Is HP only available for new cars?

MinuteNoodles

MalMonroe said:

Obviously, 0% interest for the whole two years is great and that's what drew me in to that deal.

At least at £55 a month hopefully we won't be seeing you in a couple of years when you're asking how to finance a new car because your deal is coming to an end and you're skint as hopefully you'll have been putting away a couple of hundred quid a month to finance it's replacement or buy it outright.

DrEskimo

MalMonroe said:

DrEskimo said:

You can get HP or PCP (which is just a variant of HP) for used, but the rates are hardly competitive.

If you have a good credit history and income, then you can get much cheaper unsecured loans.

Whilst not meaning to pry, but if you don't have savings then presumably you haven't had surplus funds in your budget to set money aside? Therefore where is the money to pay back a loan suddenly going to come from....?

Actually, rates are fabulous. I've got a car on PCH and my rates are 0% interest for two years. Can't really get better than that. 

 Also, please don't pry. Not your business really.

This is a very good point by you and @Grumpy_chap. I have heard of low interest deals on used as well, so that was an oversight on my part.

I would be a bit skeptical though and say do your research and make sure the price of the car is good, before just going for a dealer that offers 0% finance deals. In my experience when looking for my last car there was a dealer that offered this, but they typically had the car advertised for a good £1-2k over other dealers/garages. Whilst you may not pay for it in interest, you may pay for it in the price of the car itself.

It's also worth clarifying that you have described a PCP, not PCH. PCH is leasing and does not have a final payment. Also worth noting that having the option to hand back is no different to just trading the car in after 2yrs if you bought for cash. It's just you have agreed with the finance house what the minimum trade in price is in advance. So the only way it is an advantage is if the final payment is a decent value. On used, this is usually at the pessimistic side (the finance house aren't daft...) so in reality isn't that much of an advantage at all.

Also my question wasn't to pry, but to raise an important point about financial risk. I generally advice people to spend a few months saving the monthly loan payment before taking it out, just to be sure that it is manageable. If it is, then you just have a greater amount saved towards the car. If you can't, then you can be thankful you don't have a debt you can't service on a car that's now worth less than the debt you owe.

Grumpy_chap

DrEskimo said:

MalMonroe said:

Actually, rates are fabulous. I've got a car on PCH and my rates are 0% interest for two years. Can't really get better than that. 

 Also, please don't pry. Not your business really.

This is a very good point by you and @Grumpy_chap. I have heard of low interest deals on used as well, so that was an oversight on my part.

I would be a bit skeptical though and say do your research and make sure the price of the car is good, before just going for a dealer that offers 0% finance deals. In my experience when looking for my last car there was a dealer that offered this, but they typically had the car advertised for a good £1-2k over other dealers/garages. Whilst you may not pay for it in interest, you may pay for it in the price of the car itself.

I totally agree with your skepticism - on a new car it is difficult to tell best deal cash versus best deal finance, though current "system" seems to be making the finance preferable.  At least there are good online services that allow true price for new car to be established so it makes it harder to hide interest charges.

On used cars, the opportunity for inflating the price to cover zero percent finance is more in the favour of the dealer.

The offer I was sent was for 'nearly new' (pre-reg or ex-management cars) so that at least made it easier to compare what the price of the car should be before taking the finance offer and incentives.  As I am not in the market for a car I did not look into the detail.

I really feel the current "finance - finance - finance" set up is perverse and only put in place to trap us all in finance we cannot afford until we fail.  Obviously, even in times of low interest rates, zero percent finance has to be covered in the price somewhere and it would all be so much easier to just buy the car (new or second hand) as cheapest price without all the faff.  The days of "cash is king" seem to have gone, though.  Possibly because the car dealer does not suffer when a purchaser defaults, almost like a "victimless" crime in their eyes.

DrEskimo

Grumpy_chap said:

DrEskimo said:

MalMonroe said:

Actually, rates are fabulous. I've got a car on PCH and my rates are 0% interest for two years. Can't really get better than that. 

 Also, please don't pry. Not your business really.

This is a very good point by you and @Grumpy_chap. I have heard of low interest deals on used as well, so that was an oversight on my part.

I would be a bit skeptical though and say do your research and make sure the price of the car is good, before just going for a dealer that offers 0% finance deals. In my experience when looking for my last car there was a dealer that offered this, but they typically had the car advertised for a good £1-2k over other dealers/garages. Whilst you may not pay for it in interest, you may pay for it in the price of the car itself.

I totally agree with your skepticism - on a new car it is difficult to tell best deal cash versus best deal finance, though current "system" seems to be making the finance preferable.  At least there are good online services that allow true price for new car to be established so it makes it harder to hide interest charges.

On used cars, the opportunity for inflating the price to cover zero percent finance is more in the favour of the dealer.

