If you buy a car on finance you can not afford it?

[theboss]

But “everyone knows” just how attainable new cars are on finance, so any status once attached to this is hugely diminished.

Based on what I’ve learned from PH, if I wanted everyone who sees me to think I’m much wealthier than I really am, I would stop driving a PCP’d BMW and get an old Volvo or Subaru estate.

[Durzel]

theboss said:

But “everyone knows” just how attainable new cars are on finance, so any status once attached to this is hugely diminished.

Agreed, but certain people do still attach status to it, even if that status is imagined and largely only in their own head. Sadly for some people this perceived status is as important to them as actually enjoying the car for what it is themselves. It may even be a significant part of why they bought it in the first place.

It is those people who tend to take offence, since their flashy, expensive (to buy) accoutrement works just as effectively for someone else who “can’t afford it”.

Basically, people are weird.

[Deep Thought]

theboss said:

But “everyone knows” just how attainable new cars are on finance, so any status once attached to this is hugely diminished.

Based on what I’ve learned from PH, if I wanted everyone who sees me to think I’m much wealthier than I really am, I would stop driving a PCP’d BMW and get an old Volvo or Subaru estate.

Thats been my point for quite some time.

If a neighbour rocks up in a new A4 TDI S Line is anyone going to think "I am in awe of this person - they have clearly dropped £40K of their hard earned cash on this car" or are they going to think (IF they think about it at all) "oh they've got that £299 a month deal thats all over the Audi dealer down the roads front window".

[Stick Legs]

That Richard Branson is a show off and can't have any money as his so called 'airline' doesn't own all of it's actual 'planes'.

[theboss]

Stick Legs said:

That Richard Branson is a show off and can't have any money as his so called 'airline' doesn't own all of it's actual 'planes'.

You can’t really afford to travel by air if you have to buy a ticket to sit on somebody else’s plane. Same with the train I’m travelling on right now, leased by the operating company, travelling on track they have to pay to access, from which my contract phone communicates with cell towers situated on land Vodafone probably rents to talk to servers PH probably doesn’t own. All of these business models are completely unsustainable obviously.

[Red 4]

If PCPing isn't really "renting" then why do all the adverts on TV and radio refer to an "initial rental of £whatever" and all state "you will not own the car" ?

Clue - it's so it's made clear what you are getting into. Essentially, a rental agreement.

You can dress that up and call it whatever you like but the facts remain.

[Durzel]

Being pedantic.. you can own the car if you PCP. It's leasing/PCH you can't own the car (although you often can if you're prepared to pay whatever the underwriter wants for it at the end of the term).

[chow pan toon]

Red 4 said:

If PCPing isn't really "renting" then why do all the adverts on TV and radio refer to an "initial rental of £whatever" and all state "you will not own the car" ?

Clue - it's so it's made clear what you are getting into. Essentially, a rental agreement.

You can dress that up and call it whatever you like but the facts remain.

All the adverts that I have seen refer to initial rentals are referring to lease offers, unless you have one about a PCP you can share as I've not seen one.

[Red 4]

Durzel said:

Being pedantic.. you can own the car if you PCP. It's leasing/PCH you can't own the car (although you often can if you're prepared to pay whatever the underwriter wants for it at the end of the term).

You can if you pay the balloon which means you are no longer in a PCP.

[theboss]

Red 4 said:

You can if you pay the balloon which means you are no longer in a PCP.

The PCP lender will generally offer to finance the balloon - I guess this could take the form of another PCP in theory.

I took my M5 on a PCP, 0% for 4 years (with a big discount before anyone claims the interest was baked into the sale price) and then had BMWFS convert the balloon to a HP agreement which I’m steadily paying off.

I might clear it and keep the car a while longer, I might sell beforehand and thus never technically own it, although it will be near worthless by that point.

In either case my motoring needs were met by a fantastic car which I treated as my own and covered 140+ thousand miles in, finances at a total premium of about £2k in interest over 6 years or so.

I’ve earned the value of the car at least 10 times over in that period.

I also went through a catastrophic mid-life divorce in the same time period, at which point you take stock of your surroundings and suddenly appreciate everything that is leased/rented.

