Take out finance or save up and just buy outright
Discussion
I spent the first 10 years of my working life paying off car loans. I had some decent cars for my age and enjoyed them but the last one cost me about 13K in two years with depreciation and maintainance. I don't even regret that one but enough was enough especially with a young family.
I went the route of saving for something modest but likeable (subaru legacy 3.0r spec b) which, fortunately was bomb proof, and allowed me to save for a year for my C55 amg merc whilst suffering no real hardship on the motor front. I now saving for a bigger V8!
Moral- if you're young, can afford it and it's your hobby/pleasure/petrolhead, get the car. If you're priorities change but you're still a petrolhead, save.
I went the route of saving for something modest but likeable (subaru legacy 3.0r spec b) which, fortunately was bomb proof, and allowed me to save for a year for my C55 amg merc whilst suffering no real hardship on the motor front. I now saving for a bigger V8!
Moral- if you're young, can afford it and it's your hobby/pleasure/petrolhead, get the car. If you're priorities change but you're still a petrolhead, save.
Edited by Jaroon on Saturday 30th August 11:54
Muzzer79 said:
M1KEY said:
Good to see all the usual balanced responses to borrowing on PH. Of course everyone on here pays for everything cash!
As a more real world example you can borrow £5000 from Tesco over 3 years and repay £5440. That's costing you £12 a month not to have to wait and save!
QuiteAs a more real world example you can borrow £5000 from Tesco over 3 years and repay £5440. That's costing you £12 a month not to have to wait and save!
And you'll possibly save that £14 in running costs on a newer car.
Finance isn't the devil that some think, as long as it's used properly and in the right circumstances.
I.e. would someone on £30k a year really buy a £30k car (and be exposed to the depreciation) if finance wasn't available?
Having said that, I pay £300 odd a month on a train ticket and that depreciates quite quickly!!
jdw1234 said:
Muzzer79 said:
M1KEY said:
Good to see all the usual balanced responses to borrowing on PH. Of course everyone on here pays for everything cash!
As a more real world example you can borrow £5000 from Tesco over 3 years and repay £5440. That's costing you £12 a month not to have to wait and save!
QuiteAs a more real world example you can borrow £5000 from Tesco over 3 years and repay £5440. That's costing you £12 a month not to have to wait and save!
And you'll possibly save that £14 in running costs on a newer car.
Finance isn't the devil that some think, as long as it's used properly and in the right circumstances.
I.e. would someone on £30k a year really buy a £30k car (and be exposed to the depreciation) if finance wasn't available?
Having said that, I pay £300 odd a month on a train ticket and that depreciates quite quickly!!
Interest on the finance is just a penalty on top which, in relation to the car itself and your circumstances, can be a penalty worth paying.
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.
Whether you buy outright or via finance/personal loan you will still suffer the same depreciation. The only difference is the interest payments, get the right finance rate and borrow the right amount and this can be negligible. Nothing wrong with finance so long as it's used sensibly.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.
Muzzer79 said:
jdw1234 said:
Muzzer79 said:
M1KEY said:
Good to see all the usual balanced responses to borrowing on PH. Of course everyone on here pays for everything cash!
As a more real world example you can borrow £5000 from Tesco over 3 years and repay £5440. That's costing you £12 a month not to have to wait and save!
QuiteAs a more real world example you can borrow £5000 from Tesco over 3 years and repay £5440. That's costing you £12 a month not to have to wait and save!
And you'll possibly save that £14 in running costs on a newer car.
Finance isn't the devil that some think, as long as it's used properly and in the right circumstances.
I.e. would someone on £30k a year really buy a £30k car (and be exposed to the depreciation) if finance wasn't available?
Having said that, I pay £300 odd a month on a train ticket and that depreciates quite quickly!!
Interest on the finance is just a penalty on top which, in relation to the car itself and your circumstances, can be a penalty worth paying.
Zippee said:
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.
Whether you buy outright or via finance/personal loan you will still suffer the same depreciation. The only difference is the interest payments, get the right finance rate and borrow the right amount and this can be negligible. Nothing wrong with finance so long as it's used sensibly.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.
For me it's all about avoiding negative equity. You should have enough savings to put down say a 20% deposit and then this would mean a distressed sale shortly after purchase will leave you down but not in trouble. Your loan amounts amounts being paid off will keep you the right side of the depreciation curve, so if you want to sell or trade in at any time you'll clear your debts plus a bit.
otolith said:
That's really the question - how do people on modest incomes justify the depreciation costs of new cars, however they fund them?
On the other hand, a twenty a day fag habit costs enough to lease a new Focus ST, and the Focus probably won't kill you.
Your obviously a non smoker.On the other hand, a twenty a day fag habit costs enough to lease a new Focus ST, and the Focus probably won't kill you.
People who drink alcohol on a regular basis spend far more than a smoker. I am a smoker (Roll ups) and a 25gm pouch lasts me 4 days £7.63 + 1 pack of tips makes an average of £2 a day. Less than the cost of 1 pint
I'm not quite a teetotal,so occasionally if out have a glass of red wine at £6.75 and gone in 30-45 mins.
People who take a taxi to and from the pub plus what they spend in the pub would be a better comparison.
otolith said:
20 fags is nearly a tenner. Leasing a Focus ST is under 300 a month. Yes, rollies are cheaper, as are smuggled fags, but plenty of people still buy packs of 20.
Agreed if you buy a packet of 20... But many still spend £100 a week or more on alcohol,so stop the drink and they could lease a Jaguar XF.Strange for me as I used to drink on a regular basis and could spend over £100 just on a Friday night including taxi.
I can go months without consuming any alcohol so for me it's a massive saving,and far more than if i quit the smoking. We all have our vices and pleasures in certain areas and if we didn't life could get pretty boring.
So OP... stop smoking stop drinking and stop looking at nicer cars and stop smiling and live a sad boring life
TVRJAS said:
Agreed if you buy a packet of 20... But many still spend £100 a week or more on alcohol,so stop the drink and they could lease a Jaguar XF.
Strange for me as I used to drink on a regular basis and could spend over £100 just on a Friday night including taxi.
I can go months without consuming any alcohol so for me it's a massive saving,and far more than if i quit the smoking. We all have our vices and pleasures in certain areas and if we didn't life could get pretty boring.
So OP... stop smoking stop drinking and stop looking at nicer cars and stop smiling and live a sad boring life
Just read your profile - I must say what an amazing story am very envious. Do you have any pics of the areas of Thailand Strange for me as I used to drink on a regular basis and could spend over £100 just on a Friday night including taxi.
I can go months without consuming any alcohol so for me it's a massive saving,and far more than if i quit the smoking. We all have our vices and pleasures in certain areas and if we didn't life could get pretty boring.
So OP... stop smoking stop drinking and stop looking at nicer cars and stop smiling and live a sad boring life
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