The next excuse for all the delays?

[Mctaff]

This is the first time I’ve been in this position (and likely never will be again). I would always have preferred a 20k car that I own, rather than one 2-3 times it’s price that I would have to give back in X number of years time.

Fair enough,… but the numbers suggest most people are happy to get the better car and absorb the extra cost

I agree though… I’m seriously considering buying outright … I’d need to be getting a 15% gross return to make the finance a sensible option. But throwing 80k at lotus also feels like a big deal!

 

[TomE]

Fair enough,… but the numbers suggest most people are happy to get the better car and absorb the extra cost

That was true when car finance rates were lower and so on paper a £20k deposit and £500 a month at 3-5% seemed like an OK deal to get into a nice car. Now 7-8% and rising makes the total cost look a lot less attractive and the monthly payments noticeably higher for the same car.

Like Wake, I'm in the "save till you can afford it" category on cars, probably a consequence of parents who lived through wartime rationing and post war austerity, plus seeing mortgage rates rise to 14% just after I bought my first flat and struggling with my finances as a result. In other circumstances I'll borrow cheaply to invest for better returns in other assets, but (most) cars aren't an investment and I have an aversion to paying interest on a depreciating asset. I know I'm very lucky to be in a position now to make these choices.

 

[roundincircles]

That was true when car finance rates were lower and so on paper a £20k deposit and £500 a month at 3-5% seemed like an OK deal to get into a nice car. Now 7-8% and rising makes the total cost look a lot less attractive and the monthly payments noticeably higher for the same car.

Like Wake, I'm in the "save till you can afford it" category on cars, probably a consequence of parents who lived through wartime rationing and post war austerity, plus seeing mortgage rates rise to 14% just after I bought my first flat and struggling with my finances as a result. In other circumstances I'll borrow cheaply to invest for better returns in other assets, but (most) cars aren't an investment and I have an aversion to paying interest on a depreciating asset. I know I'm very lucky to be in a position now to make these choices.

I'm with you, And we had a tin bath in the kitchen when I 'were a lad. I've just had a finance quote on a 718 GTS at 7.9% over 3 years. It adds £14,500 to the cash price of £83k

 

[Pops68]

That was true when car finance rates were lower and so on paper a £20k deposit and £500 a month at 3-5% seemed like an OK deal to get into a nice car. Now 7-8% and rising makes the total cost look a lot less attractive and the monthly payments noticeably higher for the same car.

Like Wake, I'm in the "save till you can afford it" category on cars, probably a consequence of parents who lived through wartime rationing and post war austerity, plus seeing mortgage rates rise to 14% just after I bought my first flat and struggling with my finances as a result. In other circumstances I'll borrow cheaply to invest for better returns in other assets, but (most) cars aren't an investment and I have an aversion to paying interest on a depreciating asset. I know I'm very lucky to be in a position now to make these choices.

Agreed and the only way to have a car appreciate is if you don't drive it. I don't see the point in that..

 

[Mctaff]

Agree with most of what’s been said, but 91.8% of new car purchases were on finance last year, so the vast majority of buyers prefer it.

Clearly rates going up might drive that figure down, but I don’t see many people handing their 50k car back and buying a 10k replacement outright in its place. If they can afford it my bet is they would extend the finance or buy new on finance, because they are used to a certain level of car. The model is self perpetuating…

 

[Toomanyloti]

That was true when car finance rates were lower and so on paper a £20k deposit and £500 a month at 3-5% seemed like an OK deal to get into a nice car. Now 7-8% and rising makes the total cost look a lot less attractive and the monthly payments noticeably higher for the same car.

Like Wake, I'm in the "save till you can afford it" category on cars, probably a consequence of parents who lived through wartime rationing and post war austerity, plus seeing mortgage rates rise to 14% just after I bought my first flat and struggling with my finances as a result. In other circumstances I'll borrow cheaply to invest for better returns in other assets, but (most) cars aren't an investment and I have an aversion to paying interest on a depreciating asset. I know I'm very lucky to be in a position now to make these choices.

Come on Tom - Luck really? Possibly, fortunate that certain circumstances present themselves and the cards fall in your favour but not luck. I have most of the things many desire but i will not accept its anything to do with luck. I made lots of decisions which others are simply not willing to take and still I feel some of the pain every day. Sometimes these can be sacrifices which then pay off in the future. This is not luck. Winning big on the lottery is not luck. If you don't enter into the transaction by buying a ticket you have no chance of winning.

I was thinking PCP too for the very first time ever but its likely I'll cash some savings in. Interest on a depreciating asset does seem a bit daft if other funds are available instead. If finance is your only route its not daft its a choice. The interest and depreciation is simply cost of ownership.

Sorry rant over

 

[Pops68]

Come on Tom - Luck really? Possibly, fortunate that certain circumstances present themselves and the cards fall in your favour but not luck. I have most of the things many desire but i will not accept its anything to do with luck. I made lots of decisions which others are simply not willing to take and still I feel some of the pain every day. Sometimes these can be sacrifices which then pay off in the future. This is not luck. Winning big on the lottery is not luck. If you don't enter into the transaction by buying a ticket you have no chance of winning.

