|
|
Post by woofwoof on Aug 11, 2022 14:04:56 GMT
Johnc got me thinking in my 4x4 thread so I thought I'd ask about how best to own or lease a car.
I've always paid cash in the past. I think the most expensive cars I've had were the SLK 230 and 2.7 Boxster both of which were bought new with cash or rather cheques as this was some time ago. I think they were both in the mid £30k range.
What's the best option these days? Pay cash and get the pain over with? Buy on finance or even lease?
Any comments and advice and plus or minus points for ways of doing this will be very welcome!
|
|
|
|
Post by bryan on Aug 11, 2022 16:18:11 GMT
Finance liabilities and buy assets
|
|
|
|
Post by Martin on Aug 11, 2022 16:29:35 GMT
Finance liabilities and buy assets I think of my cars as assets!  There isn’t really one right answer, other than ‘it depends’ (the deal / your circumstances / savings rates etc). I think the best option is usually a low(ish) interest personal loan. The rates have gone up a bit recently, but Tescobank will lend you up to £25,000 at 3.2% APR. An example….borrow £20,000 over 4 years and it’s £444 a month as you’re only paying £1300 (£27 a month) interest. I bought my 535d on a PCP as I was coming from 20 years of company cars. The last 3 cars (Golf / 750 / family truck) were all bought with cash as it was the best / lowest cost per month according to my man maths. Rightly or wrongly I also like owning cars, which you don’t with a lease and don’t really with a PCP plus I like the flexibility, which I took advantage of as I had to change the 7 after 2 years, a year earlier than expected. If I was buying now, I think I’d fund £25k of it via a personal loan and leave that amount in savings as I’m getting a better return than 3.1%. |
|
|
|
Post by woofwoof on Aug 11, 2022 16:50:32 GMT
Finance liabilities and buy assets I think of my cars as assets! There isn’t really one answer, other than ‘it depends’ (the deal / your circumstances / savings rates etc). I think the best answer is usually a low(ish) interest personal loan. The rates have gone up a bit recently, but Tescobank will lend you up to £25,000 at 3.2% APR. An example….borrow £20,000 over 4 years and it’s £444 a month as you’re only paying £1300 (£27 a month) interest. I bought my 535d on a PCP as I was coming from 20 years of company cars. The last 3 cars (Golf / 750 / family truck) were all bought with cash as it was the best / lowest cost per month according to my man maths. Rightly or wrongly I also like owning cars, which you don’t with a lease and don’t really with a PCP plus I like the flexibility, which I took advantage of as I had to change the 7 after 2 years, a year earlier than expected. If I was buying now, I think I’d fund £25k of it via a personal loan and leave that amount in savings as I’m getting a better return than 3.1%. I'm not getting anywhere near 3.1% interest at the moment. I think I'll have to spend some time on the pc find a better rate. Good on you Martin. I'm impressed. |
|
|
|
Post by racingteatray on Aug 11, 2022 18:13:14 GMT
It’s very much circumstance-driven. Cash if you can, given the current rate of inflation, unless you can still find sub-3% finance.
We just bought a nearly-new MINI Cooper and paid cash. We were getting at best 1.5% from Chase on the money so seemed logical to use it to buy an asset which would only cost us more if we waited.
|
|
|
|
Post by woofwoof on Aug 11, 2022 18:22:03 GMT
Thanks all.
I thought I'd ask the question and I'm glad I did as it looks like I have to do some internet banking PDQ.
I did have a look at a leasing site and unless I've missed something I don't think that's a way to go for me so it looks like I'll probably be paying cash.
|
|
|
|
Post by ChrisM on Aug 11, 2022 20:07:34 GMT
Finance liabilities and buy assets Warren Buffett said something along those lines, don't buy something that depreciates unless you have to. (How many people have 3 sets of double letters in their names?) Once you get over the mental "anguish" of not owning a car, I found PCP a good option. Small downpayment, not much to pay per month over 2 or 3 years (if you get the right deal) then you buy a 2 or 3 year old car for a lot less than the market rate, knowing its history. If it has proved problematic, you just get rid of it and don't have to worry about trade-in value etc It may prove difficult to get a zero percent lease/PCP at the moment though...... or to get a deal on a car that has been hanging around for a long time as unsold dealer stock |
|
|
|
Post by Roadrunner on Aug 11, 2022 21:47:01 GMT
I always buy something nearly new, rather than brand new and let the first owner take the big depreciation hit. My Benz had only 17,000 miles on the clock when I bought it, still smelled new inside and was way less than half of its original price. Our Mini had about 11,000 miles when we bought it. I use cash which would otherwise be earning practically no interest in the bank and pay absolutely no interest on my purchase.
