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.

@WhateverTarrance this is what GAP insurance is a lifesaver for! I think mine worked out as £10 a month for the duration of the finance so I don’t need to worry about it, definitely worth the small cost to me. I think it’s definitely got more popular too.

I’m with you, OP.
‘Don’t spend money you haven’t got on stuff you don’t need to impress people you don’t know’.

I have always been the same and saved and bought cars outright but I can no longer afford that sort of lump sum and also need a bigger car this time around, and even spreading it out with a loan, I'd be paying it off over the best part of a decade and hoping the car was still running well. As it is, I'm now looking at a cheap lease around £200/month for 2 years then I can reassess my car needs. I can add a service/tyres/maintenance plan to that so I don't have any unexpected costs whatsoever. When I work out the actual cost of my current old car (what I paid for it minus what I'll get for it, divided over how long I've had it, average servicing costs, MOT costs, new tyres, other repair costs) it's actually much the same. I'm still feeling weird and nervous about it but I know it needs more expensive work in the near future so it will be worth it!

In my mind the best option is to get a car that’s 2-4 years old that you pay for in full. very few people are able to do this, so the next best option is to get a loan from the bank and pay it off as soon as you can.

I just returned my leased car in September and bought a 10k second hand car. I have mixed feelings - i really enjoyed driving the new leased car and never worrying about maintenance. Buuuut I love having that £400pm back in my pocket for savings/holidays/home improvements.

Going to keep it for at least a couple of years and see how it goes. Agree with other posters though that the cost of 2nd hand cars are just insane now.

I always got finance for cars, but managed to keep them tidy so trade in was never much less than I'd paid. I put £200 a month into a separate account each month to cover MOTs, servicing and repairs and that built up to pay towards my next car. So every time I changed cars, I traded up, but my loan/monthly bill was less. The last car I bought was in2019 and I had enough built up, plus my well looked after trade in to mean I could buy outright.

I’m with you OP. Loads of friends lease/finance their cars and that’s totally fine of course. But I have always owned my car outright and always bought secondhand within whatever budget I had at the time. Consequently, my current car is very boring, but equally I don’t have to answer to a leasing company about the minor dents and scratches I’ve managed to collect 😝

I have always owned my cars and can't see that changing. My current car was bought 12 years ago outright from my savings (because once the loan from the previous car was paid off I started saving the equivalent). Not having loan repayments/lease payments means I can put that amount in savings and earn interest, thereby having the cash for my next car (£200 a month for 12 years has given me £30K for my next car - I won't spend that! Although I have just bought DD a car outright out of it).

Apart from the huge financial gain in owning your own car, the advantage, especially if you intend to keep it for the long term, is that you don't worry so much about minor damage, can make modifications, etc.

I just upgraded my 17 year old car. Had it since new & it was very tempting to finance a new one because of the warranty, worry free driving & length of time I could keep it. I can see why people borrow & upgrade regularly.

But, we're debt adverse & I couldn't bring myself to have repayments and interest chewing up our money. Plus we need to upgrade DH's car as well very shortly. So I bought second hand. What I bought ended up being older / not the car model I wanted, because I learned quickly 2nd hand car prices are ridiculous. Also thanks to online selling sites, private sale prices are on par with car yards!

I don't understand why anyone leases a car. I drive an old skoda. Best car in the world. Wouldn't swap it for anything especially not an electric car

He’s making excuses to waste money. I’d never get a loan you pay interest on for a start. The 5 year old car we’ve just bought has a 5 year old warranty left. It’s a really reliable car so not expecting expensive bills for a while after that.

The problem with leasing is that a serous change of circumstances can make it all come collapsing around your ears. All it takes is a job loss, a child born, a rent raise.

What hassle? A 5 year old reliable car still under warranty isn’t going to need work. We run all our cars into the ground and choose ones that last. Most of the time there is little to worry about. Really don’t get this thing about endless mechanics. If you keep them serviced,what we spend to get though an MOT at end of life is less than a couple of months expensive lease bills.

We’ve never had a lease car. Current car is 10 years old. Bought at 2 years old. We’ve only had to pay for tyres, brake pads and the occasional lightbulb. Dirt cheap to run. Our previous car too. Both Skodas.

If you’ve got the money to chuck then chuck.
Wealthy people also dont buy outright. They lease and get something new every three years. Because they can.

Isn’t £100k going into supercar territory? You must live on a seriously wealthy street!

I find myself drawn to newer cars now as they have some genuinely useful safety features which I find helpful.

I don't know if it's an age thing but I really couldn't care less about the car I have anymore. My car will be 10 years old this year, got it at 3 years old with 12k miles on it. Id rather have a nicer trip abroad instead.

Everyone's different...Some people are happy paying hundreds per month to drive a nice car as they can easily afford it and think it's worthwhile to them or on the other side of the coin you have others who are drowning in loans and credit repayments trying to keep up with the Jones'.

Because most people given the choice don’t want to drive around in an old Skoda.

This. In fact, my almost 15 year old car passed it's MOT a couple of weeks ago with zero problems. Not even an advisory.

There are loads of great cars to choose from. There is no need to pay for expensive leases for something you don’t own and is a really bad financial choice.

I know it’s not the most cost effective way to do things, but we change our car frequently. I have a real thing about having a car that fits my needs at that time and they have changed frequently over the years. We seem to get cars then things happen that change our circumstances, like redundancy (DH) or a health condition (me, helped massively to move to an automatic). Once I changed my car early because my mum died the day after I’d picked it up and I forever associated the car with that. I’ve never had a luxury brand though. I am really hoping my current Hyundai goes the distance. It’s not too big or small, has all the features I would need and is nice to drive.

Indeed. Very happy with my Qashqai.

I have car finance. I paid £3000 initially, £200 a month for 3 years and then it’s mine. It’s a 10 year old Golf. I got 2 years warranty and MOTs, road side recovery.
It’s a debt, but it’s affordable for me and I get a better car than I could buy outright.
I think people confuse the lease cars which have the massive balloon payment at the end with regular finance deals which spread payment over some years.

Have always bought second hand cars outright. I’d be very surprised if the wealthy are leasing not buying. It’s certainly not the done thing in our circle

What difference does it make? We earn loads (household income £300k+ per annum) but a Skoda is a fine car, gets you from a to b. Why pay more? None of our wealthy friends have expensive cars either. Cars aren’t something anyone I know cares about. I always assume those who spend lots on cars have some sort of insecurity, like those that spend money on ‘designer’ clothing etc, but I’m probably living in a bubble.