Does nobody buy a car outright? Am I missing something?
- Thread starter TNGL
- Start date
Porsche macan is pretty good. 371 per month (for a spartan 4 pot) but optional final payment is usually set much lower than actual price. Works out much less than 371 per month.
Mine was 3.9% APR, that was standard for the offer at the time. It's gone up to 4.9% recently though, so just a case of getting it at the right time or use a 3rd party.
I've only skimmed the thread but the comparison to a mortgage on a house is completely stupid.
The used car market usually gets you a large discount on the list price. Take the A4 in the OP - new ones are what, £27-43k? 2010 ones are roughly £5-12k. That's a good
75% depreciation.
If houses depreciated by the same amount we'd see new houses going for £250k then dropping to £62k after 7 years, and there would be a lot fewer people buying with a mortgage! Just like cash buyers do with used cars.
In other words, a mortgage on a house is usually necessary whatever the property. Finance on a car is more often a choice, as there's usually a used option that one could buy outright.
The used car market usually gets you a large discount on the list price. Take the A4 in the OP - new ones are what, £27-43k? 2010 ones are roughly £5-12k. That's a good
75% depreciation.
If houses depreciated by the same amount we'd see new houses going for £250k then dropping to £62k after 7 years, and there would be a lot fewer people buying with a mortgage! Just like cash buyers do with used cars.
In other words, a mortgage on a house is usually necessary whatever the property. Finance on a car is more often a choice, as there's usually a used option that one could buy outright.
Personally, I think a good deal is the important bit, not how the car is paid for. It's a bit strange to make blanket statements about whether or not finance is sensible. Sometimes the offers are simply unbeatable.
Why would anyone buy a car outright if it's going to cost them more? Why would you buy a used car if, when all costs are considered, it doesn't offer a significant saving over new?
The only rule that generally rings true is that the longer you own a car, the better value it is. Keeping a car for 8 years, whether bought new or used, on finance or bought outright, is going to be cheaper than changing the car every few years.
Why would anyone buy a car outright if it's going to cost them more? Why would you buy a used car if, when all costs are considered, it doesn't offer a significant saving over new?
The only rule that generally rings true is that the longer you own a car, the better value it is. Keeping a car for 8 years, whether bought new or used, on finance or bought outright, is going to be cheaper than changing the car every few years.
I've always bought my cars outright. However, the arrival of a child and the need for something practical changed that.
I could have bought outright with part exchange of my existing vehicle but I'd have on the bare bones of my arse. Instead I took a bank loan at 6% APR over 3 years. It's costing me around £500 in interest over term, I own my car outright and I can settle the bank loan at any time.
The dealer finance was a total rip off and closer to 14% APR with penalties for early repayment, arrangement and admin fees. You also didn't own your car.
Finance can make sense, it all depends on your circumstances.
I could have bought outright with part exchange of my existing vehicle but I'd have on the bare bones of my arse. Instead I took a bank loan at 6% APR over 3 years. It's costing me around £500 in interest over term, I own my car outright and I can settle the bank loan at any time.
The dealer finance was a total rip off and closer to 14% APR with penalties for early repayment, arrangement and admin fees. You also didn't own your car.
Finance can make sense, it all depends on your circumstances.
When did you take that out, 2006? That's more that double what I'd expect to pay!
What do they gain offering customers that? Surely the idea of finance is for them to charge interest to make more money?
no idea but it worked in our favour.
Soldato
Just read all 20 pages of this thread from start to finish.
First thing I'll say is whilst it's great that some forum members here have sufficient cash in the bank to splash £50k+ on a car, or even £20k outright, I would suggest that the percentage of people who can do this is very very low. The point of the thread, I think, was to discuss how best to finance cars for those normal people among the population, like myself, that can put a few grand down at best. Let's face it, if you can buy any new car outright, even a cheaper one, then it doesn't matter too much to your pocket whether you choose to pay cash or finance it on a PCH deal.
My second point is where are all these fantastic deals on PCH to be found? I read threads like this quite often and there is always some claim that a nice Golf or Merc or BMW can be had for £200 a month. Great, I think, then proceed to go off and find said deal with no luck whatsoever. Either there is a total misconception on the cost of these deals or I am not looking in the right place?
