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Original poster

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

95 replies

ReallyBadEyeDeer · 16/04/2024 16:22

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?

OP posts:
Sandwichblock · 17/04/2024 09:05

calligraphee · 16/04/2024 19:39

I think it is irrational, unless it is an item that will increase in value.

I've always taken the view that, apart from a mortgage on a house, if you need to borrow for it, you can't afford it.

I don't take any debt and repaid the mortgage early, by paying my bonus in every year and it's saved me thousands over the years and is basically the reason I'm now looking at retirement at 54.

Some will obviously say I've been able to do that because I had "enough", which is true, but IME some people will never have enough no matter what they earn.

Sandwichblock · 17/04/2024 09:07

ReallyBadEyeDeer · 16/04/2024 16:50

No an actual loan directly from the bank.

Show quote history

If you're going to take debt, a bank loan can be better and cheaper than some of the other ways of doing it. That makes no sense at all.

Beatrixslobber · 17/04/2024 09:12

@Lily193 sorry, but that’s my point. He absolutely cannot understand why we wouldn’t use credit. I can see that we are all different hence saying that I don’t care what others do. He can’t understand why we wouldn’t hence him saying that it’s a no brainier. Does that make sense?

notacooldad · 17/04/2024 11:58

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.

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

It's not completely different when the premise of the post is
To not think loans for luxury items are a good idea?
I don't think it is the worst idea in the world to be honest.
The op says 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

Everything we do in life is a risk. If something will genuinely make you much happier in your life and you have thought things through and looked at best purchasing options ,why not?

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

and what if something doesn't change? You've not been significantly happier and you didn't gain anything.

My biggest non purchase regret is the most fabulous painting I saw about 15 years ago and thought I couldn't afford it. If I took a loan out it would have been paid off within 18 months.
I didn't take a loan, it would have given me joy and I regret not buying it.
Obviously dont take a huge loan out if your job is looking shakey or if it is going to compromise your budget significantly.
However if you are a reasonably functioning adult that can handle money I don't see the problem.

@CaribouCarafe
But this makes no sense - they've paid for the luxury item + additional costs in interest over the duration of the payment plan. They'd be better off saving money each month to go towards a luxury item once they have the funds to pay for it, rather than buy now and pay (substantially more) later.
But the op was talking about something that isn't going to be available long term. What is the problem with taking an interest free loan to secure the item.

mondaytosunday · 17/04/2024 12:07

Nope. How can a watch make some one happier to justify a loan?
I can see putting a holiday on a credit card if one is confident of paying it off over a few months. And of course a car - but if needing a loan it has to be a sensible one, not a vanity purchase.

6Y5T · 17/04/2024 12:12

Depends on your circumstances.

I've recently bought a used car (just under £10k) on 0% credit card. I have the cash in a savings account earning 4.9% interest.

I'll pay off the credit card just before the 0% rate runs out in 25 months time (or transfer to another 0% rate card depending on savings interest rates).

Verv · 17/04/2024 12:13

Bank loan / credit card - No, the interest isnt worth it.
Interest free credit on a single item (eg luxe watch) if you can afford to cover the repayments - yes, but I would say only if you have enough in savings to pay the loan off in full at any given moment should circumstances change.

ememem84 · 17/04/2024 12:16

loans for renovations to homes i'm ok with. I'm not ok personally with loans for cars - given then depreciate in value so much.

i have a friend who took out loan and bought herself a Hermes handbag - a kelly which whilst it is lovely and really really wonderful quality - to spend around £20k on a handbag is ridiculous. i know they have good resale value, but she also never uses it. it's just to have. to show off about.

i like a nice bag. but i draw the line at spending that muc

Allfur · 17/04/2024 12:36

I always assumed that's how lots of people paid for their fancy cars

Hoppinggreen · 17/04/2024 12:41

I agree OP
I got into a lot of trouble with credit cards some years ago. I ended up still paying for items I no longer owned.
If you cant afford expensive things buy a cheaper version cash or do without

Rosti1981 · 17/04/2024 12:45

I use 0% credit cards and loans sometimes. But the cc debt is capped and I have plans to repay it before the rate changes, so it makes more sense for me to invest the £ in a way that earns interest and pay back the cc before it comes off 0%. I've also got a 0% loan for Invisalign. Again I am making the monthly payments so no issues and I've budgeted for it over the next few months.
Debt with high interest rates or no plans to pay off doesn't make sense though.

Rosti1981 · 17/04/2024 12:48

We once took out a bank loan for flooring too. That wasn't 0% and I wasn't delighted, but it was fairly low interest (4ish % I think, and our mortgage is capped low so it didn't feel too wild... we were making regular monthly payments and eventually paid it off as a lump sum). For home improvements it felt like it could be justifiable as an investment. It wasn't ideal but not quite the same as some luxury products.

notacooldad · 17/04/2024 12:57

For home improvements it felt like it could be justifiable as an investment. It wasn't ideal but not quite the same as some luxury products.
Many luxury items will out last things home improvements.

I would rather have something that will last than an expensive holiday that needs financing and go for a cheaper holiday.

Ds1bought an expensive watch on 0% fiance about the same time as we had a new kitchen quite a few years back.There wasn't that much difference in price.
His watch has gained value and my kitchen is getting ready to be refurbished.

Hoppinggreen · 17/04/2024 13:00

We did our kitchen on 0% finance and stuck the money we had earmarked for it into our ISAs instead. We are making enough in interest (Shares) to pay the monthly repayments and we still have the money

SheerLucks · 17/04/2024 13:04

Comedycook · 16/04/2024 16:30

It's pathetic. I'd only ever get into debt for essential items. Utterly pathetic to get into debt because you're desperate to look rich.

