Car finance 'encouraged' in money saving land

gilbert_and_sullivan

There have been a string of threads here where usually first time posters are asking for help to sort out car finance they cannot afford, this will always be the case.

Quite obviously they couldn't afford it in the first place, they went metaphorically naked and alone into the house of sharks...the car sales centre...and got conned into overpaying for a fast depreciating piece of bling tat sporting the right badge that they couldn't afford to run or maintain after paying through the nose for finance.

Any questions that get asked about finance before buying a car, (which is more sensible than the first type), are met by answers encouraging people to go for low interest or free that, juggling around with dodgy credit cards etc.

Some of you seem to actively help the sharks to devour the innocent wide eyed, why?

Only the very rare poster tells the OP the truth, in that the best indeed usually the only real money saving method is to buy what you can afford, or keep the car you already have till you've saved enough to buy what you want.

For goodness sake people, bad times are here and we haven't seen anything yet, it will get worse far worse when interest rates rise sharply (and they will soon) and more people lose their jobs or have to take huge pay cuts in order to keep their jobs.

Why do you not universally tell people to ONLY pay what they can afford for a car.

This isn't a rant it's a genuine question.

motorguy

You are linking a lot of different posts together here, to try to make a point.

• Often there are people on with no buying experience asking about finance.
  
• Often there are people on with no buying experience not needing finance.
  
• Often we dont know the persons financial background.
  
• Sometimes people have weak finances
  
• Sometimes people have strong finances
  

You seem to be linking 'people have weak finances' and 'people with no buying experience seeking finance' together. Rarely that is the case and when it does happen it is usually flagged by those of us on here that its not a good idea.

For clarification though,

• just because a person is seeking finance does NOT mean they cant afford the car. They may well be very able to budget for the monthly payments.
  
• It is not up to us to judge peoples personal circumstances, only to offer information and guide. Where its glaringly obvious a person is going down the wrong route, generally on here they are guided down a better route.

motorguy

gilbert_and_sullivan wrote: »

There have been a string of threads here where usually first time posters are asking for help to sort out car finance they cannot afford, this will always be the case.

Yes, they have come on here too late - trying to close the gate after the horse has bolted.

gilbert_and_sullivan wrote: »

Quite obviously they couldn't afford it in the first place, they went metaphorically naked and alone into the house of sharks...the car sales centre...and got conned into overpaying for a fast depreciating piece of bling tat sporting the right badge that they couldn't afford to run or maintain after paying through the nose for finance.

Several things :-

• not all car salesmen are sharks
• not all customers are innocent and naive (for example, of the four cars i sold this week, one customer open lied to be me RE: cars history (its a CAT C write off) and another accused us of scratching their car when it was here (the car never moved and noone was near it, but we're out the repair cost)
• a salesman does not CON people.
• any posts that remotely meet the description you are making are generally of cars like clios, focus, astras, etc NOT of some 'bling tat sporting the right badge'

gilbert_and_sullivan wrote: »

Any questions that get asked about finance before buying a car, (which is more sensible than the first type), are met by answers encouraging people to go for low interest or free that, juggling around with dodgy credit cards etc.

I dont agree here. I'd like to see evidence that people who you KNOW clearly cant afford the repayments are encouraged to take on finance.

I'd also like to see evidence that people are encouraged to use 'dodgy credit cards'?

gilbert_and_sullivan wrote: »

Some of you seem to actively help the sharks to devour the innocent wide eyed, why?

Only the very rare poster tells the OP the truth, in that the best indeed usually the only real money saving method is to buy what you can afford, or keep the car you already have till you've saved enough to buy what you want.

Are you saying here that anyone who uses finance cant afford it, because that is a very contentious statement?

gilbert_and_sullivan wrote: »

For goodness sake people, bad times are here and we haven't seen anything yet, it will get worse far worse when interest rates rise sharply (and they will soon) and more people lose their jobs or have to take huge pay cuts in order to keep their jobs.

Why do you not universally tell people to ONLY pay what they can afford for a car.

Again, are you saying that people who use finance cant afford the car?

gilbert_and_sullivan

Fair comments pgilc1.

As a rule anyone whose properly solvent won't need advice though and will be paying for a vehicle outright or leasing of they find it more economical, and it begs the question of how close others are sailing to the wind to want to risk 75% or more finance on a fast depreciating asset.

Seeing as this site is dedicated to saving money, it makes more sense not to finance anything if possible.

The problem with people balancing their budgets is that all is great till the income stops, and apart from politicians i don't know anyone with a guaranteed job and income.

motorguy

gilbert_and_sullivan wrote: »

As a rule anyone whose properly solvent won't need advice though and will be paying for a vehicle outright or leasing of they find it more economical, and it begs the question of how close others are sailing to the wind to want to risk 75% or more finance on a fast depreciating asset.

