Best way to finance a car?

Grumpy_chap

McCreary said:

DrEskimo said:

With a car bought outright (usually settled finance after securing the best deal) you can chop and change whenever you like. 

Can I just clarify what you mean by finance? I assume you don't mean a PCP as you never own the car that way?

You can, it all depends on what you do at the end of the term.

Or, you can pay down a PCP in full at any time.

Obviously, the car industry want you to think that you never own the car and have to just give it back and start another PCP.  Why do you think that the car industry promote PCP so much?

Orangezorki

Grumpy_chap said:

McCreary said:

DrEskimo said:

With a car bought outright (usually settled finance after securing the best deal) you can chop and change whenever you like. 

Can I just clarify what you mean by finance? I assume you don't mean a PCP as you never own the car that way?

You can, it all depends on what you do at the end of the term.

Or, you can pay down a PCP in full at any time.

Obviously, the car industry want you to think that you never own the car and have to just give it back and start another PCP.  Why do you think that the car industry promote PCP so much?

You definitely don't need to hand the car back, and can get a good deal if it's the right car at the right time.  The only time I have done PCP was with a 0% deal, and I used a deal site (I think drivethedeal, but carwow is great as well) to get them to match the best cash price available.  The car was paid off before the end of the finance term, so I didn't pay a penny more than I would have with cash, and for three years most of the remaining value was offset against my mortgage, so the deal saved me more than £1k in interest payments.  And when it came to sell the car after 4-5 years, I received about 65% of the original price.

Of course, arguing that buying a new car at all isn't moneysaving is completely valid, but it saved me on road tax, and was much more fuel efficient and probably safer too.  Plus when you get a new car you get a full warranty, no need to bother with MOTs for 3 years, and everything from tyres to the cupholders are brand new - all things that I think are overlooked when people say that they found a great deal on a 4 year old car.

What muddies the water for me (and I am looking for my next car) is that I work in the NHS, and leasing a car is very tempting, as you can get a car with insurance with payments taken from your pre-tax salary.  Many of my colleagues are driving £40, 50, 60k+ cars for effectively less than £500 per month - Jaguar iPaces, Tesla model 3s etc.  But I just can't get past the idea of not owning the car, and all the fear that I will be charged a huge penalty for a tiny ding at the end of the lease.

Grumpy_chap

Orangezorki said:

the cupholders are brand new - all things that I think are overlooked when people say that they found a great deal on a 4 year old car.

What muddies the water for me (and I am looking for my next car) is that I work in the NHS, and leasing a car is very tempting, as you can get a car with insurance with payments taken from your pre-tax salary.  Many of my colleagues are driving £40, 50, 60k+ cars for effectively less than £500 per month - Jaguar iPaces, Tesla model 3s etc.  But I just can't get past the idea of not owning the car, and all the fear that I will be charged a huge penalty for a tiny ding at the end of the lease.

I have never seen a car where wear on the cupholders is noticeable?

I don't know about the NHS staff arrangements, but there are some good lease deals out there - I sometimes think lease is more honest than PCP, plus the first payment is usually much lower on a lease.  Does the NHS scheme affect your pension?

DrEskimo

McCreary said:

DrEskimo said:

With a car bought outright (usually settled finance after securing the best deal) you can chop and change whenever you like. 

Can I just clarify what you mean by finance? I assume you don't mean a PCP as you never own the car that way?

PCP is just a secured loan with a different payment structure. 

Once you view it that way, it becomes no more complicated than using finance to buy anything in life. 

Orangezorki

Grumpy_chap said:

Orangezorki said:

the cupholders are brand new - all things that I think are overlooked when people say that they found a great deal on a 4 year old car.

What muddies the water for me (and I am looking for my next car) is that I work in the NHS, and leasing a car is very tempting, as you can get a car with insurance with payments taken from your pre-tax salary.  Many of my colleagues are driving £40, 50, 60k+ cars for effectively less than £500 per month - Jaguar iPaces, Tesla model 3s etc.  But I just can't get past the idea of not owning the car, and all the fear that I will be charged a huge penalty for a tiny ding at the end of the lease.

I have never seen a car where wear on the cupholders is noticeable?

I don't know about the NHS staff arrangements, but there are some good lease deals out there - I sometimes think lease is more honest than PCP, plus the first payment is usually much lower on a lease.  Does the NHS scheme affect your pension?

Fair point about the cupholders!  

As for the pension, yes it does reduce the contributions but it's not necessarily a bad thing as quite a few senior doctors have had problems with tax on their pensions if the pot gets too big, up to the point that many retire and come back as locums.  Thankfully (?) I'm a looong way from that myself.

born_again

Can we just point Op at this thread.

https://forums.moneysavingexpert.com/discussion/6290838/getting-into-the-pcp-game

Covers everything....

Saves all the trouble of everyone arguing over the same points again 🤦‍♀️

motorguy

DrEskimo said:

motorguy said:

McCreary said:

Hi all,

Looking for some different views and opinions about buying cars. I was brought up to save up and buy things outright. My parents always saved up a for second hand car then kept them until they became too expensive to repair.

