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.

I did this maths and it was similar over 3 years but then the next 3 years (over 6 years total) owning is significantly cheaper.

@Youraveragelass that does seem very steep, how much is the value of the car? Also remember you can negotiate the ticket price, I got £8,000 off the ticket price of mine. No one pays ticket price. I don’t own 4x4s though, hatchbacks for us.

What?

Apologies if that doesn’t make sense. I’ve re read it twice and I’m sure it does, but to be fair I’ve had a vino sooooo

I’m pretty sure I own my house outright unless you know something I dont…😳

We sort of came to this conclusion as we’ve found the balloon payment always underestimates the value of the car so often have the next deposit through selling the loaned car (but that’s possibly luck), that said as well, I think the benefits of leasing are around the maintenance costs? You’re not liable for anything, even tyres with some deals? But I don’t know, I haven’t tried leasing.

Oh I meant when you get a mortgage you don’t tend to own it outright for a looooong time. Good for you

That’s not true, with a mortgage you own the house. Same with a PCP car, you own the car. Like a mortgage it’s a secured loan, you don’t pay your mortgage you lose the house, don’t pay the PCP payment you lose the car. You’re still the owner though.

I’ve always had old second hand cars, basically with what I could afford to scrape
together, as indeed has DH.

Worked fine until we poured all into a house move this summer, both our cars basically died within 3 weeks of each other, and of the move, and we just didn’t have the cash to buy 2 half decent cars.

I ended up getting one on finance - I’m not thrilled about it honestly but I can easily afford the payments - I just did it with a bank loan rather than car finance as the rate was better. It’s still a second hand car but much nicer than previous ones I’ve had and I’m really enjoying having a decent one for once. We’ve no other debts and are mortgage free so this is working out ok for now.

I bought a 10 year old car last year with very little mileage…bought it for 8.5k cash. It was fine for about 2 months then gave me nothing but trouble for a few months. Spent 300 to get it fixed. It ok now but the gear stick gets stuck at times. Drives me nuts. And it’s an absolute petrol guzzler. For these reason and numerous others I have decided to buy a new, hybrid automatic. They are taking my old car and giving me just over 4k for it. I’m paying 29k cash for the new one. Some may say this is insane but I’ve had enough of second hand non trustworthy cars. The one i mentioned is not the first to give me trouble. Some people do choose to pay upfront for their cars. Someone has to I suppose 😅

Personally I would hate the monthly expensive commitment and have always owned cars outright.

But I am quite lucky that my DH is excellent at maintenance if/when it’s needed.

Ok thanks

I just looked up mine, it’s £240.96pm. Finishes end of march so I need to decide what to do. I can afford to buy something modest outright but we will see…

Are these £150-250pcm cars small runaround types or are you paying huge deposits and balloon payments?

That doesn’t really his question though does it? They still afford it

the answer is they just have more money

We buy new and keep for 10 or 12 years

@Youraveragelass mine is a small engine VW polo, manual. I can’t remember a big deposit and I don’t think there will be a big balloon payment. I hope I don’t get an unpleasant surprise but I doubt it.

@Davros your balloon payment will be in your paperwork, it’s declared up front.

That was nearly four years ago, I’ll have to dig it out. Probably not a bad idea anyway. Thanks for the info, it’s giving me the kick up the arse I need

I've just bought a 3 year old second hand car. I did technically have enough to buy it outright, but that would have left me short of money, and the car was a good deal so I didn't want to lose it, plus my old car wasn't in great shape. So, I got a few thousand on finance which got me 2 years servicing and roadside assistance instead of the standard one year. I'm expecting to receive an inheritance soon and I plan to pay off the finance then. I'd never get a lease car. I want to own my car, even if it is a depreciating asset.

The car I had before this one I loved so much and I had it for 16 years and paid 12,000 at a year old. It cost me only servicing, tyres, brakes, springs and a new battery.

My latest car, also bought used was 13,000 and I've had it 7 years so far. This year it needed around £400 of repairs and any other costs have been usual things. I would like at least six more years out of it.

Between them I've had 23 years of car ownership so far for £25,000 plus a bit of maintenance. These were not small runarounds but not status cars either.

That's why we did it. It seemed a reasonable price. Especially as we have no mot ans it's under warranty.

Second hand cars are much more than when we bought our previous one 6 years ago. Coincidentally, that car (we own it outright and have it still) hasn't depreciate as much since we bought it. We again had a stroke of luck and bought it just before all the chip issues and prices sky rocketed. It has been a pain in the bum though. Extremely low mileage, ex mobility car and after a year the gearbox went. Cost thousands to repair!

I would only lease again if we could find a similar deal on a big enough car but we don't need a 4 by 4 or suv and we're not into luxury cars. Holidays on the other hand, I like to spend on and you could argue that leaves you with nothing in your hand too.

I’m definitely not against spending money on experiences. I go on holiday a fair bit myself. I do get what you’re saying though, people just value different things. For me a car’s just something to get me from A to B, so if a cheaper one does the same job, I can’t really justify spending more. Holidays are a luxury, cars are more of a necessity.

My equivalent of a luxury car is houses. I don’t need the high-end finishes, but I do want them and really appreciate them. That said, I make a profit from selling them!

Cars are a really simple thing.

You either like them and choose to spend money on them or don't like them and spend as little as you think is necessary to suit your needs.

Some people like objects others like to spend 20k a year going on holiday.

Agreed. I’m not a car person and would rather slam my head against the wall repeatedly than have to go buy one and my husband sees car shopping as a hobby.

We learned early onto make some ground rules.

1. no more than 1 car payment at a time
2. All new car payments (or significant cash spends) need to be mutually agreed on
3. He took over car maintenance and I don’t bitch or moan when he spends money on preventative maintenance or repairs.
4. As long as #1 & #2 are adhered to I don’t comment on his car buying

What this looks like in practice is that has bought and sold multiple trucks in the last 15 years and I hav had 1 new (to me) suv in that same time period. My choice about my vehicle as it’s in great shape and I’ve said I’ll drive it into the ground. With one exception he trades in his current at the time vehicle for a new to him on with less than $500 cash being spent. Works for both of us!