perils of car finance

frost500

I was told at the end of the PCP either hand the car back and use any equity to put towards another death sentence, hand the car back and walk away, subject to unfair ware and tare or pay the balloon and it's yours. I was never told I could of sold the car privately, then pay the balloon and net the profit. What they did was offer me finance for a new car and the "damage" to the old car on top. I paid the damage and walked away. Then bought an old S3 for £2.5k spent £2.5k doing it up, so I am in for £5k in the past 12 months for a 20 year old car! But as I said I would rather do this than start a PCP or hp or PCH. Cars, whatever you do, money seems to vanish. Unless of course you are "savvy", then somehow cars cost nothing on finance, how so?

Mercdriver

frost500 said:

I was told at the end of the PCP either hand the car back and use any equity to put towards another death sentence, hand the car back and walk away, subject to unfair ware and tare or pay the balloon and it's yours. I was never told I could of sold the car privately, then pay the balloon and net the profit. What they did was offer me finance for a new car and the "damage" to the old car on top. I paid the damage and walked away. Then bought an old S3 for £2.5k spent £2.5k doing it up, so I am in for £5k in the past 12 months for a 20 year old car! But as I said I would rather do this than start a PCP or hp or PCH. Cars, whatever you do, money seems to vanish. Unless of course you are "savvy", then somehow cars cost nothing on finance, how so?

You basically listened to what they said and took it as god's honest.  They haven't lied to you, they just haven't given you all the available options in order to try and keep you coming back to them.  At the end of the term, you can take the car to whoever you want, provided the balloon/GFV is settled. 

Where people do tie themselves in knots is when they take out a 4 year PCP on a 4/5 year old car at 8.9% or in the case of Ford Used, 12.7%, get 2/3 years through it and while it is in for a 'FOC courtesy check' get schmoozed into wrapping the remaining balance into another 4 year deal.  That way is truly foolhardy.  I tried to convince my oldest nephew on my wife's side not to trade in his 16 plate Black edition fiesta that he still had 2.5 years to pay on to get a 13 plate ST fiesta, rolling in his previous finance into it.  In his case it was straight HP, not PCP, but he was having none of it.  He wanted his ST fix, and so is now at the start of a 5year term, paying more overall than he would have done for a newer car.  I told him to wait until he had some equity to bargain with, but he is 22, old enough to (not) learn his lessons.

At least he followed my advice not to touch a PCP with a bargepole...

fred246

I have got neighbours that have new cars every 3 years. Must be on some sort of PCP. I always see us on opposite ends of a spectrum. It's not just having a new car it's about total dereliction of care for the car. So everything is the responsibility of the main dealer. They do nothing whatsoever apart from driving it. They never check tyre pressures, oil or water levels. They have absolutely no idea how to go about performing those tasks. They may own a screwdriver but have no other tools or equipment.  I never take my car to a garage. I have a garage full of tools and equipment. Everything about the car is my responsibility. If there is a problem I fix it. They wait for a van to come from the main dealers. If my car needs servicing I do it on a sunny sunday afternoon. They arrange to go to the main dealers early and expect a courtesy car. Their spending must be astronomical in comparison to mine. I must spend a lot more time looking after cars but I work at times convenient for myself. Somehow I feel I am more 'in control' than they are. They are so dependent on other people and the service they offer. I am sure over the years their cars have let them down a lot more than mine. Their cars have been on the back of breakdown lorries much more. They have been stranded waiting for the service van much more than me. Having a brand new car with total neglect seems less reliable than owning an old car which is really well looked after.

sebtomato

fred246 said:

 They do nothing whatsoever apart from driving it. They never check tyre pressures, oil or water levels. They have absolutely no idea how to go about performing those tasks. They may own a screwdriver but have no other tools or equipment.  I never take my car to a garage. I have a garage full of tools and equipment. Everything about the car is my responsibility. If there is a problem I fix it. They wait for a van to come from the main dealers. If my car needs servicing I do it on a sunny sunday afternoon. They arrange to go to the main dealers early and expect a courtesy car. 

Maybe it's a company car. I have had company cars for the last 20 years, and despite the fact that they may cost me slightly more than me owning the car (due to tax becoming less and less favourable each year), the main benefit is that the company and its suppliers have full responsibility for the car. I only pay for personal fuel (and BIK tax).
For example:

• Car needs servicing or MOT: they collect it, fix it, bring it back.
• Someone is damaging the car/denting a door: they collect it, drop a courtesy car, fix it, bring it back. It costs me nothing. I make one phone call
• I am damaging the car (I damaged 2 alloy wheels and tires driving too close to a roundabout curb a few months ago): they collect it, fix it, bring it back. Again, it costs me nothing.

