To not think loans for luxury items are a good idea?

[ReallyBadEyeDeer]

As in expensive watches, designer handbag, sports car, aesthetic surgery.

Things that someone might really really want and arguably could make them much happier in life, but involve taking a bank loan to pay over a length of time.

Even if you do have the income to pay it off monthly without causing financial strain. What if something changes in future?

I wouldn’t take out a loan for anything apart from a mortgage for a house.
If I can’t afford it at the time I can’t afford it. I’ll save up and buy it when I can.
Im risk adverse, you never know what the future holds.

I used to think like that OP. However I have changed my stance.
I'm not really into luxury items, however if I wanted something I would consider taking an interest free loan. it would make financial sense for me to. I have plenty of money in savings. I would not be eating into my savings and paying off monthly and amount that I can afford

Also it would help my credit rating. I currently have no mortgage as I have paid it off, I have no debit card debit, no loans and my council tax and utilitey bills are up to date and I paid for my year old car by bank transfer so on paper I am not a good credit risk.

Debit isn't necessary a bad thing. It is a money management tool.

Ultimately debt is only bad if you can’t afford to service it - and if you can’t afford to service it, it doesn’t matter whether you’ve taken it out for a designer watch or a replacement washing machine. If you can afford to repay it, it also makes no difference whether you’ve taken it out for a designer watch or a replacement washing machine.

Sometimes I use credit because the interest on the loan is less than the interest I am earning by keeping my money in the bank.

aside from something like a house, an education, or maybe a car, most purchases can wait until you have the money. Luxury purchases absolutely can and should wait.

Debt is inherently bad if you waste money on interest. It really doesn’t there if you can afford the payments in the long run. If you pay twice for a holiday or a handbag than you would have paid by saving in advance, then it is wasteful. You could have two things instead of one with a bit of patience.

Things that someone might really really want and arguably could make them much happier in life, but involve taking a bank loan to pay over a length of time

Do you mean tens of thousands of pounds or even just a couple?

We save but still borrow a few thousand from credit union every year to put towards our big summer holiday (save up through the year for smaller ones) we just add in a bit extra for the loan every week on top of our usual CU savings and have it paid back by the next holiday and repeat.
I suppose a holiday is indeed a luxury and a loan is debt, but it doesn't feel like that.

It definitely does make me happier😅

Sometimes I use credit because the interest on the loan is less than the interest I am earning by keeping my money in the bank.

I do this, so for example I have the money for next summer's holiday in the bank, it's in an account attracting 4.75% interest, paid for the holiday on my 0% credit card, because I use it for other expenses such as petrol which I pay off immediately I meet the minimum payment requirement easily each month, and the only money that sits on there is the holiday, by the time next July rolls around I will pay off the holiday and the interest pays for the hire car.

Having said that I am very strict with money, debt etc and can be trusted to do this with a credit card and not spend frivolously or incur charges/interest. I don't have any actual debt other than our mortgage and previously student loan. I've always saved to buy what I need

YANBU
As you say, circumstances can change and I'm much more of the opinion "if I don't have enough money for it then I can't afford it."
Yes half the time this, means I don't buy myself quite enough nice stuff but at least I'm debt free and have relative peace of mind 😁

Hmm mix of opinions. Talking around 5-8k on the type of much longed after item that will not be available forever (rare) so that makes the saving up for it over time tricky.

I agree. It's so easy for people to get into debt. I've never had credit for anything - I refuse to pay the shocking interest rates.

It depends. I have savings, but i have no loan history. I want a home improvement loan at some point.

I could have just bought it, but i didn't want to dip into my savings (psychologically) so I got a loan for a handbag and paid 40 pw for about a year. I just chose to do it that way. But I've no car loan, and atm, no other loan.

Obviously if you fall into a pattern of go-to "ill get a loan!" thinking, for any thing that you want, that ain't good.

