The financial "advice" thread
Discussion
My God what is PH turning into? Hardly a mention about cars themselves, just a load of wittering about how best to "buy" a car, APRs, PCP rates, endless "bargain" leasing threads and lord knows how many telling us how clever they are for buying a 15 year old Focus rather than a new {insert name of nice new/newish performance car}.
How about people give just INFORMATION on finance but stop trying to ram their vacuous, tired old waffle about how their own choices are the best and how anyone that might think differently is a retard.
PLEASE PLEASE PLEASE more opinions, information, experiences about cars, far far less stuff that would make even the most drone some accountant fall asleep.
Otherwise I'm going to have to start calling PH Mumsnet for blokes.
How about people give just INFORMATION on finance but stop trying to ram their vacuous, tired old waffle about how their own choices are the best and how anyone that might think differently is a retard.
PLEASE PLEASE PLEASE more opinions, information, experiences about cars, far far less stuff that would make even the most drone some accountant fall asleep.
Otherwise I'm going to have to start calling PH Mumsnet for blokes.
I would be very happy to write up an unbiased thread all about the different finance products available as their pros and cons - but as I'm in this business it would probably be deemed advertising. And in fairness it's not going to stop any other threads appearing about members wanting advise about whether they're getting a good deal on finance, is it.
It's an intrinsic part of owning and driving a nice car for the majority of people on here. I suppose all questions could be directed to the 'finance' section in the forum but that's not car specific and doesn't have as many readers as general gassing.
It's an intrinsic part of owning and driving a nice car for the majority of people on here. I suppose all questions could be directed to the 'finance' section in the forum but that's not car specific and doesn't have as many readers as general gassing.
rfoster said:
I would be very happy to write up an unbiased thread all about the different finance products available as their pros and cons - but as I'm in this business it would probably be deemed advertising. And in fairness it's not going to stop any other threads appearing about members wanting advise about whether they're getting a good deal on finance, is it.
It's an intrinsic part of owning and driving a nice car for the majority of people on here. I suppose all questions could be directed to the 'finance' section in the forum but that's not car specific and doesn't have as many readers as general gassing.
Sounds a good idea. I'd like to read it.It's an intrinsic part of owning and driving a nice car for the majority of people on here. I suppose all questions could be directed to the 'finance' section in the forum but that's not car specific and doesn't have as many readers as general gassing.
rovermorris999 said:
rfoster said:
I would be very happy to write up an unbiased thread all about the different finance products available as their pros and cons - but as I'm in this business it would probably be deemed advertising. And in fairness it's not going to stop any other threads appearing about members wanting advise about whether they're getting a good deal on finance, is it.
It's an intrinsic part of owning and driving a nice car for the majority of people on here. I suppose all questions could be directed to the 'finance' section in the forum but that's not car specific and doesn't have as many readers as general gassing.
Sounds a good idea. I'd like to read it.It's an intrinsic part of owning and driving a nice car for the majority of people on here. I suppose all questions could be directed to the 'finance' section in the forum but that's not car specific and doesn't have as many readers as general gassing.
Vladimir said:
My God what is PH turning into? Hardly a mention about cars themselves, just a load of wittering about how best to "buy" a car, APRs, PCP rates, endless "bargain" leasing threads and lord knows how many telling us how clever they are for buying a 15 year old Focus rather than a new {insert name of nice new/newish performance car}.
How about people give just INFORMATION on finance but stop trying to ram their vacuous, tired old waffle about how their own choices are the best and how anyone that might think differently is a retard.
PLEASE PLEASE PLEASE more opinions, information, experiences about cars, far far less stuff that would make even the most drone some accountant fall asleep.
Otherwise I'm going to have to start calling PH Mumsnet for blokes.
My god...How about people give just INFORMATION on finance but stop trying to ram their vacuous, tired old waffle about how their own choices are the best and how anyone that might think differently is a retard.
PLEASE PLEASE PLEASE more opinions, information, experiences about cars, far far less stuff that would make even the most drone some accountant fall asleep.
