Please explain car finance options to me

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  • Please explain car finance options to me
  • iamanobody
    Member

    I do about 15k miles a year

    due to finish my car loan soon

    £180 a month spare

    need a new car soon

    Whats the deal with PCP – do i pay deposit, monthly payments for x months, hand back car?

    What do you do about repairs/tyres/tax/servicing/mot etc?

    Premier Icon bikebouy
    Subscriber

    See Ling 😜👍👍👍

    legend
    Member

    Whats the deal with PCP – do i pay deposit, monthly payments for x months, hand back car?

    Pretty much, you’ll also have the option to buy the car at the end if you really want it

    What do you do about repairs/tyres/tax/servicing/mot etc?

    Generally your responsibility

    legend
    Member

    See Ling

    That’s lease, silly. Wouldn’t want Ling to come here by mistake thinking there’s a deal in the works for Ling’s Cars at http://www.lingscars.com

    johndoh
    Member

    Depends – some do fully inclusive deals but I doubt you’ll get a decent car inc. maintenance etc on 15k a year for £180 a month.

    And look for better deals on older models – I got an outgoing XC60 on a deal last year that was *significantly* cheaper than if I got the similarly-specced new style of the same car.

    Ohh, and don’t be caught out by cheaper monthly payments that want a higher deposit and/or lower month inclusive mileage with higher per mile charges if you have gone over the contracted mileage.

    iamanobody
    Member

    is servicing not included? what about repairs?

    iamanobody
    Member

    is servicing not included? what about repairs?

    Johndo -where do i look – obvs a complete noob at this!!

    Premier Icon wwaswas
    Subscriber

    There’s an explainer of the choices here:

    https://www.whatcar.com/news/pay-new-car/

    johndoh
    Member

    Servicing generally not, repairs (if a warranty item and the car is still in warranty) would be. If you took out a four year deal and the warranty is only three years, you would be paying for any repairs yourself in the final year.

    johndoh
    Member

    Iamnobody – these guys often have some good deals, but I usually sign up for loads of deals around the time my company vehicle is due for replacement.

    I actually got my XC60 deal directly through Mill Volvo (a Volvo main dealer in the north) and not a third-party lease company.

    On a PCP you’re basically paying the difference between what it costs and what it’s worth at the end of the term. Some manufacturers will set the future value a little lower than part-ex price which means if you hand the car back in good condition you will have a few quid available for a deposit on a new car.

    Any deposit comes off the amount you owe, as does any deposit contribution from the dealer/manufacturer, scrappage scheme or the like which in turn brings the monthly cost down. Any extras you spec can add significantly to the monthly cost as you usually pay the full amount over the finance period.

    My mate who used to work for Ford always said your best with a low deposit and few options. If you want certain options look for a higher spec model with them already included.

    As mentioned above, have a look for cars about to be replaced as they usually have big discounts and low APR to shift old stock. For example, Audi were recently offering 10k off a 35k A6 which brought the PCP deal down to standard hatchback money as the car would still be worth the same in 4 years as it would before the discount. New Ford Focus is just about to be released so 0% and thousands off stock of the old model.

    gobuchul
    Member

    Get your brother in law to sign up for you. Makes the process a lot easier.

    Premier Icon Larry_Lamb
    Subscriber

    Why don’t you Google it? You’ll get more in-depth information.

    Our PCP deal includes servicing – was chucked in as part of the deal so all I’ve had to do is the put fuel in it, a set of tyres and its first MOT. Coming up for the first PCP swap over and so far the salesman is bending over backwards for us offering us assorts of deals and just about to sign for another car which for the same monthly outlay is effectively an upgrade to what we’ve currently got in terms of the price of the car. PCP is like leasing with options. I really don’t see the point in buying cars now…before when I bought a car I had £250 a month for car loan, was generally running a circa 5yr old car and as soon as I paid it off ditched it and bought another so went straight into another loan. Now I pay £280 a month for a brand new car. Why for the same/similar outlay per month would you want a 5yr old semi-banger over a brand new car under warranty with free servicing?

    You need to make the mental leap that you’re really paying a set amount each month for the use of a car rather than owning a car…which is the best way to do it…there are no benefits to owning depreciating assets. One of Warren Buffet’s golden rules…buy appreciating assets, lease/rent depreciating assets. I think he knows a thing or two about these things.

    Premier Icon P-Jay
    Member

    One of Warren Buffet’s golden rules…buy appreciating assets, lease/rent depreciating assets. I think he knows a thing or two about these things.