|
|
|
|
Post by woofwoof on Aug 12, 2022 8:40:47 GMT
I always buy something nearly new, rather than brand new and let the first owner take the big depreciation hit. My Benz had only 17,000 miles on the clock when I bought it, still smelled new inside and was way less than half of its original price. Our Mini had about 11,000 miles when we bought it. I use cash which would otherwise be earning practically no interest in the bank and pay absolutely no interest on my purchase. I've mostly tended towards new with a few exceptions. I've mostly been into two seat soft tops but I fancied a big comfy saloon and when wandering around the used car lot of a local Jag dealer I sotted a 3 year old 4ltr S Type for £15k plus change and thought it was a bit of a bargain as it was pretty much half price and as I didn't know if I'd like it or not I thought I'd go for the cheaper option. So I did. I sold my Boxster privately and got the Jag and had £7k left over which I was happy with. I have nothing good to say about the Jag dealer but the car was I think a bit of a bargain. People had been telling me to go for a car which had already depreciated for years but I suppose you have to do things for yourself to fully realise the benefits. Sadly I don't think I'm going to find a 3 year old Evoque, E Pace or Ipace at half price anytime soon. |
|
|
|
Post by franki68 on Aug 19, 2022 14:29:24 GMT
Finance liabilities and buy assets Warren Buffett said something along those lines, don't buy something that depreciates unless you have to. (How many people have 3 sets of double letters in their names?) Once you get over the mental "anguish" of not owning a car, I found PCP a good option. Small downpayment, not much to pay per month over 2 or 3 years (if you get the right deal) then you buy a 2 or 3 year old car for a lot less than the market rate, knowing its history. If it has proved problematic, you just get rid of it and don't have to worry about trade-in value etc It may prove difficult to get a zero percent lease/PCP at the moment though...... or to get a deal on a car that has been hanging around for a long time as unsold dealer stock I think the buffet quote is used very often ,but taken out of context.He is a multi billionaire to whom it actually makes no difference to lease or buy and around the period of his quote finance in the USA was ridiculously cheap,you could lease cars for almost no interest. How can paying interest on a depreciating asset make sense unless you can earn more than the cost of the finance using that money ? I never get the maths to work with finance ,if you buy a 100k car for cash it's 100k,if you use finance it is say 120k ? So the argument I encounter often is well if I invest my money in something that returns 10% then financing a car at 7% makes sense ,but who can find a safe investment that returns 10% ...not me. The other issue with that argument is they forget you pay tax on that money you earn so to afford to pay 7% interest say you have to earn say 13% . I think there are cases where it does make sense.I remember the last gen M5 some deals at 500 pcm and Aston did the new vantage at £1000/month ,this is far less than the depreciation these cars suffer so that makes sense. I also think finance prices are a big factor in why cars are so utterly ridiculously expensive at the moment,they are marketed on the basis of selling the finance so prices are inflated . |
|
|
|
Post by johnc on Aug 19, 2022 15:06:35 GMT
I know I have said it before but I have a spreadsheet which shows that unless the apr is very low, a PCP costs you much more in interest over the term than HP. You pay more per month with HP but you pay less interest and you own the car at the end of the day.
PCP is useful for those for whom the size of the monthly payments is of greatest importance.
However we leased the i-Pace largely because we had a discounted monthly cost (because the lease companies get big discounts from the manufacturers) and I really wasn't sure what the residual of an electric car would be like. I probably made a mistake on that one but it would have cost much more a month to do HP or PCP!
|
|
|
|
Post by Grampa on Aug 19, 2022 16:23:28 GMT
The way I look at leasing/PCP/Contract Hire is that effectively you're financing the deprecation rather than the whole car and you don't have any funds tied up in the residual value of the car - I used contract hire for many years when I wanted to change every three years - not only kept the monthly payments down, but as the three years was coming to an end, all I had to do was choose a new car, arrange for an adjustment in payments (sometimes went up sometimes went down) no deposit to find and get the new car with minimal effect on my finances - no hassle trying to get a good trade in which was handy for me going for a different brand every time. But it only worked for me when I was changing every three years - I'm out of all that now (mostly because no one makes a car I want to spend a fortune on any more) and with three cars that are 7 years, 12 years and 18 years old, I outright own 2.8 of them.
|
|
|
|
Post by PG on Aug 19, 2022 16:45:24 GMT
I think there are pros and cons both ways for all the financing routes.
Since I left the company car world (nearly 30 years ago now) we've used both HP and cash as routes to buy cars. In the HP cases, one was at a low rate and the other was a 50% down, 12 payments at 0% for the rest.
