Reply to: Pay cash or use finance to buy a car?

[swamp]

I've got a 2 year old BMW bought on "Personal Lease" in March 07. I'm paying nearly £500 a month. Current value about £13k but still owe £18k on the 4 year finance deal. Now can't get rid of it due to the "negative equity" as one dealer put it. Anyone got any bright ideas on how to get out of this one?

Go back in time. Change the contract to a PCP guaranteed final value jobbie. Then travel back in time to today, go to the dealer and hand back the keys.

[AZZIK]

Thanks for all the replies. I think I'm just going to pay for it here and now.

I'm already overpaying into the Mortgage so if anything went particularly bad, there's plenty of cash available that I can get at anyway.

How bad do you guys think things will get with the cost of used cars? Do you think they have much further to fall?

The price of used cars are actually going up now - went to BCA last week and was very surprised

[Sausage Surprise]

I've got a 2 year old BMW bought on "Personal Lease" in March 07. I'm paying nearly £500 a month. Current value about £13k but still owe £18k on the 4 year finance deal. Now can't get rid of it due to the "negative equity" as one dealer put it. Anyone got any bright ideas on how to get out of this one?

[Fred Bloggs]

I tend to avoid HP and the likes as paying off early can be a painful experience. Likewise with personal loans too. Currently in dispute with Norther crock who told lies about a personal loan for 3 years and when I went to pay it off after 2 years there's penalties. They reckon they'll have the original phone conversations taped and can refer to them. But after 5 months of complaining they're still not cooperating. It might be time soon to make a formal complaint to the banking authorities.

[swamp]

Thanks Swamp, you just saved me £255! click4gap.co.uk says a return to invoice insurance paying up to £15000 valid for 3 years will cost me £135. Mini want to charge me £390!

A pleasure Love to see the look on the dealer's face when you turn down their (inevitable) hard sell!

Current choices are NOT PCP but HP or Cash. The offer they gave me on HP will cost me £1200 in total over the 2 years (that's interest and charges). No personal loan I can find on the internet (so far) can beat that. Also, paying off £15k from the mortgage saves me £1500 over 2 years, and a whole lot more long term, so HP is looking good.

I'm on a two year HP deal. Reckon it's the way to go. Slightly cheaper than a personal loan but just remember they own the car until you pay off the loan!

[ruth11]

Used car prices have actually been going up for the last few months!

Read posts by this chap (v8mate) on PistonHeads. Used car prices look like they are stabilizing now though.

Mini have traditionally enjoyed good residuals, and are one of the few cars I would consider buying new. Make sure you pick your options carefully though; there are some 'must haves' like air con and long service pack, and possibly leather too. But there are lots of overpriced/useless options too.

Don't know much about PCP deals, but they would have been a very good idea on an expensive car pre-crash. Though I know someone who bought a 911 turbo on PCP which has plummeted in value, but he can't hand back the keys because his "credit rating would be ruined"...? If I was buying right now I would not be looking at PCP because I think used car values will hold up very well.

For GAP insurance buy online (clickforgap.co.uk) or over the phone when sat in the dealer. As someone said, get Return to Invoice GAP.

HTH

Thanks Swamp, you just saved me £255! click4gap.co.uk says a return to invoice insurance paying up to £15000 valid for 3 years will cost me £135. Mini want to charge me £390!

Current choices are NOT PCP but HP or Cash. The offer they gave me on HP will cost me £1200 in total over the 2 years (that's interest and charges). No personal loan I can find on the internet (so far) can beat that. Also, paying off £15k from the mortgage saves me £1500 over 2 years, and a whole lot more long term, so HP is looking good.

Thanks again

[swamp]

Thanks for all the replies. I think I'm just going to pay for it here and now.

I'm already overpaying into the Mortgage so if anything went particularly bad, there's plenty of cash available that I can get at anyway.

How bad do you guys think things will get with the cost of used cars? Do you think they have much further to fall?

Used car prices have actually been going up for the last few months!