Otherwise I'm going to have to start calling PH Mumsnet for blokes.
Do you never learn ?
rovermorris999 said:
rfoster said:
I would be very happy to write up an unbiased thread all about the different finance products available as their pros and cons - but as I'm in this business it would probably be deemed advertising. And in fairness it's not going to stop any other threads appearing about members wanting advise about whether they're getting a good deal on finance, is it.
It's an intrinsic part of owning and driving a nice car for the majority of people on here. I suppose all questions could be directed to the 'finance' section in the forum but that's not car specific and doesn't have as many readers as general gassing.
Sounds a good idea. I'd like to read it.It's an intrinsic part of owning and driving a nice car for the majority of people on here. I suppose all questions could be directed to the 'finance' section in the forum but that's not car specific and doesn't have as many readers as general gassing.
V8RX7 said:
Vladimir said:
My God what is PH turning into? Hardly a mention about cars themselves, just a load of wittering about how best to "buy" a car, APRs, PCP rates, endless "bargain" leasing threads and lord knows how many telling us how clever they are for buying a 15 year old Focus rather than a new {insert name of nice new/newish performance car}.
How about people give just INFORMATION on finance but stop trying to ram their vacuous, tired old waffle about how their own choices are the best and how anyone that might think differently is a retard.
PLEASE PLEASE PLEASE more opinions, information, experiences about cars, far far less stuff that would make even the most drone some accountant fall asleep.
Otherwise I'm going to have to start calling PH Mumsnet for blokes.
My god...How about people give just INFORMATION on finance but stop trying to ram their vacuous, tired old waffle about how their own choices are the best and how anyone that might think differently is a retard.
PLEASE PLEASE PLEASE more opinions, information, experiences about cars, far far less stuff that would make even the most drone some accountant fall asleep.
Otherwise I'm going to have to start calling PH Mumsnet for blokes.
Do you never learn ?
Anyway back on topic......
Some examples would be great. Have been looking at the Golf R deals but the wife doesn't like the fact the car goes back! What about cherished numbers? etc etc
OK here goes - let me know if you have any other questions and I can add them in.
Car finance options.
1. Hire purchase - available for all new and used vehicles of all ages (depending on finance company.)
This is effectively a loan to buy a car. You pay a deposit to the car dealer, and the balance is paid back in monthly instalments to a finance company over a period between 24 and 60 months usually. At the end of the finance agreement, when all the payments have been made, title of the vehicle passes to you.
Pros: You can get into the car you want now rather than saving up and waiting.
Cons: You'll pay interest on the money you borrow.
2. Lease purchase - available for all new and used cars, typically up to 5 years old (though some finance companies will offer balloons on expensive classic cars too.)
This is essentially the same as a hire purchase, but with a final balloon payment payable at the end of the agreement. This final balloon is not a guaranteed future value - you must still pay this. This can be covered by perhaps refinancing the final balloon, or selling the car to cover the balloon - or just paying the balloon if you have the money to do so.
Pros: You will get more car for your monthly budget with a finance agreement with final balloon payment.
Cons. You'll pay more in total interest charges over the term, as you are deferring a large lump of capital until the end of the agreement. There's also the possibility that the final balloon payment may be more than the car is worth and this is at your risk - when you start your finance agreement, most finance companies will ask what mileage you expect to cover in the vehicle and they will set the final balloon at a conservative level to try and ensure you're not in negative equity.
3. Contract Purchase or PCP. Available on all new cars and used cars up to 5 years old at the beginning of the agreement, and 9 years old at the end (depending on finance company.)
This is very similar to lease purchase, you'll pay a deposit plus monthly payments, and at the end of the agreement there is again a final balloon payment payable. This time however, it's classed as a guaranteed future value - this means that the finance company will guarantee to purchase the vehicle from you for exactly the same amount as your final balloon payment. This balloon payment is set by the finance company at the start of the agreement by ascertaining what mileage you expect to cover over the term of the agreement (2-4 years.)