    That’s generally attributed to the serial bankrupted, and ‘so bad at business he’s failed to out perform a basic savings account compound interest’ Donald Trump.

    Warren Buffet actually tends to buy depreciating assets for cash (as he has rather a lot of it) and maintains and keeps them for their entire usable life. My Dad does the same thing, he’s worth a fortune (not as much as Buffet of course) but he’s still got the Passat he bought in 2001.

    There are a million variables that mean if you want to be savvy, ignore someone elses 1-line mantra as it just won’t apply to you.

    Also, people tend to think they’re acting completely unemotionally when it comes to cars but it’s usually the complete opposite.

    Premier Icon theotherjonv
    Subscriber

    I really don’t see the point in buying cars now…before when I bought a car I had £250 a month for car loan, was generally running a circa 5yr old car and as soon as I paid it off ditched it and bought another so went straight into another loan. Now I pay £280 a month for a brand new car. Why for the same/similar outlay per month would you want a 5yr old semi-banger over a brand new car under warranty with free servicing?

    You need to make the mental leap that you’re really paying a set amount each month for the use of a car rather than owning a car

    Basically this but with the proviso…..if you’re going PCP then it needs really to be with the mindset that you will change it at the end and carry on. If you want to own a car (and unless you’re minted) don’t buy new, as the depreciation when you take delivery and drive it away is massive.

    The cautions to PCP are – what if you can’t keep up payments; you could still be liable for them unless you’re sufficiently far in (check the details on this don’t quote me) – and while folk will say if you don’t think you can afford the payments don’t sign up full stop, situations do change (illness, redundancy, Bojo becomes PM and burns the place down, etc….)  and you can get stuffed if you exceed mileage / ding it a bit too much.

    I just looked at PCP but in the end went 2 years old and set up ‘my own PCP’ – namely have gone for a personal loan over 4 years. After 3 I will owe approx 1/4 of the loan but I’ll also have a ‘linearly depreciated asset’ (ie w/o the massive new car depr.) which will be worth more than that 1/4 of the loan (a car doesn’t have zero value at 2+4 years old, plus I put deposit in too). So, I can buy the rest of the car (by paying the last year of the loan) or I could sell the car for its value, use some to pay off the loan and the rest as a PX for something new. Plus if something did go wrong, I could sell the car to pay off the loan at any time.

    Premier Icon convert
    Subscriber

    Why for the same/similar outlay per month would you want a 5yr old semi-banger over a brand new car under warranty with free servicing?

    Or……the third way of not having jam today and a ‘nice’ car from the moment you leave your mummy’s side; making do with a car that’s reliable but cheap and not all that for a few years whilst you build up a surplus so you are not running in a cycle of constant debt. 10-15 years of mediocre motoring in my younger years means barring financial calamity for the rest of my days every time I need a replacement car I have a cars worth of investment (bank, isa, shares, whatever) waiting to be used to buy a 2-3yr old car cash.

    Premier Icon P-Jay
    Member

    Anyway,

    PCP is generally seen as ‘the way to go’ now – call me a cynic, but cars have become stupidly expensive these days, simply so the manufacturers can ‘support’ their sale with massive discounts – £23k for the most basic 3rd door (sorry, coupe) Astra? Yeah right, when you can buy an ‘ex-demo’ with 3k miles for £14k.

    Anyway, some come with tyres and maintenance, but most don’t these days, buyers are looking for the low monthly price, not an easy life.

    In simple terms you pay a deposit, typically the value of 3 rentals in advance, but again that’s not always the case and then pay monthly for it – at the end you’ve got a few options:

    Pay of the final payment and keep/sell it, which is sometimes a bit tricky.

    Part-ex it, hopefully, if you haven’t wrecked it, and they’ve got their sums right, you should have enough equity for the next one – keeping you on the never-ending cycle of a new car every 2-4 years.

    Hand it back, if they’ve got their sums wrong and it’s now worth less than the final payment, you give your best gallic shrug, toss them the keys and walk away. But this almost never happens, there’s enough slack in the system to ensure they can always ‘do a deal’.

    If you want to add extras:

    Servicing – most modern cars only need a service every 2 years, you’ll likely only ever do it once and it costs £150 o or so.

