What o you think of this deal? New Ford Fiesta £65 per mth 4.9%

kitchpoo

Premier wrote: »

You'll be surprised
Not everyone buys their car on the drip.

Just because it's depreciating asset, the owner can still have equity in it.

I do the opposite, buy right, keep for 4 months and change, I've had 10,000 miles 4 months motoring (excluding fuel but including servicing, parts, Tax, car washes etc)

I'm on the second car in this method, so my £2000 original equity is now £2600.

The key is buying right, looking in the local papers for those who dont know their car's value etc.

taxiphil

Ling_Valentine wrote: »

Yes, perhaps, but usually that "equity" is really masking a loan or some other finance/borrowing that they are slowly paying off. Most people are in neg equity (just as bad).

Anyway, why on earth would anyone want real cash "equity" in an asset that day by day loses value? You could equally lose it on the lottery - at least there you stand a very small chance of winning. No one wins with cars. That's why they market them as lifestyle items, not consumer goods. To trick you to rationalise the loss.

I might not be an accountant, but you may as well have a pile of cash and burn a £10 note every day, because that's what's happening to the equity in a car... larger cars and 4x4 owners can burn £20 notes.

You never know when you might need your cash liquid. Converting it to metal and saving it in a heap of steel which currently are about the hardest things in the world to liquidise at a good price, is monetary madness. Buy gold, not pressed steel. For goodness sake, under the mattress is better than that!

Why do people get so emotional about cars? You would never talk about having "equity" in a cooker, or a fridge or a TV. Car is a (dangerous) transport tool, a consumer good - so spend as little as possible, taking the smallest risk, balancing against the greatest safety. And don't pour liquid cash into it. There is no tangible benefit to say you "own" it instead of "rent" it. It is a habit to own things. Owning things which lose value (unless you can write them down and offset it tax-wise) is just waste.

I have to disagree with all that I'm afraid Ling. You're tangling up two separate issues: 1. depreciation; 2. interest/lease payments.

True, there is no escaping depreciation, however you fund your car. But at least if you own it, you're not paying interest to the finance company or lining the pockets of the lease company on top of the depreciation.

The car still depreciates if it's leased, and the lease company passes on 100% of this depreciation cost to the customer plus their own profit margin on top.

So there most certainly is a benefit to owning it, and the right advice for Money Savers would be to save up in advance for your car, buy it outright, then use the next few years to save up enough to change it for a newer one in the future.

Take the example you gave earlier in the thread:

Ling_Valentine wrote: »

My 1.4TDCi Style (aircon) will cost you £2k a year in payments

So after 5 years I've given you £10k and then have to hand the car back to you. However if I'd bought the same car for £10k, it would last me about 10-12 years. (Alternatively if I chose to sell it after the first 5 years I'd have a hefty deposit towards my next car, compared to a deposit of ZERO if I'd been leasing for those 5 years).

However you dress it up, the simple fact is that leasing or borrowing costs more in the long run.

Ling_Valentine wrote: »

All these car dealers with massive premises, staff and overheads... you pay for their lifestyles! They laugh (more of a groan at the moment), when you buy a car. Remarkably, they complain I distress new car prices - doesn't anyone think that if the car dealers are upset with me, I may be onto something ???

Hey, come on, let's not be hypocritical here. You make a few quid out of your leasing company too don't you? Essentially there's no difference between your leasing company and a car dealership that flogs finance packages. You're both making a profit out of putting people on the road.

I'm not entirely comfortable about you using a Money Saving website to promote the idea that people should fund their cars in this manner, given the vested interest you have in it.

Nothing personal. By the way I thought you were great on Dragons' Den

Ling_Valentine

Goldspanners,

Yes, i agree. However, I am just trying to save people money on new cars and undercut nearly new cars. That's what I do. Some work, some don't. May as well just tell the truth. The ones that work, offer a brilliant deal.

Ling_Valentine

anewman wrote: »

There are benefits to ownership for some people. For example, changing the stereo or those who are into modifying cars and remapping etc that you just could not do with a rented car. I remember reading some story on the internet of someone who was buying a car under finance ending up in loads of trouble because he had modified the car (and technically it was not his to modify) Admittedly these are things most people are not interested in doing though.

A tiny tiny minority of people mod new cars.

Ling_Valentine

kitchpoo wrote: »

I do the opposite, buy right, keep for 4 months and change, I've had 10,000 miles 4 months motoring (excluding fuel but including servicing, parts, Tax, car washes etc)

I'm on the second car in this method, so my £2000 original equity is now £2600.

The key is buying right, looking in the local papers for those who dont know their car's value etc.

Kitchpoo

Always someone who is better than every motor dealer in the UK. This time, it's you. Cars as an investment tool, maybe Martin will recommend that?

Ling_Valentine

taxiphil wrote: »

and the right advice for Money Savers would be to save up in advance for your car, buy it outright, then use the next few years to save up enough to change it for a newer one in the future.

Really? Utter tosh. Less than 0.5% of people buy a car this way and to have £20k of valuable cash savings tied up in a car is completely mental. Those savings are at the mercy of the markets. Good job you didn't buy a 4x4 1 year ago!

----

Thanks for nice comments.

I declare my interest and simply try to open people's minds.

goldspanners

leasing might work out well for a lot of people, folk that just want a nice car to either keep up with the jones' next door or as a reliable tool to get them from a to b.
but a lot of people enjoy the pride in owning thier car,whether it be worth £500 or £50,000.
like your name ling, theres a certain romance in owning your own car.

Contessa

I've been considering changing my high mileage diesel car but decided that, as long as she's still running well, it's not worth it. What does put me off about leasing, or PCP etc deal, is concern I would be penalised if the car isn't in pristine condition on return. At the moment I don't really worry about the odd body work scrape, chip etc.

Hintza

Contessa wrote: »

......is concern I would be penalised if the car isn't in pristine condition on return. At the moment I don't really worry about the odd body work scrape, chip etc.

But you are penalised when you come to sell it, so its really six and half a dozen. If I have a ding I just get it repaired.

Lemonade_Pockets

If a asset depreciates rent it. If appreciates buy it.

The leasing works because the lease companies buy the cars with a great deal more discount than a private buyer can, so the depreciation gap is a lot smaller. So even when they add their margin on the monthly payment is still probably less than the monthly depreciation if you bought new with cash. Most lease companies make their serious cash selling maintance agreements.

PCP's work on the same basis. When a dealer sells a car on a pcp most of the time they will get a bonus they usually pass most or all of this onto the customer. The manufacturer will also subsidise the finance to encourage u to buy new hence u end up with rates like 0% or 4.9% in this case.

The certain romance in owning your own car is daft especially if your talking about a new one. Even the very wealthy out their don't buy things like cars outright. Thats because they know that they can stick their cash into something that will give them a lot better return. Its called the oppurtunity cost.