Full payment vs PCP

masterboy123

I need an advice on this issue.

If a car costs 35000 euros and have got the savings to pay for it in full.
However then i will be left with limited funds.
So i thought of paying 60% down payment and get 40% loan from dealer. But dealers PCP finance say max deposit could be 11000 euros. And then pay 5.9% APR and total cost of credit 3000 euros. So i will be losing a good amount on high interest.

Is there any other way of paying 60-70% deposit and take a loan for the rest? My bank declined my request of personal loan.

bazz26

Spending all your savings on paying for a car is not a good idea.

Dealers do regular fiance too but interest rates are probably higher than PCP rates as PCP deals seem to be the way they want to sell cars now. At the end of the day if you borrow money you have to pay it back with interest in some shape or form. The only thing you can do in that situation is shop around for the lowest amount in interest over the term of the loan.

TheBully

Some dealers offer 0% finance on pcp, that's the cheapest loan you will ever get! If the dealer you are looking at doesn't offer this then maybe shop around for a low interest loan, credit union maybe?

masterboy123

It took about 2 years to save that amount. But family members are going to go up in coming years so savings are gonna drop.
You're right, at the moment there is a huge sense of being independent but once the money flows away things may change.
But at the same time always wanted to get my dream car...so in a mixed situation now

Skommando wrote: »

Depends how long it takes you to save that amount.

If it took years, don't blow your money on car that price, ether with cash or credit.

The cheaper you can live, the more independent and free you will be in life.

masterboy123

0% finance?? Is that possible?

TheBully wrote: »

Some dealers offer 0% finance on pcp, that's the cheapest loan you will ever get! If the dealer you are looking at doesn't offer this then maybe shop around for a low interest loan, credit union maybe?

Skommando

masterboy123 wrote: »

0% finance?? Is that possible?

yep, perfectly possible instead of offering a decent discount on the car. You're still paying a premium. It's all smoke and mirrors, like the 'scrappage' deals.
sometime these prices are a genuine lowest price offer, especially on end of line models, sometimes not so much.

masterboy123

Just searched for and Skoda is offering 0% pcp.
However, benz is not giving this option

Skommando wrote: »

yep, perfectly possible instead of offering a decent discount on the car. You're still paying a premium. It's all smoke and mirrors, like the 'scrappage' deals.

bazz26

Some VAG brands are doing 0%. But 0% PCP doesn't always mean it's the cheapest way to pay for a car. You really have to read the small print and do the maths. Car manufacturers/dealers are not in the business of giving you credit upfront to buy a car for nothing.

bazz26

Mercedes cut their retail prices by upto 10% on some models temporarily instead of offering 0% PCP. BMW are contributing up to 5k towards PCP deposits but their PCP interest rates are something like 5.9% or 7.9%. Car companies are playing with numbers now so you need to do the maths rather than just looking at headline grabbing low PCP rates/incentives.

rustynutz

Check out kia, they are offering 0% finance on a traditional hire purchase agreement, the only catch is you need to put 40% deposit down. Sounds ideal for what you are looking for though. They are offering 3.9% on PCP also. I only know this as I am in the same boat as you, doing a lot of research at the moment

nice_guy80

a credit union loan is probably cheaper than the lot

wild turkey

masterboy123 wrote: »

I need an advice on this issue.

If a car costs 35000 euros and have got the savings to pay for it in full.
However then i will be left with limited funds.
So i thought of paying 60% down payment and get 40% loan from dealer. But dealers PCP finance say max deposit could be 11000 euros. And then pay 5.9% APR and total cost of credit 3000 euros. So i will be losing a good amount on high interest.

Is there any other way of paying 60-70% deposit and take a loan for the rest? My bank declined my request of personal loan.

If you have €35000 in savings and the bank declined you, consider changing banks !

bazz26

nice_guy80 wrote: »

a credit union loan is probably cheaper than the lot

I wouldn't say they are cheaper in terms of interest rates but they would be more flexible around repayments if you are struggling with repayments and they don't penalise you in interest if you decide that you want to pay off the loan early.

ShadowHearth

wild turkey wrote: »

If you have €35000 in savings and the bank declined you, consider changing banks !

As soon as I read it I went wtf?! Unless op has really bad credit history.
Op, if I would have 35K savings I would not put it all in car. I would better take finance and pay some amount off Intrest, but have peace of mind and rainy day fund. If **** goes south, you won't need to sell car asap for pennies and try to recover. 35K on your account will give you time to recover and keep repaying payments and not panic.
Your best bet is to go pcp with 0% or lowest you can get apr. Pay/trade in your car as deposit. Pay no Intrest in 3 years and get free servicing. Then in 3 years pay off balloon payment. This way you do borrow some money, but not as much in Intrest.

