Finance

jonnyburgo

0% credit cards are what we do, pays for our holidays, always pay them off before they are due. You can make them work for you if you have your head screwed on 

LuttiS

I get the idea of spreading cost if you can afford it - i think it's more the millionaire lifestyle on low pay that i don't get. 

If your car brakes and you have kids, i'd class that as more of a need than a want, and i'd say finance is a good thing there - if you can afford it. 

A girl who used to work where i work was on basic admin salary, but got a sales trainee position which a salary increase, nothing huge, but with the potential if she did well to move up a coupe of salary bands. Soon as she started trainee she went and got a brand new Astra on finance with all the latest features, top of the range etc costing her i think just over £400 a month. This basically crippled her. She didn't do well as sales either, so the other pay rise didn't come. 
She couldn't afford it. 
That's what i don't get.

Another girl i worked with a long time ago - We were on probably around £1000ish take home p/m, was constantly buying stuff on finance, new TV, new laptop, latest phone, even got a wedding loan.. She was also renting at £500p/m, hew partner wasn't much above minimum wage at the time.. 
I had none of this and was struggling at the time! 

I get that it can get you out of a bind.. i think it's the financial awareness bit that gets me.

mart

Danny1969 said:

... 
@boogieman what you do is sensible and buying on CC and then paying off completely can offer benifits and protection but ultimately your not the kind of customer CC companies want, they aren't gonna make anything from that they really need people to not pay the money back until they have made the interest 

Do you think there’ll come a time when CC companies try to penalize those of us who pay off the whole balance each month?  

Danny1969

mart said:

Danny1969 said:

... 
@boogieman what you do is sensible and buying on CC and then paying off completely can offer benifits and protection but ultimately your not the kind of customer CC companies want, they aren't gonna make anything from that they really need people to not pay the money back until they have made the interest 

Do you think there’ll come a time when CC companies try to penalize those of us who pay off the whole balance each month?  

At the moment the cost of your transactions are paid for by the customers who are  paying interest .... that will just continue I think 

Phil_aka_Pip

VimFuego said:

99% of all our money is created as debt, the main way the economy grows is to create more money (remember we import more than we export, so we send more money overseas). Simple economics really. 

IIRC It was the Italians who thought of that, back in the 1600s. before then, you had to have hard cash to lend to people. They invented the idea of crediting a borrower's account with yea many ducats, and then telling him he owed them yea many ducats plus interest, even though they had no ducats to lend him. Madness!

TTony

Back in my parents' day, I think it was pretty standard to buy stuff on HP, or get it from Radio Rentals (or one of the equivalents).

That renting culture - whether for the TV, the fridge or the house - seemed to become viewed as a bit "council estate" sometime over the years, maybe around the same time as all the council estates were being sold off to private buyers.

Today's finance culture is really just a return to the 50s/60s renting culture.


It worries me for two reasons.

Firstly because it's all based on low interest rates and (for cars) projected resale values.  So, you can get a nice new shiny BMAudiBenz today, and it'll cost you £299/mth for 3 years.  No brainer, go for it.  At the end of the 3 years, you get hit with some extra charges (for excess mileage or "damage" or whatever), which is a bit painful. 

Then, in 3 year's time, interest rates have also gone up, and  residuals have slumped because of the glut of 3 yo "prestige" cars now available s/h from all the expired PCP deals.  To replace that same car, the price is now £499/mth.  What are you going to do?     Find the dosh, or hunt around for a 5yo Focus like the one you used to have?

(Actually, I can see similar finance deals being developed for the 3yo cars, if only to keep the stock moving).

The second reason is that, whilst £299/mth is a no brainer today, interest rates are only going to go one way over the next 5-10 years.   As your mortgage increases, and increases, and increases, (and house values fall) we're likely to see another of those negative equity  situations arising, and another massive squeeze on household budgets.


But everyone has a different attitude to risk, debt, and having "things" ...

57Deluxe

I love/watch the Sky drama Billions and have abso£utely no idea what they are talking about...

thermionic

I was talking with my cousin recently and she said she'd got about £8-9K of PPI compensation. When she was younger and not getting paid much she'd take out loans for anything she wanted - car, holidays etc. and was suckered into buying PPI for all of them.

