Is car finance the way to go now?
Discussion
f1nn said:
Good for you, and I'm not suggesting a bank loan wasn't the cheapest way to finance the car, but you're still on the hook for 5 years, which some finance companies offer regardless.
Also, I'm assuming you bought your car from a dealer, what difference would it have made if he took your banks 12.5k, or the finance companies 12.5k? He would have been paid in full before, effectively at least, before you took the car away and he may of even got some form of kickback on the finance.
In any case, the car you bought was never a £16995 car, and the way you funded it certainly didn't turn it into a 12.5K car.
List price it was £16,995 but yes I agree it wasn't necessarily the way I funded it that got it down to 12.5k, none the less that was how much I paidAlso, I'm assuming you bought your car from a dealer, what difference would it have made if he took your banks 12.5k, or the finance companies 12.5k? He would have been paid in full before, effectively at least, before you took the car away and he may of even got some form of kickback on the finance.
In any case, the car you bought was never a £16995 car, and the way you funded it certainly didn't turn it into a 12.5K car.
Edited by f1nn on Friday 2nd September 16:49
I've always been against finance preferring a bank loan but after a guy I know had a bad experience with a dealer I think I would do it on a high end used car
car was 31k, he had it a few weeks and it developed a fault, dealer said claim on warranty, warranty said it was a publicised fault so bounced it back to the dealer.
dealer was an arse who refused to pay for it to be fixed, 5k bill
contacted finance company who authorised the repair immediately.
Car is now fixed and running fine
car was 31k, he had it a few weeks and it developed a fault, dealer said claim on warranty, warranty said it was a publicised fault so bounced it back to the dealer.
dealer was an arse who refused to pay for it to be fixed, 5k bill
contacted finance company who authorised the repair immediately.
Car is now fixed and running fine
smiller147 said:
List price it was £16,995 but yes I agree it wasn't necessarily the way I funded it that got it down to 12.5k, none the less that was how much I paid
Sorry if I sound skeptical, but broker discounts on Seat Ibiza's seem to be around 10-15%. You're claiming better than 25%. Waving cash around isn't goung to make that sort of difference, if any.Was this in a new, unregistered car? Factory order? No part-exchange?
wack said:
I've always been against finance preferring a bank loan but after a guy I know had a bad experience with a dealer I think I would do it on a high end used car
car was 31k, he had it a few weeks and it developed a fault, dealer said claim on warranty, warranty said it was a publicised fault so bounced it back to the dealer.
dealer was an arse who refused to pay for it to be fixed, 5k bill
contacted finance company who authorised the repair immediately.
Car is now fixed and running fine
This is a very good point , if you take the hire purchase or PCP finance route you enter in to a tri-partite agreement between yourself, the dealer and the finance company all of whom have a responsibility to ensure the vehicle is of a suitable quality (obviously the responsibility is not with the customer at the time of sale). This makes it a lot easier to reject a car or have issues dealt with should they arise, I don't think it just higher end cars this is more beneficial to as end of the day any car could suffer potentially expensive issuescar was 31k, he had it a few weeks and it developed a fault, dealer said claim on warranty, warranty said it was a publicised fault so bounced it back to the dealer.
dealer was an arse who refused to pay for it to be fixed, 5k bill
contacted finance company who authorised the repair immediately.
Car is now fixed and running fine
Just to address some of these points.
As with all finance, there is no one-size-fits-all approach. Many people think 'cash is king' which TBH is not always the case. You need to look at all of the angles and see what works for your own personal circumstances.
smiller147 said:
a) You can pay it off over a longer time
Most car finance companies will offer 60m HP, which realistically is what most unsecured lenders will also do.smiller147 said:
b) You own the car from the get go
Double edged sword. You do, but that's not always a great thing. you get much more consumer protection with a secured loan and also if you have difficulty with the payments you can sometimes just give the car back (rule of halves)smiller147 said:
c) Dealers offer huge discounts to cash buyers
You would normally get the same 'cash' discount if taking the standard HP, and sometimes you're better off taking the dealer finance to get a 'deposit contribution' and a supported low rate dealsmiller147 said:
d) It is just cheaper in general to use a good bank loan.
