PCP Vs Lease

mrsmortgage

The way I see it.... The car is costing £40k (or there about over four years).

A used 4 yo Q7 is around 35k (and that's from a dealership) so trading it, I'm assuming I'd be getting 30k for it.  If I buy for 68k (out right), the ownership over 4 years would cost me £38k.... So would I rather have the cash in bank (in case of emergencies) or waiting to recoup some of the cost in 4 years? I frankly prefer to have the cash (knowing that I always have to keep the rest of the monthly payment set aside, so that those payments are guaranteed). 

I haven't seen anyone giving any deals for buying outright. At least I've never found one when buying. 

motorguy

mrsmortgage said:

The way I see it.... The car is costing £40k (or there about over four years).

A used 4 yo Q7 is around 35k (and that's from a dealership) so trading it, I'm assuming I'd be getting 30k for it.  If I buy for 68k (out right), the ownership over 4 years would cost me £38k.... So would I rather have the cash in bank (in case of emergencies) or waiting to recoup some of the cost in 4 years? I frankly prefer to have the cash (knowing that I always have to keep the rest of the monthly payment set aside, so that those payments are guaranteed). 

I haven't seen anyone giving any deals for buying outright. At least I've never found one when buying. 

Yes £40,000 ish to drive it for 4 years, or £833 a month amortised.

You should easily be able to get the same discount with a cash purchase.  You could get the £3,500 finance incentive too by taking their PCP offer and clearing it after a week or so.

So you could save that full £10,000 or so in interest charges.

The flip side of that is -

• The cash would be working for you elsewhere, gaining interest
• You have the assurance of a big pile of cash available should you need it.

Grumpy_chap

mrsmortgage said:

Ok looking into it....they're giving me a £6.5 OTR discount

mrsmortgage said:

I've just been to my local Audi. Lovely man! I can't figure out what's the actual amount I'm paying interest on. According to my calculations, it should be around £26k... But I can't seem to get to that number in any way shape or form.  

I can't see in that example where the £6.5k discount is.
It is not even clear that they are offering the £3.5k deposit contribution available without asking on the Audi website.
Unfortunately, the full model spec and options are not visible.

You would be paying:
 - deposit £11,687
 - 47 monthly x £622 = 29,234
 - Equals £40,921 if you walk away at that point
 - Or add another £31,716 to buy and keep the car.  
 - Equals total £72,637 to buy a £62k car.

Keeping £60k in the bank to avoid sinking cash but paying £10,800 to do so seems illogical unless you can invest that £60k to better the £10,800 as return over 4 years.  I am surprised if that is possible.

mrsmortgage said:

I haven't seen anyone giving any deals for buying outright. At least I've never found one when buying. 

The best deals for buying outright are now on the basis of buying the best deal with the best finance that the Dealer can offer as the Dealer makes money by selling finance.  Then settle the finance early.

Where else have you obtained quotes from other than the local Audi dealer?

mrsmortgage

I think the key here is that I don't plan on keeping the car... Which is why I look at it over 48 months of ownership.

My spec quote shows a price of £68k (that's what I've based the discount on). 

Plus I think I'd rather have the liquidity rather than the full ownership of said asset. 

Grumpy_chap

OK, so I guess it is the S line 55 TFSI quattro tiptronic with comfort & sound pack plus metallic paint at list £68,350 OTR.

The Dealer is showing the cash price at £62,863 and allowing £1k deposit contribution for PCP.  Makes the price £61,863 which is the saving of £6.5k.

The period you plan to keep the car is almost irrelevant in term of how you pay.  It is all down to your priorities but to have liquidity of £60k will cost you nearly £11k.  Have you considered using the current cash and then making the monthly payments back to yourself?  If you did that, the car would only need to be worth £22k after 4 years 32k miles and you will be quids in.

mrsmortgage

Grumpy_chap said:

OK, so I guess it is the S line 55 TFSI quattro tiptronic with comfort & sound pack plus metallic paint at list £68,350 OTR.

The Dealer is showing the cash price at £62,863 and allowing £1k deposit contribution for PCP.  Makes the price £61,863 which is the saving of £6.5k.

The period you plan to keep the car is almost irrelevant in term of how you pay.  It is all down to your priorities but to have liquidity of £60k will cost you nearly £11k.  Have you considered using the current cash and then making the monthly payments back to yourself?  If you did that, the car would only need to be worth £22k after 4 years 32k miles and you will be quids in.

Could you be so kind to explains to me in more detail? 

Grumpy_chap

This is a MSE site, so we want to save you money.

Your choice of car is not the one I would make, but I steer clear of saying the MSE solution is to have a 10yo mini, which seems to be what some say is MSE.

The way I see it, MSE is to have what you want in the most cost-effective way.

So, you can get the car AUDI Q7 S-Line 55 TFSI Quattro Petrol Tiptronic with Comfort & Sound Pack plus metallic paint for £62k.  The interest you will pay adds another £11k over the four years.  I would not incur that interest, but you value the liquidity on the money in the bank and if you value that liquidity then it is an informed decision.  

Anyway, I mentioned upthread that I'd received a marketing e-mail for these cars during the week and the discount was large.  So, I plugged the spec into their website and got the following:


There are details and terms and conditions but that is a £10k saving which is better than the £6.5k the local Audi Dealer offered you.  Still PCP at same interest as Audi offered you, but a slightly higher initial deposit.

Please spend a bit of time to shop around the various brokers and see the best deal you can get for the exact specification you want.  Try Drive-the-Deal, Broadspeed, Carwow.

We will disagree on the importance of liquidity, but your financial position will improve two-fold by saving the extra £3.5k.

mrsmortgage

If I understand it correctly... I take the PCP, settle ir ASAP (so the interest incurred would be as little as possible). I end up paying say 62k (based on the figures quoted above).. and after 3 years I sell it for £30k, meaning it cost me 32k Vs 40k, (over the 4 years) ?

mrsmortgage

Much appreciated that makes sense. Would say that what I mentioned above is broadly what you propose ? 

Grumpy_chap

mrsmortgage said:

If I understand it correctly... I take the PCP, settle ir ASAP (so the interest incurred would be as little as possible). I end up paying say 62k (based on the figures quoted above).. and after 3 years I sell it for £30k, meaning it cost me 32k Vs 40k, (over the 4 years) ?

Yes, on your figures.  Apart from the typo on selling after 3 years - I think your time-frame is 4 years?

If you shop around for best price, it will cost you less.  On the broker example I put, you'd pay £58k and sell in 4 years for £30k, so it will cost you £28k.  Better prices than I found may be possible as I have not put much effort into getting a keen price - it is worth your time investment I would have thought.

It is a bit convoluted that you have to buy on finance and then settle early to get the best deal.  Gone are the days of "cash is king".  Obviously, don't tell the Dealer that you will settle the finance early as they may get uncomfortable at that.

That Audi Dealer has not even given you the incentive level that is publicly available on the Audi website, which is a bit opportunistic.