maidhc wrote: » Buying a car *is* a financial decision. Second biggest one after a house. Why is it stupid advice to buy a car from savings? Given that you are earning 0% on it in the bank, it is cheap money. If you don't have ample reserves after buying a car, then sure, you shouldn't do it. I'm not against hp or pcp per se, just how people are using it. It isn't all sustainable. Hp is obviously much more transparent and a far better product imo. Leasing also has its uses, more in a commercial context though. I would also suggest buying a new tv every two years would be pretty idiotic. iPhones obviously tend not to last as long, so different factors apply. If you had any knowledge of regulatory matters (I do...) a great deal of time is spent trying to protect people, not from themselves, but from savvy sales people.
dil999 wrote: » I didn't, I argued that the cost of driving a car from day 1 to 365 of driving a car is approximately the same as from day 366 to 731. 'Value' is a subjective concept and is not, on its own, a financial term and is meaningless as such
acronym Chilli wrote: » I may get to respond to other points, but... This, this is where you show the gap. You're muddling words like value, cost, price, finance. You've said it costs the same to drive a car from day 1 to 365 as from 366 to 731, and for the 365 afterwards. That's ridiculous. So why would anyone ever drive a car for the third year when they could have a brand new car for that year instead? Value is not meaningless. It's based on the price you'll pay for something.
dil999 wrote: » Your last comment suggests that you don't have a financial background. Value in terms of finance tends to be an agreed realisable amount. the Value of an asset in terms of accounting is what you could potentially sell that asset for. Value in terms of a purchase transaction is not a financial concept. In that context, it is a subjective importance. What may be of value to you may not be of value to someone else. Price is an agreed amount based on what the purchaser wants to pay and the seller whats to sell at. Value doesn't enter into it. You might value your 10 year old BMW 320 at 12K, but that is never going to be the price. Rather than responding to my other points, go out and have a few pints and relax. You will feel a lot better for it.
ftm2008 wrote: » Does anyone know the apr when Eco grants are used on the VW.. in particular the Skoda and Seats.. it is 0% or eco grant.
ftm2008 wrote: Does anyone know the apr when Eco grants are used on the VW.. in particular the Skoda and Seats.. it is 0% or eco grant.
Lantus wrote: » Looks like these vehicles will all be scrapped based on t&C's. When you trade in. Presumably the value of older diesels for ten years or older is now sufficiently poor? A private sale may be slightly more beneficial in some cases?
dil999 wrote: » PCP is a loan. No different from a bank loan or a hire purchase agreement. A dangerous tool????
twin_beacon wrote: » PCP, IS a hire purchase agreement, which is very different to a car loan as you don't own the car during the period of finance with a hire purchase. If you can't afford a new car without a PCP deal, then I would reconsider as any change to your current financial situation means you may not be able to afford PCP either and you could lose your car, and the money you paid on the car. Or even a change in job may mean that you may go over the mileage limits. The overall winner of a PCP deal is the person that fully intends on keeping the car after the 3 year deal, as they get a lower interest rate for the first 3 years.
dil999 wrote: » Yes you are correct in that a loan gives you 'ownership'. In practical terms that's pretty irrelevant. You are in a better position with a pcp if your financial situation changes because: 1: you still have your savings. 2: you can hand back the car to repay the finance. If less than half has been repaid you will have to pay the difference between what is owed and the current price of the car, maybe 5% of the car price at worst If you have paid more than half you just hand back the car.
twin_beacon wrote: » What do you mean by you still have your savings? If you have a car loan and cant make the repayments, you can just sell the car to cover off the remainder of the loan, and keep the balance.
dil999 wrote: » Re the savings reference, read back on the previous 100 or so posts.