Interest rates are sometimes lower, I'll agree with that. Not always the case.As with all finance, there is no one-size-fits-all approach. Many people think 'cash is king' which TBH is not always the case. You need to look at all of the angles and see what works for your own personal circumstances.
kiethton said:
jhonn said:
kiethton said:
Always found the best deals are found by taking their finance on whatever terms they want you to (to get the best discount) and then settling up the finance with the finance house (not the dealer) within 14 days 
Is that quite a straightforward/routine thing to do? Apologies if it's a stupid question - I'm thinking of going for a new Fiat Spider and was thinking of the finance route.(No trade-in).When you say 'settling up the finance' is that paying off the loan completely? Are there not any penalty clauses?
Thanks!
May make it harder to get approved for credit elsewhere (a bank) if needed though
Note the 14 days is a little vague - strictly it's from when you sign the docs, and dealers will often ask you to go in a few days before delivery to sign, so be careful to not leave it until 14 days after you get the car. Then you would be settling and may have to pay up to 60 days interest, as well as any fees.
We did this last year buying a VW - I think the dealer would have turned himself inside out to get us to commit. Waited a few days to make sure car was OK then called VW FS who couldn't have been more friendly. Once you say you're going to withdraw the balance is frozen and (at least in VW's case) they give you 30 days to pay.
Don't mention to the salesman you're going to do this!
smiller147 said:
Now I get this might not be to everyones taste but it worked well for me. Got my Ibiza down from £16,995 to £12,500 and I'm paying it off over 5 years.
b
ks did you pay £12500 for a car that was up at £16,995! That would mean if they sold it at list they had £4495 profit in it which is just rubbish 
I worked for a VAG main dealer of a similar brand and I can tell you I never had £4500+ across any car and I definitely didnt have it across our Ibiza equivalent, The most I ever had across one of those was £2200 and even that was rare. However if you want to add a copy of the invoice (with sensitive info hidden of course) I would love to be corrected.
Sheepshanks said:
Just a point here - doing it within 14 days you're not settling, you're withdrawing. That means no doc etc fees, although they're generally being done away with now anyway. You do pay interest on daily basis until the point you ask to withdraw but it'll be a tiny amount.
Note the 14 days is a little vague - strictly it's from when you sign the docs, and dealers will often ask you to go in a few days before delivery to sign, so be careful to not leave it until 14 days after you get the car. Then you would be settling and may have to pay up to 60 days interest, as well as any fees.
We did this last year buying a VW - I think the dealer would have turned himself inside out to get us to commit. Waited a few days to make sure car was OK then called VW FS who couldn't have been more friendly. Once you say you're going to withdraw the balance is frozen and (at least in VW's case) they give you 30 days to pay.
Don't mention to the salesman you're going to do this!
Just to clear this up.Note the 14 days is a little vague - strictly it's from when you sign the docs, and dealers will often ask you to go in a few days before delivery to sign, so be careful to not leave it until 14 days after you get the car. Then you would be settling and may have to pay up to 60 days interest, as well as any fees.
We did this last year buying a VW - I think the dealer would have turned himself inside out to get us to commit. Waited a few days to make sure car was OK then called VW FS who couldn't have been more friendly. Once you say you're going to withdraw the balance is frozen and (at least in VW's case) they give you 30 days to pay.
Don't mention to the salesman you're going to do this!
If you withdraw, there is a distinct possibility the finance company will expect you to pay back any deposit contributions you have received as well as any free servicing/warranty etc being null & void.
This is being written into most finance paperwork now so if you plan on going this route please read ALL of your paperwork carefully, you can't claim ignorance once you've signed it!!
