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  • FIRST POST
    • Tarambor
    • By Tarambor 30th Jun 17, 12:03 PM
    • 1,546Posts
    • 1,062Thanks
    Tarambor
    My opinion about buying a car on finance
    • #1
    • 30th Jun 17, 12:03 PM
    My opinion about buying a car on finance 30th Jun 17 at 12:03 PM
    Given the plethora of questions about PCP and other deals, here's a video that perfectly sums up exactly what you're getting yourself into.

    https://www.youtube.com/watch?v=8tk1BycWC9I
Page 2
    • TrustyOven
    • By TrustyOven 5th Jul 17, 2:10 PM
    • 669 Posts
    • 708 Thanks
    TrustyOven
    Not intended as a put down. Simply a comment on the fact that we rely on the idea of finance for some of the most important things in our life. Sure, it would be nice if you didnt need to borrow but in reality we all borrow for a house. Also i dont think its that different. Sure, cars will depreciate but not so many years back a lot of people were (and some still are) living with negative equity in the tens of thousands because of loans for a house.
    Originally posted by MataNui
    You raise good points.

    I would say that people don't need to buy a newlybuilt house. They could buy a house that's much older, as long as other criteria matches.

    Yet with buying new cars, people seem (from my observations of this board on the MSE forum) to have this feeling of entitlement that they should be able to buy a new car. There's no need for them to have the new latest car. There's a big difference between a car and a house.

    Admittedly there might be a disconnect in scenario, thereby the PCP is not buying a new car, but an older car. In either case, anyone that is buying a car on finance is probably not buying a 500 quid banger, but getting a 8k+ car. If they are buying a 500 quid banger on finance, then that's an outlier for my post.

    Those that are taking out a car loan.... do they have money saved up?
    If no, why not?
    Does it make sense to take a portion of their disposable income and thow it on a car for 2-5 years, rather than saving up so that they wound't ever need a car loan (or perhaps any other loan other than a mortgage)?

    There's also the idea of how long it would take to save up to buy the car or the house. We generally can't save up to buy a house without a mortgage, but we can do that with a car. The timescales are different, the payment amounts are different. It should be achievable to buy a crap car and run that while you save up for a new car, and then buy it in 2-3 or 4 years time, just as if you were going with car finance. Can't really do that with a house purchase unless you are fortunate to have the means to do it.

    So for most, there is no choice for house. There is a choice for cars.

    I am not against the idea of finance, in general. I'm against personal finance for cars. Businesses buying vehicle / equipment / buildings / materials, or countries or individuals taking finance for other purposes, are generally ok from my perspective.
    Goals
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    • MEM62
    • By MEM62 7th Jul 17, 9:17 AM
    • 1,373 Posts
    • 987 Thanks
    MEM62
    'My opinion about buying a car on finance'

    Lunacy. Paying interest to purchase an asset with a value that falls like a stone makes no sense at all. Buy with cash & run for as long as it is economically viable to do so.
    • silverwhistle
    • By silverwhistle 10th Jul 17, 11:07 PM
    • 1,646 Posts
    • 2,175 Thanks
    silverwhistle
    Sure, it would be nice if you didnt need to borrow but in reality we all borrow for a house. Also i dont think its that different. Sure, cars will depreciate but not so many years back a lot of people were (and some still are) living with negative equity in the tens of thousands because of loans for a house.
    Originally posted by MataNui
    No, I disagree. I may have had negative equity at one stage (or perhaps I didn't, not sure), but it didn't matter as I didn't have to move. I also bought a house, at 28, before buying a car, and that was a £100 banger (or £500, say, in current prices). You always need somewhere to live but you don't always need a car, as my experience shows.

    Both my last cars were sold at around 12 years old, and neither from a desire to change or unreliability, but purely from international moves and the cost and bureaucracy of transferring registrations. Both were small hatchbacks but capable, full to the brim, of taking me to and from the Alps every year. By the time I get my next car in 4 or 5 years time there should be a healthier second-hand market in electric and hybrid cars, and I'll be paying cash again.
    • tempus_fugit
    • By tempus_fugit 11th Jul 17, 12:22 AM
    • 291 Posts
    • 282 Thanks
    tempus_fugit
    My post was in response to the point by the poster that you need a large deposit every so many years.

    The video isn't about PCP, its about his sister spending money she doesn't have.

    I don't see the problem with PCP. A car depreciates however you choose to pay for it. I have one on PCP and one owned outright. They are both depreciating. And yes, I could have paid cash for both if I wanted to but would rather have the flexibility of cash in the bank.
    Originally posted by rs65
    Yes, it can work, just as long as people go into it with their eyes open of course. For me it was important to have low payments now until I have more income in a few years's time. I had the money for the deposit whichever way I chose to finance the car, but the PCP option means I get to keep the deposit for next time (or for the balloon payment) and have lower payments meantime. I normally wouldn't do it that way, but it suited my current circumstances. And I'm aware of the implications, it's when people aren't and get caught out that ti becomes a problem.
    Retired at age 56 after having "light bulb moment" due to reading MSE and it's forums. Have been converted to the "budget to zero" concept and use YNAB for all monthly budgeting and long term goals.
    • menachem
    • By menachem 11th Jul 17, 2:26 AM
    • 8 Posts
    • 1 Thanks
    menachem
    Yes, it can work, just as long as people go into it with their eyes open of course. For me it was important to have low payments now until I have more income in a few years's time. I had the money for the deposit whichever way I chose to finance the car, but the PCP option means I get to keep the deposit for next time (or for the balloon payment) and have lower payments meantime. I normally wouldn't do it that way, but it suited my current circumstances. And I'm aware of the implications, it's when people aren't and get caught out that ti becomes a problem.
    You have a point there but the video simply want to say that if his sister has enough cash to buy car. Then, why not pay it on cash instead of car loan. For, his sister will not only worry for paying loan but also for maintenance of car.
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