Absolutely this!

AlwaysGinPlease · 17/04/2024 13:09

Comedycook · 16/04/2024 16:30

It's pathetic. I'd only ever get into debt for essential items. Utterly pathetic to get into debt because you're desperate to look rich.

Agreed. It's actually quite sad.

Pedallleur · 17/04/2024 13:12

Daisy12Maisie · 16/04/2024 16:53

For a Rolex it would probably be worth it as they go up in value so much but I wouldn't do it.

No they dont. certain models may increase in value over time but that bubble is bursting now. However, an interest free loan for eg 2 yrs is a great way to buy the item (as long as you can afford the repayments)

Sandwichblock · 17/04/2024 13:14

Where are people getting all these interest free loans from? I haven't seen 0% credit offered for years not that I'm really looking

Youdontevengohere · 17/04/2024 13:21

I wouldn’t do it myself, but unless I was the one expected to bail them out if it went wrong I couldn’t care less how others choose to spend their money/organise their finances.

CaribouCarafe · 17/04/2024 13:23

notacooldad · 17/04/2024 11:58

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.

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

It's not completely different when the premise of the post is
To not think loans for luxury items are a good idea?
I don't think it is the worst idea in the world to be honest.
The op says 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

Everything we do in life is a risk. If something will genuinely make you much happier in your life and you have thought things through and looked at best purchasing options ,why not?

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

and what if something doesn't change? You've not been significantly happier and you didn't gain anything.

My biggest non purchase regret is the most fabulous painting I saw about 15 years ago and thought I couldn't afford it. If I took a loan out it would have been paid off within 18 months.
I didn't take a loan, it would have given me joy and I regret not buying it.
Obviously dont take a huge loan out if your job is looking shakey or if it is going to compromise your budget significantly.
However if you are a reasonably functioning adult that can handle money I don't see the problem.

@CaribouCarafe
But this makes no sense - they've paid for the luxury item + additional costs in interest over the duration of the payment plan. They'd be better off saving money each month to go towards a luxury item once they have the funds to pay for it, rather than buy now and pay (substantially more) later.
But the op was talking about something that isn't going to be available long term. What is the problem with taking an interest free loan to secure the item.

I still think it's a terrible idea - you never know when your boiler or roof will pack in, then suddenly you have debt over a frivolous item to contend with as well as the new boiler/roof repairs and you're likely to then resent having bought that handbag/jewellery etc.

You can always put a few quid in per month into a 'fuck it fund' for when such an off-chance luxury good comes along that you simply need to have now. But getting a loan with an interest rate for a piece of expensive tat is not worth it in my view. And the problem with interest-free loans is that it primes you for just taking more loans in the future (and potentially ones with an interest rate). It's better to get into a mentality of 'I can't afford that' and move on with your life, not ruminating for years over something that you wish you bought.

On a similar note, it never ceases to amaze me how many couples overspend on weddings only to start their married lives in debt or on the bones of their arse - one day sets them up with months or even years of additional stress.

People honestly need to just be content with less, not striving after the latest gadgets, trends, or vehicles

CheshireCat1 · 17/04/2024 13:24

Never, ever would I take a loan out for any item, not even a car, only for a mortgage.

WhyCantPeopleBeNice · 17/04/2024 13:26

I did, many years ago, I borrowed £5k for cosmetic surgery and if I'd not made overpayments would have paid close to £10k - in the end I think it was about £8k

It was an op for me, I cannot express enough the confidence boost it gave me, not just physically but I was the first thing in an exceptionally long time I'd done for me, prioritising my wants.
Within 3 months my confidence had risen so much I was offered a promotion (female bosses, not because of my looks!)
It made me believe in myself and made the debt and increased cost totally worth it for me.

Saying debt for a luxury is bad really doesn't account for all the grey in our lives, nothing is black and white. The important part is that whomever is taking on the debt is doing it for themselves not to impress others

ComtesseDeSpair · 17/04/2024 13:41

Sandwichblock · 17/04/2024 13:14

Where are people getting all these interest free loans from? I haven't seen 0% credit offered for years not that I'm really looking

It’s one of the ironic things about credit: if you earn a lot, have a lot of savings, manage your money really well, and therefore don’t actually really need credit, lenders fall over themselves to try to lend to you. I have £100,000 worth of un-utilised credit availability at 0%, if I wanted to take advantage of it.

But if you desperately need credit because you don’t earn a lot and you have a financial emergency, cheap credit is virtually impossible to come by.

Konstantine8364 · 17/04/2024 13:45

I got a loan for a horsebox for 7k (it was actually off my mum but if she hadn't have offered I would have got a bank loan). I was confident I could pay it back (and I did in exactly the payment schedule agreed with my mum). And I got an extra 2 years of enjoyment from taking my horse on trips out, I wouldn't have had otherwise if I had waited and saved. If my financial situation would have changed (extremely unlikely in my industry). I could have sold the horsebox as older second hand horses lose very little value year on year. For me it was 100% the right decision.

It all depends on your situation and your attitude to risk v reward. Personally I would never do it for a bag or a car, they don't bring me much joy. But having a horsebox has been amazing (for me!) And well worth the slight risk.

Verv · 17/04/2024 13:50

Sandwichblock · 17/04/2024 13:14

Where are people getting all these interest free loans from? I haven't seen 0% credit offered for years not that I'm really looking

A lot of luxury watch authorised dealers offer 0% finance.
Goldsmiths, WOS, Banks Lyon etc.