26000 Elephants wrote: » But why would someone on PCP still have savings, while someone with a loan would not? Savings are, at best, a very spurious pillar to your argument.
acronym Chilli wrote: » I think the main argument is that you haven't ploughed them into the cash purchase of a car. I don't see the connection in the traditional car loan scenario though. If you've a car loan, then you should still have your savings. In fact, you might have all your savings since you wouldn't be obliged to pay the upfront deposit, could finance the entire amount.
batman1 wrote: » How many fancy jeeps and cars do you see of 06/07 where people got extra on the mortgage for a car and now they're stuck with them, paying them off over 40 years or whatever.
mickdw wrote: » Yes you could pay extra car money into the mortgage at the rate you would normally pay for a car and it could work very cheap money. The reality is rather different for most. They took car money with mortgage, fell on harder times in recession and if lucky managed to keep the mortgage up to date. Paying in extra would be a fantasy for most. Now 10 years later they are still paying for that car and it needs to be replaced meaning they will end up paying for increased mortgage and now new car loan too. The reality in alot of cases was that they could never afford the new car 10 years ago.
dil999 wrote: » Articulate but inaccurate. twin_beacon posted "If you can't afford a new car without a PCP deal, then I would reconsider as any change to your current financial situation....." If not using PCP (or HP), the only other ways to purchase a new car is a bank/credit unit loan or cash i.e. savings Hence i mentioned savings, because if you didn't use PCP and used savings to purchase your car, then you would have no savings in reserve in case of "any change to your current financial situation"
twin_beacon wrote: » You are making assumptions, and took my points up wrong. Very few people buy a brand new car totally from their savings. However, IF you have that much disposable cash at the ready, by all means do it as you have no finance costs. I'm not suggesting that anybody clears out their savings, to buy a car, and leave them in financial difficulty as a result. If not using PCP/HP, the alternative is not just a loan OR savings. My last car (bought second hand, but thats irreverent) was a combination of trade in, few grand from the savings (of course I didn't clear it out) and a small loan to cover the remainder. The car before that was paid for via trade in and a loan. With a PCP deal, you basically pay 60% of the value of a car over 3 years. My point being, if you can't afford to finance that car over a 5 year period, with a car loan, then you should reconsider, as the monthly repayments should be roughly the same. If you enter into a PCP deal for a car worth lets say for 35k, then and when your 3 years are up, you trade in, and get the same car again, by the end of year 2 on your second car, you have basically paid out a little over 35k, depending on the APR. You asked earlier how easy is to sell a car? Depends on the car, however its impossible to sell if you are on PCP, as its not actually your car. PCP is great for some people, but you are implying its the best way for everybody to buy new car, which it isn't.
dil999 wrote: » - You get a predictable value back after 3 years if you decide to change. So you minimise the depreciation risk. Even high mileage users can benefit. 30,000 miles over the agreed limit only knocks €2400 of the GMFV
dil999 wrote: » Just to clarify. PCP is not a way to 'buy a new car'. Its a way to finance the purchase. I am not implying anything. I am categorically saying it. PCP is by far the best way to fund a new car. For anybody. - It's cheap, generally the lowest interest rates of any finance option. 0% in many cases. - You get a predictable value back after 3 years if you decide to change. So you minimise the depreciation risk. Even high mileage users can benefit. 30,000 miles over the agreed limit only knocks €2400 of the GMFV - You get the same dealer discount as a cash purchaser even with a trade in. - The half-rule protects you in that if you have paid over half the loan amount, you can hand back the car and the loan is settled. In fact if you haven't paid back half, you can still return the car and you are only liable for the difference in what you paid and half the loan amount. - You can use a trade in. - You can use part cash - You can sell the car, It requires some more logistics around paying off the remaining amount before finalising the sale. But its very doable, and probably not much more effort than trying to sell any new to 3 year old car privately. Also selling the car is an unlikely scenario, it's an new to 3 year old car. The finance only runs for 3 years and you have a trade in option and hand back option. - You can purchase the car outright at anytime if you wish. You can finance the GMFV through cash or a loan No other finance structure offers you all these benefits. Not one single point has been made in the 180 odd pages of posts here (many informed, many uninformed) that has even gone close to making me change my opinion on it. Your example is correct if you want to change your 35K car every 2 to 3 years it will cost you approx 20% of the price of the car. 7K per year. 35K every 5 years is spot on. That's a function of the price of the car and the depreciation rate of the car. Its completely independent of the method you use to finance. Cash, Personal loan, PCP its all the same. Like purchasing any thing if you agree to pay more than you can afford then you can get in trouble. Be that using too much cash, or financing something by paying a higher monthly payment than you can afford. I really think this thread has been done to death at this stage
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