I started to do this too as and haven’t ever owned a new car. Last year I bought a 1 year old Nissan Qashqui outright using savings. My wife’s car (which we also own) is going to need replacing in a couple of years so we’re in the process of saving for that.

The thing I have been pondering recently is that I only know one of my friends who actually buys cars outright like I do. Everyone else I know has PCPs, hire cars or hire purchases. I don’t have any experience with these and wondered if I am missing a trick? Are these actually better than what I am doing? Everyone I speak to tells me that I should do what they do so I’m looking for a bit of impartial advice if possible?

Thanks in advance!

If you're happy with your car and plan to run it long term, then i'd say stick with what you're doing / have done.  Rinse and repeat when your needs change (though the Qashqai is a very capable all rounder) or the car reaches end of life.

People who PCP tend to do so because its an easy way to wrap up their monthly motoring costs (depreciation, warranty and sometimes servicing) in one monthly amount.  They get paid monthly and they're not terribly concerned about ownership.  As peoples needs change - say with a growing family - then they havent a big commitment to the car so can change at the end of / near the end of the term for something that suits better at that point.

Is it more expensive?  Pretty much certainly, though very low interest rates through incentivised new car deals can offset that.

My impartial advice is stick to what you know works for you and continue to do what you're doing. 

I would argue that owning a car ouright and not having a car on finance or through a lease deal is the most flexible way to run a car if you feel you have to change often.

You don't have to worry about availability of capital to settle outstanding finance, as you've ensured you've covered that upfront, and you don't have to worry about mileage limits or early termination fees on leasing.

With a car bought outright (usually settled finance after securing the best deal) you can chop and change whenever you like. 

Relative to making a commitment to one car, and running it for say 15 years, with a PCP or leasing deal you're not tied in to a particularly long timeframe.  That was the point i was making.  £250 a month this time for a Golf, then maybe a Tiguan etc as time progresses.  That would be fairly typical for say a couple with a young family over time as needs change.  

Its one of the reasons PCP / leasing suits so many - no long term commitment and just set your budget and chose the vehicle type you want for that timeframe.

You will note i also said at the end of the term / approaching the end of term so there would be no requirement to settle outstanding finance - either return it (likely not such a good idea in the present climate) or trade it in.  No need to clear the finance to do either of those.

Advocado

motorguy said:

DrEskimo said:

motorguy said:

McCreary said:

Hi all,

Looking for some different views and opinions about buying cars. I was brought up to save up and buy things outright. My parents always saved up a for second hand car then kept them until they became too expensive to repair.

I started to do this too as and haven’t ever owned a new car. Last year I bought a 1 year old Nissan Qashqui outright using savings. My wife’s car (which we also own) is going to need replacing in a couple of years so we’re in the process of saving for that.

The thing I have been pondering recently is that I only know one of my friends who actually buys cars outright like I do. Everyone else I know has PCPs, hire cars or hire purchases. I don’t have any experience with these and wondered if I am missing a trick? Are these actually better than what I am doing? Everyone I speak to tells me that I should do what they do so I’m looking for a bit of impartial advice if possible?

Thanks in advance!

If you're happy with your car and plan to run it long term, then i'd say stick with what you're doing / have done.  Rinse and repeat when your needs change (though the Qashqai is a very capable all rounder) or the car reaches end of life.

People who PCP tend to do so because its an easy way to wrap up their monthly motoring costs (depreciation, warranty and sometimes servicing) in one monthly amount.  They get paid monthly and they're not terribly concerned about ownership.  As peoples needs change - say with a growing family - then they havent a big commitment to the car so can change at the end of / near the end of the term for something that suits better at that point.

Is it more expensive?  Pretty much certainly, though very low interest rates through incentivised new car deals can offset that.

My impartial advice is stick to what you know works for you and continue to do what you're doing. 

I would argue that owning a car ouright and not having a car on finance or through a lease deal is the most flexible way to run a car if you feel you have to change often.

You don't have to worry about availability of capital to settle outstanding finance, as you've ensured you've covered that upfront, and you don't have to worry about mileage limits or early termination fees on leasing.

With a car bought outright (usually settled finance after securing the best deal) you can chop and change whenever you like. 

£250 a month this time for a Golf, then maybe a Tiguan etc as time progresses.

Its one of the reasons PCP / leasing suits so many - no long term commitment.

I don't know much about PCP, but surely there's a term?  36 months is the norm I believe?  I would consider that to be a long term commitment.

You can't change the car monthly as you suggest.  To do that you'd need to rent a car from Hertz or similar.

However, owning a car outright is much more flexible than PCP, you can change it every week if you want to...

ontheroad1970

Advocado said:

motorguy said:

DrEskimo said:

motorguy said:

McCreary said:

Hi all,

Looking for some different views and opinions about buying cars. I was brought up to save up and buy things outright. My parents always saved up a for second hand car then kept them until they became too expensive to repair.

I started to do this too as and haven’t ever owned a new car. Last year I bought a 1 year old Nissan Qashqui outright using savings. My wife’s car (which we also own) is going to need replacing in a couple of years so we’re in the process of saving for that.

