Car Finance - How? What? Why?
Discussion
JonV8V said:
Tesla - is that the same company who mislead a little on the tax benefits for company car drivers and get round the bail out out of a finance deal after 2 months by linking their GFV to having finance throughout?
As far as I know Tesla don't sell PCP, they have a hire-purchase plan offered by a third party. tomglibbery said:
timbo999 said:
Some of the above posts imply that you don't pay interest on the GFV, but trust me you do!!
You don't. It is entirely separate the the finance agreement. Source? I sell cars for a living and arrange finance every day.
walm said:
I have a couple of pretty simple rules.
1. Ignore the monthly and ignore the APR.
2. Work out the total cost of ownership.
Whichever has the lowest TCO is the best deal.
APR is NOT a good measure.
Monthly payments are a scam used by idiots/liars to get you into a more expensive car than you really want or push you into a bad deal.
My worry for you OP is that, like many, you are SHOCKED by the odd four-figure out of pocket expense on maintenance for a slightly older car.
So to avoid that you are about to spaff £12.6k on depreciation + interest.
So to avoid £1.5k every now and again, you have spent nearly £13k – nearly 10 times as much.
Now sure, every car will face depreciation.
But the 3-5 year period is obviously a lot more than say 5-8yr – yet it isn’t clear that the maintenance costs are that much more.
So what I do is aim for a low mileage but slightly older car in an attempt to minimise BOTH maintenance and depreciation.
The question of finance is just finding the lowest possible TCO and here the MAIN swing factor is far more likely to be depreciation rather than interest rate.
The same topic comes up time and time again and the same falsehoods get stated time and time again.1. Ignore the monthly and ignore the APR.
2. Work out the total cost of ownership.
Whichever has the lowest TCO is the best deal.
APR is NOT a good measure.
Monthly payments are a scam used by idiots/liars to get you into a more expensive car than you really want or push you into a bad deal.
My worry for you OP is that, like many, you are SHOCKED by the odd four-figure out of pocket expense on maintenance for a slightly older car.
So to avoid that you are about to spaff £12.6k on depreciation + interest.
So to avoid £1.5k every now and again, you have spent nearly £13k – nearly 10 times as much.
Now sure, every car will face depreciation.
But the 3-5 year period is obviously a lot more than say 5-8yr – yet it isn’t clear that the maintenance costs are that much more.
So what I do is aim for a low mileage but slightly older car in an attempt to minimise BOTH maintenance and depreciation.
The question of finance is just finding the lowest possible TCO and here the MAIN swing factor is far more likely to be depreciation rather than interest rate.
The APR represents the TRUE effective cost of the money borrowed and hence is the only unbiased way of comparing different deals and ensuring you get the best deal, for deals of over 1 year. That also means that a higher APR can result in a lower TCO (worse value) depending on the shape of the repayment profile.
For some people a deal with a higher APR can make more sense than a lower APR if the repayment profile suits them better (e.g. loan v PCP etc)
sidicks said:
The APR represents the TRUE effective cost of the money borrowed and hence is the only unbiased way of comparing different deals and ensuring you get the best deal, for deals of over 1 year. That also means that a higher APR can result in a lower TCO (worse value) depending on the shape of the repayment profile.
My understanding is that many costs of borrowing can be excluded from APR. Admittedly I don't con people into buying finance for a living so I won't be 100% versed in the very latest tricks to avoid comparability.Hence TCO is better owing to the word "total" in there.
walm said:
My understanding is that many costs of borrowing can be excluded from APR. Admittedly I don't con people into buying finance for a living so I won't be 100% versed in the very latest tricks to avoid comparability.
Hence TCO is better owing to the word "total" in there.
APR has to take into account all costs over the life of the transaction,Hence TCO is better owing to the word "total" in there.
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