[xjay1337]

James_33 said:

Pommy said:

Some posters get extremely angry about leasing and financing to a level that is really quite bewildering.

When you read pointed comments such as 'you dont't own it' and 'you can't afford it' afforded to a vehicle purchase but not a house purchase there must be some underlying affront to that persons beliefs.

For those who have a mortgage but hate car financing do you refer to your house as the banks or do you call it yours?

'Hey, bbq at the banks house this arvo, come round!'

'Hey mate, i'm moving into my banks new house, can you give me a hand'

When you get pulled over by the Police 'is this your car sir?' 'No officer, its the finance companies'.

I can only think that those who get so angry have been brought up with a core value around saving, only buying something where you can buy it outright with whats in your bank and avoiding credit. By someone buying on credit it appears to trigger a reaction akin to tearing up someones religious or political belief.

Do these individuals feel that those who finance cheated the system to get something quickly and easily that they didnt work hard for? Its like they feel someone cheated on a test and got the same result they did and THATS NOT FAIR.

Its as if they have to knock someone so that that person getting a Golf R on finance doesnt pollute their own achievement.

The world has changed, the very wealthy finance their cars, people are changing cars more quickly and cars have become throw away items, not prized assets and so why wouldnt you take the most financially beneficial solution to achieving the desired outcome?

I don't have a car on PCP or a lease deal but i do have one on hire purchase, and it does specifically say in my contract that "I do not own the car" and also that i am not to tell anyone that i "own it" until the final payment has been made.

Whether it's a house on a mortgage that's been paid off monthly or a car and so on, if you are paying for it monthly then as a fact no you don't "own" it, it is "you're house" but only whilst the payments are been made and if stopped then they take it back.

Great post by Pommy

Dont be ridiculous with my leased Fiesta it's just "my car" until I give it back
When it was new and people were like "Oh new car?" i just said yeah, and not "well it's mine but isn't because I am leasing without the option to buy so actually it makes it property of ALD". Only a nonce would say that.
Of course in contract law they have to say that it isn't yours because LEGALLY it isn't but no-one lives in the "legal world" - we live in the "real world" :-)

[blueg33]

chow pan toon said:

Red 4 said:

If PCPing isn't really "renting" then why do all the adverts on TV and radio refer to an "initial rental of £whatever" and all state "you will not own the car" ?

Clue - it's so it's made clear what you are getting into. Essentially, a rental agreement.

You can dress that up and call it whatever you like but the facts remain.

All the adverts that I have seen refer to initial rentals are referring to lease offers, unless you have one about a PCP you can share as I've not seen one.

Yup

On my PCP its called a deposit. No mention of rental.

[Red 4]

theboss said:

Red 4 said:

You can if you pay the balloon which means you are no longer in a PCP.

The PCP lender will generally offer to finance the balloon - I guess this could take the form of another PCP in theory.

I took my M5 on a PCP, 0% for 4 years (with a big discount before anyone claims the interest was baked into the sale price) and then had BMWFS convert the balloon to a HP agreement which I’m steadily paying off.

I might clear it and keep the car a while longer, I might sell beforehand and thus never technically own it, although it will be near worthless by that point.

In either case my motoring needs were met by a fantastic car which I treated as my own and covered 140+ thousand miles in, finances at a total premium of about £2k in interest over 6 years or so.

I’ve earned the value of the car at least 10 times over in that period.

I also went through a catastrophic mid-life divorce in the same time period, at which point you take stock of your surroundings and suddenly appreciate everything that is leased/rented.

I'm glad to hear that's worked out for you. Not so glad to hear about your messy divorce.
I'm not against PCP per se - it suits some people and it can, in some circumstances, be cheaper than buying.
I've said this on this thread.

It's just those people who drone on about PCP being a purchase plan when the vast majority of people who PCP will never actually buy/ own the car.
It seems to really grate on some people.
I can only assume they are insecure and have built a house of cards around them.

For the avoidance of doubt I'm not saying PCP can't work or even be the cheapest way of driving certain cars.
Just don't kid yourself about who really owns it.

