Car Loan

jhenan

Hi, just wanted some help regarding a car loan I am due to get (not too familiar with this, so please bear with me):
Car cost: 54 692
Deposit : 15 000
Amount to finance: 39 692

What would be the best way to pay this off, HP or PCP, deals so far:

Deal 1: PCP over 4 years 613.78 x 48 and balloon 16125
Fees: 295 + 149
TOTAL to PAY: 61 030.44

Deal 2: HP over 5 years 760 x 60
Fees: 149
TOTAL to PAY: 60 749

Deal 3: PCP over 3 years 685 x 36 and balloon 19925
Fees: 295 + 149
TOTAL to PAY: 60 029

They have quoted a flat rate and APR for interest and can make sense of the figures over using the flat rate. Now, I have asked for how much it would cost if I paid early in the first 2 deals, say in 3 years to see how much cheaper I would get it.

For Deal 1: Settlement in 3 years would be 26 750
I dont understand, total cost would be
(613.78 x 36) + 26750 + 15000(deposit) = 63 846.08 More expensive than if I did this over 4 year?!

For Deal 2: Settlement in 3 years would be 17 400, thus total cost:
(760 x 36) + 17400 + 15000(deposit) = 59 760 - not much cheaper than over 5 years

They said you can't work out the final repayment from just using flat rate as the interest incurred changes, more at the start as you borrow 40 000 and then less towards the end as you pay off capital in first 3 years. They said this is true for all loans now. Is this true?

So could I effectively reduce my interest charges by overpaying in first 2 years? I am thinking of paying in 3 years, but don't want a straight HP deal (4 years is around 950 a month) - rather have a lower monthly rate and then give myself the choice.

I don't want them to say after I pad big amounts in my first year that it does not matter, your interest charges are the same!! Any help would be greatly appreciated

Thank you

J

imoneyop

The best thing to do would by a car you can actually afford rather than pay 60 grand for a car that will be worth a fraction of that when you finish paying for it.

longtermplanner

I agree with imoneyop - buy a perfectly good car for £15,000 so you don't need to borrow at all!

jhenan

Hi,

Thank you for your comment, I appreciate that will be the case in the future, but I am not looking to sell the car later, will want to keep it.

Its value is around the 60000 mark but with discounts I got it down to 54962. I would pay the 60000 if I could now, but can't so am going down the finance route.

I know its not a sensible life choice but I am young and confident I can repay this amount. I just want to make sure I make a sensible decision about the finance I choose - do you have any suggestions on the figures I quoted?

Thanks

J

lalman

What can is it jhenan?

Just out of curiosity...

jhenan

Porsche 911!

bargainbetty

Unless you are buying a significantly top spec and unusual one, it's still going to depreciate massively. It's a toy car for a young person and you're going to pay for the nose for it for years to come.

Buy an old one for £15k and have some fun thrashing it. Then figure out where your life is. Why not save up that much towards a mortgage instead?

Clive_Woody

jhenan wrote: »

Porsche 911!

A mate of mine got one of those, it wasn't long before he regretted buying it from new. The fuel, insurance, mpg, tax, servicing etc were huge on top of the repayments. Lovely car but you will never get to drive it to it's full potential in the UK and getting a few points on your license will only add to the insurance pain.

Get a second hand Boxter and play in that, not quite as fast but a lot cheaper.

poppasmurf_bewdley

And don't forget to buy a hands free phone kit for £20 first, as most Porsche owners I've seen evidently can't afford one.

forgotmyname

If they are selling it to you for £55k then its not worth £60k

Its worth £55k - their profits which could be quite sizeable.

If you decide to sell it next month your probably looking at £10k less. So its going to be worth £45k.

When a big service is due your going to have to dig deep. It wont be cheap.

Its one of those cars you buy knowing its going to lose a fortune. But you want one anyway. Buy a house instead?

heartbreak_star

I'm waiting for the post asking for the best way to sell a depreciated luxury car that still has finance outstanding.

But then, I'm a cynic.

HBS x