Was I crazy For buying a car on finance after becoming debt free?

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Last Updated on January 25, 2022 by Melissa S.

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Buying a car on finance is something most of us have to do in life, however, a couple of years ago when I finished my debt free journey, I never expected to do it again. Read on to find out why I changed my mind.

Becoming debt free was a big moment for me, and something that had influenced me along the way was the incredibly supportive debt free community that you can find on Instagram.

After years of earning a substantial salary yet still putting small purchases on credit cards, I really opened my eyes to the way we are brainwashed as a society to spend money at every opportunity – through social media, advertising, the behaviour of our peers – and I’m glad to say I know my attitude towards this has changed for good.

car finance

However, for a time I think I may have been influenced too far the other way. I have mentioned Dave Ramsey a lot on this blog, and his Baby Step program certainly helped me pay off my debts and develop the right attitude. Through Baby Step 1 and 2, I was able to build an emergency fund and pay off my debts using the debt snowball method. A key part of this process is agreeing to never use credit again.

This has definitely been taken to the extreme by a lot of Dave’s followers and the debt free community, and for a time it was my attitude too. I saw lots of people proclaim that they would be driving their current car until it fell apart, and you can even get car bumper stickers that proclaim “Dave Ramsey makes me drive this”.

Is this a good attitude to have about debt? Absolutely. Is it a better attitude than constantly wanting to upgrade your car once the finance is paid? Definitely. Does it work for everyone all of the time? No.

So here are the reasons I have for buying a car on finance after becoming debt free.

I didn’t have enough savings to buy the car outright

This is the biggest, most obvious reason  why I chose to buy a car on finance, so I have put it first in the list. Because if I did have the money, then I would definitely have made a cash purchase. Why not just save up? Because it would have taken me probably 3 years to do so, and I don’t think my existing car would have lasted that long, on top of all the other reasons listed below:

buying a car on finance

A car is essential to me for my job and lifestyle

I visit schools all over the North West of England for my job, often doing 100 mile round trips in a day. Aside from this, living in a rural area, not having a car for the school run, shopping and day to day life would be out of the question. It goes without saying that I need a safe and reliable car for myself and my family, so this was a big factor.

My existing car was 9 years old and had done almost 100,000 miles

My existing car – a 2011 Nissan Juke – had started to feel “clunky” to drive. The previous year it had cost me £700 in repairs to get through its MOT which is the equivalent 3 monthly payments on the new car. It had also broken down in a car park after I returned from a shopping trip – even though this was covered through my AA membership it still cost me hours of time to wait for the callout  – and then £30 for the part required to fix it.

I was gobsmacked when I found out it was still worth £3000 to trade in 

Because I had resigned myself to “drive it until it fell to pieces”, I did not expect there to be much trade in value left. So when I started thinking that the time might be coming that it actually WAS falling to pieces, the fact I could get £3000 off my next car was a real incentive.

My car had done around 97,000 miles and I noticed when I put a mileage higher than 100,000 then the value suddenly dropped – so it was a big factor in deciding that the time was right to upgrade.

“Dave Ramsey made me drive this” – but Americans don’t have MOTs!

This is a major point that Brits (and other nations) need to be aware of – in America, there is no such thing as a yearly MOT. You can keep on driving your heap of junk literally until the wheels fall off. However, this is not the case here in the UK. As I mentioned, my previous year’s MOT cost me £700. I also knew that my car was in need of new tyres which would be around £400, and I had 2 months left on the MOT. 

Together with the trade in price, this was potentially £4000 that I could put towards the cost of a new car, so I seemed to have found a golden window of opportunity to trade in my car before the MOT was due and it went over 100,000 miles.

buying a car on finance

I am very particular about my car

This is something that I almost didn’t include in this post, and then I thought – why not? After all, being frugal doesn’t mean spending the least amount of money possible, it means spending more on the items you value and less on those you don’t.

 I have always prided myself on having a car that I love. It doesn’t have to be the most fancy or top of the range, but there are certain features I really wanted and if I am going to spend several thousand pounds buying a car on finance, I want to make sure that it’s a car I will love for years to come.

I totally understand that not everyone feels this way about cars and that’s fine too. But for me, a sporty car with nice alloy wheels, a certain colour (for me it had to be white) and a reversing camera were the features I was looking for. Apple Car Play was also a must for my next car.

I got a great deal on a used car

It goes without saying that I was never contemplating buying a new car on finance, as the costs versus a secondhand model are astronomical.

After doing a couple of week’s research, I found an amazing deal on a Peugeot 2008.

It was an ex-mobility car, meaning it had been leased through the motability scheme and then sold on, so it was 3 years old and had done only 10,000 miles. It also was a top of the range GT Line and featured all the things I wanted and more – a panoramic sunroof, Apple CarPlay, reversing camera and many other features. And yes, it was white!

To buy this car new would have been £28,000. But used it was £11,999! With my trade in price and a £1000 cash deposit, this brought my PCP (Personal Contract Purchase) loan amount down to £8,000. This was well within my budget.

Could I have found a cheaper car? Yes. But as I outlined above, I was willing to pay extra to get a car I really loved with features that I wanted.

Was this car still amazing value? Absolutely!

My actual car

The monthly payments are affordable to me – and currently I’m sidehustling the money!

Ideally, I would like to save up and pay off the loan early, but in the meantime the £230 a month payment is well within my budget. Even better, thanks to my side hustles such as blogging, matched betting and ebay selling, I have given myself a low target to make at least £230 per month from these methods. So far I’ve smashed this every month!

So even though the loan payment comes out of my salary, my sidehustles are making me enough money to pay for my car, which is an awesome feeling!

Is buying a car on finance right for me?

Obviously, everyone’s circumstances are different and by giving my own personal experience above you can see my justification for it. If you are unsure if it is right for you, you can check out my guide in this post.

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Hi! I'm Melissa

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