The offer I was sent was for 'nearly new' (pre-reg or ex-management cars) so that at least made it easier to compare what the price of the car should be before taking the finance offer and incentives.  As I am not in the market for a car I did not look into the detail.

I really feel the current "finance - finance - finance" set up is perverse and only put in place to trap us all in finance we cannot afford until we fail.  Obviously, even in times of low interest rates, zero percent finance has to be covered in the price somewhere and it would all be so much easier to just buy the car (new or second hand) as cheapest price without all the faff.  The days of "cash is king" seem to have gone, though.  Possibly because the car dealer does not suffer when a purchaser defaults, almost like a "victimless" crime in their eyes.

Agreed.

Getting a good idea of used car prices is difficult, as variation is huge across dealers, location and models. Then add in model year and mileage and options and it becomes a right headache! Thing to remember is that it isn't just one price, but a distribution of prices for any one car, so it's about finding the one at the tail end of the distribution.

Perhaps it's specific to the EV market but I am comforted by the fact that new EVs tend to have higher cash discounts than PCP (not that I tend to buy new, but use it to judge used prices).

As you say, even on 0% there is still the price of the car to consider, and as @MinuteNoodles points out, the need to consider your position at the end of the finance term in order to settle the final payment. All too easy to just get in the buying habit of buying another car every few years which you wouldn't otherwise do. Another reason the dealers love it....

Grumpy_chap

DrEskimo said:

Perhaps it's specific to the EV market but I am comforted by the fact that new EVs tend to have higher cash discounts than PCP (not that I tend to buy new, but use it to judge used prices).

I am interested by your experience with EV, as I find the pricing even more opaque than ICE cars.  Also EV so expensive comparatively.  I thought discounts very hard on EV's at the moment because of supply & demand.

DrEskimo said:

All too easy to just get in the buying habit of buying another car every few years which you wouldn't otherwise do. Another reason the dealers love it....

So true, so true, they 'suck you in' and there is no escape.  Make you feel like they care and looking after you.  HaHa!
Happened to sister-in-law:
Buying a Mini £10k used, but then dealer said, hey, this car £16k new so why not have new one on 50-50 2 years no interim payment and 0% finance.  Well, duh, save £2k right now and take away a brand new car instead of used.
2 years pass and got to pay £8k to keep the car - SiL did know this from the outset.  But kindly dealer pops up, hey £8k to keep your 2 year old car, or the new car is now £18k and I can let you have for 50-50, so only pay £1k extra da de dah.
SiL is now on 4th Mini as they tried that trick again and again.  This time, she did resist the 'good deal' spiel and bought outright.

Shakin_Steve

When I am looking to buy a used car (I have only ever bought used) I put the registration number into 'We Buy Any Car' and 'Parkers'. It gives you some idea of what it's worth, although WBAC is only the trade in value. The seller may be a couple of hundred over, but you're not going to get stung for thousands, and you can always print the numbers off.
Autotrader also tell you on their ads whether the price is high, or low.

DrEskimo

Grumpy_chap said:

DrEskimo said:

Perhaps it's specific to the EV market but I am comforted by the fact that new EVs tend to have higher cash discounts than PCP (not that I tend to buy new, but use it to judge used prices).

I am interested by your experience with EV, as I find the pricing even more opaque than ICE cars.  Also EV so expensive comparatively.  I thought discounts very hard on EV's at the moment because of supply & demand.

I bought a used Zoe and it was not much more than a comparative Clio. I paid £14,500 (after the deposit contribution :P) and similar spec and power Clio's were about £12,000 (2yrs old with 5,000mi).

In the last 18months it's had barely any depreciation (trade price is around £14,000) and has been peanuts to run. Spent about £90 to drive the 4,500miles. Range is about 150miles on average and never had an issue. It's got to the point of being so ridiculous that I don't even think a free petrol car would have been much less in running costs!

It was an experiment to see just how they are to drive and I cannot see myself ever buying a petrol car again unless I absolutely had to. The driving experience and running costs are just too nice!

Grumpy_chap

Thanks Doc.
I do (did until lockdown) 140 mile round trip commute, so was looking at Tesla, iPace, or Mach-E and the capex required killed the option.
Maybe the new normal will make an option similar to yours more workable.  I like the look of the MG ZS.

DrEskimo

Grumpy_chap said:

Thanks Doc.
I do (did until lockdown) 140 mile round trip commute, so was looking at Tesla, iPace, or Mach-E and the capex required killed the option.
Maybe the new normal will make an option similar to yours more workable.  I like the look of the MG ZS.

Yea I was expecting to do 80miles a day for a job I started in March....now I will be 100% home based!

Bit annoying as I could maybe justify upgrading to a Tesla if I was doing 20k+ per year......