Why is car finance so wrong?
Discussion
Picking this up from other threads, why is there such a stigma on car finance?
I've always used car finance, I've used PCH once but have used PCPs reasonably religiously for 20 years. It's meant that I have been able to get the car I want, when I want it and had no risk and usually not really paid any more for it? (my current BMW is on a PCP but the deposit contribution was only £400 less than the interest I'll pay?)
But whenever car finance is mention in threads, it's gets criticised? What am I missing?
I finance phones, a computer, my boiler all fine, but not a car?
I've always used car finance, I've used PCH once but have used PCPs reasonably religiously for 20 years. It's meant that I have been able to get the car I want, when I want it and had no risk and usually not really paid any more for it? (my current BMW is on a PCP but the deposit contribution was only £400 less than the interest I'll pay?)
But whenever car finance is mention in threads, it's gets criticised? What am I missing?
I finance phones, a computer, my boiler all fine, but not a car?
As above
All the bullsh** "If you can't afford to pay cash then you can't afford the car" is cloud cuckoo land.
I have paid cash, used HO, PCP, PCH - different cars, different life stages and all carefully considered.
On the drive at the moment we have 4 cars, 3 owned outright and paid for with cash, one is on PCP
If I can afford the monthly payment then I can afford the car in my opinion
All the bullsh** "If you can't afford to pay cash then you can't afford the car" is cloud cuckoo land.
I have paid cash, used HO, PCP, PCH - different cars, different life stages and all carefully considered.
On the drive at the moment we have 4 cars, 3 owned outright and paid for with cash, one is on PCP
If I can afford the monthly payment then I can afford the car in my opinion
Wardy78 said:
Picking this up from other threads, why is there such a stigma on car finance?
I've always used car finance, I've used PCH once but have used PCPs reasonably religiously for 20 years. It's meant that I have been able to get the car I want, when I want it and had no risk and usually not really paid any more for it? (my current BMW is on a PCP but the deposit contribution was only £400 less than the interest I'll pay?)
But whenever car finance is mention in threads, it's gets criticised? What am I missing?
I finance phones, a computer, my boiler all fine, but not a car?
Sometimes people do make some poor decisions because they can't see beyond the monthly payment, but equally there are a lot of people who don't actually understand finance etc and are just negative about it.I've always used car finance, I've used PCH once but have used PCPs reasonably religiously for 20 years. It's meant that I have been able to get the car I want, when I want it and had no risk and usually not really paid any more for it? (my current BMW is on a PCP but the deposit contribution was only £400 less than the interest I'll pay?)
But whenever car finance is mention in threads, it's gets criticised? What am I missing?
I finance phones, a computer, my boiler all fine, but not a car?
It's your money, spend it as suits you. Just ensure you've gone in aware of the total cost and possible alternatives etc.
I don't think it's wrong per se but it does often mask the fact that buying any new car is a pretty expensive thing to do, regardless how you pay for it.
A friend has a new Volvo Xc60 and it's costing an outrageous amount of money over the 4 year term to drive what is a fairly unremarkable car. There's no way he'd pay the up front cash price but somehow he's happy paying his 600 quid a month even with a hefty deposit.
If I did regularly want a brand new car, I'd certainly look at the numbers but I recently bought my wife a 3 year old Suzuki Across (Rav4 clone) for £20k which should do her for the next decade or so. My friend with his never ending conveyor will pay more than that in deposits alone.
A friend has a new Volvo Xc60 and it's costing an outrageous amount of money over the 4 year term to drive what is a fairly unremarkable car. There's no way he'd pay the up front cash price but somehow he's happy paying his 600 quid a month even with a hefty deposit.
If I did regularly want a brand new car, I'd certainly look at the numbers but I recently bought my wife a 3 year old Suzuki Across (Rav4 clone) for £20k which should do her for the next decade or so. My friend with his never ending conveyor will pay more than that in deposits alone.
If I did regularly want a brand new car, I'd certainly look at the numbers but I recently bought my wife a 3 year old Suzuki Across (Rav4 clone) for £20k which should do her for the next decade or so. My friend with his never ending conveyor will pay more than that in deposits alone.
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This
The reason car finance is wrong is that it allows you plebs to drive equal or better cars than me. I love to lord it over people with my bundles of cash buying a car outright for C-A-S-H to show my superior earning power. It's a disgrace that premium cars such as Mercedes, Audi and BMW are driven by shopkeepers and clerical assistants. Back in my day they would stick to Ford Fiesta 1.1 Popular Plus's whilst I could show off my grandeur in my Mercedes 500SE and everyone would know that I own vast tracts of land.