Also, many things cannot be fixed on modern cars with a screwdrivers or basic tools. On my 2 years old Audi A3, all the faults so far have been sensors or software/networking (nothing to do with me neglecting the car). Not sure it's really an improvement for owners but it is what it is. Cars are now very complicated technologically (and trend will continue).

fred246

"All the faults" on my 2 year old Audi. My 16 year old car has had NO faults in the last 2 years. In engineering terms components do fail early or late. I do wonder whether people who buy brand new cars do have more problems. Like a snagging list on a new house. Components fail early. Cars 3 to 10 years old may be more reliable than brand new ones.

Dr_Crypto

I’m not sure what your point is. New cars always lose money. Used cars lose less money. 

New cars are more fun and can be customised to your spec. They also can make you feel good.
Other people don’t like cars and would be perfectly happy with. 10yr old run about. That’s fine too.
Your money your choice. 

Scrapit

frost500 said:

My advice to people who are just about to buy a car on finance, it is just my personal experience based on years of car ownership in all it's forms. Believe me, I have learnt the hard way.

 

DO NOT DO IT. Do not, ever take out finance to buy a car. Whatever scheme you select, HP, PCP, PCH - avoid. As soon as you drive away from the showroom, the car has already lost £1000s. You will not get a  good deal, ever. The finance company always wins. Think about it, the finance companies are in control, without them, you could not afford the car - so why do it? The new car feeling will soon go away (month at the latest). If you are a regular person, the car will be used everyday, so it will get knocked in car parks, kids will stain the seats, the alloys will rub on curbs. This is normal, to expected, real life. The evil finance companies will call it "damage" and charge you at the end of the contract. You will end up in debt even when they have the car back. Think of what you could do with the money if you saved it over the 3 or 4 years?

 

Take a new (or nearly new) Golf (£20k), and a 2005 Golf (£1k). Both drive and stop, both do the same job. If you take the wings, doors and bonnet off both cars - could you tell them apart? If you bought the 2005 Golf for £1k, spent another £1k on "overhaul" - it will be as good as and "nearly new" Golf that will cost you £15k + interest + end of term fines. It will be totally yours, it won't matter if it gets a couple of knocks, you can leave it at the pub and walk home, it is just a tool to move you around, nothing else. Have not got £2k to spend on a second hand car, but have £200 a month to spend on a "nearly new" car for 48 months? It would be better to take a 0% card and spend £2k (£1k for the car, £1k for overhaul). Get to know a good mechanic you can trust, this will be invaluable. There are 100s of good cars available for next to nothing, why get in debt?

 

Just my thoughts....

Sounds like you dropped the ball.
Finance is working just fine for me.

sebtomato

fred246 said:

"All the faults" on my 2 year old Audi. My 16 year old car has had NO faults in the last 2 years. In engineering terms components do fail early or late. I do wonder whether people who buy brand new cars do have more problems. Like a snagging list on a new house. Components fail early. Cars 3 to 10 years old may be more reliable than brand new ones.

Newer cars have got more technology than older cars. I think a 15 year old car is easier to fix than my 2 year old A3, which has got a lot of computers, sensors and driving assistance (it basically drives itself on motorways). Very different types of fault, less mechanical, more software/high tech.
To be fair, my 2 year old A3 has only had two issues so far:

• The bonnet sensors were not working well, so car kept reporting "Bonnet open" and disabling various things, like the windscreen wipers. Took 2 attempts for Audi to fix (under warranty). I think they just adjusted the bonnet.
• The car displayed some highly random errors twice (completely random error messages were being displayed at 5 seconds interval). Audi said it was a "car network interference" issue, but couldn't fix it. However, they advised to stop using a third party USB charger in the cigarette lighter socket, and that stopped the fault. Apparently, NFC on iPhones can create that too. Highly random

At least, new and recent cars get warranty to resolve those kind of faults.
On an A3, I would say repairs and maintenance could start becoming expensive after 5 years, particularly on cars with S tronic.
I am afraid the trend to have fault moving away from mechanical to technological types instead is only increasing, with cars getting more advanced self driving capability and less complex mechanically (electric cars don't have many mechanical parts to go wrong).