Best way to buy an almost new car…

daveyjp

If you have cash use it.  Its a far quicker purchasing process as you aren't blinded by figures for loans, PCPs etc. You then pay yourself back over a similar term to any loan you would take out.

Car_54

Arunmor said:

Car_54 said:

MEM62 said:

1) Rock up, choose car, pay cash, tax, insure and drive away.  No finance costs - just running and depreciation.
2) Rock up, choose car, late a loan, tax, insure & drive away.  Now you have running costs, depreciation and the interest on the loan. 
3) Rock up, choose car, put it on PCP, tax insure & drive away.  You then have running costs, depreciation and interest on finance, albeit with lower monthly payments than you would have on a loan.  In this case you don't even end up owning the car unless you also pay a balloon payment.          

Or 4) if there are incentives to do so, put it on PCP and pay it off ASAP while keeping the incentives.

Doubtful on a used car.

But not unheard of on a nearly new. I got £2,000 off an approved used Jag a few years ago.

Grumpy_chap

Sunsh1ne54 said:

By opting for a year or three old versus new it looks like I’d save about £8k 

Is that £8k off list price, or £8k off actual retail price for brand new?
Have you checked the car you are after against the online broker prices?

400ixl

Car_54 said:

Arunmor said:

Car_54 said:

MEM62 said:

1) Rock up, choose car, pay cash, tax, insure and drive away.  No finance costs - just running and depreciation.
2) Rock up, choose car, late a loan, tax, insure & drive away.  Now you have running costs, depreciation and the interest on the loan. 
3) Rock up, choose car, put it on PCP, tax insure & drive away.  You then have running costs, depreciation and interest on finance, albeit with lower monthly payments than you would have on a loan.  In this case you don't even end up owning the car unless you also pay a balloon payment.          

Or 4) if there are incentives to do so, put it on PCP and pay it off ASAP while keeping the incentives.

Doubtful on a used car.

But not unheard of on a nearly new. I got £2,000 off an approved used Jag a few years ago.

Or even if not cash, could be multiple years of service pack or extended warranty. Those can still be hundreds of savings over the first few years.

Goudy

Sunsh1ne54 said:

Goudy said:

PCP on used cars aren't usually the best option as they tend to work out expensive.

For a start interest rates are usually higher for used finance deals and deposit contributions aren't usually great either.

As it's used and on finance, you could end up with an expensive loan around your neck and a car out of warranty that goes bang. That's something to consider.

You also usually get a few other incentives and free add ons with a new that you might not get with used or less of in the case of nearly new, like breakdown cover and extended warranties.

As you are looking at nearly new, I'm presuming months rather than years old, so run some figures on a new model first.
Look for a discount deal on somewhere like Carwow so you can compare the total cost to you with any nearly new deal you might look at, again as a total cost.

If there's only a few months in them, it might just work out cheaper overall to plump for new, if it has a better rate, larger deposit contribution and a full warranty and 3 years breakdown.

 

By opting for a year or three old versus new it looks like I’d save about £8k 

That's not really nearly new.

Cars on demo are usually kept around 6 months, maybe a little longer then sold off.
Pre reg cars that were registered 1 to 3 or so months ago, these sort are nearly new.
Basically anything under 1 year old with limited mileage on them and a longer proportion of warranty left than has expired, but in the eyes of the dealer they will all be used and not subject to any manufacturer offers or discounts though they will have the rest of the warranty on them.

You will also find some dealers have access to pre made stock.
These are new, but are pre built and stood in a field or compound somewhere.
These can attract some healthy discounts, usually in the form of larger deposit contributions and low interest rates offered by the manufacturers to help shift them.
Not all manufacturers/imports do this stockpiling and certain times of the year are better than others for them, so you need to root around which do, but they are still new and will still come with manufacturers offers, discounts and full warranty.

1 to 3 years old are used. They might be nearly new compared to your old car but will have wear, tear and and lost a  larger proportion or all of their warranty period.

PCP certainly keeps the monthly payments down but as already mentioned, they usually attract higher interest rate on used and how would you feel if there was a major/expensive problem and you still had 12 monthlies left to pay plus the GFV and no warranty?

It's no good just comparing list prices. Don't get fixated on invoice or list prices and certainly not the monthly payments, anyone can make the monthlies look low by extending the finance period which will cost your a lot more in the end. Give a dealer a monthly target and that's what they'll do.

With finance you need to look at the total cost of the deal.
Total up what it will cost you over finance period including any discounts, interest rates and freebies like servicing and breakdown cover.

If you are in fact looking at nearly new, ie demos and pre reg cars you might be better off with looking at what a discounted, (pre built car) from the likes of Carwow is going to work out at first, then compare to the other types will cost.
That 8k saving could soon start to dribble away with high interest rates on a used deal.