All options for paying for a car will work for some people and not for others...
Finance though is often disparaged because of the dream it sells which doesn't always reflect reality:
- PCPs where people can find it hard to get out of it as they can't afford the end payment / money for a new car / deposit for a new car - so the costs are wrapped into the next PCP and so forth
- Leasing where you pay any extra costs (e.g. paint / other extras) over the period of your lease, not the life of the car, effectively paying for higher depreciation
- Leasing where the headline figure sucks you in at £300 p/m (ooh I can afford that) to then realise it is 18 months with 9 months upfront making it £450 a month
- business deals (e.g. NHS scheme) where people bought into nice cars without realising that it changed their pensionable pay and therefore had a financial impact on their pension
- the sales and peer pressure into the belief that somehow a new car says something about you / your character / etc. so that people get sucked into paying more than they can really afford
There is a reason why manufacturers advertise everything now at monthly costs - because it looks more affordable.
A discovery sport 2.0 D165 Dynamic SE Auto (7 Seat) over 4 years / 12,500 miles on 3-48 will cost you £708.73 p/m
Over that 4 year period you will pay £36,145.23
Brand new you can buy one for £47,000
4 years old on c. 50,000 miles is c. £24,000
So cost to own is c. £23,000 by buying for cash v. £36,000 to lease it (56% more).
Of course - if you own it you may have some of the additional bills e.g. post-warranty, but most of that will be under manufacturer warranty anyway.
So, on paper - it looks a really bad deal to lease it - however there are lots of people out there who don't have the ability to spend £47,000 on a new car but can find £700 p/m - so suddenly you are driving a better car than you can 'afford' So the enticement is being able to drive a bigger / faster / better / more expensive car than you could otherwise - even though you might be spending 50% more to do so...
It is that disconnect between what appears to be good (and sucks people in) and the reality which makes people anti-leasing / finance.
Of course there are bargains in the leasing world as well as in buying for cash, so if you are prepared to hunt around and take what is available you can do well...
I know people with two cars at £700 p/m+ on their drive who complain about the cost of living and how they can barely afford to feed their children - there could be a simple answer!
Finance though is often disparaged because of the dream it sells which doesn't always reflect reality:
- PCPs where people can find it hard to get out of it as they can't afford the end payment / money for a new car / deposit for a new car - so the costs are wrapped into the next PCP and so forth
- Leasing where you pay any extra costs (e.g. paint / other extras) over the period of your lease, not the life of the car, effectively paying for higher depreciation
- Leasing where the headline figure sucks you in at £300 p/m (ooh I can afford that) to then realise it is 18 months with 9 months upfront making it £450 a month
- business deals (e.g. NHS scheme) where people bought into nice cars without realising that it changed their pensionable pay and therefore had a financial impact on their pension
- the sales and peer pressure into the belief that somehow a new car says something about you / your character / etc. so that people get sucked into paying more than they can really afford
There is a reason why manufacturers advertise everything now at monthly costs - because it looks more affordable.
A discovery sport 2.0 D165 Dynamic SE Auto (7 Seat) over 4 years / 12,500 miles on 3-48 will cost you £708.73 p/m
Over that 4 year period you will pay £36,145.23
Brand new you can buy one for £47,000
4 years old on c. 50,000 miles is c. £24,000
So cost to own is c. £23,000 by buying for cash v. £36,000 to lease it (56% more).
Of course - if you own it you may have some of the additional bills e.g. post-warranty, but most of that will be under manufacturer warranty anyway.
So, on paper - it looks a really bad deal to lease it - however there are lots of people out there who don't have the ability to spend £47,000 on a new car but can find £700 p/m - so suddenly you are driving a better car than you can 'afford' So the enticement is being able to drive a bigger / faster / better / more expensive car than you could otherwise - even though you might be spending 50% more to do so...
It is that disconnect between what appears to be good (and sucks people in) and the reality which makes people anti-leasing / finance.
Of course there are bargains in the leasing world as well as in buying for cash, so if you are prepared to hunt around and take what is available you can do well...
I know people with two cars at £700 p/m+ on their drive who complain about the cost of living and how they can barely afford to feed their children - there could be a simple answer!
Car finance is a trap and a con. Especially PCP.
The only sort of benefit is a new car every X years. Otherwise there is none. The interest rates alone are daft and the monthly payments are far to expensive. Then again if you wish to pay out a lot of money on a car then so be it.
