The economics of new car sales
Discussion
liner33 said:
You cant spend it twice ! I wouldn't advocate spending all of ones savings on buying a car but would think that those that would spend £30k of their savings on a car probably have other money to play with as well and got it because they didn't spend it on interest/pcp deals
Thats a real leap there.I dont imagine theres very many people at all will go out and drop £30,000 of their own hard earned into a new 3 series.
If they have money - REAL money - its not because they've saved up the interest they would otherwise have paid.
daemon said:
Again, applying YOUR beliefs on to them. Do you not think people can multiply £200 x 36 to see what something is going to cost them. And they'll know what the deposit is and whether it suits them to pay it.
That's only part of the equation though, there is the cost of a used car, depreciation, maintenance to compare as well. And there are still lots of people who don't understand finance, the difference between compound and simple interest and all the rest.
If there were the same financial marketing behind used Honda Accords, I guess they would be more popular than they are. The fact that manufacturers control pricing of new but not used cars is how they can facilitate this. If 75% of new cars go on finance, the list price is almost irrelevant - clearly you can sell far more cars when its split up into convenient payments than if it's a big lump sum. In other countries where finance is less of a front-end part of car sales, used cars are expensive in relation to new.
Dr Jekyll said:
daemon said:
Exactly it.
All these financial experts and all they can find to do with their hard earned is put it into something thats depreciating like snow off a ditch
You do realise that financed cars still depreciate?All these financial experts and all they can find to do with their hard earned is put it into something thats depreciating like snow off a ditch
My point being that for all this great financial advice posed about how its so much better to buy a new car with cash compared to a PCP or lease deal when the best they can do with their money is put it into something thats going to give them a typical return of -50% in three years.
IF you'd £30,000 in savings would you REALLY sink it into a car?
I can genuinely understand people putting cash into something at £5,000.
I can genuinely understand people putting cash into something like a TVR (as someone on this thread has done) thats going to hold or increase in value.
But i really cant get my head around those saying that buying a common or garden car thats going to drop in value with your own hard earned is a great idea??
As someone has posed already - which makes more sense -
- Spending £10,000 cash on a Seat MII?
- Paying £119 deposit and £119 a month?
Which is going to give you more satisfaction? Looking out the window and thinking "s
t, that cost me £10,000" or "wow i've a brand new car on my drive for £119 a month"?Edited by daemon on Friday 21st November 19:48
daemon said:
Uh huh.
My point being that for all this great financial advice posed about how its so much better to buy a new car with cash compared to a PCP or lease deal when the best they can do with their money is put it into something thats going to give them a typical return of -50% in three years.
IF you'd £30,000 in savings would you REALLY sink it into a car?
If I wanted a £30,000 car yes I would, in preference to taking the same depreciation hit and paying interest as well.My point being that for all this great financial advice posed about how its so much better to buy a new car with cash compared to a PCP or lease deal when the best they can do with their money is put it into something thats going to give them a typical return of -50% in three years.
IF you'd £30,000 in savings would you REALLY sink it into a car?
Obviously if there was a particular deal that meant the financed car was discounted therefore less than £30,000 that would be different, but that's comparing apples and oranges.
daemon said:
As someone has posed already - which makes more sense -
Which is going to give you more satisfaction? Looking out the window and thinking "st, that cost me £10,000" or "wow i've a brand new car on my drive for £119 a month"?
It's complicated. Unless you are a 17-year-old girl, I'm not sure you are get much pride about owning a Seat Mii anyway. - Spending £10,000 cash on a Seat MII?
- Paying £119 deposit and £119 a month?
Which is going to give you more satisfaction? Looking out the window and thinking "s
t, that cost me £10,000" or "wow i've a brand new car on my drive for £119 a month"?The finance is a decent deal but ultimately it's paid for by the customer. You could get a new 107 for £6k, for example. Or for £10k a new, larger car.
The finance is first and foremost in pricing that. Yes, the finance is better than cash here, but that's a marketing thing to sell more cars - they could cut the price of the car, but they make more money by selling huge numbers of the things on finance than by pricing it cheaper in the first place. If you have the £10k cash you can buy, say, a used Mercedes S Class, instead. And that's not possible on finance.
KTF said:
A bank loan might disagree with that 
Fair point, but that requires someone to make the connection. Amazing the number of people who can't, and think that dealer finance is the only way to get a car.People used to rent TV's but you never hear of that now, yet the reasons for doing so ran along the same lines as why people justify lease cars....
thelawnet said:
daemon said:
As someone has posed already - which makes more sense -
Which is going to give you more satisfaction? Looking out the window and thinking "st, that cost me £10,000" or "wow i've a brand new car on my drive for £119 a month"?