The thing I have been pondering recently is that I only know one of my friends who actually buys cars outright like I do. Everyone else I know has PCPs, hire cars or hire purchases. I don’t have any experience with these and wondered if I am missing a trick? Are these actually better than what I am doing? Everyone I speak to tells me that I should do what they do so I’m looking for a bit of impartial advice if possible?

Thanks in advance!

If you're happy with your car and plan to run it long term, then i'd say stick with what you're doing / have done.  Rinse and repeat when your needs change (though the Qashqai is a very capable all rounder) or the car reaches end of life.

People who PCP tend to do so because its an easy way to wrap up their monthly motoring costs (depreciation, warranty and sometimes servicing) in one monthly amount.  They get paid monthly and they're not terribly concerned about ownership.  As peoples needs change - say with a growing family - then they havent a big commitment to the car so can change at the end of / near the end of the term for something that suits better at that point.

Is it more expensive?  Pretty much certainly, though very low interest rates through incentivised new car deals can offset that.

My impartial advice is stick to what you know works for you and continue to do what you're doing. 

I would argue that owning a car ouright and not having a car on finance or through a lease deal is the most flexible way to run a car if you feel you have to change often.

You don't have to worry about availability of capital to settle outstanding finance, as you've ensured you've covered that upfront, and you don't have to worry about mileage limits or early termination fees on leasing.

With a car bought outright (usually settled finance after securing the best deal) you can chop and change whenever you like. 

£250 a month this time for a Golf, then maybe a Tiguan etc as time progresses.

Its one of the reasons PCP / leasing suits so many - no long term commitment.

I don't know much about PCP, but surely there's a term?  36 months is the norm I believe?  I would consider that to be a long term commitment.

You can't change the car monthly as you suggest.  To do that you'd need to rent a car from Hertz or similar.

However, owning a car outright is much more flexible than PCP, you can change it every week if you want to...

Ouch! All that depreciation and hassle.  

motorguy

Advocado said:

motorguy said:

DrEskimo said:

motorguy said:

McCreary said:

Hi all,

Looking for some different views and opinions about buying cars. I was brought up to save up and buy things outright. My parents always saved up a for second hand car then kept them until they became too expensive to repair.

I started to do this too as and haven’t ever owned a new car. Last year I bought a 1 year old Nissan Qashqui outright using savings. My wife’s car (which we also own) is going to need replacing in a couple of years so we’re in the process of saving for that.

The thing I have been pondering recently is that I only know one of my friends who actually buys cars outright like I do. Everyone else I know has PCPs, hire cars or hire purchases. I don’t have any experience with these and wondered if I am missing a trick? Are these actually better than what I am doing? Everyone I speak to tells me that I should do what they do so I’m looking for a bit of impartial advice if possible?

Thanks in advance!

If you're happy with your car and plan to run it long term, then i'd say stick with what you're doing / have done.  Rinse and repeat when your needs change (though the Qashqai is a very capable all rounder) or the car reaches end of life.

People who PCP tend to do so because its an easy way to wrap up their monthly motoring costs (depreciation, warranty and sometimes servicing) in one monthly amount.  They get paid monthly and they're not terribly concerned about ownership.  As peoples needs change - say with a growing family - then they havent a big commitment to the car so can change at the end of / near the end of the term for something that suits better at that point.

Is it more expensive?  Pretty much certainly, though very low interest rates through incentivised new car deals can offset that.

My impartial advice is stick to what you know works for you and continue to do what you're doing. 

I would argue that owning a car ouright and not having a car on finance or through a lease deal is the most flexible way to run a car if you feel you have to change often.

You don't have to worry about availability of capital to settle outstanding finance, as you've ensured you've covered that upfront, and you don't have to worry about mileage limits or early termination fees on leasing.

With a car bought outright (usually settled finance after securing the best deal) you can chop and change whenever you like. 

£250 a month this time for a Golf, then maybe a Tiguan etc as time progresses.

Its one of the reasons PCP / leasing suits so many - no long term commitment.

I don't know much about PCP, but surely there's a term?  36 months is the norm I believe?  I would consider that to be a long term commitment.

You can't change the car monthly as you suggest.  To do that you'd need to rent a car from Hertz or similar.

However, owning a car outright is much more flexible than PCP, you can change it every week if you want to...

Where did i suggest changing the car monthly?  Can you point me to it please?

This seems to be being taken out of context and dissected.  If you consider the O/Ps situation whereby he has bought a particular car with a view to long term ownership, then - as i've said before at least once - if you were compare that to perhaps a couple with a young and growing family, one of the benefits of paying monthly for the car is as the family grows you can at the end of your PCP / lease term chose a car that best suits your changing needs.  Thinking of my niece, they had a Clio, then an Astra and now have, with two young children have a Captur.  Thats probably over a 6 year+ period.

There are people on here who keep cars for 10, 12, 14, 15+ years.  Thats a long term commitment. 

We've committed with our main car, bought new, to run it at least 10 years but frankly if we get it to that point we'll likely just drive on at it indefinitely.  That, again is a long term commitment.

2-3 years, not so much