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.

The fancier and more electrical engineering in newer cars are making me want to buy exclusively 20 year old Volvos every few years.

If you look after your (older) car, it will last. Ours are 18 and 21 years old respectively. One has done just under 200k miles and the other is about 170k. They’re serviced and fixed and looked after and both run well. They also don’t cost £600 every time it needs plugging into a diagnostics machine when a light comes on that you can’t access because it’s sealed behind a dashboard…

Haven't you just contradicted yourself though?

If someone is concerned about depreciation of buying a car then there's some logic in leasing one instead, particularly if having a new car is something that matters to them.

Also I think it's possible to overthink it - 40% of people in the UK have less than £1000 savings. 16% have nothing at all. Many people might prefer to buy if they had the choice, but they don't - they can't afford to buy a new or even second-hand-but-decent car, and either also can't get enough 'normal' credit (either already in debt, just don't earn enough, have already used it on other things, or whatever), or just think if they're going to take out a loan anyway they may as well do PCP and don't have to think about insurance, MOTs/services, maintenance costs, etc. on top.

They're not choosing leasing, it's their only option.

What do you mean , never own your house outright? Of course that’s not true.

If you pick reliable cars, buy around 3 to 4 years old, you can usually drive them for about 6/7 years before you have any major issues. I bought a Volvo V60 in 2021, it's a 2017 plate. It cost £9k, which I paid half up front and half on a 20 month interest free credit card. So £225 a month for that time and no interest paid. It's had MOT service every year about £200, new battery and tyres. So it's wayyyy cheaper than a lease, reliable and comfortable. I'm saving up at the moment and I'll do the same in a few years time, I'll probably need to spend around 12k this time as second hand prices have gone up loads. It's worth about 5k now privately/4k part ex, so if I did want a newer car now I would be funding 8k myself.

Yes we’ve gathered that. Keep up

No it isn’t - depending on what you prefer. I now lease my car and have done for 10 years after driving round in second hand cars that weren’t very reliable. I really enjoy driving a comfortable, reliable car as opposed to worrying about breaking down constantly. After breaking down in the middle of winter with a 3 month old in the car with me, I vowed never again to be in that position. And yes, I know new cars can break down but it’s less likely. So I set my budget, and stick to it. Some people think nothing of spending £3k on a designer handbag every year - I prefer to spend that much on a car each year. It’s not depreciating in value because I’ve never owned it in the first place!

🙄