Best wat to finance new car??

ipri

Hi...always just accept finance from company selling...I'm sure there are better/cheaper ways..any advice...whats the process? thanks ian

verityboo

Is is a new new car? There are lots of offers from manufacturers on new cars including low rate or 0% finance. They sometimes throw in extra's as well (VAT free price or free servicing). We are changing our car at the moment and been lots of research and with the manufacturers offers, new cars can work out cheaper than nearly new

It also depends on how long do expect to keep it and what car you are looking at, On cars with low depreciation a PCP could be considered

motorguy

ipri wrote: »

Hi...always just accept finance from company selling...I'm sure there are better/cheaper ways..any advice...whats the process? thanks ian

Firstly, negotiate the price of your new car, and the value of any trade in and when you are happy with that THEN discuss finance.

Use moneysupermarket.com or martins own subforum here to find the best deal for the amount you need and note down the monthly payments, the term and the APR rate. Quote that to your dealer and ask him to price match it. Make it clear that you go elsewhere for the finance if he cant and follow that through if he cant or doesnt come very close.

eschaton

Unless it is 0%, then the best way to finance a new car is with.....




CASH, works for me everytime.

motorguy

eschaton wrote: »

Unless it is 0%, then the best way to finance a new car is with.....




CASH, works for me everytime.

Really? You think locking up CASH in a depreciating asset is always a good idea?

There are quite often exceptions to that if you havent done your homework properly :-

(a) there is a manufacturer backed scheme that works out cheaper. For example BMW / Mercedes /VW often put cash incentives into their finance schemes. A couple of years ago Mercedes were putting £12000 into their PCP finance deal on a GL class Mercedes. That is money they simply would not discount off the car, so it was a great deal. Also, BMW at the minute are doing a PCP deal at the minute on a new 7 series whereby for something like £3000 down, you can finance the car for £550 a month. I would challenge you to buy the cash and sell it at three years old for less total outlay

(b) the cash can otherwise be working harder for you elsewhere. For example, we've just finished building a new house. It made more sense for me to take out a low rate hire purchase deal on my car and use cash whilst building the house, thus saving 17.5% on VAT that we would otherwise be paying on fittings if we did them further down the line

(c) there would also be a school of thought along the lines of "if it appreciates, buy it. If it depreciates lease it". There was a lease deal recently whereby you could get a Civic Type R for £220 a month. Again, a cash buy at £20,000 would probably work out costing you more. I would struggle to feel i had got a good deal if i spent £20K of my hard earned cash on a new car, only to get £10,000 of that back in three years time.

(d) you're absolutely sure you're not going to need the hard cash during your ownership of the car and are happy to lock it up in a depreciating asset.

(e) i am always wary of 0% finance deals. Usually because the manufacturers who normally do them are generally trying to support an otherwise weak car on the market, and of course somebody is paying the interest somewhere along the line....

(f) often dealers have preregistered / stock that doesnt qualify for 0% finance deals that can be bought for significantly less therefore outweighing the 0% finance deal. For example i bought a brand new passat bluemotion in Jan 10. It was from VW group stock but was unregistered and in the dealers showroom. I was able to get the car for £15650, including metallic paint, mats and flaps however it didnt qualify for the 0% finance because of the way it had been bought by the dealership. I could have bought similar car for £20500 that did qualify for 0% finance. It doesnt take much effort to work out which is the better deal....

ipri

some opposing ideas here...still a bit confused....want to buy new/nearly new...will keep for a long time..have car to put in as deposit...ian

motorguy

ipri wrote: »

some opposing ideas here...still a bit confused....want to buy new/nearly new...will keep for a long time..have car to put in as deposit...ian

I bought a passat new after heavy negotiation on the car.

I then agreed the finance through the dealer, having first checked out the best rates otherwise available.

Check out new cars via a main dealer, ex demonstrators, online brokers such as https://www.broadspeed.co.uk, and importers such as carcraft, then decide which best suits you. Often main dealers will price match, but they will need to be prompted to do so with actual hard facts and figures

If you plan on keeping the car a long time, i'd avoid lease or PCP (balloon payment) deals. Stick to a straight finance deal.

eschaton

pgilc1 wrote: »

Really? You think locking up CASH in a depreciating asset is always a good idea?