    Tyres, it really depends on how fussy you are – they’re not stupid, tyres will generally last 12k miles on a new car, so about a set a year (driven wheels) in a FWD car the rears will usually last 4-5 years by which time they’ll be deteriorating more due to age then wear but that’s someone else’s problem. So if you sign for 12k miles a year over 3 years they’ll assume a set of tyres at 1 year, another at 2 years and you’ll return it with them worn. They don’t get great discounts on tyres if at all because the only places set up to handle large fleets are Kwickfit etc and they’ll only usually fit the OEM tyre – but assume £400 in tyres.

    With both, they’ll simply divide the cost over the term and add a profit for managing it.

    Repairs shouldn’t be an issue, if it breaks in the first 3 years it’s usually a warranty issue, or crash damage, they don’t cover either.

    Consumables, not usually covered, but again it’s rare to have to do much more than change pads on a new cars and even then, it’s rare.

    5lab
    Member

    £23k for the most basic 3rd door (sorry, coupe) Astra? Yeah right, when you can buy an ‘ex-demo’ with 3k miles for £14k

    eh? the 3 door is no longer sold – the equivilent is the GTC, which is marketed as a different car. The cheapest astra is £17.5k list, £13.5k discounted

    https://broadspeed.com/new_cars/Vauxhall/Astra/Choose_Number_Of_Doors/Choose_Bodystyle/Choose_Fuel_Type/Choose_Engine_Size/Choose_Transmission

    “Or……the third way of not having jam today and a ‘nice’ car from the moment you leave your mummy’s side; making do with a car that’s reliable but cheap and not all that for a few years whilst you build up a surplus so you are not running in a cycle of constant debt”

    Because if you lease or PCP a car you’re not in a constant cycle of debt because you’re not buying a car. Well no more if you consider that paying your gas bill every month is being in a constant cycle of debt. So not jam today situation at all. Why on earth even if you had the cash for a car sat in the bank, would you actually use it to actually buy an actual car? you need your head read if that is what you’d do.

    You just pay an amount a month for the use of a car. What is the point of car ownership? What are you getting out of it? Please name just one benefit. It’s not an investment. You’re not making money, only losing money, you take all the risk, pay all the bills, it costs you more and at the end of the day and you still end up running a banger with other peoples bogeys and semen stains on the seat, rather than driving a brand new car.

    And bangernomics is a whole other model and not comparable at all. I’ve spend 20 years of my driving career running bangers, I know you can run them on a shoe string if you are prepared to spend your weekends under them doing jobs, hunting around dodgy industrial estates for the cheapest parts, tyres etc and dealing with dodgy people, and every time you turn that key wondering if the car will start or leave you stranded somewhere remote with no mobile signal in the p-ing down rain. It might be a sign of getting old and sensible, but I’m sort of over that and am quite prepared to spend just a little bit more (and it really is just a little bit in the grand scheme of things) to drive a brand spanking new car around instead. Take it from me; someone who has done both, the latter really really is alot better.

    Premier Icon bails
    Subscriber

    ” quite prepared to spend just a little bit more (and it really is just a little bit in the grand scheme of things) to drive a brand spanking new car around instead”

    I bought a Focus over 7 years ago for £5k. It’s got heated leather seats, cruise control, auto lights and wipers, auto-dimming mirror and a towbar for my bike rack. It’s cost me £70 per month in servicing, maintenance and depreciation, assuming it’s currently worth a very pessimistic £500.  That includes buying a spare set of steel wheels and winter tyres that are still going.  Admittedly, I’ve done the oil changes myself but I’ve done then every 9 months/6k miles so if it’had them done by a professional at the normal intervals the cost would probably be about the same.

    A comparable lease, with the £500+ cost of a factory fitted towbar, would be £200-£250 per month.

    I ‘get’ leasing, but it’s more expensive than some other options that aren’t exactly ‘bangernomics’. It does seem to be the cheapest way of getting a brand new car, so if you want one of those then lease away!

    Premier Icon convert
    Subscriber

    Because if you lease or PCP a car you’re not in a constant cycle of debt because you’re not buying a car. Well no more if you consider that paying your gas bill every month is being in a constant cycle of debt. So not jam today situation at all. Why on earth even if you had the cash for a car sat in the bank, would you actually use it to actually buy an actual car? you need your head read if that is what you’d do.

    You just pay an amount a month for the use of a car. What is the point of car ownership? What are you getting out of it? Please name just one benefit. It’s not an investment. You’re not making money, only losing money, you take all the risk, pay all the bills, it costs you more and at the end of the day and you still end up running a banger with other peoples bogeys and semen stains on the seat, rather than driving a brand new car.

