How to pay the balloon payment at the end of car finance PCP

DrEskimo

quickoldfart said:

DrEskimo said:

£10,000 repaid at £240/month would take 41 months to repay, assuming you are charged no interest. 

In the nicest possible way, but do you think buying a £10k car is affordable? If it wasn't a car you had on PCP, would you be looking at buying a £10k car right now? I'm going to guess it will be out of warranty soon, if not already? What happen if it requires repairs during the next 41months? Would that require taken on yet more credit?

That is very presumptuous of you to assume my circumstances, I am more than comfortable enough to make any repayments or repairs should they happen. it just fits my circumstances to not invest in another brand new car right now, plus I really like this car.
This forum unless I am mistaken is about saving money, that is all I was enquiring about.

If you read my comment again, I didn't presume anything. I asked questions to get further clarity.

I always recommend people avoid credit where possible, particularly to buy very high value items that are known to depreciate heavily. My advice is to never borrow more than 50% of the total value, and to not repay this back for more than 3yrs. This ensures you are not in a position where the car is worth less than the finance agreement tied to it. Should you find yourself in a situation where you can no longer service the debt (possibly through no fault of your own), you are no left with finding additional funds to settle the agreement. 

Based on your post, you are borrowing 100% of the value and looking to spread that cost over at least 41months. On that basis alone, it does suggest you may be overstretching yourself. Hence why I enquired further by asking more questions.  

I'm sure you like the car, and I understand why you don't want to tie yourself into a new car, but those aren't the only options.

foxy-stoat

quickoldfart said:

foxy-stoat said:

Have you applied for a £10,000 loan or do you have enough credit on a money transfer card?

Neither, I have a couple of months before the end of the original agreement, I am just after advice on my options.

If you want to save money, then apply for both and see what rate they offer you for the loan, and if you can get enough credit for a MT then BT after the introductory rate ends.

redux

DrEskimo said:

£10,000 repaid at £240/month would take 41 months to repay, assuming you are charged no interest. 

In the nicest possible way, but do you think buying a £10k car is affordable? If it wasn't a car you had on PCP, would you be looking at buying a £10k car right now? I'm going to guess it will be out of warranty soon, if not already? What happen if it requires repairs during the next 41months? Would that require taken on yet more credit?

Warranty expiring? The car is said to have done 25,000 miles, so it isn't about to start falling apart, though obviously some routine servicing will be happening, same as any car.

In my opinion, though of course I'm a different person, this is a better deal than buying from new, now a decent chunk of depreciation is out of the way, even if some borrowing is needed to go towards it. I might be in for a bit cheaper though.

quickoldfart

Ok perhaps I should clarify things, I didn't wish to over complicate my initial question.
I will probably be keeping the car for another 6-12 months, then I will sell it.
We have semi retirement travel plans, when they happen the car will no longer be needed.
This will be funded by the sale of our other property, I had hoped the flat would have sold by now, and I would simply have paid off the balloon payment before the agreement ended, but sadly it hasn't yet sold. Until it does I still need a car, and I certainly do not wish to go through the hassle of selling this one and buying another just for 6-12 months

I am not some youngster who has got himself into debt, because he wanted a flashy 'Motah!'
I run an architectural practice and this is my company vehicle, had I not planned on packing it in and sailing into the sunset, I would simply have replaced it.

DrEskimo

redux said:

DrEskimo said:

£10,000 repaid at £240/month would take 41 months to repay, assuming you are charged no interest. 

In the nicest possible way, but do you think buying a £10k car is affordable? If it wasn't a car you had on PCP, would you be looking at buying a £10k car right now? I'm going to guess it will be out of warranty soon, if not already? What happen if it requires repairs during the next 41months? Would that require taken on yet more credit?

Warranty expiring? The car is said to have done 25,000 miles, so it isn't about to start falling apart, though obviously some routine servicing will be happening, same as any car.