Talking around 5-8k on the type of much longed after item that will not be available forever (rare) so that makes the saving up for it over time tricky.
If you can afford the loan,whatever it is, isn't going to be around forever and it's something that will make you happy, why not?
Look round for best interests rates, preferably 0% ones and enjoy your item.
Life doesn't have to be sackcloth and ashes and if it'll give you joy, go for it.
As long as you aren't getting loans upon loans for everything and it's not your typical lifestyle o can't see the problem.

These days, if I see someone flashing conspicuous luxury goods, I assume they’re purchased with credit. Those items are made for and marketed to people on average incomes who want to display their ‘wealth’ to other middle and low income people. Buying things you don’t need with money you don’t have to impress people you don’t know is the absolute height of stupidity. With the exception of a mortgage, if you have to take out a loan to buy it, you can’t afford it.

Buying things you don’t need with money you don’t have to impress people you don’t know is the absolute height of stupidity. With the exception of a mortgage, if you have to take out a loan to buy it, you can’t afford it
Wrong. I could afford to to pay cash for a piece of art I love. However it made more sense to buy it on credit. It was 0% purchase and I was protected by credit card ts and Cs.
The piece cost me £3000 5 years ago and I absolutely love it! It makes me smile every time I walk into the room it's in and it wasn't bought to impress anyone.

I don't see anything wrong in having a splurge now and again if you can afford to pay it back.
You just need to be wise which payback option you use.

Wrong. I could afford to to pay cash for a piece of art I love. However it made more sense to buy it on credit. It was 0% purchase and I was protected by credit card ts and Cs.
The piece cost me £3000 5 years ago and I absolutely love it! It makes me smile every time I walk into the room it's in and it wasn't bought to impress anyone

So that doesn't apply to you then. It doesn't mean it's wrong.

@MetalFences
So that doesn't apply to you then. It doesn't mean it's wrong.
Pretty much yes, with the conditions I stated.
Buying luxury things isn't always to impress others.
If there's ways of affoding it that works for you, why not?
If something is going to be time limited , like the op has stated and it can be bought, again why not.

It's about being financial savvy and realising debit/ credit can work in your favour.
If you're on your arse and there's no way you can afford it, then that's stupidity.

Completely different. You could afford it just a different way to pay.

I have no debt but couldn’t care less what others choose to do.

We do have one friend that doesn’t understand why we don’t get better cars ‘on credit’. Apparently it’s a no brainier which makes me giggle as I completely disagree.

I don't understand why it makes you 'giggle' - she has different priorities to you. Surely you can see that everyone is different?

I think it depends.

if you are financially savvy , can afford up front but an interest free loan can be a much better idea than paying, if your savings earn interest, the money is better in your account than it is in the sellers.

its really not as simple as it’s always a bad idea. It is often about managing your money in the most prudent way, paying out and losing the interest on your savings v an interest free loan is usually optimal as long as you are in control and don’t over commit.

I only borrow money for an appreciating asset, a home or a tool I need in order to work.

So that's my mortgage and, if necessary, my car, because it allows me to have a sensible income.

Nothing else makes sense, unless you have had a really bad year - illness, stress etc - and you genuinely need to sleep in the sun for a week to regain your strength.

Otherwise - I try to stay within my budget.

I have a loan for my car as I previously had cheap ones that didn’t last very long. It wasn’t a brand new car when I got it. I’m not sure if I will keep this one once the loan is paid off or if I will get another one as I need the car for work (drive a lot of miles) and obviously as they get older there’s more chance of problems.

Up until recently I’ve had a phone contract for the last 10ish years. I decided not to upgrade this time and just keep my current phone with a sim only plan (no contract). I’d just got used to always having the latest phone which is probably the same for a lot of people. People get used to having the latest items or having new things.

I strongly disagree.

i shall give an example. We needed a new boiler. The cost was 4k. Genuinely, we could easily have afforded that. The money was in a high interest account. We took an interest free loan. Cost was about 50 quid a month, barely noticed.

the cumulative interest we earned on the money reduced the price of the boiler by quite some, as such it was the best financial decision for a depreciating asset.

@CaribouCarafe agree with you. As a society, we need to be better at living within our means. It's madness to incur debt for unnecessary items