Leasing V Outright purchase
- Thread starter bpsorrel
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D
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You can't buy a house for £1k even here in Doncaster, but you can a car.
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hawk20
MB Enthusiast
If we all saved instead of spending it would make for a very large recession.
I have no reason to want people to stop borrowing money to buy a new or secondhand car provided that they can afford it allowing as best they can for possible changes in their circumstances.
nick mercedes
MB Enthusiast
We have a very large recession precisely because almost everyone spent a whole load of borrowed money.
hawk20
MB Enthusiast
What is that supposed to prove? That houses are dearer than cars? Er..yes. I think we all know that, in general, most houses are dearer than most cars.
The question is whether it is ever OK to borrow to buy expensive assets like houses and cars. Some say yes (including me): some say no.
hawk20
MB Enthusiast
We are not yet in recession -let alone a large one but I take your point. What you need to get hold of is that borrowing per se does not cause a recession any more than saving does.
BUT excessive amounts of either can and do cause recessions. Borrowing what you can sensibly afford need not cause any problems.
nick mercedes
MB Enthusiast
Ummm...
It's a *whopper* of a recession!!
And it's a double dip too.
Why do you suppose it was called the "credit crunch"?
hawk20
MB Enthusiast
No it is not. Go to Treasury website or Office of Budget Responsibility or many others and you will see British economy grew about 0.6% in last quarter. (Technical definition of a recession is when economy shrinks for 2 quarters in a row.)
A credit crunch is when people aren't lending freely enough to keep the economy moving. Last time it was mainly banks not lending to banks and now it is happening again in Europe where they are scared to lend to each other. Also scared to lend to some governments in the Euro. Former causes a banking crisis; latter is a sovereign debt crisis. All will probably get worse in 2012.
D
Deleted member 37751
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You keep using the argument that if you buy a car for cash, by the same argument you should only buy your house for cash.
But you can't buy a house for £1k etc but you can buy a car for that which makes the basis of that argument nonsensical.
Like I said earlier, whatever people do to finance their lifestyles is up to them and I have no real gripe with that, a few of my friends live their lives the same way. It's just that I wouldn't feel as though it's mine if I'd not saved up and paid for it instead of the other way round.
hawk20
MB Enthusiast
Hardly logical is it? Why do you feel like that about a car but not a house. Is it really just because the price of one is usually less than the price of the other? Makes a rather odd priciple.
D
Deleted member 37751
Guest
I can see that the logic is lost on you.
Where do you suppose I live whilst saving up for a (for example) £150k house?
As opposed to buying a car for a £1k and saving up £10k, I can still get about.
For me where a house differs from a car is that the house is typically an appreciating asset whilst the car a depreciating one.
For quite a while house prices were rising faster than incomes. So there was benefit of buying with a mortgage, because if you waited another 5-10 years your income+savings would buy a smaller house.
With a typical mortgage you'd also pay off the mortgage before retirement. So you would then use your asset in retirement when your income was significantly reduced.
Today's house prices are at 2006 levels I believe. But I suspect normal service will resume once the credit crunch is forgotten.
For quite a while house prices were rising faster than incomes. So there was benefit of buying with a mortgage, because if you waited another 5-10 years your income+savings would buy a smaller house.
With a typical mortgage you'd also pay off the mortgage before retirement. So you would then use your asset in retirement when your income was significantly reduced.
Today's house prices are at 2006 levels I believe. But I suspect normal service will resume once the credit crunch is forgotten.
A car will always be a depreciating asset, you can pay cash and lose the money over the next few years, lease and spend the money over a few years and give it back (or pay some more), spend on HP repayments, the result is spend money to drive some metal that will be worth less at the end of the exercise. Different financial circumstances mean different choices. If I worried about the depreciation I would have kept my old Skoda which was still reliable, reasonably comfortable and moved me about with no fuss, got dirty when it rained and shone in the sunshine, but then so did the Hyundai I had before that. You can keep on like this ad infintum, one thing is certain I can't take any of my money beyond the grave, so allowing a certain amount of prudence, I may as well enjoy it now driving a silver depreciating asset, that is also reliable, reasonably comfortable and moves me about with no fuss, gets dirty when it rains and shines in the sunshine.
If any surplus money can earn you more than the interest or lease rates then leasing would definitely the way to go, assuming one had surplus money in the first place.
If any surplus money can earn you more than the interest or lease rates then leasing would definitely the way to go, assuming one had surplus money in the first place.
Nope , I have had brand new cars , nearly new cars and cars bought for a song . I could easily put myself into debt and have another new car sitting outside , but I choose not to . In reality , the more expensive cars have been no better and no more reliable than the less expensive ones - that is not because the expensive ones have been in any way unreliable , but because there has been nothing wrong with the bargain priced ones .
In recent years , I have had one car at £14K , several between £1K and £3K , and many sub £1K with two bought for £100 - £150 . All have been reliable and have covered upwards of 10K miles per annum , but then all have been Mercedes and just did what they were designed to do . My current W126 , bought for £1300 a little over 3 years ago has now covered over 30,000 miles in my hands without missing a beat ; other cars bought in the same price ranges having racked up over 100,000 miles over longer periods without any difficulties . In over 30 years of Mercedes motoring , I have experienced two breakdowns ( one cracked distributor cap and one seized differential , both in the same W124 300TE [ the £14K one ] which had by then covered 200K , 150K of them in my hands - all of my earlier and less expensive cars having an unblemished reliability record ) .
All that any of these cars require is a few hundred a year spent on routine service parts to keep them running sweetly ( mainly things like lubricants , filters , brake discs and pads , tyres , exhausts and seldom any need to pay garage bills since most are easy DIY jobs ) .
Nowadays , I flatly refuse to pay more than about a grand for any car , and usually less ; depreciation is not a word in my vocabulary ; all of my cars are very presentable , comfortable , safe , reliable and when I see others out in newer cars I don't feel envy , just pity for those who feel the need to shell out as much to rent for a month a car inferior to mine than I paid to buy mine outright . I also don't have worries about catastrophic failures or cars being stolen/written off - despite them being insured I would not claim as none of the cars cost more than I can afford to shrug my shoulders and write off in my own mind .
It is not always the case that I agree with Nick , but on this topic we are on the same wavelength
No - only newer , more expensive ones depreciate .
Although I tend not to sell cars on : I either keep them , break them or give them away when finished with them : I don't consider any of my cars to be worth less than I paid for them , and in some cases considerably more .
Buy at the bottom of the depreciation curve and you can't lose out .
Dieselman
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Yes, but I also remember the programme Crystal Maze and always thought wouldn't having one of those domes be great as a party "coke dome".
Think I missed a marketing idea there...
A £500 car is not neccessarily a 'banger' .
I have had two W201's , two W123's , a W124 , a W116 and a W126 each costing less than that in recent years ; each looked a million dollars and , with simple maintenance , were reliable and never let me down .
I generally have two or three such cars in my fleet at any given time , so if one did break down , I have others I can use .
Dieselman
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That's what you call a scrap yard...