There are several issues rolled into one there. There was a guy on here recently looking down his nose on people who took out finance and how he 'knew better' and it transpired he gave FULL LIST PRICE on an ASTRA costing £26,000. Turns out he'd lost something like 50% of its value in 18 months, but still, he considered himself a 'canny buyer' simply because he didnt use finance, yet he'd have been far better off buying the 'right' car - in terms of resale value or by buying a year old one not a new one.

gilbert_and_sullivan wrote: »

Seeing as this site is dedicated to saving money, it makes more sense not to finance anything if possible.

Well, not necessarily. Some people find it easier to budget £200 a month on a car than to rustle up several thousand to buy it outright. Other people will use finance when they can use their own cash more effectively elsewhere. For example i financed a car a couple of years ago, so that our cash could be used to finish off our new house, thus saving 20% VAT on the cost. The other advantage of a finance deal is you're effectively paying for the depreciation in a monthly payment. Depreciation is STILL the largest cost of ownership, yet some people think by buying with cash that makes them smarter, in the same way as some people will spend £5000 changing their car to one that does 8mpg more....

gilbert_and_sullivan wrote: »

The problem with people balancing their budgets is that all is great till the income stops, and apart from politicians i don't know anyone with a guaranteed job and income.

I contend this also. If you buy your car cash and lose your job, then at some point you're going to have to liquidate that asset anyway. Alternatively, if someone is paying £150 a month for a car, and get a job in three months, then chances are they can keep up the payments til they get a new job. Thats also assuming you dont have some cash in the bank.

Dont forget that say people put down 20% deposit on a car and are paying the rest off, they can easily sell the car if times are tight and moreoften clear the finance anyway.

Also, i am a massive advocate of income protection insurance. I pay £50 a month for insurance that pays out £1200 a month (plus the £300 or so job seekers) if i'm made redundant. I think everyone should consider that, not just those who arent 'smart' enough to buy with cash.

motorguy

O/P i'd really like to see one of these threads you are talking about on here where someone who clearly cant afford a new car is encouraged by people on here to use finance?

gilbert_and_sullivan

pgilc1 wrote: »

O/P i'd really like to see one of these threads you are talking about on here where someone who clearly cant afford a new car is encouraged by people on here to use finance?

I'm not going to link to any particular thread, as that would be unfair to highlight a particular posters situation, it's for them to judge.

However I stand by my assertion that someone who is in control of their finances will not be borrowing money to buy something as short lived and quickly depreciating as a car.

How can you know that someone who asks finance questions can easily afford their future payments, you can't no one can you can only go by what they have posted bearing in mind they want help to buy something they really can't afford, and in many cases they can't know either or they wouldn't be risking borrowing £15K or more on a vehicle that will lose probably £10 in it's first 3 years.

I hate to see the threads here where people have got themselves in serious straits over a car purchased on finance, owing umpteen thousands on a car that's often got serious problems, often through being neglected because they can't afford to service the thing correctly by the time they've paid for it every month and put the ever more expensive fuel in it.

You appear to be car dealer and no doubt you are a responsible one, and would refuse to sell a car to someone who you know from gut feeling can't really afford it.

I suggest then you are a dealer who maybe takes a pride in his way of business and wants repeat custom from satisfied people, there are dealers like that out there.

Not all are like you though, some are finance specialists who happen to give a car away with each lucrative finance package, reading between the lines of many postings here you can feel the situation the usually young find themselves in.

From my prevous work i've seen car sales people from the other side of the fence, some of the underhand things i've seen have been quite unpleasant, innocent gullible and desperate people taken unfair unscrupulous advantage of, and i've seen decent honourable car sales depts and dealers too who have your sense of fair play.

I've seen unpleasant buyers too who try to screw the very last ha'penny from a deal, who want an internet only price deal but the back up and goodwill from a reputable dealer who has to provide all the facilities in the world and the buyer thinks a tenner profit from his £6k car will get said dealer to help him maintain it for free long after the warranty has expired.

Fairness in all things.

You don't agree with me and that fair enough, i take on board your valid points.

At the end of the day should posters on a money saving site be encouraging anyone to take on finance they 'might' not be able to fulfil, and the heartache that goes with it?

motorguy

gilbert_and_sullivan wrote: »

At the end of the day should posters on a money saving site be encouraging anyone to take on finance they 'might' not be able to fulfil, and the heartache that goes with it?

I'll start with this one as its standing out to me.

How can we advocate anyone buying anything of significance that they 'might' not be able to keep as long as they like?

Peoples circumstances change all the time, very often for the better, sometimes for the worse. Only sometimes does that lead them to have to give up something they have bought - for example, by giving up their car as we're discussing here - but that can happen just as easily when you've bought something for cash?

I've a guy at the minute trying to do a deal with me out of his £5,000 Honda Civic to a £500 banger. There are reasons for him wanting to do that, but that doesnt mean he shouldnt have bought the car in the first place?

motorguy

gilbert_and_sullivan wrote: »

I'm not going to link to any particular thread, as that would be unfair to highlight a particular posters situation, it's for them to judge.

I think thats an easy way out.

gilbert_and_sullivan wrote: »

However I stand by my assertion that someone who is in control of their finances will not be borrowing money to buy something as short lived and quickly depreciating as a car.