In my opinion, though of course I'm a different person, this is a better deal than buying from new, now a decent chunk of depreciation is out of the way, even if some borrowing is needed to go towards it. I might be in for a bit cheaper though.

I agree, it's certainly unlikely, but of course can still happen. My comment was merely pointing out the possiblity that things can and do happen. Being prepared for the worse is never a bad strategy. After all, no one plans to get into financial difficulty....

I was simply pointing out that a false dichotomy was being presented. That the OP was either facing getting into a nother new car deal, or had to buy this car. There are plenty of other options.

quickoldfart said:

Ok perhaps I should clarify things, I didn't wish to over complicate my initial question.
I will probably be keeping the car for another 6-12 months, then I will sell it.
We have semi retirement travel plans, when they happen the car will no longer be needed.
This will be funded by the sale of our other property, I had hoped the flat would have sold by now, and I would simply have paid off the balloon payment before the agreement ended, but sadly it hasn't yet sold. Until it does I still need a car, and I certainly do not wish to go through the hassle of selling this one and buying another just for 6-12 months

I am not some youngster who has got himself into debt, because he wanted a flashy 'Motah!'
I run an architectural practice and this is my company vehicle, had I not planned on packing it in and sailing into the sunset, I would simply have replaced it.

I would never assume anything of anyone. Simply present questions to motivate people to determine if this is the decision they still think is best. I only wanted to present an alternative option, which you were very free to ignore! 

I think a loan is probably your best and cheapest option to purchase the car, assuming you can get accepted for a cheap rate. Just be wary of early repayment charges. 

On_my_way

The point is though that if you have to get another loan on the car then you can't really afford it - as you have already had a loan to pay for it in a way already.

quickoldfart

On_my_way said:

The point is though that if you have to get another loan on the car then you can't really afford it - as you have already had a loan to pay for it in a way already.

Not Really! Car PCP agreements are more akin to hiring a car rather than a loan for the whole amount. If at the end of the contract period there is residual value in the vehicle that is a bonus.
I have happily paid my £240 a month to drive around in a nice new car, and it wouldn't bother me in the slightest if I simply gave it back. But as I have said several times I still need a car for the time being
All I am doing is essentially buying a 4 year old car on finance, and asked for advice on that.
I was not asking for a life coach or for people to make incorrect assumptions on my ability to pay for the bloomin thing

redux

On_my_way said:

The point is though that if you have to get another loan on the car then you can't really afford it - as you have already had a loan to pay for it in a way already.

Some businesses see fit to lease rather than buy property or equipment, including cars, the OP mentions business use, and in some ways PCP is like a type of lease.

Given latter comments by the OP,  it doesn't sound like struggle to me. 

If the car is arguably worth £13,000 now, it might make £10,000 in a private sale in a year's time.

Interest on a say 30 month loan could be £250 in the first year.

Taking time off work to arrange sale, consider cheaper alternatives, maybe see a couple of them, arrange collection, might use working day time that could otherwise have been charged out to clients at maybe £500 or so.

Looks like a pretty simple decision to me.

On_my_way

Yes, but you have got to the end of the PCP agreement so the car has already lost a lot of value - it does not seem like a great plan to borrow to pay it off especially if you don't intend to keep it long term.

It is, of course, entirely your decision to make - but looking from this angle it appears to be a massive waste of money.

redux

On_my_way said:

Yes, but you have got to the end of the PCP agreement so the car has already lost a lot of value - it does not seem like a great plan to borrow to pay it off especially if you don't intend to keep it long term.

It is, of course, entirely your decision to make - but looking from this angle it appears to be a massive waste of money.

You're partly discussing previous depreciation, as if saying you wouldn't start from here, but it's already history.

Personally I wouldn't have done the previous leg of this path either, and I might choose a car in the £4000 to £7000 range with hopes to use it for years, but I think it can make sense for the OP's circumstances and viewpoint. I'm assuming a simple loan is more flexible than a new follow-on PCP; I don't know much about the latter with respect to early closure