new car nor would I want to commit to 200+ quid a month just to ride around in a shiny one that doesn't belong to me. I'm happy with my 15 year old volvo (and that was second hand) - paid for, gone round the clock, and it's never let me down!

My mum loves getting a shiny new lease one every few years and she claims its the reliability and warranty she does it for, etc but that's bollocks with the amount she's paying, she just likes having a shiny new car and there's nothing wrong with that, just not my choice!

People prioritize different things. I know ‘broke’ people whose kids often go regularly without food or clean clothes, but who can always find money for cigarettes.

I was just thinking that ppl do a lot of stuff they can't afford for different reasons.

Like ppl who go on holidays they can't afford...or those who have pets they can't afford.

Some ppl may ask why you own a dog and you are so poor you have to go to a food bank. The dog may be one of their few pleasures in life...much the same as having a nice new car.

Years ago, I remember wondering why one of the senior managers at work had an old car on his salary. Mine was the same model but newer and he would have been earning at least 3 times my salary. Now I realise when you're older, you may well have more financial responsibilities and with kids in Uni... I know what a drain on resources it can be.

Judging from the outside, isn't always a wise move. You have no idea what their circumstances are.

Buying second hand baby items doesn't mean you're skint, it means you're sensible!

Like someone else said I see no point in owning a depreciating asset now , before the car I got on lease now I paid £10k for a car and it lost so much value anyway.
So now I set aside a certain amount of money each month which I happy to spend on car which includes service plan and no mot, warranty etc which for me is a great peace of mind as we don't know any car mechanics and don't have a clue myself .

I got mine on finance because my car died on my at work (carer in community) in the middle of the road at the start of a 14 hour work day on a Friday.

I was told under no uncertain circumstances that if i did not have a vehicle by Mondays morning I would be sacked. And told to walk home after i finished at 11pm (3 miles from home)

Yes my boss was an utter cunt, but i was 18 at the time and new to dickhead bosses (my previous was an ass but not as bad) so i panicked.

Walked into the local car showroom and told them 'I'm easy, i want the cheapest car regardless of what it is, and stick it on finance'

BellatrixLestat

Buying second hand baby items doesn't mean you're skint, it means you're sensible!

It doesn’t no, but in this instance the person was skint. Ie couldn’t make ends meet and therefore asking around for baby items.

As I said, my own DC has many second hand items.

BUT if you can afford an electric car with a good range the running costs are so much less expensive it pays for the lease itself!

Our car does 200 miles on one charge which costs about £4 on home electricity or is free if we charge using our solar. Added to that you've the reliability and guarantees that come with a new car and no MOT if you hand it back before one is due.

If "the poor" didn't spend a couple of hundred a month on leasing, they could be saving that as a cushion for their next car or repairs, etc.

My colleague (who isn't poor - I set the salaries!), asked me persistently whether I was interested in a lease. On the grounds that there would be no 'unexpected bills'.

Nope, just the set in stone expected one of £200/month! My worst unexpected bill was £400, or two month's worth of lease payments.

I bought an old C3 for £1350, it lasted five years, over which time I saved the £3k for my Yaris, which I hope will last 10 - whereupon I'll spend another £3k.

But then other people can waste their money as they see fit.

YABU
We do this as we need a safe reliable car as our families live a days drive away, and the only car I can afford outright is an old banger which wouldn't cope with those journeys, we keep them for three years as that's when it's under warranty and needs no MOT when warranty runs out and we've paid it off in 3 years we use the current car as down payment on new one so there always up to date, I've had too many issues with old cars to trust putting my baby in one, maybe get off your high horse and stop looking down your nose at people because you can afford to buy an 18 month old car outright not all of us have that luxury

I'm fascinated by this leasing thing which i never knew existed - i just thought there were an awful lot of rich people around.

Can anyone tell me - I just had a quick look at leasing deals and they all seemed to have a v.low mileage allowance - eg. 8000 miles per year. I do at least 20,000 just commuting to work, never mind driving away on holiday. Are there better deals out there, or do you pay a v.low sum if you go over? How do all of you with leases manage it?

Yaflamingalah Wed 10-Jul-19 08:50:44
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.

you need to check the lease agreement very carefully , people can end up with big bills for exceeding the mileage limit , and repairs for very minor scrapes and dents and scratches
If it was called renting a car ( which of course it is ) would it sound so attractive?

I prefer to own my cat and not worry about the odd scratch here or there. Bought a 3-yeard old car last year, and now set aside a monthly sum roughly equivalent to what it costs to lease one. That money pays for MOTs, repairs, etc. The money left by the time the car is finished will go towards buying a new one.

Are there better deals out there, or do you pay a v.low sum if you go over? How do all of you with leases manage it?

Can't remember exactly but it's not extortionate if you go over. You just need to ask about it when you are pricing the leases up. As I say we saved because we leased an electric car and fuel costs are practically non existent. (£4 for 200 miles/free with solar).

Because I like a new car every few years and we can afford it.

Alaimo

"I prefer to own my cat and not worry about the odd scratch here or there"

Fab typo

I’m absolutely crying at the cat typo!

@thecatsthecats it's your own choice but you must admit you have been very lucky with older cars not going wrong on you. We have twice (twice!) before dc had an old car break on us so badly and without warning that it was totalled. And this was after £400 / £500 here and there for this and that over time too. Wiped out our savings to get a new one which we could ill afford as we were just about to move into a new flat which needed renovating, and DH couldn't get to work. It was awful. Twice!

We have leased our current utterly normal and not flash car for four years and it was a year old when we bought it so had three years covered by warranty. I found us an excellent deal which meant it was £116 a month, so bloody cheap for what it is! It has started playing up now despite the garage being unable to find anything wrong and we are going to chop it in, take the bit of money we'll have back and get another. A Hyundai this time which has a nice 5 year warranty, or a Kia which has a 7 year one.

We can absolutely afford our repayments - it's about minimising risk, both of safety in an older car and of the thing failing or causing large bills at random, particularly as we have a baby now. I don't see what there is to be sniffy about with that; you can read Martin Lawrence's writeup on moneysavingexpert of all the different options, there is no right or wrong, just different needs and priorities.

I have always found it cheaper to buy cars, but I buy 8-10 year old ones for under 2k.
I just make sure I check the MOT history and have never bought without a FSH.
My last car I bought for 1800, sold it 2 years later for 1700! I spent £300 ish on it in total over the 2 years, so MUCH cheaper than leasing!
You have to know a little bit about cars to do this though, or be lucky!

@pandarific

Or conversely, you've been very unlucky? I grew up in a very rural area. No bus services, public transport of any kind, taxis extortionate. Five miles walk to the nearest of any of these. The consequences of sudden car failure are highly significant.

Everyone drives older cars. They are adept at a wee bit of tinkering. They save so that they buy their next car 3-5 years old and last forever too. Cars generally get replaced because their upkeep becomes more significant than their running costs. Not because of catastrophic, unpredicted failure.

Though I have to admit I was incredibly lucky with my last car running out. It took us on a 300 mile trip without so much as a whimper. Took it into work on the Monday, and that was it, kaput. Perfect timing, as I was off travelling and didn't actually need to replace it until 3 months later, and got a 100% refund on the tax I'd just paid, plus scrappage! Nice little holiday bonus.

@Yaflamingalah I once had a reasonably senior and well paid colleague, who shared your mistrust of new vehicles. She had an 18 year old VW, when eventually it gave up the ghost after nearly 200,000 miles she had to buy a new one. She excitedly called us to the car park one morning and with utter disbelief I saw a car the same make, model and age as the last one, even the same colour, just much lower mileage!