Read posts by this chap (v8mate) on PistonHeads. Used car prices look like they are stabilizing now though.

Mini have traditionally enjoyed good residuals, and are one of the few cars I would consider buying new. Make sure you pick your options carefully though; there are some 'must haves' like air con and long service pack, and possibly leather too. But there are lots of overpriced/useless options too.

Don't know much about PCP deals, but they would have been a very good idea on an expensive car pre-crash. Though I know someone who bought a 911 turbo on PCP which has plummeted in value, but he can't hand back the keys because his "credit rating would be ruined"...? If I was buying right now I would not be looking at PCP because I think used car values will hold up very well.

For GAP insurance buy online (clickforgap.co.uk) or over the phone when sat in the dealer. As someone said, get Return to Invoice GAP.

HTH

[ASB]

Thanks for all the replies. I think I'm just going to pay for it here and now.

I'm already overpaying into the Mortgage so if anything went particularly bad, there's plenty of cash available that I can get at anyway.

How bad do you guys think things will get with the cost of used cars? Do you think they have much further to fall?

Yes. It is somewhat bizarre that currently a number of new cars can be bought for less than a 1 year old model. Check prices and brokers very carefully.

[BlightyBoy]

How bad do you guys think things will get with the cost of used cars? Do you think they have much further to fall?

If the cost of houses continues to fall the way it has, then I would expect used-cars to go up in value. That being when everyone ditches their houses and move into the Morris.

You could probably get some nice IKEA furniture for the back of an A4 Combi.

[ruth11]

Thanks for all the replies. I think I'm just going to pay for it here and now.

I'm already overpaying into the Mortgage so if anything went particularly bad, there's plenty of cash available that I can get at anyway.

How bad do you guys think things will get with the cost of used cars? Do you think they have much further to fall?

[ASB]

No, it covers the shortfall for any insurance payout and the invoice amount you paid for the car. So if in 2 years and 11 months my car gets written off, anyone's fault, I get my insurance payout of the value of the car at that point and then the Gap insurance gives me the rest up to what I paid for the car!

Means that it almost makes writing off my car deliberately a good idea!

Some insurers will do a return to invoice type value for the first 3 years - albeit at additional premium, may be cheaper than gap insurance.

[Sockpuppet]

Under normal circumstances I'd keep debt on the lowest APR - so use your cash on offset.

However it depends on how deep this recession goes.

Would you rather have access to your money if you need it, in which case take out a loan.

Personally I'd take out a loan just in case

This is what I did with my bike. I have a loan of £5k I took out for it. Now I easily have >£5k in the profit account for divs but I wanted all the cash I could get my mits on still in the bank.

I can pay the loan off at any time and it costs me only about £30 a month to service.

[NickNick]

Friends had their brand new car nicked off the driveway when it was about a month or 6 weeks old. The insurance only paid out a fraction of the cost of the car, but the loan they had on it was still (practically) for the full value. In this instance, the GAP insurance paid off the gap between what they borrowed and what the insurers paid out. IE the depreciation in that first 6 weeks.

[zara_backdog]

To be fair there isn't a British car manufacturer left that produces mainstream consumer cars:-

Ford and Vauxhall (GM) - Yanks
Toyota, Honda, Nissan - Japanese
Jaguar/Landrover - Indian

I can't think of any other mainstream manufacturer with a UK production facility.

Yes, but there are UK companies who supply parts to the companies who produce in the UK - surely as long as manafacturing remained in the UK it would benefit these supplies?

[TykeMerc]

They thought it would be a great idea in Germany... until they realised everyone went out and bought Honda's and Toyota's.

I don't see why the UK tax payer should subsidise a foreign car brand no mater where it's built.

To be fair there isn't a British car manufacturer left that produces mainstream consumer cars:-

Ford and Vauxhall (GM) - Yanks
Toyota, Honda, Nissan - Japanese
Jaguar/Landrover - Indian

I can't think of any other mainstream manufacturer with a UK production facility.