Another issue is people say they can't afford to buy a house, yet finance a car on £400PCM with a £5000 deposit. Maybe just buy an older car outright and save the monthly repayments for a house deposit. I guess though that's another story.
The only sort of benefit is a new car every X years. Otherwise there is none. The interest rates alone are daft and the monthly payments are far to expensive. Then again if you wish to pay out a lot of money on a car then so be it.
Another issue is people say they can't afford to buy a house, yet finance a car on £400PCM with a £5000 deposit. Maybe just buy an older car outright and save the monthly repayments for a house deposit. I guess though that's another story.
vikingaero said:
The reason car finance is wrong is that it allows you plebs to drive equal or better cars than me. I love to lord it over people with my bundles of cash buying a car outright for C-A-S-H to show my superior earning power. It's a disgrace that premium cars such as Mercedes, Audi and BMW are driven by shopkeepers and clerical assistants. Back in my day they would stick to Ford Fiesta 1.1 Popular Plus's whilst I could show off my grandeur in my Mercedes 500SE and everyone would know that I own vast tracts of land.
Exactly! The world is now going to Hell in a (no doubt financed!) handcart! 
Leon R said:
Incorrect unless you work on the assumption that cars are a trap in general.
They are in reality. A car just needs to be reliable and get you where you need to go in an acceptable time. I've had a lot of cars and paid various prices. I've spent as little as £800 which got me a little run around. Worked perfectly but then baby came and needed something that could get a pram in the boot.In general cars are a financial trap.
Ankh87 said:
Leon R said:
Incorrect unless you work on the assumption that cars are a trap in general.
They are in reality. A car just needs to be reliable and get you where you need to go in an acceptable time. I've had a lot of cars and paid various prices. I've spent as little as £800 which got me a little run around. Worked perfectly but then baby came and needed something that could get a pram in the boot.In general cars are a financial trap.
Wardy78 said:
Picking this up from other threads, why is there such a stigma on car finance?
I've always used car finance, I've used PCH once but have used PCPs reasonably religiously for 20 years. It's meant that I have been able to get the car I want, when I want it and had no risk and usually not really paid any more for it? (my current BMW is on a PCP but the deposit contribution was only £400 less than the interest I'll pay?)
But whenever car finance is mention in threads, it's gets criticised? What am I missing?
I finance phones, a computer, my boiler all fine, but not a car?
Some of us think it's a fI've always used car finance, I've used PCH once but have used PCPs reasonably religiously for 20 years. It's meant that I have been able to get the car I want, when I want it and had no risk and usually not really paid any more for it? (my current BMW is on a PCP but the deposit contribution was only £400 less than the interest I'll pay?)
But whenever car finance is mention in threads, it's gets criticised? What am I missing?
I finance phones, a computer, my boiler all fine, but not a car?
king con. Some of us have met people who don't read the small print and have taken out finance at ridiculous levels of interest because they want to look successful and when overtime is cut they are f
ked.......Danny gets a "new" car...a 4 year old A3 Slime (sic)...Danny says....Pony boy your car is st, look at my new car...Top of the range leather seats, fandango alloys...Pit Pony says...Gosh that looks a nice car, I have no idea how much something like that would cost, if its not too rude a question, how much would I need to save up to buy a car like that...Danny says....Its only £398 a month....Pony says....Gosh how long do you have to pay that for until its yours......Roll on 6 months...Danny is b
hing because I told him we have switched some of our production to India, so we are cutting all overtime and letting all the agency staff go. To be fair the only people I know who use finance are the sort whose financial decisions over the years would make Martin Lewis suicidal.
It's a con because they take a car that cost £20k to make and instead of retailing it at £26k they pretend the retail price is £46K.
So knowing that in 2 years time the used value is going to be £26k they are happy to rent it to the public for £450 a month. And the public think they've saved £9k because of the "Great" finance deal.
I might have the figures wrong but I think it's the principle of how it works.
I wouldn't say don't buy a car on finance, just understand the alternatives and risks., and please choose wisely because in 10 years time its your choices that I'll be looking to buy.....
I've only ever bought 1 thing on finance, (other than the mortgage) and that's the kitchen which we had the cash for but they were offering a 0% finance deal.so we stuck the money in a stocks and shares ISA. 4 years later it's about 30% more in value. (Thanks to Donald, its not higher)
Because this is an enthusiasts website where a passion for cars is imperative. But you’re not allowed to be so passionate that you risk even slight financial hardship in your route to experiencing something that you really want. Thankfully there will always be people on standby to tell you want you really want and how best to spend the money that you work hard for.
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