Take out finance or save up and just buy outright
Discussion
Qwert1e said:
The problem with borrowing money to buy a car is that the car depreciates but you continue paying for it at the full original price. Some people say "fine, if you can afford it". But the problem comes when you then want to buy a new car a few years later. You can't afford that one either so the cycle of debt goes on and on.
It's completely the opposite of having a mortgage to buy a house where the loan tends to shrink relative to the value of the house. Opposite way round with a car.
This^^.It's completely the opposite of having a mortgage to buy a house where the loan tends to shrink relative to the value of the house. Opposite way round with a car.
The thing to remember is that companies offer finance because they make a profit from it, so somewhere along the line you're always paying more than you need to.
Plus, I know plenty of people who are still paying for cars that they no longer own.
I can't imagine anything more miserable than that.
Edited by DJP on Friday 29th August 15:27
Nervasport said:
Just fancy treating myself to something better and more reliable and cheaper to run.
New cars generally aren't more reliable or cheaper to run. More things to go wrong and servicing is more expensive if you want to keep the warranty. Also remember total running costs include depreciation and interest payments.berlintaxi said:
Are you the OP's mum?
No a Skoda Fabia would be a mum's recommendation 
mp3manager said:
I save up for the things I buy, including the house, only a mug pays interest.
Not everyone is in such a financially beneficial situation.The vast majority of people don't own their home outright and a significant portion of cars are bought on finance.
OP - if it works for you, do it. You will pay interest, but that can totally be worth it to have something decent costing you less to run, etc.
Just don't chop and change car regularly on finance as that's when you start losing big £££
mp3manager said:
Nervasport said:
ikarl said:
Why do you keep saying meggy?? What's a meggy?
Short for meganeI save up for the things I buy, including the house, only a mug pays interest.
Think I might just do what I did before and save up. Like some of you have said it's greater satisfaction knowing you've worked hard to get it and own it outright, rather than paying x amount per month which could be spent/saved on better things. New job is literally a mile from my house so I wouldn't need to use the car as much and when I stop and think about it is be paying x amount on a car I wouldn't use much which would be a waste.
Qwert1e said:
The problem with borrowing money to buy a car is that the car depreciates but you continue paying for it at the full original price. Some people say "fine, if you can afford it". But the problem comes when you then want to buy a new car a few years later. You can't afford that one either so the cycle of debt goes on and on.
It's completely the opposite of having a mortgage to buy a house where the loan tends to shrink relative to the value of the house. Opposite way round with a car.
That isn't a problem with borrowing money, it's the definition of depreciation which would occur whether you bought the car outright or not. If you buy a car for £5,000 outright today and sell it for £2,000 you've still lost money as you've still paid the 'full original price'. Continuing to pay by way of either saving up or paying back the bank is immaterial. A few hundred quid in interest is just a fee for the convenience of not having to save. It's completely the opposite of having a mortgage to buy a house where the loan tends to shrink relative to the value of the house. Opposite way round with a car.
The only logical answer is to buy a car that has stopped depreciating, but you'd be at square one because it'd be a snotter anyway, generally speaking.
Nervasport said:
Just fancy treating myself to something better
Nothing wrong with that.Nervasport said:
and more reliable
Sounds sensible to me.Nervasport said:
and cheaper to run.
UVAVU! If by long haul you mean you're going to keep this one for 11 years (or longer) then fine, but are you not going to be bored of a 1.2 hatchback in less time than that? Rather you than me.To answer the original question, there's nothing wrong with finance but as already mentioned, a bank loan will be cheaper overall (even if monthly payments are higher). What I ask when signing up to this sort of commitment is, "I'll finish paying this in {e.g.} 5 years; how is my life different today compared to 5 years ago, and how different will it be in another 5?"
You would be a fool to anything other than save up. Notwithstanding that an 11yr old 94k car should still be good for the same again without major problems, new cars on finance are a superbly effective way of throwing money down the toilet.
Keep driving the car you've got and saving up until you can actually afford something better you want.
Keep driving the car you've got and saving up until you can actually afford something better you want.
Despite PH hatred of debt I think there is a time and place.
I've taken finance on the family car. This does relatively few miles and I've taken a term short enough, and put enough deposit down that the car will not end up in negative equity, and if circumstances change I will be able to get out. By the end the car should be worth more than my original deposit. I'm comfortable with this.
Compare this with my work car, which I like to change once a year, which does circa 35k miles, and consequently on which I won't touch finance.
In short my advice is not to rush into it, but if the deal is right don't let it be a deal-breaker.
I've taken finance on the family car. This does relatively few miles and I've taken a term short enough, and put enough deposit down that the car will not end up in negative equity, and if circumstances change I will be able to get out. By the end the car should be worth more than my original deposit. I'm comfortable with this.
Compare this with my work car, which I like to change once a year, which does circa 35k miles, and consequently on which I won't touch finance.
In short my advice is not to rush into it, but if the deal is right don't let it be a deal-breaker.
lauda said:
And where do you live whilst you're saving for the house?
Well, back in the day, one was something of a young entrepreneur and saved plenty of money while living with Mummy and Daddy.I then bought my first house, sans mortgage, and saved for my next property whilst living there... and so on.
Can be done, y'know.
Edited by DJP on Friday 29th August 16:10
xRIEx said:
UVAVU! If by long haul you mean you're going to keep this one for 11 years (or longer) then fine, but are you not going to be bored of a 1.2 hatchback in less time than that? Rather you than me.
To answer the original question, there's nothing wrong with finance but as already mentioned, a bank loan will be cheaper overall (even if monthly payments are higher). What I ask when signing up to this sort of commitment is, "I'll finish paying this in {e.g.} 5 years; how is my life different today compared to 5 years ago, and how different will it be in another 5?"
Uvavu! Isn't that what bob and vic used to say on shooting stars To answer the original question, there's nothing wrong with finance but as already mentioned, a bank loan will be cheaper overall (even if monthly payments are higher). What I ask when signing up to this sort of commitment is, "I'll finish paying this in {e.g.} 5 years; how is my life different today compared to 5 years ago, and how different will it be in another 5?"
I've decided to just save up and that gives me the security of having a financial buffer if things go tits up aswell as having money for the car.xRIEx said:
He rents of course. That way he's not paying interest.
DJP said:
Well, back in the day, one was something of a young entrepreneur and saved plenty of money while living with Mummy and Daddy.
I then bought my first house, sans mortgage, and saved for my next property whilst living there... and so on.
Can be done, y'know.
Ahem.. I then bought my first house, sans mortgage, and saved for my next property whilst living there... and so on.
Can be done, y'know.
DJP said:
lauda said:
And where do you live whilst you're saving for the house?
Well, back in the day, one was something of a young entrepreneur and saved plenty of money while living with Mummy and Daddy.I then bought my first house, sans mortgage, and saved for my next property whilst living there...
Can be done, y'know.
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