    However you like to play it in your head with a PCP someone is buying a car (admittedly cheap) and giving it to you to use. Over the course of 2,3 or 4 years you are paying the cost of the depreciation of a new car plus the interest on the money used to make the purchase. Yes, through economies of scale the car is bought cheap and the finance on the money used to make the purchase is good but you are still trapping yourself in a cycle of debt; just doing it by proxy.

    What are you getting out of it? Please name just one benefit.

    Not paying anything like as much a month for what, to me at least, is a comparable enough product that I am happy with the compromise. Example, current car is quite a nice relatively sporty Audi with all the trimmings bought at just shy of 3 yrs old. In 4 years time I will easily sell it privately and buy a new like for like with an additional cash contribution of circa £10K. To raise that £10K I’ve got to put aside £206 a month between the time I bought the current car and when I propose to buy its replacement. If you prowl the internet forums there are folk getting all moist about getting the exact same model (without most of the extras I have)  for ‘only’ £450pm plus initial deposit of 4 months payment of whatever. Now, my 3-7yr old car will probably need a bit of work that the 0-3yr old car won’t and I also won’t have the bragging rights of a brand new car on the drive but the former I’m happy to budget for and the latter I could not care less about.

    The other aspect – if life goes to shit, I loose my job or some other financial calamity where I can no longer afford the £206 the car is effectively costing me – guess what, I still own a car. I’m not stuck in a financial arrangement I can no longer afford. I have the option to just extend the time until I change cars again (I probably will anyway) and give myself a 6 month/1 year/2 year payment holiday. Whilst still having a car. Ask you pcp firm if they would be happy to do that for you. Maybe give you a courtesy car to go to job interviews in.

    So in summary, like you I effectively pay a monthly sum for my motoring; but for me this method is far more preferable. To make it truly effective you have to be pretty obsessive and patient to get a really good value 3yr old; a bit anal about keeping receipts to generate a good history, handy with a camera to make it sell for maximum privately and canny with the model to buy what retain it’s value. PCP does make for an easier consumer experience for people who just want an easy life or just have to have new.

    Premier Icon convert
    Subscriber

    p.s. the Jam today comment was made about those fresh into the world of work that feel ‘entitled’ to a nice car from day one. You see it so often  – effectively still kids looking all awkward in their first suit in their first proper job putting aside a sizeable chunk of their meagre salary on an unnecessarily nice new car on finance. Cos they deserve it. Sod that, buy boring and cheap but put the money aside you would have spent and start saving up to get ahead of the game – it’s a long life.

    trail_rat
    Member

    Well wobblisxott has covered renting and bangernomics.

    The third way of buying a normal car that’s a couple of years old still low miles and not a banger is also an option.

    Someone else paid the depreciation.

    We got a 2015 version of the car we wanted at the start of the year with 5 k on the clock with all the options ticked for less than half the sticker price of a new one ( with no options )

    Premier Icon andy4d
    Subscriber

    In my experience all options other than bangernomics cost about the same. I am in euro land so figures are different but…..

    Bought a 3yr old 2007 Passat. It cost me €250pm. After 4 years (really last 2yrs I had it) I had spent a fortune on tyres/servicing incl timing belt/new electronic hand brake twice/aircon packed in/intetest etc etc.

    Traded it in for a pcp kia. Got about 5k for the Passat (so Passat lost 7k plus all the other costs maybe 2k+) after 4 years!!!

    Threw in about 2k plus the Passat on the Kia. Got free servicing/warranty, lower road tax/insurance and lower finance % for €340pm. So €90 (really €50 With road tax/insurance savings) a month more for hassle free driving for 3 years and no nasty bills.

    Just traded it in for another pcp, a seat. I had about 6k equity trading in the Kia, so I lost about 1k of my original deposit/trade in (kia lost about 9k of value at trade in). The new car cost a few grand more than the kia (loan costs about 30 per 1k) so for 390pm now I am back on the cycle of free servicing etc etc. At the end I should have about 6k equity in the car again.

    If i had kept the Kia(basically buying a 3yr old car again) the bank loan was about  350pm over 3 years plus servicing/tyres etc etc and at the end have a 6yr old car with 100k+ miles done worth about 6k equity.

    So my quick/basic back of a fag packet maths led me to see getting a new car or a 3yr old car ‘costs’ about the same. Buying new you pay the depreciation, buying used you pay the wear and tear.

    fotorat
    Member

    FFS when you have paid for you car – enjoy it – you finally own it and do the servicing and repairs yourself – then reward yourself, by spending the money you didnt hand over to a garage, on bike bits.