I was thinking PCP too for the very first time ever but its likely I'll cash some savings in. Interest on a depreciating asset does seem a bit daft if other funds are available instead. If finance is your only route its not daft its a choice. The interest and depreciation is simply cost of ownership.

Sorry rant over

"Winning big on the lottery is not luck"? Say what? Sorry, that's pretty danged lucky where I come from... just sayin'

 

[Leonard]

I'm with you, And we had a tin bath in the kitchen when I 'were a lad. I've just had a finance quote on a 718 GTS at 7.9% over 3 years. It adds £14,500 to the cash price of £83k

Which is basically the same as the Emira now 🙁

 

[TomE]

Come on Tom - Luck really? Possibly, fortunate that certain circumstances present themselves and the cards fall in your favour but not luck. I have most of the things many desire but i will not accept its anything to do with luck. I made lots of decisions which others are simply not willing to take and still I feel some of the pain every day. Sometimes these can be sacrifices which then pay off in the future. This is not luck. Winning big on the lottery is not luck. If you don't enter into the transaction by buying a ticket you have no chance of winning.

I was thinking PCP too for the very first time ever but its likely I'll cash some savings in. Interest on a depreciating asset does seem a bit daft if other funds are available instead. If finance is your only route its not daft its a choice. The interest and depreciation is simply cost of ownership.

Sorry rant over

"The harder I practise, the luckier I get" - Gary Player

I've taken some gambles and won more than I've lost. Sometimes I've badly misjudged the risks and sometimes the upside has been far more than I thought possible. Major world events over the last decade happened to create both challenges and significant opportunities for my businesses - luck, right place right time or seeing a silver lining in the cloud? I've also narrowly missed being at the scene of 6 terrorist attacks. So yes, luck plays a part.

 

[NicolasB]

I'm with you, And we had a tin bath in the kitchen when I 'were a lad. I've just had a finance quote on a 718 GTS at 7.9% over 3 years. It adds £14,500 to the cash price of £83k

When I was talking about financing part of my R8 I am buying, the dealer said 7.5%. Told them my local bank is doing personal loans for 6.0%. they went back to their "finance guy" and managed to bring it down to 6.1%. Always worth it to try and haggle with them.

 

[Tonyshepp]

This is where my head is. I have outright cash to buy the car. But if I put 20k down and borrowed the rest on pcp I pay 7.9% for now on the balance, let’s say 60k. If I put that 60k in an interest account let’s say 5%, my borrowing is only 2.9%. Yes I’m paying a bit of interest BUT what happens if depreciation is worse than what is currently predicted, I have a car 3/4 years old I can’t sell. If I’m on pcp I walk away having leased the car for 3/4 years; effectively just funding the depreciation.
I’ve always bought cars with cash but equally hate the feeling when I try and trade a car in and get mugged by a dealer.

 

[Markc]

This is where my head is. I have outright cash to buy the car. But if I put 20k down and borrowed the rest on pcp I pay 7.9% for now on the balance, let’s say 60k. If I put that 60k in an interest account let’s say 5%, my borrowing is only 2.9%. Yes I’m paying a bit of interest BUT what happens if depreciation is worse than what is currently predicted, I have a car 3/4 years old I can’t sell. If I’m on pcp I walk away having leased the car for 3/4 years; effectively just funding the depreciation.
I’ve always bought cars with cash but equally hate the feeling when I try and trade a car in and get mugged by a dealer.

You would be better to put in the max allowed in the pcp. Thus borrowing less and still underwriting the value of the car. Put the remaining sum in a high interest account as above

 

[Markc]

You would be better to put in the max allowed in the pcp. Thus borrowing less and still underwriting the value of the car. Put the remaining sum in a high interest account as above

Just looked at the pcp examples, Paying around £10k to underwrite the GFV for 3 yrs

 

[Tonyshepp]

Just looked at the pcp examples, Paying around £10k to underwrite the GFV for 3 yrs

So doing the figures on mY 77,195 car. Lotus are wanting just shy of 51k at the end of a 3 year term (20k down). That means, apart from financing 3k of delivery and road tax, they anticipate 26k depreciation over 3 years, nearly 9k a year.
That’s only 35% depreciation over 3 years which sounds too good to be true.

 

[Markc]

So doing the figures on mY 77,195 car. Lotus are wanting just shy of 51k at the end of a 3 year term (20k down). That means, apart from financing 3k of delivery and road tax, they anticipate 26k depreciation over 3 years, nearly 9k a year.
That’s only 35% depreciation over 3 years which sounds too good to be true.

Sounds good to me. How much can you save if you put the max deposit down?

 

[Tonyshepp]

Sounds good to me. How much can you save if you put the max deposit down?

If you put the max down, 36k the optional final payment is the same at 50k but you save 1.1k in interest over 3 years compared to putting down 20k. So it’s not really worth putting the extra 15k down.