At the end of the term, you have the following choices.
a. Just hand the vehicle back to the finance company with no further obligation - please note that the finance company will charge you if you have gone over your anticipated mileage as a pence-per-mile cost which will be on your agreement. They will also have the right to charge for any damage to the vehicle, missing keys / missing services etc.
b. Sell the car yourself and pay the balloon to the finance company before it's due. If you sell the car for more than the final balloon payment then you get to keep any equity in the vehicle to put towards your next car.
c. Refinance the final balloon if you want to keep the car, or simply pay the balloon and title will pass to you.
Pros: Payments are usually lower than a straight forward hire purchase and there is the safety net of just being able to hand the vehicle back at the end, if you want to.
Cons: Same as lease purchase, you'll pay more interest than a hire purchase because you are deferring a lump of capital until the end of the agreement.
On all of the above agreements, you are responsible for all maintenance / servicing / road fund licence / insurance, just as you would if you owned the vehicle outright. Your name goes on the vehicle registration document, and the finance company have a 'charge' over the vehicle (which will show on an HPI report.) They are the owner of the vehicle until such time as the agreement is finished. You are responsible for keeping the vehicle in a roadworthy condition.
Assuming you take one of these agreements in your own name rather than in a limited company, then the agreements are regulated by the consumer credit act which is very flexible. This give you the option of making lump sum payments during the course of the agreement and either lowering your remaining monthly payments, shortening the term or lower the final balloon (if you have one.) You can also settle the finance agreement at any time and benefit from a regulated settlement figure. The finance company will provide you with a settlement figure which shows the balance outstanding to pay, less a rebate of interest charges that you won't have to pay as you're settling early, and the final settlement figure.
Under the consumer credit act, you also have the right to voluntarily terminate the agreement and hand it back to the finance company, once you have paid 50% of the total amount payable under the agreement. The finance company will have the right here to charge you for any damage / missing keys / services / illegal tyres. Additionally, on a contract purchase agreement, the finance company will also have the right to charge you for excess mileage on a pro-rata basis.
Note - whilst it is your right to terminate the vehicle and it doesn't have an effect on your credit score, it does leave a footprint on your credit file that can be viewed by any finance company who are considering credit applications. It may or may not have an influence as to whether they will consider lending you money.
Contract Hire and Personal Contract Hire - available for all new cars and vans - not usually available for used cars.
With this scheme you are effectively hiring your choice of vehicle for a set amount of time. At the end of the term, you simply hand the car back to the finance company. There are often the options of extending the lease agreement if you want to. You'll pay VAT on your monthly rentals - on a personal contract hire this is usually included in the rentals quoted to you by the finance company but it's best to check.
All contract hire agreement includes road fund licences throughout the term. You may be charged for any increase in the cost of road fund licences (depending on how much the government increases it year on year.) There is the option of an additional maintenance and servicing package for premium on the monthly rentals.
You are responsible for paying for fuel and insurance, and on a non maintenance agreement, you'll also need to pay for all maintenance and servicing in accordance with the manufacturer's guidelines. Naturally you are responsible for keeping the vehicle in a roadworthy condition at all times. At the end of the agreement, the finance company will charge for any excess mileage you have covered in the car, and any damage in accordance to the BVRLA guidelines.
Pros. you can get a new car every few years with a low deposit and usually lower monthly rentals than you would achieve on a hire purchase agreement. There are often some extremely competitive contract hire deals that are subsidised by the manufacturer.
Cons. You never own the car and will not benefit from any equity in the vehicle.
Car finance options.
1. Hire purchase - available for all new and used vehicles of all ages (depending on finance company.)
This is effectively a loan to buy a car. You pay a deposit to the car dealer, and the balance is paid back in monthly instalments to a finance company over a period between 24 and 60 months usually. At the end of the finance agreement, when all the payments have been made, title of the vehicle passes to you.
Pros: You can get into the car you want now rather than saving up and waiting.
Cons: You'll pay interest on the money you borrow.
2. Lease purchase - available for all new and used cars, typically up to 5 years old (though some finance companies will offer balloons on expensive classic cars too.)
