Negative equity in new car finance?

motorguy

marlot wrote: »

Who would really care if that was your car?

Its actually what he drives. I was making the point that its relative to your own personal measure of what successfully achieving that goal is.

I'll give you an example. A month ago i was driving a 2002 Fiat Marea JTD. Now it would be easy for me to get all sniffy on a thread like this and say 'oh you cant afford a car if you have to take finance, i bought my car with cash'. And by my own measure of success - "have i bought a car with cash?" then yes, i have succeeded.

The stilo was using £60 of diesel a week and approx £120 a month in maintenance - there was always something that had broken or was needing maintained - so in the interests of reliability and no hassle, i now have a diesel golf on finance. It uses £45 a week of diesel, costs £200 a month on finance and is under manufacturers warranty for 2 more years yet so no maintenance costs (free servicing too!), which works out roughly the same.

So there are two fairly valid scenarios whereby on one hand "one could claim to buy ones own car for cash", but the reality is, you're driving an old car that isnt really fit for driving 25,000 miles a year in. So instead i have a reliable car but there are those who would say because i had to finance it, i "cant really afford it".

Another example - if i was to rent a house rather than have a mortgage, OR sell our home and use the £150K equity to buy a house for cash, then i could quite quickly and quite easily claim to be 'debt free'.

I could then be on here claiming what a 'liberating' experience that is, and how i'm here 'help people' achieve oneness with the world too.

Just because i chose to have a mortgage and our house is perhaps bigger than strictly necessary to house my family doesnt mean i "cant afford it"

NOW, the reality of the situation - of the broad spectrum of people out there, there are of course those sadly who are floundering with debt.

However, there are many many people who are very happy to budget a certain amount every month for a car or a house or a mobile phone or whatever and who have no problems with that.

It doesnt mean they cant afford it it just means they budget their money in an alternative way.

marlot wrote: »

People spend all their money, including money they don't have, creating an image. I can't be bothered with it all.

Indeed and neither can i. However i dont judge others because they may or may not chose to drive a flash car on finance.

marlot wrote: »

I went to a speech by Anne Widdecombe recently, and she observed that people who compared themselves with those who had more than them seemed remarkably less happy than those who compared themselves with those who had less (and tried to help them).

Absolutely. Anything i do or have, its because it impresses me not to impress other people. I could have easily got a 3 year old top spec BMW for the price of the 9 month old Golf if i'd want to impress other people, but i didnt. The Golf impresses me because of its solidity, its completely anonymous image and the crazy MPG i get from it.

marlot wrote: »

We're fortunate enough to have several cars, but I don't feel the need to replace the Honda Jazz because its now eight years old. No more than I feel the need to replace the washing machine because its not a current model. I'll replace them when they break and are uneconomical to repair, or when my needs change.

Yup. Totally the same opinion. Only got such a fresh car because i do 25K miles a year and i plan to run it for 10 years - so i know exactly what i have rather than buy someone elses problems.

marlot wrote: »

One of my neighbours drives a 20 year old, decrepit merc. The other drives an almost new merc SLS. Each to their own - I don't mind.

Indeed. Leave them to it. I wouldnt judge either neighbour. We're all at difference points on lifes journey - sometimes you're doing well ,sometimes not so well - it all ends the same way.

Strider590

motorguy wrote: »

Yes its very easy said, and not hard to achieve if your measure of success in meeting your goal of "only ever buying my car for cash" is an 04 Vectra 1.8.

Success?

I don't measure success with material wealth.......
But I do measure debt as a failure.
My own goals and aims are not based around impressing shallow people, I keep my achievements to myself, because they are personal, it's about being a better person.

I've owned various cars over the years, the most recent being the Vec (and also the cheapest), but i've never even considered putting myself in debt to buy one. I look at my bank account, I halve my balance and that is how much I spend on a car...... Though I may have to changed that policy next time around.

Other people may see a fancy car as being "success", but I don't give a flying duck what other people think. To me, anyone who thinks like that simply isn't worth knowing.

motorguy

Strider590 wrote: »

Success?

I don't measure success with material wealth.......

Success in meeting your objective of not having a car on finance, not success in having material wealth.

Its not hard to meet an objective if you dont set 'the bar' very high.

Widening that, its not that difficult to live a debt free existence if your aspirations from life are low.

If you drove a Ferrari 458 and lived in a mansion and were debt free, then thats an achievement. Driving an 04 Vectra, maybe not so much.

Strider590 wrote: »

But I do measure debt as a failure.

Debt isnt necessarily a failure. Progression towards any goal often involves a debt of some sort - very few businesses are ever started without some sort of borrowing, very few homes are owned without some sort of loan. If its a means to an end its not necessarily a bad thing.

In fact, i would go so far is not understanding that means you're restricting your opportunities in life.

Strider590 wrote: »

My own goals and aims are not based around impressing shallow people, I keep my achievements to myself, because they are personal, it's about being a better person.

Good for you. My wifes Uncle is like that. Retired University Professor. Intellectually brilliant. Lives an average life. If thats your bag, cool.

Strider590 wrote: »

I've owned various cars over the years, the most recent being the Vec (and also the cheapest), but i've never even considered putting myself in debt to buy one. I look at my bank account, I halve my balance and that is how much I spend on a car...... Though I may have to changed that policy next time around.

If thats how you view a car then grand. However it doesnt make those who dont share your view wrong.