It's complicated. Unless you are a 17-year-old girl, I'm not sure you are get much pride about owning a Seat Mii anyway. - Spending £10,000 cash on a Seat MII?
- Paying £119 deposit and £119 a month?
Which is going to give you more satisfaction? Looking out the window and thinking "s
t, that cost me £10,000" or "wow i've a brand new car on my drive for £119 a month"?r11co said:
Fair point, but that requires someone to make the connection. Amazing the number of people who can't, and think that dealer finance is the only way to get a car.
People used to rent TV's but you never hear of that now, yet the reasons for doing so ran along the same lines as why people justify lease cars....
Because TVs at the time were expensive, dropped in value like a stone, prone to unexpected major failure as they got older and were superceded by the latest model quite quickly? Yeah that rings a bell.People used to rent TV's but you never hear of that now, yet the reasons for doing so ran along the same lines as why people justify lease cars....
Dealer finance is often the best way to buy a NEW car as its usually incentivised by the manufacturer with "manufacturer contributions" or subsidised rates or PCP format deals.
Buy a new Z4 Sdrive 28i and BMW will put £6500 into the finance deal that you cant otherwise get as discount. Why would you go to the bank?
Antony Moxey said:
Its £109 actually, so a bit better. As it happens my daughter is a 20 year old girl and is pleased as punch to have a brand new Mii sat outside. I'll point out to her the error of her ways later, as well as chastising both myself and my wife for agreeing to the deal for her birthday present. Tw*t.
I think you got a cracking deal and i'm sure your daughter is / will be chuffed.You've a brand new car with all the latest safety features for what it could be costing to run some old banger.
daemon said:
Grandfondo said:
Its you that seems to have the problem understanding the difference between "affordabillity" and ownership! 
I dont understand how, given you've already admitted in this thread you've used a PCP deal in the past, its an option for people.Really, whats it to you how people chose how to finance their cars? What does it really matter?
Why do you feel its so important to be the "better man" on an internet forum?
Grandfondo said:
daemon said:
Grandfondo said:
Its you that seems to have the problem understanding the difference between "affordabillity" and ownership!
I dont understand how, given you've already admitted in this thread you've used a PCP deal in the past, its an option for people.Really, whats it to you how people chose how to finance their cars? What does it really matter?
Why do you feel its so important to be the "better man" on an internet forum?
Antony Moxey said:
Its £109 actually, so a bit better. As it happens my daughter is a 20 year old girl and is pleased as punch to have a brand new Mii sat outside. I'll point out to her the error of her ways later, as well as chastising both myself and my wife for agreeing to the deal for her birthday present. Tw*t.
I beg your pardon. Unless you are a 20 year old girl. daemon said:
Grandfondo said:
daemon said:
Grandfondo said:
Its you that seems to have the problem understanding the difference between "affordabillity" and ownership!
I dont understand how, given you've already admitted in this thread you've used a PCP deal in the past, its an option for people.Really, whats it to you how people chose how to finance their cars? What does it really matter?
Why do you feel its so important to be the "better man" on an internet forum?
PCP/lease gets some people into cars they can't afford to own!
Which part of that sentence is not factually correct ?
Grandfondo said:
WRONG again!!!!!! Learn To read. See if you can get this into your head.
PCP/lease gets some people into cars they can't afford to own!
Which part of that sentence is not factually correct ?
Speaking of yourself in the third party, which is weird and creepy in equal measures you saidPCP/lease gets some people into cars they can't afford to own!
Which part of that sentence is not factually correct ?
Grandfondo said:
Not at all,but his honesty is a breath of fresh air which makes him a bigger man than most of the look rich quick renters on PH.
KTF said:
A bank loan might disagree with that
Well not really, The stats show that people are buying Ford Fiestas and the like, which are conveniently wrapped up by the manufacturers into low monthly payment finance deals. These work because the new cost is low and so is depreciation.OTOH, you aren't going to get into a new S Class on any kind of affordable deal.
Yes you can just borrow the price of a second hand one, but these dont have the same delicious PCP wrapping whereby you only pay the cost of leasing, so your payments are effectively cut in half.
daemon said:
Grandfondo said:
WRONG again!!!!!! Learn To read. See if you can get this into your head.
PCP/lease gets some people into cars they can't afford to own!
Which part of that sentence is not factually correct ?
Speaking of yourself in the third party, which is weird and creepy in equal measures you saidPCP/lease gets some people into cars they can't afford to own!
Which part of that sentence is not factually correct ?
Grandfondo said:
Not at all,but his honesty is a breath of fresh air which makes him a bigger man than most of the look rich quick renters on PH.
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