I have found that the biggest "con" about buying outright is that unless you save the monthly payments you would have been making or get savings from elsewhere, come time to change you have to find another big chunk of cash. The biggest pro of buying outright, as Franki said, is that unless it is hugely manufacturer supported, the amount of interest you pay on finance deals is truly eye watering even at today's supposedly low interest rates.
I think PCP was interesting when the deposit contributions being chipped in were large - it could almost offset the interest. And those level of discounts were never available buying outright. But with rising rates I think a lot of people who took out PCP 1-2 years ago are going to be in for a real shock come change time. Even though they will have equity in the old deal (inless used cars soften a lot in harder economic times), the rising prices of new cars, lack of discounts and rising interest rates are going to really hit them. Unless manufacturers are forced back to more market support.
|
|
|
|
Post by Stuntman on Aug 19, 2022 19:26:26 GMT
I have almost always paid cash.
The exceptions have been:
Either, when the manufacturer has offered a 0% finance deal on a new car, and taking this deal has no impact on the price paid (whether list or discounted). I have done this on three occasions, including on my current GR Yaris, for which I still owe about £20k currently but it's interest-free. I have also put this money aside in a deposit account earning a fixed rate of interest which matures two months before I need to pay the balance in full.
Or, when there has been an additional manufacturer contribution if you took the finance, which would not be available under an outright cash purchase. I have done this once (for my current Cayman GTS 4.0), thinking that I would pay off the balance of the finance early enough so that I would actually pay less overall for the car on a net basis.
As it transpired, my financial circumstances changed considerably during 2021 which meant that I couldn't actually pay the balance off as early as I had originally intended, but the fact that I hadn't paid the full amount of cash for the car in 2020 enabled me to defer making other financial decisions in the short term that would have had worse outcomes. Basically I had an extra £40k to play with compared to having paid for the car in full, which really helped me last year.
Once my financial circumstances reverted to 'normal' in January 2022 I the paid off the £40k I owed (i.e. as soon as economically viable) which still saved me about £450 in interest charges compared to allowing the agreement to run for its full term. So as it turned out, taking the finance was actually a really good decision because of the flexibility it afforded me.
Food for thought...
|
|
|
|
Post by ChrisM on Aug 19, 2022 19:51:17 GMT
^
There are also some people who like to feel that they own the car outright, so won't take finance or lease a car or do a PCP etc
|
|
|
|
Post by woofwoof on Aug 21, 2022 10:33:58 GMT
The way I look at leasing/PCP/Contract Hire is that effectively you're financing the deprecation rather than the whole car and you don't have any funds tied up in the residual value of the car - I used contract hire for many years when I wanted to change every three years - not only kept the monthly payments down, but as the three years was coming to an end, all I had to do was choose a new car, arrange for an adjustment in payments (sometimes went up sometimes went down) no deposit to find and get the new car with minimal effect on my finances - no hassle trying to get a good trade in which was handy for me going for a different brand every time. But it only worked for me when I was changing every three years - I'm out of all that now (mostly because no one makes a car I want to spend a fortune on any more) and with three cars that are 7 years, 12 years and 18 years old, I outright own 2.8 of them. This is very sensible and I hadn't really looked at it like this. I did take a quick look at leasing and decided that I couldn't get anything like that interest rate on savings without trying a lot harder and gave up but seeing the payments as covering depreciation makes it all look rather more reasonable. But. It's done now. I've arranged to buy a car and I'm just waiting for a call back next week. Luckily for me the fact that I could get how I buy wrong doesn't really matter as I/we are comfortable and the recent family trauma has left me with the attitude that I/we might as well die just about penniless and Mrs WW agrees with this and if anything is even more convinced. |
|
|
|
Post by woofwoof on Aug 21, 2022 10:38:41 GMT
^ There are also some people who like to feel that they own the car outright, so won't take finance or lease a car or do a PCP etc There are just so many options Chris and unfortunately I'm not in a good position to be able to sit and work it all out and do the thing that's most sensible from a financial point of view as the past couple of years have left me... just... drained. I may get back on top form again but at the mo I'm just grateful for the help and advice I've been offered here and for all those years I was a workaholic that have left me ok money wise  |
|
|
|
Post by racingteatray on Aug 23, 2022 16:05:40 GMT
What have you arranged to buy?
|
|
|
|
Post by woofwoof on Aug 24, 2022 12:38:41 GMT
What have you arranged to buy? A used LR/RR product. I was just keeping it quiet in case anything went wrong but all seems to be going smoothly and it should be delivered tomorrow, that's Thursday morning. I initially went to a showroom to drive something else but ended up going this route and buying from another dealer. The dealer is out in the sticks so I'm paying a bit extra to have it delivered. I'll post details later and wait for you all to laugh at me and tell me I've bought completely the wrong thing but it'll be an experience and that's the main thing. It does drive well, IMO. I'm going to hang on to my MX5 and Getz for a while but having three cars doesn't really work so one or two may go at some point. I had a conversation with Mrs WW about keeping two cars so she can disappear off in one and I have the other but rather sweetly (or worryingly) she doesn't want to go anywhere without me. Awwww... I'll post details and maybe a picture when I can. I am very grateful for the welcome and help I've had since I re-joined and for that I'll say, Thank You all. |
|
|
|
Post by LandieMark on Aug 24, 2022 16:18:47 GMT
I'm guessing the dealer in Pickering?
