Car purchase - use loan or savings?

Nasqueron

robatwork wrote: »

It sounds like you've convinced yourself, and you're the only person who needs convincing.

Personally I wouldn't go near PCP, but something like 75% of all new car sales are via that route now. Are you sure you want a car in 4/5 years from the same manufacturer?

What on earth are you on about? Of course I don't want a new car, I have a car already. Come July time I will pay the balloon and no longer owe a penny. I went on PCP as it was 0% and I earned over £1000 in interest from not paying up front for the car and having the money in my account. What is there to not understand?

What I am pointing out is that the guy I was quoting keeps referring to PCP as a trap as if there were loads of hidden pitfalls which there aren't. If you sign up for PCP and don't realise that you need to pay the balloon at the end or keep on a cycle of new PCP and never owning a car then more fool you for not reading what you were signing up for. It's like the PPI debacle all over again, people signing up for stuff and then saying they weren't told what it was and demanding money back

pjcox2005

I'd go as follows:


Check if there is any discount for buying with finance as normally is.


If so and you can subsequently pay finance off early with no penalty then do that and use savings to clear.


I'd ensure you have savings still available for emergency though and not taking yourself to the wire.


If not paying off with savings ensure the interest rate is below the potential savings rate so you're not losing out.

MrMrMr

pjcox2005 wrote: »

I'd go as follows:


Check if there is any discount for buying with finance as normally is.


If so and you can subsequently pay finance off early with no penalty then do that and use savings to clear.


I'd ensure you have savings still available for emergency though and not taking yourself to the wire.


If not paying off with savings ensure the interest rate is below the potential savings rate so you're not losing out.

Thanks for getting off the argument of PCP! Different thread people. I understand what PCP is, as I would hope most.

Think it's just the scary thought of using a big lot of my savings to pay for the car outright, normally always bought the car ongoing.

I'd still have some savings, would take a long time to build up again.

So if a discount off the car if use their finance you mean take it out but then pay it straight off? Good idea didn't think of that. So even if it's say 10% APR as long as can settle and the fees aren't too bad (less than the discount given) then that's better way?

I just thought maybe keeping it on finance or a loan you get a bit better protection, but if bought outright you'd struggle?

Still think I'll pay something on a credit card like above to get that protection, maybe a deposit or something.

Don't think there is any rate of savings near an interest rate for a loan though.

Thanks

Cornucopia

MrMrMr wrote: »

Thanks for getting off the argument of PCP! Different thread people. I understand what PCP is, as I would hope most.

I think some posters have had bad PCP experiences. I certainly don't see PCPs as a "trap", and I don't recall hearing any mainstream financial commentators saying it, either.

The bottom line is that the numbers are what the numbers are (and with a PCP they are all laid out for you at the outset). There is no magic (white or black) about PCPs. They simply embed some of the financial downsides of buying a (new) car and put them into a necessarily inflexible structure.

Think it's just the scary thought of using a big lot of my savings to pay for the car outright, normally always bought the car ongoing.

Yes, there is a different way to look at the issue, which is that the car is a depreciating asset (and then some), and consequently you should avoid paying out chunks of capital for it, but fund it (and its depreciation) from income.

Or you can crunch the numbers.

So if a discount off the car if use their finance you mean take it out but then pay it straight off?

14 day cooling off period.

I just thought maybe keeping it on finance or a loan you get a bit better protection, but if bought outright you'd struggle?

Protection? The car's warranty will be unaffected by the purchase method (unless an extended warranty forms part of the Dealer incentives).

If you mean financial protection for the payments, redundancy, etc. then most of that is on optional insurance products these days.