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.

It’s a tricky one , because few people have money to outright buy a new or nearly new car.

obviously with new cars less likely to brake down or have big bills .

and not forgetting people WANT a nice new car (who doesn’t?)

factor that in with the convenience of getting to work/ shopping/ day trips not using the bus and many can justify the monthly cost.

personally I don’t have a car on finance. We have in the past . Our current car is ten years old, but as it normally only travels less then 50 miles a week , it will probably hang on another few years

husband would love a new car, he sees it as a symbol of doing well in life.

the thought of working just to pay for a stupid car is madness to me.

others will say it’s important to their lives

( not forgetting 90% of mumsnet seem to live rural with no public transport. Least that s what most posts claim 🤷‍♂️)

We net over £8000 a month, our car payments are a tiny fraction of that, we could absolutely save the £40,000 and put the money down but there are so many financial reasons why we don’t do that. One of the benefits of PCP is that the car company is often on the hook for some of the depreciation depending on how you pick your car and the balloon payment it has. It takes away a lot of the unpredictability of car ownership which I hate.

Cars for me are the same category as holiday as opposed to my financial investments; I’m paying for the experience, it’s not an asset that needs to bring me any kind of financial return. I have a certain amount of money a month I am happy to pay on cars, and I accept that it is higher than buying something older and maintaining so I have a decent car, new, bells and whistles etc because cars are a priority for me.

Leasing a new car ensures the car is fully roadworthy, fuel efficient, under warranty and can be affordable.

I know a lot of mumsnetters take pride in running an old banger but unless you’re lucky or have a mechanic in the family they can quickly become costly to repair and unreliable.

I have no interest in car ownership, and being responsible for repairs etc. I prefer to rent (lease) one with a maintenance package. It’s nothing to do with affordability for me (I can afford to both buy a car outright and to lease one), it’s about my preference.

People that dont agree with cars on finance; do you feel the same about mortgages? Only buy a house if you can afford it outright?

I don't think most people are against buying a car on finance if you don't have the savings to buy outright. It's leasing that many don't like. That's like renting where you own nothing at the end of it.

I’m fine with not owning a car. I don’t want to own a car! I want to rent one.

I find it odd when people start comparing houses and cars, they’ve said themselves that cars depreciate, so car ownership really is not advantageous in that regard!

Me too. DH and I do a lot of travelling for work and have kids at uni so up and down the motorway. We want a newer more reliable car with good safety features and high comfort levels, so we are willing to pay a monthly rental cost for it. It’s just part of our day to day living expenses. Doesn’t make our choice any more valid than anyone else’s. Each to their own 🤷‍♀️

I checked this out yesterday and was pleasantly surprised. I can buy a newer second-hand version of my car for £15k (3 years old, 25k on the clock), having bought my original one 12 years ago for £10k.

And that's fine. You can do what you want with your money. I prefer to spend less on cars and more on other activities so I spend accordingly.

I don't understand why people lease cars, all that money spent and nothing to show for it at the end. Must be a status thing I guess?
I've always liked "classless" cars myself, Land Rover defenders for the past 20 plus years which are now going up in value, so it's worth spending money on them, they're generally straightforward to repair with no computers and parts aren't expensive. that suits me, I have a good support crew for them and they're much loved family pets with names, but that's not for everyone.

my late dad always used to say it's not what the car looks like, it's the quality of the person that gets out of it that matters and I think that's a good point.

Now that my mortgage is paid off I don't owe money to anyone and I like it that way. If I can't write a cheque for something, I'll manage without it.

I lease a car and I’m a nice person 🤷🏻‍♀️

@CrotchetyQuaversorry but I’m laughing at a Land Rover defender being classless.

I have a EV mini on finance. I have some savings, not loads and and a mortgage.

Highly unlikely to lose my job. I like having a new car every couple of years.

Neither option is unreasonable at all. The important question is - do you want to drive an expensive/fast/beautiful/excellent spec car or not? It's important to me, I love cars. Couldn't care less about the price of my house, kitchens, bathrooms, furniture. Cars are my thing. But if a car is just a reliable means to get from A to B then you would be silly getting an expensive car if it doesn't bring you joy.

If I wanted a £100k car and had £100k to buy outright I wouldn’t. I’’d invest the £100k, use the profit to pay towards the monthlies and still have a big wedge left after the car was paid off. Effectively doing what the car manufacturer/finance company would do.

Good second hand cars that will last a while are quite expensive now (such as Audi/VW) - so much that it’s not much difference financially between buying a second-hand 3 year old car and just buying a new one on PCP in large part due to car manufacturer deposit contribution (comparing cost and value after final balloon payment versus the secondhand car 4 years later). If it’s only £1k a year more for 4 years new that’s what I’d get - primarily as I could choose the spec more specifically.

The big problem with new cars is they are not built to last anymore. Nobody buying a new car this year will be driving around in it in 20 years time. Those days are gone.

@CrotchetyQuaverme too 🤣 . to me a classless car would be a Volvo, Toyota Kia or Honda (middle of the range and reliable) or I think Tesla are now becoming classless within the EV market, driven by people from all walks of life (I work at a dealership so find it interesting how the Tesla customer has changed over the last 3-4 years as they have become more affordable and mainstream).

No class versus classless…

Im in the own outright camp.
No mileage limits, no spurious charges for minor straches / wear and tear at the end of the term. Not tied into dealerships for servicing and repairs.
If you own a car outright, if something unexpected happens financially you can sell it or trade it in for something cheaper (possibly!) But with a lease or PCP it's not yours to sell. If you can't keep up on the payments, the car gets taken off you, then you are without a vehicle...just food for thought.
Someone said why own a depreciating asset? Well, why rent one?

@WhatASmashingBlouseYouHaveOnyou can do pretty much all of that with PCP, barely anyone actually just hands the car back because unless the car is worth less than the balloon payment (never in my experience) that would be daft. Wear and tear, mileage caps etc literally don’t matter if you don’t hand the car back at the end. We usually pay the balloon payment ourselves and sell on ( we have kept one car and ran it into the ground actually due to the balloon payment being so low vs value of the car, Covid bubble) or directly trade in somewhere, the money we make from that is then the deposit for the next car.

I own my car outright , modest model.
Even if your lease car goes wrong you will be the one responsible for getting it fixed,must be the lease co approved garage , usually the dealership.
Yay no costs but if you add up what you spend on leasing its massive compared to repair costs.
My colleague is spending £680 per month on a new lease car over 3 years
680 x 12 x3 = £24, 480

My car 5.5K outright ( bought 2021)

Insurance £220 per year
Service £145 yearly
Road tax £40
No repairs needed
Total over 3 years
= 6715
Her car is a slightly newer model
Add on costs if you go over mileage and any damage, they inspect rigorously BTW

Its insane!

Just personal preference. It costs more overall to lease but for some people that’s money well spent for the pleasure they get from their car.

What happens at the end of the lease period (is it two or three years) do you have to pay to make the car perfect again or have you paid an upfront deposit.
Does it include insurance (could be useful for a youngish high risk driver if included).
We used to get clapped out old bangers which prompted me to walk everywhere or go by train but then went upmarket to buy three/four year old cars and keep them until they became old bangers

We've always been a family of car buyers. I've got a 68 plate vauxhall corsa that I bought second hand in 2021 for about £10k with 6000 miles on the clock.
We start saving for the next car almost as soon as we drive the new one out of the garage.
We don't have the disposable monthly income to afford a monthly fee, without massively sacrificing other areas of our life - like holidays.