[Durzel]

I find the whole thing weird really. It's a subject that really ought not to wind anyone up, but it does.

Someone financing a car makes no difference to me whatsoever. It doesn't affect me in any way.

The only way it could be considered as affecting would be if I actually gave a st about what people thought about what I drive. I've had supercars and regular cars and they've always been for me and me alone, I've never cared what people thought about it one way or the other. On the contrary I've always felt rather embarassed at the idea that some people have expressed that it somehow made me a "better person" to have a Porsche or a Ferrari or whatever.

I don't really have any time for people who think like that, so I struggle to find the offence in anyone financing, leasing, renting, hiring or otherwise obtaining a car that they enjoy.

I think the people who do find it distasteful that others own cars "above their station in life" realise their argument is borne solely out of emotionality rather than logic, simply irritation that those people are appearing to be as affluent as them. The guy that pointed out that it's not so much about taking offence at the fact they have something on finance, it's the dilution of their own affluence that grates, because they place so much value on it - really nailed it. There's always someone else richer out there, living one's life in pursuit of superficiality seems really hollow to me.

So yeah, get finance or don't get finance - whatever works and makes you happy

Edited by Durzel on Monday 10th February 11:10

[Red 4]

Durzel said:

I find the whole thing weird really. It's a subject that really ought not to wind anyone up, but it does.

Someone financing a car makes no difference to me whatsoever. It doesn't affect me in any way.

The only way it could be considered as affecting would be if I actually gave a st about what people thought about what I drive. I've had supercars and regular cars and they've always been for me and me alone, I've never cared what people thought about it one way or the other. On the contrary I've always felt rather embarassed at the idea that some people have expressed that it somehow made me a "better person" to have a Porsche or a Ferrari or whatever.

I don't really have any time for people who think like that, so I struggle to find the offence in anyone financing, leasing, renting, hiring or otherwise obtaining a car that they enjoy.

I think the people who do find it distasteful that others own cars "above their station in life" realise their argument is borne solely out of emotionality rather than logic, simply irritation that those people are appearing to be as affluent as them. The guy that pointed out that it's not so much about taking offence at the fact they have something on finance, it's the dilution of their own affluence that grates, because they place so much value on it - really nailed it. There's always someone else richer out there, living one's life in pursuit of superficiality seems really hollow to me.

So yeah, get finance or don't get finance - whatever works and makes you happy

Edited by Durzel on Monday 10th February 11:10

All fair points and very well put.

It can work the other way though.

People driving leased/ PCP'd can look down on people driving older cars/ sheds - even if the person driving the older car owns it outright.

[Graveworm]

theboss said:

You can’t really afford to travel by air if you have to buy a ticket to sit on somebody else’s plane. Same with the train I’m travelling on right now, leased by the operating company, travelling on track they have to pay to access, from which my contract phone communicates with cell towers situated on land Vodafone probably rents to talk to servers PH probably doesn’t own. All of these business models are completely unsustainable obviously.

If after you pay for something, objectively you didn't suffer unreasonably it's arguable that you could afford it.
Unless something you do, leaves you better off after all costs are taken into account (Including opportunity costs) then it does not make financial sense.

Doing something, that isn't necessary, that costs money does not make financial sense. That's not what life is about though and we do what we choose to. Many of your examples actually make money e.g aircraft, trains etc. so not comparable..

Others are the most cost effective way of doing something we choose or need in the way we want irrespective of our personal financial positions. The cheapest flight is the cheapest flight for a billionaire or a pauper. The billionaire may chose the private jet but it doesn't often make financial sense to. Putting the cheapest flight on a credit card, and paying the minimum amount, is a different issue and may not meet the objective affordability test. I know CEOs of huge concerns, who only fly economy, because they don't think business class is worth the extra, yet pay for their staff to fly up front.

Housing is generally an essential. Usually an affordable mortgage, makes financial sense as it and opportunity cost are less than the minimum cost of housing and the accrued value. It's not the same as buying a depreciating asset.

Everything should be affordable. Other than that it makes sense to do what the person paying thinks is worth the cost.

