Best way to buy a new car

hazeleyes

Hi,
I'd be grateful for a little advice please.
I keep reading the phrase "Guaranteed Minimum Future Value" (GMFV) figure on car manufacturer/trader websites, when referring to their finance arrangements. When I bought my current car (10.5 years ago) there were simply finance agreements, i.e. HP agreements whereby you took out finance on any balance remaining after any deposit paid against the total purchase price of the car. Nowadays these GMFV -type arrangements seem very common and mean that I have to pay a hefty lump sum after about 3 years if I want to keep the car. The blurb says that that is a way of enabling me to pay a lower rate of interest on the finance.
If/when I buy a new car , I should be keeping it for the forseeable as I couldn't afford to exchange it for another new one in, say, 3 years. Basically, a new car would have to last me a good number of years (retired and on a restricted income).

Is there an alternative to these "GMFV-type schemes and which is the most cost-effective way of purchasing a new car these days? I don't have a mortgage and my credit card stands at just in excess of £600.00.

All advice/help would be gratefully received. Thanks.

OddballJamie

Just buy it with standard HPI, the GMFV deals work well to keep people in a new car every two-three years. Anything left over at the end is used towards the deposit for the next car and so on.

As you don't have a mortgage, would saving up for a new car not be an option? It's a lovely feeling buying one without finance and knowing it's yours from day one.

Strider590

OP, step back and look at these deals for what they are.......

They're a trap, nothing more, nothing less.

My friend got sucked into one on a new Audi, he'll NEVER be able to afford the lump sum at the end and this is exactly what they want, because it means his only choice is yet another car in 3 years time OR lose the car and all the money he will have paid.......

I won't get into the 90% of the UK are stupid argument (but they are), but in the case of cars and finance, people fall in love with the idea of owning a new car, to the point where all logic and reason go straight out of the window.

Foxy-Stoat_3

Bank loan or standard finance agreement would be the best way forward.

Agreed that the way dealers sell new cars to the average Joe 6-Pack or Eddy Punch-clock is to give them "cheap looking" finance deals. Its a cheap looking way of getting the normal folk into new cars.....your'll be just renting a new car

neilmcl

Strider590 wrote: »

OP, step back and look at these deals for what they are.......

They're a trap, nothing more, nothing less.

Move on. We've heard this argument from you countless times now. It was nonsense then and it's nonsense now.

hazeleyes

Thank you everyone for your input. I did think that the GMFV-type deals weren't for me, simply on the basis that I don't intend to be changing my car again in 3 years' time (chance would be a fine thing!!) but your comments have now convinced me that straightforward finance arrangements would be the best way forward.

Thanks again.

bodgerx

hazeleyes wrote: »

Hi,
Basically, a new car would have to last me a good number of years (retired and on a restricted income).

My advice, this being the case, I would avoid a new car completely. If your income is 'restricted' (I take this to mean 'modest') Then payments on a new car are the last thing you need. Pay cash for something older. Then your income will be whole lot less 'restricted'.

mgdavid

neilmcl wrote: »

Move on. We've heard this argument from you countless times now. It was nonsense then and it's nonsense now.

people differ from your opinion - learn to accept that :T

matt1987

Iv never considered doing these deals before, until my MIL did it on a Fiat 500. The difference is, she wants hassle free motoring and wants a new 500 every 3 years so it works well for her.

I have had 3 cars on finance, all on HP and have now been paid off. Suits me fine as now the cars are mine and i have a nice amount of spare income at the end of the month.

Something that is worth considering though, depending on what car you go for and the price, you could just re-finance the lumpsum at the end of the term? Most of the good deals are on these type of deals, and if your looking at a 500 or similar your balloon payment at the end shouldnt be much over £4.5k after 3 years of paying max £149pm with a £500 deposit?

If you really need a new car, thats Just an option!


Matt