£40K purchase - sanity check!

nc11

I'm looking for a nice exec to serve me during the next 12 months (at least). A new contract with a long motorway journey is the main reason. I'll be doing up to 18k miles.

What I'm not sure of is how to structure a deal so I'm not in negative equity should I lease, and then after a year (if contract is not extended) have to get rid of the car.

Have got the following dealer offer at present:-

OTR price - £40,000
deposit - £2500
dealer contribution - £5500
Finance - £32000 @ 24x£620pm with a £20000 baloon

Now the way I look at this deal is that I'll be paying £10000 (2500 deposit plus 7500 (620x12)) after 12 months.

Based on parkers, the car will be worth around £30000 sold privately (based on a 65 plate guide price) after a year, so I'll have to pay 24500 to settle the finance, and still have 5500 'equity' after selling the car. So effectively I've "hired" the car for £4500 through 12 months (or 375 pm).

Am I missing something? looks like a great deal on paper! Obviously there's no guarantee on future value, so is parkers price a good indicative guide to use?

Would appreciate your input! as they say - if it's too good to be true, it probably isn't...;)

Cheers,

NC11

angrycrow

I’m not an expert on car finance or leasing as I always buy older cars outright and self-maintain them resulting in annual running costs of around £1000 including depreciation, repairs and servicing but excluding fuel. However this does not work for all as some peoples job requires them to show a certain image.

I cant make your figures work. If you put down the £2500 deposit and the dealer puts in £5500 with the payments stated your total cost is £37380 after dealer contribution. If you pay 12 months at £620 you still owe £27440. You state you could sell the car privately for £30000. It is extremely unlikely you could sell a 1 year old car privately so most likely it would have to go to trade. Not knowing what the car is it is difficult to predict the trade price but probably £1000 to £1500 less than private sale price, say £28500 leaving you just over £1000 back from the sale of the car. Total cost over the 12 months £8880 or £740 a month.

loskie

just take out a 12 to 18m lease. look at the leasing thread on pistonheads. your costs sound ridiculous.
18000m is not a lot per annum you could possibly lease something decent for about £6k

http://www.whatcar.com/car-leasing/car-leasing-guide/

AdrianC

This looks familiar from another place...
http://www.pistonheads.com/gassing/topic.asp?h=0&t=1620452

nc11

Yes - I've started the same thread in PH... Looks like I did the right thing to question the logic which seemed good 'on paper'!

Leasing does appear to be the way to go and I'll pursue it tomorrow.

Cheers,

NC

neilmcl

nc11 wrote: »

I'm looking for a nice exec to serve me during the next 12 months (at least). A new contract with a long motorway journey is the main reason. I'll be doing up to 18k miles.

What I'm not sure of is how to structure a deal so I'm not in negative equity should I lease, and then after a year (if contract is not extended) have to get rid of the car.

Except you're not looking at a lease, you're looking at a PCP deal. If you're only want a car for 12 months then go ahead and take out a proper lease (personal contract hire), it'll likely be cheaper in the long run.