    5lab
    Member

     quite prepared to spend just a little bit more (and it really is just a little bit in the grand scheme of things) to drive a brand spanking new car around instead.

    not sure the ‘just a little bit’ really pans out. I buy an old-ish (6 years) mondeo-sized car every 5 years. last two have cost me £1000 and £1500 respectively. After 5 years, there’s scrap value, maybe £250, so say £250/year in depreciation.

    Servicing is minimal (I don’t do it at all for the last 2 years of ownership), a generous £100/year. Repairs a bit more, maybe £150/year on average.

    so, excluding costs like insurance/tyres, which is probably broadly similar (actually, I suspect they’d be cheaper on bangernomics), that’s £500 a year in costs. an equivalent lease (10k miles a year) would be ~£300 a month, or £3600 a year – so the saving for driving a crap car (no denying a new one is much nicer) is £3100 a year.

    I’ve been doing this for 15 years. By next year the savings will have topped £50k. not chump change by any reckoning.

    Premier Icon P-Jay
    Member

    <div class=”bbp-reply-author”>5lab
    <div class=”bbp-author-role”>
    <div class=””>Member</div>
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    </div>
    <div class=”bbp-reply-content”>
    <div class=”bbcode-quote”>

    £23k for the most basic 3rd door (sorry, coupe) Astra? Yeah right, when you can buy an ‘ex-demo’ with 3k miles for £14k

    </div>
    eh? the 3 door is no longer sold – the equivilent is the GTC, which is marketed as a different car. The cheapest astra is £17.5k list, £13.5k discounted

    </div>

    Marketed as?, yes, different? no.

    Anyway, my point was this – fairly humdrum cars are now, really, really expensive ‘on paper’, but as almost no one walks into a dealership and pays cash, it’s more of a theoretical price – Manufacturer Finance gives you £4k “deposit contribution”, cuts another £3k from the cost in “support” that the customer doesn’t see to make and APR seem very low, and in some cases sticks on a more than generous guaranteed final value.

    Makes a £15k car, a £23k car, and makes a £23k seem really cheap to rent for 3 years.

    It’s a great tactic for them, and means, much to @covert obvious bitterness, that more people than ever are buying new cars.

    trail_rat
    Member

    I’m not even pushing that as it’s clearly not the ops bag but the last 50000miles in my old car (130k on clock when sold for 650) cost me 2grand in repairs over 4 years. And the car cost me 1400 quid.

    Including tires, 2 timing belts , a water pump , brake disks and pads allround (not really repairs just preventative maintainance to ensure it was entirely turnkey reliable….I’d have happily drove it to the Alps right to the day I sold it) abs sensor or two  and rusty<span style=”font-size: 0.8rem;”> exhausts and the wheel bearings . </span>

    I only changed for more airbags/esp/abs etc  as my wife started a new job that involves more of other peoples kids traveling in her car so I wanted them to be safe if there was an accident.

    Premier Icon convert
    Subscriber

    It’s a great tactic for them, and means, much to @covert obvious bitterness, that more people than ever are buying new cars.

    Bitterness? Not sure I understand.

    Don’t get me wrong – I want people to buy new cars. Thousands of them. It means the motor industry has the capital to invest in making better cars and also supplies people like me with nicely depreciated nearly new cars to buy. Actually I try not to buty ex pcp cars if possible because they tend not to be looked after that well and not be that well specced but they saturate the market depressing the 2nd hand price and keep the easily pleased happy allowing people like me to hunt out the better ones without a huge price penalty.

    So no; please keep on buy new – I need chumps to buy them new to make my motoring cost effective.

    The only thing I regret is that more cars are not engineered to last longer. Environmentally we should be trying to make sure every car manufactured lasts as long as possible. The snag with the current purchasing model is the person buying the car is not that interested in the viability in keeping it on the road in 15 years time as they will have long since sold it on. And the manufacturers are selling the car to the first owner so prioritise what they want not what the 4th or 5th owner will want nursing it through it’s end of life. Too many cars are crushed because they become uneconomic to repair rather than impossible to repair and some of that could be engineered out by having different priorities from the outset. Also less new cars bought would mean a less saturated market and higher 2nd hand prices making repair less financially dubious. See Cuba as an example of what can be done when the supply of new cars dries up.

    trail_rat
    Member

    Aye look at what happened to the sub 1k banger market during scrap scheme . All but dried up.