93DW said:
smiller147 said:
Now I get this might not be to everyones taste but it worked well for me. Got my Ibiza down from £16,995 to £12,500 and I'm paying it off over 5 years.
bks did you pay £12500 for a car that was up at £16,995! That would mean if they sold it at list they had £4495 profit in it which is just rubbish I worked for a VAG main dealer of a similar brand and I can tell you I never had £4500+ across any car and I definitely didnt have it across our Ibiza equivalent, The most I ever had across one of those was £2200 and even that was rare. However if you want to add a copy of the invoice (with sensitive info hidden of course) I would love to be corrected.
Butter Face said:
Just to clear this up.
If you withdraw, there is a distinct possibility the finance company will expect you to pay back any deposit contributions you have received as well as any free servicing/warranty etc being null & void.
This is being written into most finance paperwork now so if you plan on going this route please read ALL of your paperwork carefully, you can't claim ignorance once you've signed it!!
I was careful to check with VW FS what the balance would be IF we withdrew as they'd made a £2750 contribution. Many people have done it with VW though without any issues. I would think they'd be opening up a can of worms as it's illegal to charge different prices for cash or credit.If you withdraw, there is a distinct possibility the finance company will expect you to pay back any deposit contributions you have received as well as any free servicing/warranty etc being null & void.
This is being written into most finance paperwork now so if you plan on going this route please read ALL of your paperwork carefully, you can't claim ignorance once you've signed it!!
We also got a discounted service deal but having paid something towards it I was confident there'd be no problem there. I have heard Toyota on free servicing deals send out vouchers just before the service is due but only if the PCP is still active.
If push came to shove you could always just revert to settling anyway - you're home free then, and the extra cost would be minimal especially as fees are generally being done away with. Last time I looked it was just £10 with VW, whereas they used to be a couple of hundred.
93DW said:
Granfondo said:
Just click on drivethedeal.com and you will be proved wrong!
Its been a while since I sold new cars, Id forgotten all about those sites. 2 minutes on there reminded me why I stopped selling new cars Granfondo said:
Just click on drivethedeal.com and you will be proved wrong!
Ah, yes. Whopping finance contributions However, note this, which contradicts the message that waving cash around gives a better price.
DriveTheDeal said:
This discount is conditional upon you taking out PCP finance at 7.1% APR Representative arranged by the dealer. If you do not wish to take out this finance, then you will need to add back £250 to the prices that we quote.
benjijames28 said:
Dr Jekyll said:
This is the kind of statement that boggles my mind. I have enough disposable income to build up sufficient savings to buy a car, MOTs and breakdowns are not something I lose sleep over, if the cost is worrying then I've bought the wrong car. But £250 a month going out of my account every single month, even if I've only driven it a few times, is something I would most definitely notice. Just think what you can do with £250. A lot of people barely put that into their pension.
Pension? What the hell is a pension?Sorry im under the age of 30, we are shafted with s
t wages, higher cost of living than you older lot. Pensions are very low on priority list. My generation tends to live for now. We all struggle to get on housing ladder. ked over by the baby boomers with their final salary pensions, cheap houses and buy to let portfolios. I earn more than the average uk employee, and even if can ever save the money for a deposit, I can't get a big enough mortgage because all the flats I want to buy have been bought by baby boomers and their bloody portfolios. To buy a 2 bed flat in Cardiff where I want to live it's £180k. To get a deposit on a mortgage like that I would have to save 40k, so forgive me for wanting to have a nice car in the mean time.Generation buy will come to a end until the baby boomers come to retire and die and suddenly their bloody portfolios flood the market.
Don't even get me started on pensions, sure there are still good schemes out there, my partner gets 12% for every 6% he puts in, but I'm stuck with a poxy 1% contribution. Fantastic. Can't wait to be retired and have that dazzling £300 a year to spend! It's just not worth it. Be easier to just kill myself when I turn 70, if that's even when I can retire.
