Car Buying Cost Cutting System Article Discussion Area

lopez123

I am looking to buy a new car and have found some very good quotes from the above website company.

Does anyone have any experiences of them. Is just that their quotes seem to good to be true!!!

Many thanks

panda_magic

I know this thread is about purchasing but has anyone looked at leasing options.

We have two cars and we lease one and have bought the other on a 5 year loan ,and I still can't decide which is the best option.

With leasing you effectively pay someone else for owning a depreciating asset. the leasing company obviously take some profit but often these companies have higher purchasing power and can therefore deliver a monthly cost that is cheaper than paying HP etc. The market is very competitive and shopping around can make this method of funding your driving very attractive.

On my wifes car the difference meant we paid about £3500 less over 3 years on a corsa. This was about the same as the guaranteed resale value offered by a HP deal. OK maybe we could have got more if selling privately or exchanging but its worth considering especially if you like brand new cars cash flow is more important to you, and you don't like haggling.

Pros of Leasing:
Car tax is normally included
Cheaper monthly costs compared to HP or loans
True cost of motoring is easy to understand
You never own the car and so at the end of the lease term the car is given back - no haggling for the best price! Leaving you free to get the next deal.

Pros of Buying:
If you have a large deposit or can buy cash I'm sure its cheaper in the long run (provided you are good at haggling a good price in the first place)
If you don't mind keeping cars for a longer time or buy newly new you can probably save too.

All in all I think Private lease hire is worth a look.

plumbs_2

Did you have any response to your question and did you buy a car online?

AdrianHi

Lot of open questions on this thread, some I can give my view on.

"Settling car loans early, why is settlement figure so high?"
The answer to this is many car finance deals, like PCP's, are front loaded with interest payments. It means you pay mostly interest charges off early on and only reduce the capital owed back towards the end. This kind of finance is OK if the rate is good and your are absolutely sure you will not want to settle early. Most car dealer flat rate finance works like this, get them to tell you in writing that this is not the case if unsure. Balance Lease Purchase is similar to PCP but capital and interest is paid equally each month so there is little penalty for settling early and there is a balloon payment at the end. Lombard Direct were doing this type of deal at 6.9% recently, may be they still do. PCP or balanced lease purchase is wonderful if you have an outstanding mortgage greater than the purchase price of the car and the loan rate for the car is lower than your mortage rate. Reason is, any cash you have sunk into the depreciating asset of a car, is cash not paying off your mortgage so effectively costing you interest charges at your mortgage rate. So any finance you can find for any part of the cars purchase price which is lower than your mortage interest rate is worth having. This is also why Leasing can be cheaper too, no cash tied up in the car, so you can reduce your mortgage by that amount and save on mortage interest charges. Get the advantage of the leasing car company buying power and your are winning, as with the Corsa example mentioned earlier.

If you do put your own money into a car the number 1 thing to look at for cars inside your budget is depreciation. What will it be worth in 3 / 4 / 5 / 6 years time? The difference between purchase price and eventual selling price is more important than the purchase price of the car so long as payments are in budget for you. I would sooner take on a VW Golf for £16K than a Ford Focus for say £15K because in the long run I will have paid out a lot more on the Focus, the Golf holds its value better.

The question of where to get the money from to pay for the car is really down to finding a bench mark interest rate to beat. If you have a mortgage at 5.5% flat rate (about 11% APR) this is the benchmark, any finance you can find lower than that rate is worth having, even if you do pay a 2% fee for putting it on a 0% credit card, so long as the 0% period is 6 or 7 months or more in this example you are still winning.
If you are mortgage/debt free the benchmark rate to beat would be whatever net savings rate you would otherwise get for the cash you are considering putting into a car.

So to decide which way to go for financing your chosen car compare:
Monthly lease cost
vs.
Average monthly depreciation over period you plan to have car + Monthly finance charges (regardless of whether it is PCP, HP, bank loan or whatever) + Lost interest on deposit paid or mortgage interest rate charges on this amount if you have a mortgage
The actual loan repayments you make are not relevant (so long as you can make the payments) because we need to know difference between purchase price, sale price and cost of finance charges / lost interest on savings to know what the car actually cost you in the long run.
When I do these calculations for myself I include every outgoing for a car, tyres, MOT, servicing and this sometimes gives surprising results. If you buy a desirable car that hold's it's value very well the lowest cost way of using a car like that can be to always have one still under warranty and less than MOT age. This is because year 4 depreciation may not be much less than the average of the first nearly 3 years (assume you buy nearly new, not brand new) and the other running costs have gone up (MOT, breakdown cover, extended warranty, later more expensive services, tyres not new to start with). The exception to this would be if you are prepared to have a car like this at 6/7/8 years old+ when depreciation has slowed right down. If I have a car at this age, it's getting worn out and needs fixing too often.

Break a car down to long term monthly average costs and you find out what fit's inside your income level long term (is that car you can pay the purchase price for today going to bleed you dry as it depreciates faster than you can save up for it's replacement?).

hugopires

Hi everyone,

I have been looking for a new Lexus RX 400h, the Listers Group seem to have a few good deals on this model.
As anyone dealt with Listers before? Would you recommend?

Thanks.

rozzz

have saved cash to buy car, been looking online and best deal is £6225 for new on road...as paying cash can i get more off and if so how?

AdrianHi

rozzz wrote: »

have saved cash to buy car, been looking online and best deal is £6225 for new on road...as paying cash can i get more off and if so how?

There may be a cheaper way to do it (cheaper even than juggling 0% credit periods on credit cards) , but it depends entirely on what the car is you are buying?
What is it? Vauxhall Corsa? Hyundai i10? ???

toffeeblock

I'm no legal expert, but I understand that it is against the law for a dealer to offer a different price for a cash or financed sale. A friend of mine negotiated a great deal based on a finance agreement and at the last minute (prior to signing) changed his mind and said he'd pay cash instead.

The dealer wanted to renegotiate the price, but after threatening him with a call trading standards the salesman chatted with his manager and the dealership agreed they had to honour the initial offer.
:beer:

I never buy new myself to avoid the depreciation, but this tactic might be worth trying for those that do.

peter_cox

Depending on which manufacturers car you buy new determines what packages are available on new cars.As a ford,nissan and citreon dealer we work on back end profit from the makers and sell out retail at cost.In reply to the handing the car back if you have had the car 4 years it will be well past volantry termination time now subject to the cars condition.The person who owes welcome the money should look to see if paymnt protection has been included in the payment as this is done as a seperate part to the agreement by welcome finance!

peter_cox

look at youre credit agreement it will have halves and thirds payment figures on.work out how much you have already paid and add any deposit paid and then look at the half payment figure to see where you are if you are just off you can pay the difference and hand the car back subject to condition.make sure its hp if its a personal loan with a car finance company its better for you let me know either way for more info!