Comments on: Sale purchase

By: Ray

Ray — Fri, 13 Jan 2006 09:05:31 +0000

My sister does that too, and it is effectively leasing rather than buying. And yeah, it’s still crazy.

By: mike

mike — Thu, 12 Jan 2006 18:12:14 +0000

Jesus Sarah, you really do have a lot of time to yourself.

By: Pete

Pete — Thu, 12 Jan 2006 15:43:16 +0000

Actually, what your sister is doing isn’t totally crazy. She is effectively renting, or leasing, a car, in the full and certain knowledge that she will never own it. It sounds like a rational, planned use of debt (unlike people who keep re-mortaging their houses but still believe they’ll own them one day).

It is mostly crazy though, because:
1. She could probably get a similar deal by leasing a car, without incurring any debt.
2. She is always paying for the use of a car during its period of fastest depreciation (brand new – 3 years old).
3. If she ever decides she doesn’t want to have a car any more, she’ll presubably have to clear the outstanding debt to get rid of it, which seems wierd.
4. Modern cars are very reliable, and very cheap 2nd-hand. 3000 euro will buy a low-milage car in mint condition. (mine cost me 1300 euro, perfectly reliable but I wouldn’t call it mint condition). Buying new is pointless.

The balloon payment doesn’t get rolled into the next loan. It’s carefully sized and timed to ensure that consumers do exactly what your sister does, so the dealers keep selling new cars, and keep getting trade-ins at exactly the age and mileage when they can be re-sold most pofitably.

By: Sarah

Sarah — Thu, 12 Jan 2006 12:48:21 +0000

oh pete you are right too. This is exactly how everyone operates…Its like my sister-in-law buying cars. The only ever enquires about the loan repayments and ignores the balloon repayment at the end. Then she changes the car and gets new finance before the term is up..so she never has to pay the final installment…but sooner or later its got to catch up..I mean those balloons must get spread over the next loan…Let’s get Eddie in.

By: Pete

Pete — Thu, 12 Jan 2006 11:59:42 +0000

Of course, Gerry is right, 100 euro over 20 years is no big deal, but I really do think it’s helped me understand the attitude to debt thing, which has baffled me for ages. If people see a way out of debt, they will scrimp and save to get there. But if they see no way out, ever, then more debt means nothing, as long as they can pay the interest. But do they worry about rising interest rates in the future, or are they just thinking one month at a time (ie. not thinking)? Sorry for drifting off-topic, perhaps worth a new blog thread Sarah?

By: Sarah

Sarah — Wed, 11 Jan 2006 20:15:16 +0000

hurrah! Gerry, between this and your gay adoption post you are proving much better at explaining me than I am….

By: Gerry

Gerry — Wed, 11 Jan 2006 19:31:01 +0000

What Pete fails to realise is that in 20 years you will still have the sauceboat but you will have no memory of the heating oil you spent thousands on. And all Tom will have is debilitating after effects of a lifetime’s sexual deviancy. i thin you made the right if not the sensible choice.

gerry

By: Sarah

Sarah — Wed, 11 Jan 2006 16:42:19 +0000

aaagh. Paddy. I hate you. The sauceboat will never the same. DEEP SIGH. btw, did you see that Denis is buying up Independent shares? I hope this is not a manifestation of possible self-destructive narcisstic tendencies…

By: Paddy

Paddy — Wed, 11 Jan 2006 16:39:31 +0000

Nice to see that the money you earn from Rupert ends up with Tony.

By: Sarah

Sarah — Wed, 11 Jan 2006 14:45:19 +0000

ROTFL…ah, where would I be without my blog and my wonderful commenters…who needs psychotherapists?