The third thing I'll say is that as a driver of old cars myself I am getting more inclination to buy something new the older I get. I'm just fed up of old cars now. Dealing with getting them fixed. Fed up of hearing the crashing sound you get from worn suspension whenever you go over a speed bump. Fed up of heavy feeling clutch pedals or heavy feeling steering, which isn't sufficiently failed to justify getting anything fixed on it. Fed up of not having the refinement and quiteness of something new. I drove a Seat Leon 1.2 TSI as a hire car on holiday 2 weeks ago. Lovely car, so quiet and refined compared to my 14 year old Honda Accord that I was not looking forward to coming back to. Not that there is anything wrong with it as such - it gets me to work - but it's old and haggard. Do I really want to spend several hundreds of pounds a month on a new car? No I don't. But the thought of yet another £5k car does not fill me with joy.
First thing I'll say is whilst it's great that some forum members here have sufficient cash in the bank to splash £50k+ on a car, or even £20k outright, I would suggest that the percentage of people who can do this is very very low. The point of the thread, I think, was to discuss how best to finance cars for those normal people among the population, like myself, that can put a few grand down at best. Let's face it, if you can buy any new car outright, even a cheaper one, then it doesn't matter too much to your pocket whether you choose to pay cash or finance it on a PCH deal.
My second point is where are all these fantastic deals on PCH to be found? I read threads like this quite often and there is always some claim that a nice Golf or Merc or BMW can be had for £200 a month. Great, I think, then proceed to go off and find said deal with no luck whatsoever. Either there is a total misconception on the cost of these deals or I am not looking in the right place?
The third thing I'll say is that as a driver of old cars myself I am getting more inclination to buy something new the older I get. I'm just fed up of old cars now. Dealing with getting them fixed. Fed up of hearing the crashing sound you get from worn suspension whenever you go over a speed bump. Fed up of heavy feeling clutch pedals or heavy feeling steering, which isn't sufficiently failed to justify getting anything fixed on it. Fed up of not having the refinement and quiteness of something new. I drove a Seat Leon 1.2 TSI as a hire car on holiday 2 weeks ago. Lovely car, so quiet and refined compared to my 14 year old Honda Accord that I was not looking forward to coming back to. Not that there is anything wrong with it as such - it gets me to work - but it's old and haggard. Do I really want to spend several hundreds of pounds a month on a new car? No I don't. But the thought of yet another £5k car does not fill me with joy.
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The idea of finance is also to sell the car.
Associate
I bough my last car cash, but it was a close call -- since I have an offset mortgage, paying cash means less 'offset' and thus more interests on the house, so technically there is a fine balance between keeping the capital as much as possible against my mortage and pay the finance interests rate gradually, OR splash out the cash, take the hit on the mortage interests going up a bit, but not have to worry about finance.
I decided to take the hit -- these days I'd look carefully again; the BMW APR is a bit silly (6.9% or somethign, last time I looked) -- however they seems to be a in panic trying to sell cars these days, so perhaps I might change soonish.
I decided to take the hit -- these days I'd look carefully again; the BMW APR is a bit silly (6.9% or somethign, last time I looked) -- however they seems to be a in panic trying to sell cars these days, so perhaps I might change soonish.
www.hotukdeals.com
www.drivethedeal.com
www.contracthireandleasing.com
www.nationwidevehiclecontracts.co.uk
A Golf or Merc for under £200 is going to come with a pretty meaty deposit; £2k+.
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Soldato
pretty much, you can get the 200pcm but the deposit will be higher.
Depends if you luck out on the timing, were plenty of Golf GTIs out there a month or so back for £140-160 pcm 9+23. Mercs are never on good deals in my experience, apart from weird models like the B250e or GLA. My 330e was £260 (before options) on a 6+23 which I found very good.
Lots of people like to conveniently forget the often significant initial payment when bragging about cheap finance.
You should be looking at the 'amortized' cost per month not the headline figure. To get the amortized cost; add up the deposit, fee's and monthly payments and then divide by the term of the lease. For example a 9+23 on a "£180 Jaguar XE lease" with £150 of fee's would actually be £247.5 a month (9+23=32, 32*180=5760, 5760+150=5910, 5910/24=247.5).
Then you know exactly how much the car is costing you every month, how you choose to finance that initial is up to you be it savings or a 0% credit card. This also helps you to see the wood for the trees on properly cheap deals.
Then you know exactly how much the car is costing you every month, how you choose to finance that initial is up to you be it savings or a 0% credit card. This also helps you to see the wood for the trees on properly cheap deals.
Soldato
Can't see a 3 series for less than £300 per month and still significant deposit required at that price. What cars can you get for £200 a month then?