As other mentioned, be careful with 0% Apr as most likely dealer will try to make sweet love to your anus in other ways.

masterboy123

Well, in this case i am losing approx 3000 euros as total cost of credit.
I am looking at GLA 200 cdi from benz which is in the range of 35 grand (Some people may this car is not great, but that's a different topic).

But you're right & so i want to keep some money saved if things go wrong. However at the same time i don't want to throw away 3 grand in interest rate, after all its our hard earned pennies.
Any idea if benz would do 2-3% APR PCP finance? On their website they have a pcp finance calculator which wont let me put deposit of more than 11 grand and ends up showing 3 grand interest rate.

ShadowHearth wrote: »

As soon as I read it I went wtf?! Unless op has really bad credit history.
Op, if I would have 35K savings I would not put it all in car. I would better take finance and pay some amount off Intrest, but have peace of mind and rainy day fund. If **** goes south, you won't need to sell car asap for pennies and try to recover. 35K on your account will give you time to recover and keep repaying payments and not panic.
Your best bet is to go pcp with 0% or lowest you can get apr. Pay/trade in your car as deposit. Pay no Intrest in 3 years and get free servicing. Then in 3 years pay off balloon payment. This way you do borrow some money, but not as much in Intrest.

As other mentioned, be careful with 0% Apr as most likely dealer will try to make sweet love to your anus in other ways.

masterboy123

How low is their % interest rate? I am reluctant to go and open another account with a new society.

nice_guy80 wrote: »

a credit union loan is probably cheaper than the lot

ShadowHearth

masterboy123 wrote: »

Well, in this case i am losing approx 3000 euros as total cost of credit.
I am looking at GLA 200 cdi from benz which is in the range of 35 grand (Some people may this car is not great, but that's a different topic).

But you're right & so i want to keep some money saved if things go wrong. However at the same time i don't want to throw away 3 grand in interest rate, after all its our hard earned pennies.
Any idea if benz would do 2-3% APR PCP finance? On their website they have a pcp finance calculator which wont let me put deposit of more than 11 grand and ends up showing 3 grand interest rate.

I don't think you can haggle the Intrest rate with dealers. Best option, but dependant on timing is credit union. Sometimes they do specials with lower apr, but their usual apr is pretty much same as banks now. 8-9%.
35K with options already selected? You priced it? Mercs are know to sell you bare bones cars and then charge you a fortune. By the time you make it at least something that does not resemble paddy spec you will be in region of 40K.
Skoda Octavia vrs could be an option too. Same money and they do 0% Apr right now. So would suit you. As I said already: go pcp, put max deposit, pay monthly payments at 0% Apr, have free servicing. Then in 3 years you will build up even more savings and pay off balloon payment.
Nobody said you would need to take full amount of 35K of finance. Pay your own 20K and get a loan of 15K (Apr will be lower on 15K), then go to dealer and look what is the best straight sale price is. Might even knock price down and use less money. In this case you won't use out all of your savings and still will have at least 15K for your rainy day fund.

bear1

What is your dream car op? The gla?
Here is what I'd do, take say max 10 from your savings and buy yourself a 2nd hand car and let the depreciation be taken over by another person.
You own the car outright and you've still got a considerable amount of savings to be ready for future events.
You could get a fairly good car for that.

masterboy123

Yes I like GLA and X1. GLA looks more appealing to me. But yea i am looking to buy 2nd hand GLA from dealer. The problem is there are very little 2nd hand GLA available in the market. Looking to go for leather seats and found one for 35k and is 161 model. I am happy to pay less & get 151 model but there isn't any available. And i don't want to get from UK for personal reasons.

bear1 wrote: »

What is your dream car op? The gla?
Here is what I'd do, take say max 10 from your savings and buy yourself a 2nd hand car and let the depreciation be taken over by another person.
You own the car outright and you've still got a considerable amount of savings to be ready for future events.
You could get a fairly good car for that.

Mantis Toboggan

bear1 wrote: »

What is your dream car op? The gla?
Here is what I'd do, take say max 10 from your savings and buy yourself a 2nd hand car and let the depreciation be taken over by another person.
You own the car outright and you've still got a considerable amount of savings to be ready for future events.
You could get a fairly good car for that.