Why save for tomorrow and for go all the good things now while I have my health and good looks?
Maybe the solution is to buy in a awful area, but why should I? for now if I don't want to live at home I'm stuck renting paying off a f
king baby boomers 2nd pension, so they can Swan about banging on about how my generation are the worst, shouldn't be buying shiny white audis and should be buying houses instead. Does my head in.
Edited by Nickbrapp on Sunday 4th September 22:47
There's one thing that confuses me about finance and that is the GFV.
Is this known as the balloon payment that you pay at the end of the term to keep the car?
I also see stuff about using the car to fund the deposit on a new car after the term. How does this work? Just as an example, if the balloon payment was £15K, then how would that fund a deposit on a new car?
I'm just doing some sums at the moment to see if it's better to go down the finance route as I almost always change cars at 3 years old at the very latest.
Is this known as the balloon payment that you pay at the end of the term to keep the car?
I also see stuff about using the car to fund the deposit on a new car after the term. How does this work? Just as an example, if the balloon payment was £15K, then how would that fund a deposit on a new car?
I'm just doing some sums at the moment to see if it's better to go down the finance route as I almost always change cars at 3 years old at the very latest.
TazLondon said:
There's one thing that confuses me about finance and that is the GFV.
Is this known as the balloon payment that you pay at the end of the term to keep the car?
I also see stuff about using the car to fund the deposit on a new car after the term. How does this work? Just as an example, if the balloon payment was £15K, then how would that fund a deposit on a new car?
I'm just doing some sums at the moment to see if it's better to go down the finance route as I almost always change cars at 3 years old at the very latest.
If the balloon payment is £15k but the trade value is £18k you will often (if PCP) get the £3k difference back as a deposit against a new car - keeps you in the cycle....Is this known as the balloon payment that you pay at the end of the term to keep the car?
I also see stuff about using the car to fund the deposit on a new car after the term. How does this work? Just as an example, if the balloon payment was £15K, then how would that fund a deposit on a new car?
I'm just doing some sums at the moment to see if it's better to go down the finance route as I almost always change cars at 3 years old at the very latest.
Either that or you can sell the car and pocket the difference after settling the GFV
If underwater, or the car is worth exactly £15k there may be no money to roll over into another deposit....
For leasing, none of the above applies - you just hand the car back and have to find another deposit/initial payment
TazLondon said:
There's one thing that confuses me about finance and that is the GFV.
Is this known as the balloon payment that you pay at the end of the term to keep the car?
I also see stuff about using the car to fund the deposit on a new car after the term. How does this work? Just as an example, if the balloon payment was £15K, then how would that fund a deposit on a new car?
I'm just doing some sums at the moment to see if it's better to go down the finance route as I almost always change cars at 3 years old at the very latest.
It's two things.Is this known as the balloon payment that you pay at the end of the term to keep the car?
I also see stuff about using the car to fund the deposit on a new car after the term. How does this work? Just as an example, if the balloon payment was £15K, then how would that fund a deposit on a new car?
I'm just doing some sums at the moment to see if it's better to go down the finance route as I almost always change cars at 3 years old at the very latest.
1) The balloon payment.
2) The minimum amount the vehicle will be valued at when the agreement finishes.
So the worst case is you can hand the car back as the balloon and walk away. But with luck the actual value will be higher so the difference can be used towards a deposit on a new car. The GFV may be deliberately set at a level intended to leave a deposit because that makes it easier to encourage you to get a fresh car. On the other hand it may be set at a high level leaving no equity to keep the monthly payments down (Mercedes used to be notorious for this).
Also bear in mind you are paying interest on the entire GFV all the way through the deal so the lower the GFV the cheaper in the long run. If you really don't need the option of keeping the car after the agreement it's probably cheaper to lease.
Gassing Station | Car Buying | Top of Page | What's New | My Stuff