for treating financed cars as unaffordable?

[Youraveragelass]

I was having a discussion with friends about cars, having issues with mine at the moment, and it has made me question my thinking around cars. There are some beautiful cars on my estate, and while I’d say I can’t afford one, I could afford the monthly repayments but I just couldn’t afford (or want) to put £100k down to buy one outright. That is the extreme of course, and I could buy something secondhand, which I do, but I can’t ever see me going beyond my means for a car.

This seemed to be such alien thinking to my friends, they didn’t understand why owning it outright matters to me. It’s made me reconsider how I think about finances more generally. I’ve never had anything on finance, and the idea has always made me feel uneasy. My default has always been that if I can’t afford it outright, I don’t have it.

I guess, I just wanted to know whether I’m being unreasonable to hold this view and need to lighten up on such strict viewpoints or whether I’m not being unreasonable to be cautious about a depreciating asset.

Neither is an “unreasonable” point of view, it’s about personal approach to finances, cashflow, risk appetite, and spending priorities. Many people take the approach that debt they can afford to service is manageable and acceptable debt. Many people simply see it as a cashflow thing: they can’t afford £50,000 in one lump but they can afford it in instalments over a couple of years. Different people are more or less debt averse and risk averse. Some people just aren’t interested in high end cars. You only have to agree with your own household spending arrangements being within your comfort levels.

No one owns anything anymore tbh

I have a cheap car but I’ve been thinking about taking the plunge and trying to lease one. Nothing luxury but something as new as poss

i have just had this dilemma. We had an ev scheme brought in at work and I was going to go for it and lease something a little bit fancy and have 3 years of fun. However the scheme changed price went up a bit and I couldn’t bring myself to do it. I’m buying an 6 months old ex demo which I will own once paid off via a bank loan.

my current car is 13yo and I will keep this one as long probably.

I find the idea of leasing a bit odd personally, but we usually use a car loan to help us buy something second hand and spread the cost over 5 years.

£100k for a car? Why would anyone spend this much unless they were seriously wealthy. We always buy outright (and agree finance for cars is mad) but we buy second hand, last time we spend £10k that was in 2016. I guess it’s still got 3-4 years in it. So less than £1k per year. Leasing would cost way more.

I don’t think there is any black and white right or wrong with it, it’s how different people prioritise things differently.
I do also think that though that the price of a reliable second hand car has increased so much that more people are having to lease to afford something they can trust

I personally wouldn’t lease because I don’t value having a ‘nice’ car enough to not resent the monthly payments and also I’m lucky enough that I can afford to buy something reliable and that fits my needs outright.

Err they do.

Would never lease a car.

We save for around 5 year old second hand reliable cars and run them into the ground.I can’t imagine not owning a car or paying huge fees each month just to have something shiny when you could own something cheaper. It’s basically chucking money away.

Some people are more into cars than others, I've had a classic and a new sports car but very happy with my elderly Merc now, its reliable (touch wood) and doesn't cost me much to maintain beyond tyres (flipping potholes around here) and the occasional oil change and I bought it outright at two years old so no finance/lease payments over the years - the way i see it a car literally has the job of getting me from a-b, but who has the best car is almost like a competition among some of my male colleagues.

It's a status symbol for some people.

See: all the white Range Rovers.

If you can't afford the car, you find a way to afford the monthly payments so people think you can afford the car.

(My car is a 2009 Fiesta. It cost £1500 to get through its last MOT. But I reckon there's a couple of years left in it!)

I own my car. It’s 12 years old. I brought second hand when it was 4 years old. I also prefer to own and have no debt. But when I need to replace this car it’s going to cost a lot more than it did last time! Second hand car prices have rocketed. I have the option of a company car which I might consider.

I have always avoided car finance and would agree with your thoughts about it. But I have had a massive change of heart. I have always bought second hand but prices have gone up so much and to be perfectly honest I want a new car. I'm done with worrying about MOTs and sick and tired of clapped out old bangers that may or may not start. I'm going for a three year lease on something brand new and I'm ever so excited.

My eldest worked it out between what you loose in depreciation and interest you pay in the loan there’s isn’t a great deal of difference you pay/loose each month
except for he has a brand new 29k car that won’t need mot for 3 years with manufacturing warranty
against a 5 year old plus car that he has to maintain and mot

I like leasing. I get a lovely car. I don't own the depreciation and I hand it back when its getting older for someone else to deal with the sale of it. I dont need to worry about MOTs, breakdown costs or repairs as everything is under warranty. I just need to put it in for servicing and replace the occasional tyre.

Google "You will own nothing and be happy". It's the way the work is heading. However, I feel the same as you and would rather own my tangible objects.

I've just switched to SIM only as this time round my phone is still functioning at the end of the contract. But I own my vehicles and no one can take them from me!

I think a lot of new cars are priced to be leased rather than bought.
But I agree, I would rather pay for 2nd hand and own it outright after a few years than add to my monthly outgoings indefinitely via leasing.

I see your thinking, but even if you had 100k to spend on a car you shouldn’t buy it outright because it’s a depreciating asset, unless you know it’s a car that’s going to increase in value - but if your car was likely to increase in value it would cost far more than 100k in the first place

I had a similar thought last year OP. Realising the that people have new kitchens, bathrooms and cars because they're less risk averse than me and are ok with paying out via HP/loans each month for newer things.

I don't like the idea of all my pay being spent before it's earned but the price of second hand cars has rocketed over the last few years so it's increasingly harder to save for something newish so I think we'll end up on some monthly payment when we need a new car.

10 and 12 year old cars here, both over 100k and doing ok so far...

We’ve done both in the past….had a lease car…very nice, brand new etc etc…when it came to handing it back ( in 2020) we were “ billed” £300 for a few dents inside the footwell where the seat belt buckle had hit it…..so we bought our next car and the one after that and I think we will carry on being an owner driving family….x

I buy a year old car via bank loan , keep it for double the length of the loan so have several years of no monthly loan or finance payments.

Why on earth anyone would spend one hundred thousand pounds on something they use to go to Tesco or do the school run is beyond me, absolutely pointless

This comes up quite a bit.

Many people prefer a newer car, but don’t want to own a depreciating asset so wouldn’t spend £££ in one lump sum.

I’ll never own a home, don’t own music or tv series or films

i’m just thinking of the hassle that is going to mechanics etc

leasing a car takes that all away from you

New cars ain’t cheap any more, even a moderately spec’d M4 is north of £100k these days. I saw a Porsche recently with £300k of options alone.

I've just paid off my first car, honestly it became a sinking money pit at the end. Never again. Even if it means I can't have an as nice car.

But a lease car isn't owned by the person that leases it. The lease is a monthly fee for the pleasure of driving it... and if the car is a write off due to an accident, this can be very costly indeed. There will be a discrepancy between what the Insurance will pay out and what the lease company said the car is worth.