    iamanobody
    Member

    Just working out the cost this year:

    car “cost” £2k 2 years ago, “worth” £1kish now

    Insurance is high as group 27 and RFL is also!
    <table width=”259″>
    <tbody>
    <tr>
    <td width=”175″>Car insurance</td>
    <td width=”84″> £         368.00</td>
    </tr>
    <tr>
    <td>DVLA</td>
    <td> £         241.50</td>
    </tr>
    </tbody>
    </table>
    Repairs
    <table width=”157″>
    <tbody>
    <tr>
    <td width=”94″>Servicing</td>
    <td width=”63″> £  110.00</td>
    </tr>
    <tr>
    <td>Brakes</td>
    <td> £  220.00</td>
    </tr>
    <tr>
    <td>Tyres</td>
    <td> £  400.00</td>
    </tr>
    <tr>
    <td>Starter motor</td>
    <td> £  110.00</td>
    </tr>
    <tr>
    <td>Window</td>
    <td> £    80.00</td>
    </tr>
    <tr>
    <td></td>
    <td> £  920.00</td>
    </tr>
    </tbody>
    </table>

    Fuel cost this year –
    <table width=”259″>
    <tbody>
    <tr>
    <td width=”175″>Fuel cost</td>
    <td width=”84″>385.5421687L</td>
    </tr>
    </tbody>
    </table>
    <table width=”84″>
    <tbody>
    <tr>
    <td width=”84″> £     2,257.97</td>
    </tr>
    </tbody>
    </table>

    iamanobody
    Member

    so total cost plus depreciation this year is: £3872 plus £500 (depreciation)

    trail_rat
    Member

    920+depreciation for costs that you won’t have on your new lease car over and above the lease

    Won’t get much car for 1500 quid.

    Must admit I can see the attraction for big miles or someone who’s earnings depend on a car. But I don’t buy the “it let’s me have a nicer car for the same cost”

    As someone who’s car does less than 10k a year. I’d still have been in a banger if it wasn’t for the safety aspect . And I’m sure my next car will be a hybrid -hopefully they will have settled on a technology by then .

    Bought car in 2012 brand new for £10k

    Paid for it with a PCP over 3yrs at 0.25% interest.  Paid balance off at 3yrs cash.

    It gets serviced & mot every year for about £100 and that’s it.

    6yrs old now and its like new with 40,000mls on it.  Going to give it to the kids in a couple of years time to learn to drive and get my wife another car.  It will be on PCP with the intention to purchase if I can find a similar deal

    Premier Icon Ben_H
    Subscriber

    There are of course grey areas and priorities to consider – but I think it’s fair to say that new cars cost more than old ones in absolute terms, over time, however they are funded. This is an important part in explaining car finance.

    The motor and related finance industries have done an excellent job of shifting buying patterns towards new cars.  See also general consumer trends towards new things, owned for less time.

    I suspect that there’s a distinct motoring market trend towards accessing a new, more expensive car for a shorter period of time than in the past.  I imagine there are internal industry data showing that a person entering a PCP / lease will have a very high probability of going on to enter another finance agreement for a new car every 2-3 years.  As I say, there are grey areas, but costs over 10 years or so are usually very stark.

    It’s completely fine to decide that this is for you.  Cashflow may be more important than total cost, for example, and you might be happy to pay the additional sums to finance this.  New cars are also more comfortable, stylish, reassuring etc.

    Debt used wisely is a good and important thing, but the “smart” consumer debt and clever PCP / lease deals for those willing to use the system only exist because almost all retail debt is consumed by people who want the new things more than they want the fair price.  As a result, many people will make imperfect or overly expensive car purchases, given their actual needs.

    It’s nearly endemic in most developed economies now – as shown by the packaging and marketing tools that drive the retail industry based on getting the lowest headline figure to capture the sale.  We’ve reached the point in the cycle where they’re going beyond “easy monthly installments” to weekly and daily numbers.

    2007/8 showed that consumer debt had gone so far that the lenders couldn’t even foreclose on it.  These are now interesting times – but it’s arguable that everyone is poorer because of the huge escalation in retail debt deliberately attributable to deregulation since the 1980s.

    Coming back to the car finance point: this churning, consuming of cars every few years is illustrative of wider issues.  Forget the debt structures and consumerism driven by this debt that has created such a culture… the fact is that we have reached a point where more people than ever are churning over cars like cheap, disposable consumables – while, statistically, individuals (no-one here of course 😉 ) appear to be struggling to pay for the home and its associated running and food costs and have almost no savings or pension! 🙂

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