My opinion about buying a car on finance

Legacy_user

Given the plethora of questions about PCP and other deals, here's a video that perfectly sums up exactly what you're getting yourself into.

https://www.youtube.com/watch?v=8tk1BycWC9I

[Deleted User]

You need to change the title of your post to " My opinion about buying a car on finance".

MataNui

"Arrogant and egotistical". Yep. Would definitely agree with that bit of it.

Although....

PCP is a bit of a problem. Its very, very easy to use PCP to put you into a car for 2/3 years that when the deal is over you wont have a car and wont be able to afford to go back into a car of that level for many more years.

big deposit (you current car plus savings) - smaller affordable monthly payments (The hook) - big balloon that you will never be able to finance. Result is skint with no car when the deal ends.

T9090H

Modern society is full of " I must have now syndrome" far better to save and pay cash.

MataNui

Modern society is full of " I must have now syndrome" far better to save and pay cash.

I take it you rent then while you are still saving for your first house? Either that or you earn a 6 figure salary.

takman

MataNui wrote: »

I take it you rent then while you are still saving for your first house? Either that or you earn a 6 figure salary.

The difference is that when you are renting a house you are much better off getting a mortgage and paying that off because it's better to pay a mortgage and own it than to rent it.
House prices also increase over time (so is a good investment) and a house will easily last someone their entire life.

Compare that to a car which decreases in value and will eventually need to be replaced with another one. Just like a house its better to buy a car than rent one for your entire life which is basically what you are doing with Lease and PCP agreements.
Plus when you consider you can get a decent enough car for less than a years worth of payments for a car on credit. Then from a money saving point of view its much better to buy a car outright than to get one on credit.

davidwood123

takman wrote: »

The difference is that when you are renting a house you are much better off getting a mortgage and paying that off because it's better to pay a mortgage and own it than to rent it.
House prices also increase over time (so is a good investment) and a house will easily last someone their entire life.

Compare that to a car which decreases in value and will eventually need to be replaced with another one. Just like a house its better to buy a car than rent one for your entire life which is basically what you are doing with Lease and PCP agreements.
Plus when you consider you can get a decent enough car for less than a years worth of payments for a car on credit. Then from a money saving point of view its much better to buy a car outright than to get one on credit.

True, but alot of people forget about what they're actually paying for their house.
They buy them (an example) for £100k and spend £170k in mortgage payments yet still think it cost them the original £100k.

TrustyOven

MataNui wrote: »

I take it you rent then while you are still saving for your first house? Either that or you earn a 6 figure salary.

Not sure what your intent is. It reads as some sort of double-edged put-down.

Paying for a loan on a brand new or nearly-new car is not sensible. Best to save up and buy it new.
Or better still, save up and buy a cheaper car knowing that it will depreciate in value and is a liability (money leaves your pocket, rather than the reverse).

Not sure what your point is with the house. It has different dynamics involved compared to car loans.

Herzlos

TrustyOven wrote: »

Paying for a loan on a brand new or nearly-new car is not sensible. Best to save up and buy it new.

With interest rates that low you're probably better taking it on finance and putting the cash you would have spent on the purchase into some other investment for a while. Car purchases involve keeping a lot of capital tied up.

T9090H

Why would you pay additional interest for an asset that will immediately devalue when it is drive from the forecourt. let's rewind to 2008 and car sales were at an all time low, due to the recession. So finance deals were a way to kickstart the motor industry in the UK. Separately, if you have cash you have a greater bargaining tool to negotiate price as the dealer is guaranteed the whole cash amount upfront.

mcpitman

Herzlos wrote: »

With interest rates that low you're probably better taking it on finance and putting the cash you would have spent on the purchase into some other investment for a while. Car purchases involve keeping a lot of capital tied up.

And which investment vehicle would give a return large enough to cover depreciation loss and interest rates?