There are quite often exceptions to that if you havent done your homework properly :-

(a) there is a manufacturer backed scheme that works out cheaper. For example BMW / Mercedes /VW often put cash incentives into their finance schemes. A couple of years ago Mercedes were putting £12000 into their PCP finance deal on a GL class Mercedes. That is money they simply would not discount off the car, so it was a great deal. Also, BMW at the minute are doing a PCP deal at the minute on a new 7 series whereby for something like £3000 down, you can finance the car for £550 a month. I would challenge you to buy the cash and sell it at three years old for less total outlay

(b) the cash can otherwise be working harder for you elsewhere. For example, we've just finished building a new house. It made more sense for me to take out a low rate hire purchase deal on my car and use cash whilst building the house, thus saving 17.5% on VAT that we would otherwise be paying on fittings if we did them further down the line

(c) there would also be a school of thought along the lines of "if it appreciates, buy it. If it depreciates lease it". There was a lease deal recently whereby you could get a Civic Type R for £220 a month. Again, a cash buy at £20,000 would probably work out costing you more. I would struggle to feel i had got a good deal if i spent £20K of my hard earned cash on a new car, only to get £10,000 of that back in three years time.

(d) you're absolutely sure you're not going to need the hard cash during your ownership of the car and are happy to lock it up in a depreciating asset.

(e) i am always wary of 0% finance deals. Usually because the manufacturers who normally do them are generally trying to support an otherwise weak car on the market, and of course somebody is paying the interest somewhere along the line....

(f) often dealers have preregistered / stock that doesnt qualify for 0% finance deals that can be bought for significantly less therefore outweighing the 0% finance deal. For example i bought a brand new passat bluemotion in Jan 10. It was from VW group stock but was unregistered and in the dealers showroom. I was able to get the car for £15650, including metallic paint, mats and flaps however it didnt qualify for the 0% finance because of the way it had been bought by the dealership. I could have bought similar car for £20500 that did qualify for 0% finance. It doesnt take much effort to work out which is the better deal....

Without going over your numerous points, I don't see why it's not a good idea.

If you want to buy a car then unless you want to spend more on interest payments etc.. then unless the interest received on cash is lower than your loan rate then yes cash does make sense.

Depreciation has nothing to do with it - if you are going to buy a car then of course it is going to depreciate.

Paying cash more importantly also means that you can actually afford the car in the first place and are not borrowing.

motorguy

eschaton wrote: »

Without going over your numerous points, I don't see why it's not a good idea.

If you want to buy a car then unless you want to spend more on interest payments etc.. then unless the interest received on cash is lower than your loan rate then yes cash does make sense.

Depreciation has nothing to do with it - if you are going to buy a car then of course it is going to depreciate.

Paying cash more importantly also means that you can actually afford the car in the first place and are not borrowing.

i suggest you actually read my post. You may not actually be spending more by not using cash - thats my whole point.

Depreciation has everything to do with it. If you can finance / lease a car for LESS than otherwise it would depreciate then you save money - and your capital would remain risk free in the bank!

Oh, and was it not Paul Getty who said 'if it appreciates buy it, if it depreciates lease it' - and i suspect, maybe, just maybe he could afford it in the first place - worthwhile bearing that in mind before you whitewash everyone with the same brush.

It doesnt work every time, but it does pay not to be blinkered about how best to finance a car.

sheslookinhot

best way to fund a car purchase is Cash or adding to a low rate mortgage.

bigjl

Unless 0% interest then my dad always paid cash, some say that you are tying up the money in a depreciating asset, but isn't it better to not pay any interest on the depreciation aswell. I have owned hundreds of cars over the years, and unless it was for business use I wouldn't finance again. I am fed up paying too much for cars, even as a trader I was caught in the new shiny car on finance, these days I want to spend as little as possible.


As far as leasing, well you never actually own it, so how does that free up money or save money, it is never yours. And unless you are in business then leasing has nothing to offer the private user, unless they must have the latest model, but can't afford to purchase it with cash or HP.

The OP wants to keep for a long time, so leasing would also be a bad idea, if you are keeping it then get it paid for as quickly and cheaply as possible, if that means cash then fine, or zero or low interest then fine, but leasing is only good if you want to keep up with the neighbour and regard a car as a way to show your status rather than a tool to provide mobility for its usable lifetime.

I would also suggest that Paul Getty had tax reasons for leasing depreciating assets, I think that the OP wouldn't be asking on this forum if he had that kind of financial situation he or she would have a lawyer and accountant for that.