Reply to: Buying a car - how do you finance?

[AtW]

I'll be taking a contract car next time, fed up of the salesdrones, buying, selling hassle, etc on a depreciating asset. Can get a BMW 520 for under £300/month

You can get a BMW 530 for £0 per month, if you pay cash for it upfront.

[LondonManc]

I'll be taking a contract car next time, fed up of the salesdrones, buying, selling hassle, etc on a depreciating asset. Can get a BMW 520 for under £300/month

[Pherlopolus]

From what I know. The leasing company often use this special light which picks up marks not visible under normal light. Pretty hard not to get dinged really. But at least you have had a really nice car for 2-3 years.

Nope, there are industry guidelines for fair wear and tear, and they are actually reasonable generous these days,

[LondonManc]

From what I know. The leasing company often use this special light which picks up marks not visible under normal light. Pretty hard not to get dinged really. But at least you have had a really nice car for 2-3 years.

That's the dogging crew paying cash then.

[lilelvis2000]

Not strictly accurate. For instance many lease companies will offer to sell you the car at the end of the lease for far less than you would be able to buy it from a dealer. If you want Lease then a broker like Lingscars.com is worth checking. Cars that are anticipated to depreciate least can be a steal, and sometimes they get in wrong as has happened a number of times and you are quids in.

PCP and lease you are at the mercy of how they value any minor scruffs and scrapes you pick up, this is where the biggest risk is - if they charge a lot for supposedly fixing some minor scuff that would have been ignored in a normal trade in discussion.

From what I know. The leasing company often use this special light which picks up marks not visible under normal light. Pretty hard not to get dinged really. But at least you have had a really nice car for 2-3 years.

[Dark Black]

Modern cars are pants.

Always pay cash, never more the a grand, on a decent, pre-2000, second hand car.

Drive into ground over several years.

Rinse and repeat...

HTH BIDI

[lilelvis2000]

I'm at that age where investing in a massively depreciating "asset" is unwise.

So I buy bangers for about £400 and drive 'em for two years than sell on for £300. Cheap to insure too.

[CoolCat]

Five ways to pay for your car


Pay cash

PROS The cheapest way to buy in the long term. No monthly repayments. Less paperwork to fill in.
CONS You must pay the full cost upfront. It could mean spending savings and losing interest. Cars depreciate – investing in an appreciating asset (such as your home) may be wiser if you can also afford to pay for a car on a monthly plan.
VERDICT The simplest and cheapest way of buying a new or used car, if you can afford it.

Bank loan

PROS Spreads the cost over time. You can shop around for the best loan. Often cheaper than dealer finance. You can still push for a ‘cash discount’.
CONS Cost of credit varies widely. Difficult with a poor credit rating. As with cash, you bear the brunt of any depreciation.
VERDICT A sensible option if you don’t have the means to buy a car in one go. Be sure to shop around, though.

Hire purchase (HP)

PROS You buy the car outright, in instalments. Easy to arrange via car dealer. You can return the car part way through the repayment plan.
CONS Can prove a lot more expensive than a bank loan. Servicing may cost extra – check the T&Cs. You don’t own the car until the final payment is made – the car can be repossessed if you don’t pay.
VERDICT A loan could save you £1,000s vs HP.

Personal contract purchase (PCP)

PROS Low monthly payments – you’re hiring the car for most of the deal, with the option to buy at the end. You can get a new car whenever it suits you – even every year. Competitive deals.
CONS Servicing unlikely to be included. Mileage limits will apply. ‘Balloon’ payment at the end.
VERDICT A tempting way to drive a new car every few years, but don’t forget the ‘balloon’.

Leasing

PROS Monthly payments are low. Servicing is often included. It’s easy to change cars, with no need to buy or sell.
CONS You don’t own the car, no matter how long the lease. A large upfront deposit is usually required. There may be a mileage limit – with penalties if you exceed it.
VERDICT The most convenient way to drive a new car, but unlikely to be the cheapest.

Not strictly accurate. For instance many lease companies will offer to sell you the car at the end of the lease for far less than you would be able to buy it from a dealer. If you want Lease then a broker like Lingscars.com is worth checking. Cars that are anticipated to depreciate least can be a steal, and sometimes they get in wrong as has happened a number of times and you are quids in.

PCP and lease you are at the mercy of how they value any minor scruffs and scrapes you pick up, this is where the biggest risk is - if they charge a lot for supposedly fixing some minor scuff that would have been ignored in a normal trade in discussion.

[FarmerPalmer]

I just bought a 1 year old, ex-manufacturer fleet car for cash depleting my war chest a bit, though I used a 0% card to give me some flex for a bit. I have the money in the warchest but don't want to use it all, just in case.

