My opinion about buying a car on finance
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You can get a PCP without any deposit. At the end of the deal you get a new deal with no deposit.big deposit (you current car plus savings) - smaller affordable monthly payments (The hook) - big balloon that you will never be able to finance. Result is skint with no car when the deal ends.0 -
I used to be absolutely against PCP deals but I've been persuaded otherwise. I think they can work, if the customer has a clear idea of what they want out of the deal and how much it will cost. With some of the low APRs around, the total interest payable over the term can be less than the incentives from dealer and manufacturer to take out the PCP agreement.0
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And end up being exactly what the video was talking about.
My post was in response to the point by the poster that you need a large deposit every so many years.
The video isn't about PCP, its about his sister spending money she doesn't have.
I don't see the problem with PCP. A car depreciates however you choose to pay for it. I have one on PCP and one owned outright. They are both depreciating. And yes, I could have paid cash for both if I wanted to but would rather have the flexibility of cash in the bank.0 -
TrustyOven wrote: »Not sure what your intent is. It reads as some sort of double-edged put-down.
Can give it but can't take it, eh? Your first post implied you believed it's 'far better to save and pay cash' in general, yet housebuying is a commonly-accepted counter-example, which you now accept.
Yours,
Modern Society0 -
Not sure what your intent is. It reads as some sort of double-edged put-down.
Not intended as a put down. Simply a comment on the fact that we rely on the idea of finance for some of the most important things in our life. Sure, it would be nice if you didnt need to borrow but in reality we all borrow for a house. Also i dont think its that different. Sure, cars will depreciate but not so many years back a lot of people were (and some still are) living with negative equity in the tens of thousands because of loans for a house.You can get a PCP without any deposit. At the end of the deal you get a new deal with no deposit.
Yes, you can. Thing is if people stuck to that and what was 'affordable' we wouldnt be having this discussion in the first place. People obsess with the monthly payments. The typical structure of PCP is deposit - monthly - balloon. Sales reps massage the figures to give the punter the monthly they can just about afford to put them in the car they want rather than can afford to drive. If you can just about afford the monthly then you wont be able to raise a deposit for the next car.0 -
I ended up getting a car on PCP despite saying it's something I would never do.
But with a £99 deposit and 0% interest, I really can't see how I have lost out here. I know after the term I either pay the balloon payment, or give the car back. That's fine with me, because there will be another affordable offer at that time.
In context I had the same model of car but 7 years older, with 70k miles on the clock. I bought it when it was 3 years old and had another year left to run on the standard hire purchase agreement, which wasn't interest free. My PCP monthly payment, on the brand new car, is only £15/month more.0 -
I ended up getting a car on PCP despite saying it's something I would never do.
But with a £99 deposit and 0% interest, I really can't see how I have lost out here. I know after the term I either pay the balloon payment, or give the car back. That's fine with me, because there will be another affordable offer at that time.
In context I had the same model of car but 7 years older, with 70k miles on the clock. I bought it when it was 3 years old and had another year left to run on the standard hire purchase agreement, which wasn't interest free. My PCP monthly payment, on the brand new car, is only £15/month more.
Your loosing out because instead of buying another 3 year old car like you did last time you have now bought a brand new car because of the PCP deal.
So you might be paying no interest but that £99 a month you are paying is lost in depreciation of the car (which is largest in the first three years).
So if its a three year PCP you will end up paying £3564 by the end of it and have nothing to show for it.
If you had the money in the bank to buy the car outright and were buying a new car anyway then yes the PCP deal would have been the best way to pay for it.
If you don't have much money in the bank and the PCP deal has allowed you to afford a brand new car that you otherwise wouldn't have. Then you have now started a cycle of getting a new car every 3 years always paying a large amount of depreciation and paying a monthly payment indefinitely.
I also don't see the point in getting the exact same car but just slightly newer if there was nothing wrong with it.0 -
Can give it but can't take it, eh? Your first post implied you believed it's 'far better to save and pay cash' in general, yet housebuying is a commonly-accepted counter-example, which you now accept.
Yours,
Modern Society
Yet you fail to realise that they are totally different things. I've made that bit in bold, I guess you were too trggered to miss that part of the post?
Like I said, there are different dynamics involved with a house purchase.
Yes, Modern Society is full of those with great wants and not enough means for their wants. And what do they do? Get credit of course, it's the Modern Society! :rotfl:Goals
Save £12k in 2017 #016 (£4212.06 / £10k) (42.12%)
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Not intended as a put down. Simply a comment on the fact that we rely on the idea of finance for some of the most important things in our life. Sure, it would be nice if you didnt need to borrow but in reality we all borrow for a house. Also i dont think its that different. Sure, cars will depreciate but not so many years back a lot of people were (and some still are) living with negative equity in the tens of thousands because of loans for a house.
You raise good points.
I would say that people don't need to buy a newlybuilt house. They could buy a house that's much older, as long as other criteria matches.
Yet with buying new cars, people seem (from my observations of this board on the MSE forum) to have this feeling of entitlement that they should be able to buy a new car. There's no need for them to have the new latest car. There's a big difference between a car and a house.
Admittedly there might be a disconnect in scenario, thereby the PCP is not buying a new car, but an older car. In either case, anyone that is buying a car on finance is probably not buying a 500 quid banger, but getting a 8k+ car. If they are buying a 500 quid banger on finance, then that's an outlier for my post.
Those that are taking out a car loan.... do they have money saved up?
If no, why not?
Does it make sense to take a portion of their disposable income and thow it on a car for 2-5 years, rather than saving up so that they wound't ever need a car loan (or perhaps any other loan other than a mortgage)?
There's also the idea of how long it would take to save up to buy the car or the house. We generally can't save up to buy a house without a mortgage, but we can do that with a car. The timescales are different, the payment amounts are different. It should be achievable to buy a crap car and run that while you save up for a new car, and then buy it in 2-3 or 4 years time, just as if you were going with car finance. Can't really do that with a house purchase unless you are fortunate to have the means to do it.
So for most, there is no choice for house. There is a choice for cars.
I am not against the idea of finance, in general. I'm against personal finance for cars. Businesses buying vehicle / equipment / buildings / materials, or countries or individuals taking finance for other purposes, are generally ok from my perspective.Goals
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