Strider590 wrote: »

Other people may see a fancy car as being "success", but I don't give a flying duck what other people think. To me, anyone who thinks like that simply isn't worth knowing.

I think the problem here is - you *think* that other people see themselves in a fancy car as being a success, however most people i know who have nice cars do so because they like nice cars, not because of any perceived status they think it brings them.

Beachview_2

motorguy wrote: »

S
I think the problem here is - you *think* that other people see themselves in a fancy car as being a success, however most people i know who have nice cars do so because they like nice cars, not because of any perceived status they think it brings them.

Yes I would agree with that, I buy a car that I love, because I want it, not because of what other people will think of me for driving it. I couldn't care less what others think. Of course what impresses one person, won't impress another anyway.

ontrack

motorguy wrote: »

I think the problem here is - you *think* that other people see themselves in a fancy car as being a success, however most people i know who have nice cars do so because they like nice cars, not because of any perceived status they think it brings them.

Maybe you are missing out on the main motivation of a consumer driven society, i.e. encouraging avarice.
you just have to look through a few posts here to see that people are driven to buy a new car for reasons which do not logically stack up, whether that is for perceived status is difficult to judge. However having worked in the retail motor trade (some time ago) in a garage specialising in "aspirational" cars there were plenty people who were buying beyond their means I know for sure that the majority were looking for the perceived status of having a new expensive car on the drive.
I can think of several people locally who buy a new car and keep the "new reg" on until it is superseded then put on a personal plate
where does the Like a nice car come in to that!!

marktjm3

Pixie_girl wrote: »

Hi all. I was hoping someone could help me. I had negative equity on a car and the new car company I was hoping to buy from wrapped this negative equity up into a business hp agreement (not personal as per my previous agreement). I signed this unaware that this was a different contract and that I effectively signed away my consumer rights. I know I should have read the contract thoroughly but I didn't and was in a rush to buy the car. Also I didn't realise that I got such a poor deal on my old car and the negative equity wrapped up in the new deal was 10k! I'm now owing the 10k and I can't settle early without paying back ALL the interest on the new agreement (18k!) as they don't recalculate interest under business contracts. Please help. I feel I've been well and truly screwed.

I assume from this that you are director/shareholder of a limited company?

The law broadly take the view that as a business owner you are capable of making considered business/buying decisions, so you are not afforded the protection of Consumer Credit legislation

Unless you can illustrate that you were lied to or actively misled I'm afraid you are stuck in the contract

motorguy

ontrack wrote: »

Maybe you are missing out on the main motivation of a consumer driven society, i.e. encouraging avarice.
you just have to look through a few posts here to see that people are driven to buy a new car for reasons which do not logically stack up, whether that is for perceived status is difficult to judge. However having worked in the retail motor trade (some time ago) in a garage specialising in "aspirational" cars there were plenty people who were buying beyond their means I know for sure that the majority were looking for the perceived status of having a new expensive car on the drive.
I can think of several people locally who buy a new car and keep the "new reg" on until it is superseded then put on a personal plate
where does the Like a nice car come in to that!!

Speaking as a (former) motor trader myself and selling approx 25 units a month, it is my belief that a relatively small number of sales are for 'aspirational' reasons. The amount of times i've had a BMW or Audi or Merc here at the right price and the right spec, yet it sits for ages. Also, typically, anyone buying that sort of car off me tends to be buying it because they 'like BMWs' or they've 'had Audis before'.

I guess if you were formerly selling aspirational cars then you were perhaps getting a 'skewed' view of the market? Also, on what basis did you personally judge that they couldnt afford it? Certainly their finances must have been in reasonable shape otherwise they wouldnt these days be get a massive loan as thats been pretty much tightened up?

I do remember a friend of mine was a motor trader and he basically bought 3+ year old BMWs and Audis, stuck a set of upgraded replica alloys on them and was making an easy £2,000 a car. Sold them by the bucket load for years. Once the recession started to bite though, he couldnt give them away. He still tried, but the market had moved on when he hadnt. Those same people i would have seen buying Mercs and Audis are now driving Passats and the like.

But that was 10 years ago, certainly an unviable business model now.

Likewise if people want to put a disproportionate amount of their disposable income into a car for a couple of years then why not? I got a new X5 back in '08, payments of £600 a month, fuel consumption £500 a month. Did it make perfect sense to me at the time? Yes. Could i afford the payments? Yes, no problem. Would i do it again? No. BUT, i had one, loved it at the time, and have subsequently moved on in terms of my own personal aspirations.

And again, you're assuming that because people buy cars that the reasons for doing so do not logically stack up, then they must be doing it to impress other people. Most likely they're not. They might just want a new car, want something bigger, want something smaller, want something faster, want something more economical, want an estate car for the dogs, etc, etc. Will they spend an unnecessary amount of money doing so? Yes most likely. Doesnt mean they cant afford it though.

Simple example - i sold an 06 Grand Scenic last night to a couple who traded in an 01 Zafira. Was the Zafira doing her job? Yes. Totally. Would it have continued to do so? Yes. I asked her why she was changing - "i've always wanted a Grand Scenic". No logical reason and it cost her £1500 to change, but not really going to impress anyone.

Other example this week - bloke bought a Lexus Jeep from me, traded in an Audi 3.0i Quattro estate car. Reason for driving the Audi - needed 4wd where he lived in the winter and had dogs. Reason for changing - last year the Audi didnt have enough clearance to go down the lane he lived in with the snow, so hes changing it before the winter sets in.