If you are thinking of financing an older used car, please bare in mind the point about small/limited warranty.
There are plenty that post on here of still owing thousands for a used car that have really expensive problems and no help from the warranty. 
Recently this problem seem to have been aggravated by wet belt failures some manufacturers engines suffer from. 

Sunsh1ne54

Goudy said:

Sunsh1ne54 said:

Goudy said:

PCP on used cars aren't usually the best option as they tend to work out expensive.

For a start interest rates are usually higher for used finance deals and deposit contributions aren't usually great either.

As it's used and on finance, you could end up with an expensive loan around your neck and a car out of warranty that goes bang. That's something to consider.

You also usually get a few other incentives and free add ons with a new that you might not get with used or less of in the case of nearly new, like breakdown cover and extended warranties.

As you are looking at nearly new, I'm presuming months rather than years old, so run some figures on a new model first.
Look for a discount deal on somewhere like Carwow so you can compare the total cost to you with any nearly new deal you might look at, again as a total cost.

If there's only a few months in them, it might just work out cheaper overall to plump for new, if it has a better rate, larger deposit contribution and a full warranty and 3 years breakdown.

 

By opting for a year or three old versus new it looks like I’d save about £8k 

That's not really nearly new.

Cars on demo are usually kept around 6 months, maybe a little longer then sold off.
Pre reg cars that were registered 1 to 3 or so months ago, these sort are nearly new.
Basically anything under 1 year old with limited mileage on them and a longer proportion of warranty left than has expired, but in the eyes of the dealer they will all be used and not subject to any manufacturer offers or discounts though they will have the rest of the warranty on them.

You will also find some dealers have access to pre made stock.
These are new, but are pre built and stood in a field or compound somewhere.
These can attract some healthy discounts, usually in the form of larger deposit contributions and low interest rates offered by the manufacturers to help shift them.
Not all manufacturers/imports do this stockpiling and certain times of the year are better than others for them, so you need to root around which do, but they are still new and will still come with manufacturers offers, discounts and full warranty.

1 to 3 years old are used. They might be nearly new compared to your old car but will have wear, tear and and lost a  larger proportion or all of their warranty period.

PCP certainly keeps the monthly payments down but as already mentioned, they usually attract higher interest rate on used and how would you feel if there was a major/expensive problem and you still had 12 monthlies left to pay plus the GFV and no warranty?

It's no good just comparing list prices. Don't get fixated on invoice or list prices and certainly not the monthly payments, anyone can make the monthlies look low by extending the finance period which will cost your a lot more in the end. Give a dealer a monthly target and that's what they'll do.

With finance you need to look at the total cost of the deal.
Total up what it will cost you over finance period including any discounts, interest rates and freebies like servicing and breakdown cover.

If you are in fact looking at nearly new, ie demos and pre reg cars you might be better off with looking at what a discounted, (pre built car) from the likes of Carwow is going to work out at first, then compare to the other types will cost.
That 8k saving could soon start to dribble away with high interest rates on a used deal.

If you are thinking of financing an older used car, please bare in mind the point about small/limited warranty.
There are plenty that post on here of still owing thousands for a used car that have really expensive problems and no help from the warranty. 
Recently this problem seem to have been aggravated by wet belt failures some manufacturers engines suffer from. 

Thanks so much this is really helpful. I have the money to buy outright, but it’s a lot to spend in one go and so I started to think if it would be better to do a PCP.  Most people, I think including Martin L aren’t in favour of buying new cars, if you’re looking to save money, as they devalue so quickly. I dislike the idea of paying monthly and would prefer to just buy it and have a large dent in the savings, but started second guessing myself. 

Goudy

Like everything else, there are pro and cons and it's down to you which of each are most important.

I don't see a car as any sort of a financial asset, so depreciation though important, is just a cost for the use of it.
(Same with a lease, you pay for the use but also pay some company's profit in the cost and plenty do that).

I know it costs/depreciates so try to minimise the effect of that, but there are other variables that I also consider which is why I wrote work out the total costs and compare.

OK a used car might not depreciate as quickly but that's not that helpful if the interest rate is sky high.
Which is better value overall?
A 17k used car with 10% interest
Or
A 20k new car with 6.9% interest and a £1500 deposit contribution.
Or
A 20k car with £1500 deposit contribution and no or one months interest.
(this is possible if you have the cash as you can take the finance package with deposit contribution and settle the finance asap).

Your 17k used car is probably at or nearing the end of the warranty, it's used so will need the usually, general service items like brakes and tyres much sooner then the new.
(if it's at a dealership, it's probably more like a 14K car with £3k profit built into the price but you'll pay more that 20k for it with all that interest)

Your new is new, so new warranty, new brakes, new tyres but that has a cost when they aren't new any more, higher depreciation.
Is that worth anything to you?