PCP can be a good idea if you want a new one, and as an example a Mercedes are cheaper than a Ford because of lack of depreciation.

If you want a new car look at car-wow, and see what deal you can get.

Also a note on PCP deals, my local Honda dealer (via car-wow) would give me ~2k off a new Civic, and Honda would give another 2K contribution if you take a PCP deal.
If you have cash, take the PCP deal, make 3 months payments and then ask to buy-out of the deal, you keep the 2K + 2K discounts and only have 3 months interest to pay, which is far less than the discount for doing it.

[Bluespider]

Apparently with a lot of the lease options, the small print for excess mileage, wear etc. makes it pretty expensive.

Actually, i've done the sums on the lease we have and even if i go 5k over my allowance (currently 10k per annum so 20k in total) the cos tof the excess mileage charge is waaaay less than the additional monthly payments would be for the extra mileage.
In reality, its a bit of a lottery at the end of the deal as its a 3rd party company that does the take back and even if the mileage is recorded its not necessarily charged back. They also take into account the condition of the car. if its perfect the will let the <slight> over mileage slide but if you hand back a shed they will likely nail yu for everything.
one thing is for sure... you don't get any money back for being under the allowed mileage.

[Smartie]

Balloons

Apparently with a lot of the lease options, the small print for excess mileage, wear etc. makes it pretty expensive.

Have you considered HP with a balloon payment? Cuts the monthly payments but you have to pay a big lump sum at the end. That's calculated to ensure your car is worth it at the end though so you shouldn't be out of pocket.

[Bluespider]

I've come to accept the old maxim: 'Never invest in a depreciating asset!'

Last two cars for the family have been personal leases on a 3+23 deal. Split new car every 2 years and a happy missus. Shop around, there are always deals on the go. the more flexible you are with the car you want the more likely you will get a cracking deal. You can get E class mercs for around 300 a month.


One thing I've been toying with, not sure if the numbers stack up:

get a hybrid on a lease via the business...
ltd pays for the 3+23 part (comes off as an operating cost, reduces company profit)
i pay BIK (dependent on make/model) can be as low as £100 (the mitsubishi outlander phev for example)

Anyone want to pitch in on if this is actually cost effective? will this become more attractive when the dividend tax kicks in as i'll effectively be able to take less of a dividend out as i'm not paying as much for a car.

[MarillionFan]

Five ways to pay for your car


Pay cash

PROS The cheapest way to buy in the long term. No monthly repayments. Less paperwork to fill in.
CONS You must pay the full cost upfront. It could mean spending savings and losing interest. Cars depreciate – investing in an appreciating asset (such as your home) may be wiser if you can also afford to pay for a car on a monthly plan.
VERDICT The simplest and cheapest way of buying a new or used car, if you can afford it.

Bank loan

PROS Spreads the cost over time. You can shop around for the best loan. Often cheaper than dealer finance. You can still push for a ‘cash discount’.
CONS Cost of credit varies widely. Difficult with a poor credit rating. As with cash, you bear the brunt of any depreciation.
VERDICT A sensible option if you don’t have the means to buy a car in one go. Be sure to shop around, though.

Hire purchase (HP)

PROS You buy the car outright, in instalments. Easy to arrange via car dealer. You can return the car part way through the repayment plan.
CONS Can prove a lot more expensive than a bank loan. Servicing may cost extra – check the T&Cs. You don’t own the car until the final payment is made – the car can be repossessed if you don’t pay.
VERDICT A loan could save you £1,000s vs HP.

Personal contract purchase (PCP)

PROS Low monthly payments – you’re hiring the car for most of the deal, with the option to buy at the end. You can get a new car whenever it suits you – even every year. Competitive deals.
CONS Servicing unlikely to be included. Mileage limits will apply. ‘Balloon’ payment at the end.
VERDICT A tempting way to drive a new car every few years, but don’t forget the ‘balloon’.

Leasing

PROS Monthly payments are low. Servicing is often included. It’s easy to change cars, with no need to buy or sell.
CONS You don’t own the car, no matter how long the lease. A large upfront deposit is usually required. There may be a mileage limit – with penalties if you exceed it.
VERDICT The most convenient way to drive a new car, but unlikely to be the cheapest.

[MarillionFan]

Does anyone Personal Lease a car then? That looks much cheaper than buying.

Car Leasing Deals & Contract Hire | Contract Hire And Leasing

[stek]

Dealership bus twerk goes past has about 10 second hand Range Rovers on display - 50-70k!! They're AMT ones whatever that means, perhaps that's just the dealer name but still..

I people buy them but why?