|
|
|
|
Post by woofwoof on Aug 24, 2022 19:50:55 GMT
Nupe. Out in the sticks though. Mrs WW is a passenger seat driver so it wasn't a happy drive when Google maps proved to be as useless as ever and we got lost If I told you where I'd got it from you'd see what I bought as the dealer has a "Sold" section. I don't know why, I don't remember seeing this before. Anyway. It's due about 10AM on Thursday so as soon as I can I'll take a picture and all will be revealed. No sniggering and saying I should have bought something else please. As if you can resist It has the glass panel roof and a white leather interior. I found some of the black interior ones a bit like sitting in a cave especially with privacy glass. Oh er, full service history too. |
|
|
|
Post by PG on Aug 25, 2022 13:52:17 GMT
No need for the secrecy. As you've sad it has a glass roof panel, we can safely discount an Evoque convertible, so I reckon you're pretty safe in coming clean. |
|
|
|
Post by racingteatray on Aug 25, 2022 16:04:01 GMT
Two of our lady neighbours have Evoque convertibles oddly enough, given they are rare cars.
|
|
|
|
Post by woofwoof on Aug 25, 2022 16:25:01 GMT
I wanted a 4 door so the convertible was out and I bought a used grey auto diesel Evoke with a white leather interior, glass roof, power tailgate and spare wheel. I took it out a couple of times today and I'm pleased with it. The ride seems good and the gear change is smooth enough with 1st to 2nd being the most severe but maybe I need to get used to pulling away. The acceleration from 30/40-60/70 seems to be good and also the handling for a big fat car. I did have a bit of a moment when a taxi driver did something unexpected and I had to change lanes sharply but the body roll wasn't too excessive. I also need to get used to slowing without going down through the gears. My last auto was the Jag S and that was about 12 or 15 years ago now. I have a friendly mechanic nearby and he's told me to take the car in for him to crawl over so I'll give him a call tomorrow and book it in. I will also ask him for a price for fitting cameras as it hasn't got any. I did see that there are kits available so hopefully it's not a big job. The collision avoidance warnings certainly work as they sounded as I pulled the car down the drive. So, so far so good and I do like the car. This is a picture from the dealers website as I haven't taken any yet.  And once again. thanks for all your help. I nearly bought a white one with a black interior but my first car was a white Mini and I remember it showing every little mark so this grey one tempted me + it has the lighter interior, power tailgate, spare wheel and glass roof which were all missing from the white one. |
|
|
|
Post by Bob Sacamano v2.0 on Aug 25, 2022 16:40:17 GMT
Looks smart that, I hope you have many happy miles of motoring. Watch for dye transfer from jeans on the white seats.
|
|
|
|
Post by woofwoof on Aug 25, 2022 17:40:06 GMT
Looks smart that, I hope you have many happy miles of motoring. Watch for dye transfer from jeans on the white seats. Ta. I don't normally wear jeans but I do have a pair I wear when gardening and doing DIY so I'll move the car before changing into my work clothes. It seems to be in very good condition. There are a few scratches on the passenger side of the brightwork around the transition tunnel but apart from those, and normal people wouldn't even see them, only people like us would, it's generally very good. |
|
|
|
Post by ChrisM on Aug 25, 2022 18:58:47 GMT
One white car in anyone's lifetime is enough !
That looks good and grey certainly helps to hide the dirt.
Light coloured interiors are "my thing" too, you just need to spend a little bit of time every so often to keep them clean ..... mind you, a grubby black interior can take quite a lot of effort to bring it into a reasonable condition, as I know from a certain Audi A1 earlier this year......
|
|
|
|
Post by LandieMark on Aug 25, 2022 19:24:31 GMT
Very smart. I wish you many happy miles.
|
|
|
|
Post by bryan on Aug 25, 2022 21:28:47 GMT
That looks very tidy, well done. Was it a main dealer, in which case I think they do a half day LR experience with every approved used car.
|
|
|
|
Post by Alex on Aug 25, 2022 23:09:38 GMT
Looks good. Sounds like you've got a lot of new toys to play with and I'm not surprised it feels nice and smooth if you're coming out of an old MX5 and a Hyundai Getz!
|
|
