Proof the banks are keeping us in debt.

CLAPTON

matttye wrote: »

I may not be getting what you're trying to say, because it seems black and white to me. You can either afford to pay back what you borrow or you can't.

When I say this, I mean that you do of course need a little bit of wiggle room in your budget for unexpected increases in bills, interest rates, unexpected repairs etc.



I agree and that's my philosophy about most things.

I've stepped away from that for my car because I need something reliable for work and I'd rather have one that will last for a long time, than have to keep finding a used car every couple of years.

I'm intending to keep this car for about 10 years, and I'll overpay on the car finance to try and pay it off in about half the time, so should save on the interest. It's quite a low rate anyway.

I don't understand your 'reliability' argument

when your car is 2 years old how will that be more reliable than if you bought a 2 year old car?

matttye

CLAPTON wrote: »

I don't understand your 'reliability' argument

when your car is 2 years old how will that be more reliable than if you bought a 2 year old car?

It may or may not be, impossible to say. I know that I'll take care of it though, many wouldn't.

I would still have needed to finance the car if it was 2 years old. I'm not denying that it would have made more financial sense to get a 2 year old car though. I just wanted the new car, and like I say I can easily afford the repayments.

At least I'm safe in the knowledge that I have a 5 year warranty in case anything goes wrong with it.

BillJones

a4a wrote: »

So should nobody apply for a loan?

No. Applying for a loan is in most cases an admission that you have erred.

It means that you want to live beyond your means, or that you've not planned well, or that you lack the patience to save up for what you want.

Hopefully you understood this, and it was a rhetorical question, of course.

matttye

BillJones wrote: »

No. Applying for a loan is in most cases an admission that you have erred.

It means that you want to live beyond your means, or that you've not planned well, or that you lack the patience to save up for what you want.

Hopefully you understood this, and it was a rhetorical question, of course.

It's easy to make comments like that when you don't know the individual's circumstances. Loans obviously have a place in society. If they were a sign of living beyond your means as you say, then why would people be able to take on further borrowing if they already have a loan?

Might I remind you that a mortgage is a loan as well. Has everyone who takes out a mortgage erred? Do they lack the patience to save up for what they want? Or perhaps there's a reason for it - i.e. not wanting to pay rent whilst they're buying their house.

bigadaj

matttye wrote: »

It's easy to make comments like that when you don't know the individual's circumstances. Loans obviously have a place in society. If they were a sign of living beyond your means as you say, then why would people be able to take on further borrowing if they already have a loan?

Might I remind you that a mortgage is a loan as well. Has everyone who takes out a mortgage erred? Do they lack the patience to save up for what they want? Or perhaps there's a reason for it - i.e. not wanting to pay rent whilst they're buying their house.

Fair enough, mortgages are an exception because they are used to generally buy what most would consider is an appreciating asset, now normally require a reasonable deposit so show some skin in the game for the lender and potentially become self paying if compared with rent.

Do you want to give any other examples where loans are a good idea, the only one I can think of is a tiny loan for a very cheap car if soemone is totally skint to ensure they can get to work, however this would be well under a grand.

My earlier point was that every other thread on here quotes the phrase 'due to no fault of my own' when people, have over stretched themselves. No consideration of redundancy, sacking, divorce or break up, illness, death in the family or any other possibility that affects many people every year. This obviously excludes my original example which just suggests that interest rates will return to normality at some point, when large numbers of people may well not be able to afford their mortgage. This is presumably extending the emergency base rate levels as it would be political suicide to raise rates with such large numbers beholden to their mortgage payments.

matttye

bigadaj wrote: »

Fair enough, mortgages are an exception because they are used to generally buy what most would consider is an appreciating asset, now normally require a reasonable deposit so show some skin in the game for the lender and potentially become self paying if compared with rent.

Do you want to give any other examples where loans are a good idea, the only one I can think of is a tiny loan for a very cheap car if soemone is totally skint to ensure they can get to work, however this would be well under a grand.

My earlier point was that every other thread on here quotes the phrase 'due to no fault of my own' when people, have over stretched themselves. No consideration of redundancy, sacking, divorce or break up, illness, death in the family or any other possibility that affects many people every year. This obviously excludes my original example which just suggests that interest rates will return to normality at some point, when large numbers of people may well not be able to afford their mortgage. This is presumably extending the emergency base rate levels as it would be political suicide to raise rates with such large numbers beholden to their mortgage payments.

Home improvements prior to a sale - add value to house, sell for more and use proceeds to pay off loan.

There's obviously a much lower risk of being affected by any of those things throughout the life of a normal loan than there is throughout the life of a mortgage, as mortgages take significantly longer to repay. I appreciate that a mortgage is perhaps necessary whereas loans for other things are not.

When somebody has a secure job for the considerable future and has plenty of room in their budget for loan repayments I don't think they're such a bad idea. Again, it all depends on the circumstances of the individual. Illness isn't really a concern for the young, fit and healthy.

bigadaj

matttye wrote: »

Home improvements prior to a sale - add value to house, sell for more and use proceeds to pay off loan.

There's obviously a much lower risk of being affected by any of those things throughout the life of a normal loan than there is throughout the life of a mortgage, as mortgages take significantly longer to repay. I appreciate that a mortgage is perhaps necessary whereas loans for other things are not.

When somebody has a secure job for the considerable future and has plenty of room in their budget for loan repayments I don't think they're such a bad idea. Again, it all depends on the circumstances of the individual. Illness isn't really a concern for the young, fit and healthy.

You've got a different view which is fair enough, but extending yourself for a depreciating asset is rarely wise. As I've noted above if you look on these boards there are hundreds of threads where people have been destroyed financially by car loans, or loans or credit card debts for stuff they don't even know what they spent it on.

Home improvement rarely work out favourably in your scenario, what you pay for a new kitchen, bathroom, decorating etc is rarely to everyones taste and whilst it may make a property more saleable it often doesn't pay for itself. This would be viable if taking on a rundown house to redevelop and then sell on, but that's really commercial property development and so doesn't fall under the normal domestic housing area.

a4a

If people didn't borrow, we would still be in the dark ages. Progress wouldn't be made.
If thats the way some people would rather live, thats up to them.
Personally, i'd rather improve my lifestyle as best I can in the most sensible way possible.
There are millions of borrowers who have never missed a payment and never got into trouble. In fact, there are more who have rather than haven't otherwise, banks would have shut up shop long ago.

BillJones

a4a wrote: »

Personally, i'd rather improve my lifestyle as best I can in the most sensible way possible.

Self-improvement, training, and career progression into a high-paying position?

If so, good for you. Thats to be applauded, rather than taking the lazy way, and "improving" your lifestyle by funding it with debt.

a4a

BillJones wrote: »

Self-improvement, training, and career progression into a high-paying position?

If so, good for you. Thats to be applauded, rather than taking the lazy way, and "improving" your lifestyle by funding it with debt.

I agree. But you can have all the former and still require the latter.

Its irrelevant how much you earn. I know multi-millionaires who still borrow.

If your comments are aimed at me, you don't know my circumstances, so you cant judge!