Well, thats your opinion, however i stand by my assertion that finance can be right for a lot of people a lot of the time. Cars depreciate anyway, irrespective of how you pay for them.

gilbert_and_sullivan wrote: »

How can you know that someone who asks finance questions can easily afford their future payments, you can't no one can you can only go by what they have posted bearing in mind they want help to buy something they really can't afford, and in many cases they can't know either or they wouldn't be risking borrowing £15K or more on a vehicle that will lose probably £10 in it's first 3 years.

Sorry, you are stuck in this mindset that because they are using finance they cant afford it. My wife finances a brand new car every three years, then hands it back, and gets another. This works for her. She wants reliability, she gets a warranty, she gets a new car, she gets no maintenance costs, she gets no hassle, she gets the spec she wants, etc, etc. Does she have a wail of a time in fast and fun cars? Does she pay a premium for that? Yes. Does that bother her? No

gilbert_and_sullivan wrote: »

How can you know that someone who asks finance questions can easily afford their future payments, you can't no one can you can only go by what they have posted bearing in mind they want help to buy something they really can't afford, and in many cases they can't know either or they wouldn't be risking borrowing £15K or more on a vehicle that will lose probably £10 in it's first 3 years.

But it would depreciate anyway? Would you not rather have that £15K car being paid for in equal monthly payments, rather than get a return of £5K after putting in £15K of your hard earned? You'd still have the money in the bank or for you to use elsewhere?

gilbert_and_sullivan wrote: »

I hate to see the threads here where people have got themselves in serious straits over a car purchased on finance, owing umpteen thousands on a car that's often got serious problems, often through being neglected because they can't afford to service the thing correctly by the time they've paid for it every month and put the ever more expensive fuel in it.

Oh come on, you're making this up as you go along!

gilbert_and_sullivan wrote: »

You appear to be car dealer and no doubt you are a responsible one, and would refuse to sell a car to someone who you know from gut feeling can't really afford it.

I dont offer finance - the cars i sell range from £500 to £5000. So being able to afford it in this instance means being able to pay for it outright. However, if i knew the car was going to cause them financial pain - either, for example by being much harder on fuel and knowing they do big miles, OR if the car is likely to need expensive maintenance in the near future that they havent budgeted for (for example, maybe an expensive timing belt change due imminently) then i'll either make sure they're fully aware and / or guide them towards another car.

gilbert_and_sullivan wrote: »

I suggest then you are a dealer who maybe takes a pride in his way of business and wants repeat custom from satisfied people, there are dealers like that out there.

Not all are like you though, some are finance specialists who happen to give a car away with each lucrative finance package, reading between the lines of many postings here you can feel the situation the usually young find themselves in.

Yes, it does happen. Undoubtedly so. In fact on most mass market new cars, theres little or no profit to be had, so the money is in selling finance, aftermarket extras, insurance and making money on the trade in. However that doesnt mean we advocate that on here - you've yet to show evidence of people being pushed into finance deals they cant afford on here, which is the main reason for your post is it not?

gilbert_and_sullivan wrote: »

From my prevous work i've seen car sales people from the other side of the fence, some of the underhand things i've seen have been quite unpleasant, innocent gullible and desperate people taken unfair unscrupulous advantage of, and i've seen decent honourable car sales depts and dealers too who have your sense of fair play.

Again, yes, unfortunately that happens. It happens in life. I had a Sky telesales agent guarantee me that i would be able to get 20MB broadband if i signed up to the £19.99 a month package, but i'm averaging 150K where i live. Have i been royally screwed over? Yes.

THATS what forums like this are for - to help people BEFORE they jump in with both feet.

gilbert_and_sullivan wrote: »

I've seen unpleasant buyers too who try to screw the very last ha'penny from a deal, who want an internet only price deal but the back up and goodwill from a reputable dealer who has to provide all the facilities in the world and the buyer thinks a tenner profit from his £6k car will get said dealer to help him maintain it for free long after the warranty has expired.

True.

I do think you're getting yourself hung up on something i dont see happening on here - that people are encouraging the vulnerable and those with financial issues to take on car finance. I just dont see it.

AND you havent been able to show any evidence to back up your threads. You seem to not want to link to threads because its a public forum, but these threads were put on an open forum in the first place??

I would go further and say your issue is that you see people using finance as not being able to afford it, whereas the reality is that the vast majority of people using car finance are very happy with it and it has worked well for them.

iolanthe07

It irks me that car dealers are still allowed to quote flat rate interest. This confuses some buyers who think '6%' interest is a good deal, when in fact they will be paying 12%+ APR.

newfoundglory

As far as i'm concerned, unless the finance is free (ie. 0%) you should avoid and pay for the car outright.

However, I accept that finance is in fact a bargaining tool and should be used to discount the car further (as a customer, I would expect a minimum discount of several hundred pounds for taking out a small amount of finance). But this would vary depending on how much finance is taken out. A large amount of finance, should yield a large discount. This is of course providing a non-0% finance package can be cleared and re-paid almost immediately with little or no penalty.