That's completely different from minimising the costs of doing what we choose, which is a seperate decision. If leasing/financing or paying cash is the cheapest method then that's the best financial decision. If your personal financial position means that to do what you choose, you have to pay more, then the debate remains as to what point that is unaffordable. Of course many people need access to a car, they seldom choose the cheapest option, that meets their genuine needs so there is still an element of choice.

It's no one else's business except, lots of small sub optimal financial decisions can have a significant knock on effect to the economy. This does affect everyone and often, the worst hit are those that are most leveraged.

Edited by Graveworm on Monday 10th February 14:16

[Durzel]

Red 4 said:

All fair points and very well put.

It can work the other way though.

People driving leased/ PCP'd can look down on people driving older cars/ sheds - even if the person driving the older car owns it outright.

Yup, very true. It goes both ways. People hire supercars and pretend its theirs, etc. I hold the same dim view towards anyone projecting wealth, whether they are moneyed or not

[Mandat]

Red 4 said:

If PCPing isn't really "renting" then why do all the adverts on TV and radio refer to an "initial rental of £whatever" and all state "you will not own the car" ?

Clue - it's so it's made clear what you are getting into. Essentially, a rental agreement.

You can dress that up and call it whatever you like but the facts remain.

I can guarantee you that you have not seen any adverts for PCP deals that mention "initial rental" and "you will not own the car".

You might have seen adverts for lease deals but leasing is definitely not the same as PCP.

Your misunderstanding of such simple concepts is very telling, and goes a long way to explain your incorrect views on leasing, PCP, etc.

[J4CKO]

Durzel said:

Red 4 said:

All fair points and very well put.

It can work the other way though.

People driving leased/ PCP'd can look down on people driving older cars/ sheds - even if the person driving the older car owns it outright.

Yup, very true. It goes both ways. People hire supercars and pretend its theirs, etc. I hold the same dim view towards anyone projecting wealth, whether they are moneyed or not

It doesn't matter though, if someone is "projecting wealth", just think "Thats a nice car" and move on, I think some folk let it eat them up inside.

Say we banned all finance, and you had to have the cash spare in the bank and are means checked to make sure that you are not living beyond them, would that suffice ?

Are we meant to use a shiny vehicle as a guide to their worth as a human ? It really doesn't mean anything in that context.

Go to Monaco and and any other place the super rich congregate, and there are some very expensive cars and mostly they will be bought and paid for outright, a lot of the time its from the interest on the interest on the interest and is basically loose change.

However, is all that money earnt though good honest toil ? I am thinking probably not....

amongst that lot there will be some horrible stbags who do unspeakable things for money (or have others do it more likely) swanning round in Rolls Royce Silver Dawns and Bugatti Chirons. Arms Dealers, Drug Lords, Despotic Rulers, Sketchy Oligarchs and the like.

And there we are sniping at Gareth from accounts who we know is only on a scale 6, has three kids and his wife works part time, how can he possibly afford that VW T-Roc PCP, its just not right !

We have sections of society at home that buys stuff outright, whole swathes who ponce round in RS Audis, Big Pick ups and even supercars, mainly as what they are up to is possibly illegal and is entirely conducted with cash. But they are alright those folk, they dont have finance like those poor working saps who fancy a shiny thing but are saddled with paying PAYE to provide all the services everyone uses regardless of if they contribute a penny to it.

[Rawwr]

Mandat said:

Red 4 said:

If PCPing isn't really "renting" then why do all the adverts on TV and radio refer to an "initial rental of £whatever" and all state "you will not own the car" ?

Clue - it's so it's made clear what you are getting into. Essentially, a rental agreement.

You can dress that up and call it whatever you like but the facts remain.

I can guarantee you that you have not seen any adverts for PCP deals that mention "initial rental" and "you will not own the car".

You might have seen adverts for lease deals but leasing is definitely not the same as PCP.

Your misunderstanding of such simple concepts is very telling, and goes a long way to explain your incorrect views on leasing, PCP, etc.

Ignorance is a large part of the problem, which leads to an unfair negative perception by people like Red 4 who, apparently, can't comprehend anything beyond cash.