Keep most cars long enough and depreciation is nearly 100%, it will eventually be only worth scrap value (bar the odd car that becomes a classic, if it last that long).
What makes that cost acceptable or not to me is how much fuss free use it'll give me in that time for the least outlay.

As you have savings, it's probably earning less than the interest rate on a loan or finance package unless you can find a 0% deal, so it's usually a no brainer to pay up with cash, but like I said, pay cash for the car and you'll usually pay invoice. Take the PCP package settle and you'll keep benefits that came with the finance package, like the deposit contribution.

The bigger the contribution is, the less you actually suffer from depreciation as the used value of the car, it's GFV is worked out on invoice/list price, not what you paid.

Now factor all this in and think about say buying this car used later, which is what you'll be doing buying used.
Someone had some use out of it's parts, it's warranty is going or gone and it may or may not need some more expensive servicing items, like cam belts.
It's value now has someone else's profit added to it, that's then rolled up into a finance package with a higher rate of interest, oh and you're financed it over 3 or 4 years so it's 6, 7 or 8 when you've finished paying for it.

That's doesn't sound too appealing to me and if it's total cost is more, why buy it?



 

born_again

Sunsh1ne54 said:

Thanks so much this is really helpful. I have the money to buy outright, but it’s a lot to spend in one go and so I started to think if it would be better to do a PCP.  Most people, I think including Martin L aren’t in favour of buying new cars, if you’re looking to save money, as they devalue so quickly. I dislike the idea of paying monthly and would prefer to just buy it and have a large dent in the savings, but started second guessing myself. 

But how in favour of paying all that interest would they be? Never cheap on 2nd hand cars.

Lease is just like renting.
PCP = paying interest & then if want to keep the car pay the balloon payment. If not, then you have lost all the interest charged & have no car at the end, so have to start all over again

If you if plan to keep a car till it drops then depreciation is not a issue.

ch3shirecat4

I would say maybe PCP might be a good option, especially if you want a new make of car but can't afford the full price. Might be wise to speak to a car finance company though maybe, I just recently got my merc with streamline car finance, the team are always on hand to help & they got me really good rates!

Sunsh1ne54

Goudy said:

Like everything else, there are pro and cons and it's down to you which of each are most important.

I don't see a car as any sort of a financial asset, so depreciation though important, is just a cost for the use of it.
(Same with a lease, you pay for the use but also pay some company's profit in the cost and plenty do that).

I know it costs/depreciates so try to minimise the effect of that, but there are other variables that I also consider which is why I wrote work out the total costs and compare.

OK a used car might not depreciate as quickly but that's not that helpful if the interest rate is sky high.
Which is better value overall?
A 17k used car with 10% interest
Or
A 20k new car with 6.9% interest and a £1500 deposit contribution.
Or
A 20k car with £1500 deposit contribution and no or one months interest.
(this is possible if you have the cash as you can take the finance package with deposit contribution and settle the finance asap).

Your 17k used car is probably at or nearing the end of the warranty, it's used so will need the usually, general service items like brakes and tyres much sooner then the new.
(if it's at a dealership, it's probably more like a 14K car with £3k profit built into the price but you'll pay more that 20k for it with all that interest)

Your new is new, so new warranty, new brakes, new tyres but that has a cost when they aren't new any more, higher depreciation.
Is that worth anything to you?

Keep most cars long enough and depreciation is nearly 100%, it will eventually be only worth scrap value (bar the odd car that becomes a classic, if it last that long).
What makes that cost acceptable or not to me is how much fuss free use it'll give me in that time for the least outlay.

As you have savings, it's probably earning less than the interest rate on a loan or finance package unless you can find a 0% deal, so it's usually a no brainer to pay up with cash, but like I said, pay cash for the car and you'll usually pay invoice. Take the PCP package settle and you'll keep benefits that came with the finance package, like the deposit contribution.

The bigger the contribution is, the less you actually suffer from depreciation as the used value of the car, it's GFV is worked out on invoice/list price, not what you paid.

Now factor all this in and think about say buying this car used later, which is what you'll be doing buying used.
Someone had some use out of it's parts, it's warranty is going or gone and it may or may not need some more expensive servicing items, like cam belts.
It's value now has someone else's profit added to it, that's then rolled up into a finance package with a higher rate of interest, oh and you're financed it over 3 or 4 years so it's 6, 7 or 8 when you've finished paying for it.

That's doesn't sound too appealing to me and if it's total cost is more, why buy it?



 

That’s given me plenty to mull over, thank you ☺️