Nissan & Toyota Finance

rocksimmo

Looking for some opinions on the new finance options from Nissan/Toyota and some other manufacturers.
I was working in Galway last week and Windsor had a big sign on a new Nissan Juke - "Own this for €199 per month" also our local Toyota has the same offer for a new Auris.
It seems you pay a deposit or trade in of approx 5K pay the 200 per month and after 36 months you can either
a. pay the remaining balance
b. get a new car and continue paying the 200pm
c. hand the keys back
I am tempted but wondering what people think of this type of financing.
Have seen these on UK magazines for a good few years.
Seems good to be getting a new car for 200 per month.

Opinions welcomed !!!!

Drummerboy08

It's a PCP deal, has been the norm in the UK for years now but Ireland is only coming around to it.

If you change your car every few years then it's a good option.

Zubeneschamali

rocksimmo wrote: »

Seems good to be getting a new car for 200 per month.

Opinions welcomed !!!!

My opinion: you are doing it wrong. A quick squint at Nissans website says the APR is 8%, RRP 19K, deposit 5.6 K, 36x200 = €7200 final payment due €8.8 K.

So you aren't getting a car for €200 pm, you are paying off just €4,600 of the €19K the car costs over three years, at a cost of €2,500 in interest.

mickdw

Zubeneschamali wrote: »

My opinion: you are doing it wrong. A quick squint at Nissans website says the APR is 8%, RRP 19K, deposit 5.6 K, 36x200 = €7200 final payment due €8.8 K.

So you aren't getting a car for €200 pm, you are paying off just €4,600 of the €19K the car costs over three years, at a cost of €2,500 in interest.

Yes and for it to be a sustainable option to continually buy new every 3 years, the required deposit would need to be built up in retained value in the car at 3 years old - if final payment is 8.8k, the car would need to be worth 8.8k plus your required deposit amount. If the deposit is 5.6k on this deal, the car would need to be worth over 14k at 3 years old. Considering a RRP of 19k that is unlikely to be the case so really the only way you would be buying again in 3 years would be by adding in a deposit again from your own savings which really defeats the idea of the low monthly payment.
There is nothing wrong with that type of finance but imo the figures need to be set up so that there is some deposit remaining in the car at 3 years.
So maybe an initial deal with say 3k deposit, final payment of 8.5k and a higher monthly payment would be a more realistic option meaning you can walk in again at 3 years, and there is a great chance that you will have 3k deposit right there in the car without touching savings.
All this is assuming Zubeneschamali figures are accurate.
Taking interest payment at roughly 2500, you would have a monthly figure of about 275 in this case.
You would be well advised to look for a deal with alot less interest than that also.

rocksimmo

Thank you for your responses. The last new car I purchased was a mazda 5 back in 2006 and the depreciation on it was huge in fact over 50% after 3 years. I promised myself after this that I would stick to the used car market. I suppose a 1.6 petrol Juke would not be the most desirable after 3 years so the value of this car used might not be that strong.

GavMan

Audi is slightly more transparent as they tell you what the minimum the car will be work when it comes back. Not sure if all others do

rocksimmo

Think they both have a minimum guarantee future value. Don't think the budget would stretch to an Audi though !!!!

mickdw

GavMan wrote: »

Audi is slightly more transparent as they tell you what the minimum the car will be work when it comes back. Not sure if all others do

Yes but you still need to know what it will likely be worth after 3 years as if its only worth the minimum value, you are kinda screwed if trying to buy another new one.

GavMan

mickdw wrote: »

Yes but you still need to know what it will likely be worth after 3 years as if its only worth the minimum value, you are kinda screwed if trying to buy another new one.

Completely agree. You would need your eyes fully open when entering into one.

Even Audi's deposits are ridiculous IMO. 11 grand deposit for an A4. Final Payment of 15250. GFV of 16300. Leaving you with 1050 in hand.

You'd need your a4 to be worth about 25 grand after the 3 years.

ninty9er

It's pretty much how the majority of middle America finances cars. It's not very flexible though, I wouldn't imagine Toyota or Volkswagen being as understanding about lost income as your local credit union.

rocksimmo

Thanks everyone. I guess I had my suspicions that this was too good to be true. I will soldier on with my vectra until the end of the year. I can see though how people might end up buying one of these only to be disappointed in three years time to be asked for another significant deposit by the dealer.

Zubeneschamali

rocksimmo wrote: »

I can see though how people might end up buying one of these only to be disappointed in three years time to be asked for another significant deposit by the dealer.

Only if they are really bad at sums...

mickdw

rocksimmo wrote: »

Thanks everyone. I guess I had my suspicions that this was too good to be true. I will soldier on with my vectra until the end of the year. I can see though how people might end up buying one of these only to be disappointed in three years time to be asked for another significant deposit by the dealer.

Just be aware that the deals can be arranged with different deposits from about 10 to 30 percent. If you got the dealer to work out some figures based on 10 to 15 percent deposit and you then found the monthly paynent was still acceptable to you, well it would be worth considering ad you would likely get 10 to 15 percent out of it towards The next car. As far as interest rates on car finance goes, a rate of 8 percent is not good enough.