I'm quite debt-averse by nature, and being made redundant twice in 5 years only made me more so. Many people would go under if they weren't paid for 2 or 3 months.

midlifecrisis

i avoid finance and debt. Years ago i used it all the time, i made a decent amount, spent a decent amount and racked up huge credit card debt, all low or 0% interest. but what people forget is that no matter how careful or prepared you think you may be, loss of your job, or business failure hits hard and then you struggle to make minimum payments, have to use the credit cards to pay daily bills, food etc and then you hit the limits, no more credit. fortunately i negotiated with the cards and got the interest frozen, paid back what i could, got some of the debt written off.  My credit files/ history probably reads like a horror story, i havnt dared look, but i dont miss or need the credit now. my mortgage is fully paid off, i buy cheap cars for cash and despite being offered them, i dont own a credit card. I dont think i was particularly foolish but change in circumstances can happen to anyone at anytime.

stickyfiddle

I hate it. I'm not much of a socialist but I have major concern not just over the recent availability of cheap high street finance, but moreso the risk that it will lead to ever-widening inequality.

It's as if (ie it's a massive simplification for an internet-argument) we've had one full generation of everything getting better, then those guys hit 50 and realised they could squeeze the middle and the bottom far harder but as long as only a very few are really, truly desperate then they'll escape penalty for causing it. 

Obviously not literally an entire generation, just the ones in charge...

As for me, I had what felt like a chunky bit of debt when I was 22, then escaped and sorted myself out and now won't touch debt except a mortgage and a credit card that I pay in full every month and use to get free flights.

Phil_aka_Pip

thermionic said:

I was talking with my cousin recently and she said she'd got about £8-9K of PPI compensation. When she was younger and not getting paid much she'd take out loans for anything she wanted - car, holidays etc. and was suckered into buying PPI for all of them.

I'm quite debt-averse by nature, and being made redundant twice in 5 years only made me more so. Many people would go under if they weren't paid for 2 or 3 months.

I am also debt-averse, but do not have loads of savings either. Even though I don't have any debts, I'd still go under if not paid for 2 or 3 months.

scrumhalf

Now that I've paid off my mortgage I cannot see me taking any further debt unless it's a means of deferred payment at nil cost to me.

If I want something and can't afford it, I'll wait. It's what people used to do.

Sporky

scrumhalf said:

If I want something and can't afford it, I'll wait. It's what people used to do.

True, but credit is also what people used to do.

ThePrettyDamned

I have used it before, but never for anything I couldn't afford comfortably within the time frame. I use a credit card for almost all purchases, but I pay off in full automatically every month.

It's just not how I work I guess. 

midlifecrisis

i think the problem is going to get worse, theres a generation who cant afford to have a mortgage as they are paying the equivalent in rent and cant save for a deposit, but they can afford £200 a month to drive a new car for 3 yrs so will always have that debt, when 3 yrs are up all they can do is take out another agreement. meanwhile they are paying someone elses mortgage

CabbageCat

scrumhalf said:

Now that I've paid off my mortgage I cannot see me taking any further debt unless it's a means of deferred payment at nil cost to me.

I wouldn't even take that sort of debt.

I paid off my mortgage a few years ago and have been putting money into savings ever since. There isn't anything I could realistically want to purchase now that I would need to borrow money for unless I wanted to buy a second home.

There's no problem with providing the option of debt for people as long as the lender is honest about what it costs. If I wanted to become long-term homeless so I can have a couple of good months at the casino I like to think I would be able to do so.

Carew

I've never used HP.

I've never had a loan (other than a mortgage) or overdraft either.

Whenever I've had credit card I always pay the monthly balance off in full.  I just use it as cashflow aid for my benefit.   I would never dream of using a credit card on the basis of incurring interest charges.

If I want something, I save for it first.    If you don't have the money to buy, you can't afford it - end of.

I always make sure I have money put aside for a rainy day in case an emergency replacement or repair is necessary.

mellowsun

Finance is fine so long as you don't pay any (or much interest). Putting stuff on a 0% credit card paid off over 24 months makes a lot of sense to me, particularly with inflation high and sterling weak - that guitar/amp/kitchen/whatever will cost 20% more in 2 years time.

I used to be terrible with credit cards though. Had about 16 at one point.

Snap

PCP on cars are a reasonable way to go IMO. It all depends on what you think of cars and what you use them for. I used to buy my cars outright but sat down, did the figures and worked out that I was actually better off if I got a PCP. I change them regularly and do reasonably high mileage. I also like cars. The PCP is less than the depreciation tbh. With guaranteed future value and a bit of good scouting around you can get deals that are very good.

Of course you could buy a three year old car and take your chances. Its about personal choice really.

quarky

Used credit a lot in the past before I got married. Wouldn't use it now. Well, I use credit cards, but they are automatically paid off every month. The problem is, it is easier to get into a credit trap where you need to borrow to pay payments. Credit is a fact of life for a lot of people unfortunately.

I can see the point in PCP on cars because interest rates are so incredibly low, but it still isn't something I would bother with. For a lot of people (like @snap) it makes a lot of sense though.

Credit is good, as long as it is under control.