I don't know, somebody has to buy the new cars.

Sometimes when you've your heart set on a car and you've worked hard for it, go get that new car and enjoy it.

Why should you always settle for second hand cars which you aren't exactly sure how they will fare out?

You never know the day you'll drop dead, money in the bank won't be much good to you then.

OP, if you've saved up and you can afford the car go for it. I'd go the PCP route myself but shop around for the best rate.

MojoMaker

If the takeaway business is going well would you consider borrowing from the family business and finance it as a low interest loan on their books?

i.e - keep it out of the banks altogether.

CIP4

Op you could always get a HP loan which allows you to put down whatever % deposit you want. Also its worth noting that although a HP loan will have a higher interest rate you may actually end up paying less interest vs. a lower rate PCP loan as with PCP whatever the balloon repayment is you end up paying interest on that for 3 years plus interest on the rest. With HP by the last year of your loan the loan amount will be small and you won't be paying much interest. So ultimately look at how much interest you are paying in terms of money as a 5.9% HP loan may have a lower interest cost than a 3.9% PCP loan obviously it depends on the term how much you are borrowing etc. HP is the simplest option as you pay x repayments and thats it the car is yours.

I recently bought a car and went the HP route as my % deposit was high and I didn't like the idea of not owning the car at the end of the term plus 3 years was too long a term for me. But look PCP suits some just do the figures and look at actual cost and see what suits you the best.

masterboy123

This is really great advice from everyone.

I am trying to get personal loan which turns out the best at the moment. 2nd option is Hire Purchase mentioned above.

Also a friend told me too wait till February as car prices are going to go down with the new year and 161 model will depreciate by 3 grand or so. Any comments on same?

Skommando

masterboy123 wrote: »

Also a friend told me too wait till February as car prices are going to go down with the new year

for what reason ?

masterboy123

Because 161 car will be an year old and therefore it will depreciate

Skommando wrote: »

for what reason ?

Skommando

masterboy123 wrote: »

Because 161 car will be an year old and therefore it will depreciate

161 ?

I thought you meant new car prices are going to be down next year, every new car rapidly starts depreciating from the moment it's bought, and the greatest depreciation of all is at the start.

masterboy123

Yea i was talking about 161.
My post
"Also a friend told me too wait till February as car prices are going to go down with the new year and 161 model will depreciate by 3 grand or so"

So yea like you are also saying greatest depreciation once it comes in the road.

Skommando wrote: »

161 ?

I thought you meant new car prices are going to be down next year, every new car rapidly starts depreciating from the moment it's bought, and the greatest depreciation of all is at the start.

bazz26

OP, did you try getting a car loan rather than a personal loan? Car loans usually have a lower interest rate than a personal loan as they are secured.

And if you can wait a few months then it's worth doing that, used prices don't drop automatically on Jan 1st but come late February or beginning of March you might see some movement in prices as people trade-in and 3 year old PCP cars are coming back.

masterboy123

Do you think prices will go up in March??

bazz26 wrote: »

And if you can wait a few months then it's worth doing that, used prices don't drop automatically on Jan 1st but come late February or beginning of March you might see some movement in prices as people trade-in and 3 year old PCP cars are coming back.

bazz26

I cannot see how given that most used cars depreciate in value as they age, the exception would be something rare or really special.

Idbatterim

credit union have a loan within share option, which might work well for you. Hilarious actually being on a thread, where interest is being mentioned as a substantial cost, which it is. Isnt it all about the E280 motor tax and interest isnt a legitimate cost? :rolleyes: Depreciation also isnt a cost to most :rolleyes:

op would you buy a demo etc? I work beside a bm garage and know a few of the lads working there, the hit people bought buying a 161 brand new v a 161 demo in the second half of the year, was substantial...

masterboy123

Well i have taken into consideration the cost of motor tax, fuel economy, interest rate as well as my insurance which is ridiculously high.

I wouldn't go for demo version. Because so many people drive the car and uses the gear differently...i believe in long term demo car would cause engine trouble.

Idbatterim wrote: »

credit union have a loan within share option, which might work well for you. Hilarious actually being on a thread, where interest is being mentioned as a substantial cost, which it is. Isnt it all about the E280 motor tax and interest isnt a legitimate cost? :rolleyes: Depreciation also isnt a cost to most :rolleyes:

op would you buy a demo etc? I work beside a bm garage and know a few of the lads working there, the hit people bought buying a 161 brand new v a 161 demo in the second half of the year, was substantial...