Social Experiment - Debt

[leesider]

No loans now except for the mortgage, had a few over the years but from family rather than going to the banks and they were always paid off fairly quickly. Currently all spare cash is going into the pension and paying down the mortgage.

 

[Lee Bushwacker]

I don't mind risk, but hate debt. Brought up in a household where you only bought what you could afford, seemed like a decent mantra to me so I've stuck with it - not one for debt other than mortgage like everyone else. I don't have a credit card, debit cards do much the same thing now anyway

PCP on cars is the one I can't get my head around - why would you sign up for a monthly payment for good, in return for a car you don't ever own and they keep switching it and you keep paying? Id rather the hassle of repairs and NCTs than knowing every month the bloody thing has cost €3-500 or whatever people pay

I had a college loan, but that's different, and paid off long ago

Good post Honky.
My parents had the same attitude. Never in debt. If we couldn't afford something, we did without and shrugged our shoulders. I paid cash for my first car in the early 1980s.
I got my first Visa card around the same time. Generally I only used it to buy petrol or if I had to buy a new suit for work. I always used to pay off my bill each month when I got paid.
Back then I liked owing nothing to anyone. I haven't changed and have been debt free since paying off my mortgage some years ago.

 

[Happyhonkaman]

I spoke to a financial advisor recently, not some fella who is good at Sudoku steamed off his head in my local or Greedy. but an actual professional with an office and everything.

He advised on what to do with some vesting shares, savings etc. and then said "The one thing here that I would question is your car. Why not get a loan from a Credit Union? I hate PCP car loans. You could be paying the same amount for a 2020/2021 car and you'll own it outright eventually and the interest wouldn't be that bad."

My wife pointed out that our car is a 2026 everyday vehicle and has 0% interest on the PCP whereas the credit union will charge you 7.7% and due to the zero interest it will make the PCP balloon payment far more feasible. Also no service charges etc. over the life of the agreement. On top of all that the monthly repayment is less than any second-hand car that we looked at.

Yer man conceded "THAT is the only instance in which PCP is worth it."

If the PCP wasn't 0% I wouldn't have done it again this time.

I thought the 0% thing was gone, but isn't there also this thing where they revalue the car at the end of the 2/3 years and off you go again then, but you have no control over that figure?

Im no financial genius, quite the opposite.. but I just don't like how the whole thing smells.. It strikes me that half the country are driving around in cars they could run into financial issues with

 

[Lee Bushwacker]

I thought the 0% thing was gone, but isn't there also this thing where they revalue the car at the end of the 2/3 years and off you go again then, but you have no control over that figure?

Im no financial genius, quite the opposite.. but I just don't like how the whole thing smells.. It strikes me that half the country are driving around in cars they could run into financial issues with

Buy now, pay later if you can afford it then or lose your car. Not a good scenario imho Honky!

 

[MerchantOfEnnis]

I have a rolling €10k loan that I've used for the last few years to travel and go to gigs around the world. No regrets, but I'll be glad to have it paid off soon.

I also have a credit card which I happily pay the minimum payment of €22 a month to keep, as it has got me out of jail in the past. A few years ago in New York I was watching Ireland vs All Blacks in a bar in Manhattan and got there early in the day to get a good seat. I racked up a fair old tab and when I went to pay my AIB card wouldn't work. My flight home was a few hours later so I was screwed, and was it not for the credit card in my wallet I'd say they'd have thrown me into the kitchen washing dishes.

I've no mortgage but I do now have half a million in the bank, so I'd be hopeful that I won't be taking any more loans in the future, particularly as my grá for travelling and for gigs in general has totally dried up.

 

[Crisp Sandwich]

I thought the 0% thing was gone, but isn't there also this thing where they revalue the car at the end of the 2/3 years and off you go again then, but you have no control over that figure?

Im no financial genius, quite the opposite.. but I just don't like how the whole thing smells.. It strikes me that half the country are driving around in cars they could run into financial issues with

Our plan is definitely 0%.

Depends on the terms of your contract too, most PCP plans you can walk away from after 18 months but they rarely tell you that.

I wasn't happy with the way our last car went - we took it on and a month or so later the government pushed through a blanket drop on the price of EVs. It left me in a situation where, at the end of the lease, there was "nothing" left in the car to be added as a make-weight to the next lease (which is normally the case) and, if we wanted to buy the car outright then we would have to pay the remainder of the car at market value from the day it left the forecourt - i.e. €10K more than it was a month or two later after the price drop.

So on the one hand they were saying that the car was worthless but on the other that it was worth more that it was valued at.

 

[Happyhonkaman]

Our plan is definitely 0%.

Depends on the terms of your contract too, most PCP plans you can walk away from after 18 months but they rarely tell you that.

I wasn't happy with the way our last car went - we took it on and a month or so later the government pushed through a blanket drop on the price of EVs. It left me in a situation where, at the end of the lease, there was "nothing" left in the car to be added as a make-weight to the next lease (which is normally the case) and, if we wanted to buy the car outright then we would have to pay the remainder of the car at market value from the day it left the forecourt - i.e. €10K more than it was a month or two later after the price drop.

So on the one hand they were saying that the car was worthless but on the other that it was worth more that it was valued at.

Yeah, they hold all of the cards

I suppose that value was gone off your car whether it was PCP or private though because the market value of the car had dropped regardless.

Cars are a pain in the hoop

 

[Orchard thief]

I've no mortgage but I do now have half a million in the bank, so I'd be hopeful that I won't be taking any more loans in the future, particularly as my grá for travelling and for gigs in general has totally dried up.

Nice figure to have MOE. Wouldn’t leave it parked in a current account though or in any of the pillar banks pathetic savings accounts.

That figure should generate €10k + p/a even in a very low risk situation.

Putting €450k away on
3 year savings bonds @1.96% AER tax free would give you €9k a year.

Nothing exciting but a bit of protection from inflation if nothing else.

 

[Collio64]

Had a mortgage with a building society back in the day. I do use credit cards to counteract fraud but thats the only reason I do know my limits

 

[Orchard thief]

I’ve no debt but not at all against the idea tbh.

Its maths really. Buy a car for €50k cash outright.
After 3 years its worth €30k.

Alternatively put €10k down and finance the rest on a good pcp rate. Invest the €40k.

The GFMV is importatant. The wife had a GFMV on her car a few years ago of €12k but dealers were willing to give her €19k for it towards a trade in. Didn’t bother taking the offer as it was a korean shitbox so just bought it for the €12k and sold it privately for €17.5k.

Do the sums and see what situation works out better. Nothing wrong with debt per se.