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.

At the end of our lease period we hand the car back and get a new one. It may be different as I lease through my work scheme, but I don’t have to pay to make it ‘perfect’, and I don’t pay a deposit. Insurance and maintenance (including servicing) included in the price I pay.

@cheeseonsofaif your colleague is paying £680 a month on her car it’s going to be worth a lot more than £5.5k, it’s presumably newer? Higher spec? You’re comparing apples and pears, you’ll be having very different driving experiences, that might not matter to you and that’s fine of course, but you’re not paying vastly different sums for the same thing.

I don’t pay anywhere near £680 and I drive a top spec brand new Audi.

I tend to buy a secondhand car and divide the cost by how many years it lasts (and add a bit on for maintenance costs). Then you may get a grand or two back if you sell it before it dies.

I really think, on this basis £100 a month is achievable. Considering leasing is £250 plus a month, I couldn't justify the premium for the new factor.

Yes its a newer model with all the bells and whistles granted ( lots of tech that I find distracting)but we still both drive the same way to work.
Not sure what differences there are that would be worth an extra 22K over 3 years

Perhaps I just don't care that much about cars?
It does the job absolutely fine 🙂

BTW before Im accused of jealousy I could buy the same model for cash 5 times over

We have always owned our cars and run them into the ground. I was rrally anti leasing. We have just gone with a leased car.

Second hand car prices have gone up immensely and we would have had to get a loan and pay back as we did with the other cars. I don't have £Xk sitting in my bank account spare. We have never not had to pay out for repairs etc on our cars.

Our lease car costs us £150 a month for 2 years and no initial payment. Our loan repayments would be more than that along with the depreciation of the car. As we come up to the end of the 2 years we will look for something equivalent or buy again.

What lease car are you getting for £150 pcm?

@cheeseonsofa no I don’t think you sound jealous at all, I think you just have different priorities. I LOVE the tech in my car, honestly my car brings me a lot of joy. I know for others it’s just a means to get A to B and it would seem like daft money for them, but for me it’s affordable and I love it.

Are you asking specifically about leasing or including pcp/hp in your question?

Fair enough!
Yes all that bloody tech and parking sensors
Not for me , the beeping alone drives me nuts 😂

My view is, if it gets you from A to B and it's safe and comfortable that's all I need. Im retired and never had a car on finance (lease or loan), preferring to put that money into my pension from age 20. I didn't get a decent car until I was 50 ... due to a long commute, that car was £9k. My next car was £43K, a six months old demonstrator. Love this car, but we won't be having another at this level.

How much are your second hand cars? Because mine was just over 2k, was ‘beyond’ my means and I had no choice but to get finance.

@cheeseonsofa 🤣 my husband agrees with you!

Ford Puma. We got really lucky, there was a government grant and promotion when we needed a new car. Same car doubled in price per month a couple of weeks later.

I'm sure it's not the car of choice for people who like cars but I'm not fussed what I drive as long as it works!

This simply is not true. There are plenty of people who own homes and cars outright

I don't know the difference.
A neighbour was always worried about mileage and small scratches with her non owned car.

How much is a 100k car to lease monthly? We bought our car outright in 2019 for 8k. It’s a 2015 plate and we still have it. I know even second hand car prices have gone up since though. We’re not into cars though

I do understand your thinking. But there isn't really a good way to buy a car - it's an extrememly expensive item that depreciates in value and costs more and more to maintain.

Have you considered most people can't afford to buy a second hand car outright? You can get a loan and buy one. But then you are paying monthly payment anyway and buy the time you've paid it off its probably not worth a great deal (I remember doing this when I was younger and thinking what i then owned was worth less than the interest i paid!).

The same people who can't afford to buy outright probably also can't afford a big, unexpected repair bill. And its not like you buy a second hand car and return it if its dodgy. Some dealers maybe have a guarantee period. But its short. A brand new car should have fewer problems and those would be the manufacturer's responsibility.

So in short, yes, I do get why people do it. My preference would probably be to buy a car outright that was a few years old and then keep it till its run into the ground! But then you do have all the stress and inconvenience of repairs which start to get more and more frequent.

What we actually have is a company car that we keep for 3 years. And as its my husband's company car, I don't have to think of the expense at all as it is not money we have ever had or have to think about.

I also would rather not be shitting myself if I got a small scratch on a 100k car I didn’t own

I have always had pcp’s. Never had to pay a penny for mileage or dents (although I always look after them and repair any damage but nothing to do with them being pcp cars)

Leasing and finance are two different things.

I have just got a mini with one years free insurance and five years servicing.

Why would you shit yourself? We’ve had plenty of small scratches on the cars we lease. Never had to pay for them, they’ve always been considered normal wear and tear. They don’t expect the car back in perfect condition after 3 years of being driven around!

I should say we’ve never leased a £100k car though. I currently have an electric Kia.

This is odd though because they shell out a huge payment every month anyway.
So don't they think ahead and save?

I think it depends.

We currently own our car outright and have owned and bought every car we've ever had outright. However we're currently in debt due to exceptional circumstances and should we need a new car in the next year we'd have little choice but to get one on finance. So I think it can be a useful tool.

A friend has hers on finance and it works out much cheaper and easier for her - she literally just pays the monthly cost and petrol. All upkeep and maintenance and insurance is covered by the monthly cost, no big bills to worry about.

After years of big car bills I can't totally see the appeal.

We have always owned cars bought outright usually a 1 or 2 year old car x 2 for me and Dh.

However, looking back we changed cars due to needs. My first car was a small runaround. Then we had Ds so needed a car where you could actually fit a pram in the boot. Then we had Ds2 so needed a car that would fit two car seats plus an adult in the back due to Ds2 having medical needs so a parent next to him for any journey over 20 minutes.

Then a larger car as they got taller and into teen years as Dh is 6'3" and I had sons so they were potentially going to top out at 6ft. I always drove the "family car" as I did all the school runs as a sahm. Dh had a smaller car.

We need a large car as we are doing university runs so need the space.

It is all great until your car breaks down, you need the money to fix it and the inconvenience of not having a car. This is far more likely on older cars than leased cars which are less than 3 years old.

For a leased car about 6 weeks before you are due to return it you take it to a body shop for them to sort out any issues with the paintwork etc, get it valeted inside too nearer the time.

We are definitely looking at potentially leasing our next car in a couple of years when Ds has finished uni.

After years of big car bills I can't totally see the appeal.

Can't or can?!

We haven't ever had a car on finance/loan but will buy one a few years old outright (as we've been fortunate enough to have the cash to do so).

If we are in the situation in future where we can't, I would look into finance. I wouldn't get a car costing £100,000 though! I'd probably be more likely to get a loan and still buy one a few years old!