This is essentially the same as a hire purchase, but with a final balloon payment payable at the end of the agreement. This final balloon is not a guaranteed future value - you must still pay this. This can be covered by perhaps refinancing the final balloon, or selling the car to cover the balloon - or just paying the balloon if you have the money to do so.
Pros: You will get more car for your monthly budget with a finance agreement with final balloon payment.
Cons. You'll pay more in total interest charges over the term, as you are deferring a large lump of capital until the end of the agreement. There's also the possibility that the final balloon payment may be more than the car is worth and this is at your risk - when you start your finance agreement, most finance companies will ask what mileage you expect to cover in the vehicle and they will set the final balloon at a conservative level to try and ensure you're not in negative equity.
3. Contract Purchase or PCP. Available on all new cars and used cars up to 5 years old at the beginning of the agreement, and 9 years old at the end (depending on finance company.)
This is very similar to lease purchase, you'll pay a deposit plus monthly payments, and at the end of the agreement there is again a final balloon payment payable. This time however, it's classed as a guaranteed future value - this means that the finance company will guarantee to purchase the vehicle from you for exactly the same amount as your final balloon payment. This balloon payment is set by the finance company at the start of the agreement by ascertaining what mileage you expect to cover over the term of the agreement (2-4 years.)
At the end of the term, you have the following choices.
a. Just hand the vehicle back to the finance company with no further obligation - please note that the finance company will charge you if you have gone over your anticipated mileage as a pence-per-mile cost which will be on your agreement. They will also have the right to charge for any damage to the vehicle, missing keys / missing services etc.
b. Sell the car yourself and pay the balloon to the finance company before it's due. If you sell the car for more than the final balloon payment then you get to keep any equity in the vehicle to put towards your next car.
c. Refinance the final balloon if you want to keep the car, or simply pay the balloon and title will pass to you.
Pros: Payments are usually lower than a straight forward hire purchase and there is the safety net of just being able to hand the vehicle back at the end, if you want to.
Cons: Same as lease purchase, you'll pay more interest than a hire purchase because you are deferring a lump of capital until the end of the agreement.
On all of the above agreements, you are responsible for all maintenance / servicing / road fund licence / insurance, just as you would if you owned the vehicle outright. Your name goes on the vehicle registration document, and the finance company have a 'charge' over the vehicle (which will show on an HPI report.) They are the owner of the vehicle until such time as the agreement is finished. You are responsible for keeping the vehicle in a roadworthy condition.
Assuming you take one of these agreements in your own name rather than in a limited company, then the agreements are regulated by the consumer credit act which is very flexible. This give you the option of making lump sum payments during the course of the agreement and either lowering your remaining monthly payments, shortening the term or lower the final balloon (if you have one.) You can also settle the finance agreement at any time and benefit from a regulated settlement figure. The finance company will provide you with a settlement figure which shows the balance outstanding to pay, less a rebate of interest charges that you won't have to pay as you're settling early, and the final settlement figure.
Under the consumer credit act, you also have the right to voluntarily terminate the agreement and hand it back to the finance company, once you have paid 50% of the total amount payable under the agreement. The finance company will have the right here to charge you for any damage / missing keys / services / illegal tyres. Additionally, on a contract purchase agreement, the finance company will also have the right to charge you for excess mileage on a pro-rata basis.
Note - whilst it is your right to terminate the vehicle and it doesn't have an effect on your credit score, it does leave a footprint on your credit file that can be viewed by any finance company who are considering credit applications. It may or may not have an influence as to whether they will consider lending you money.
Contract Hire and Personal Contract Hire - available for all new cars and vans - not usually available for used cars.
With this scheme you are effectively hiring your choice of vehicle for a set amount of time. At the end of the term, you simply hand the car back to the finance company. There are often the options of extending the lease agreement if you want to. You'll pay VAT on your monthly rentals - on a personal contract hire this is usually included in the rentals quoted to you by the finance company but it's best to check.
All contract hire agreement includes road fund licences throughout the term. You may be charged for any increase in the cost of road fund licences (depending on how much the government increases it year on year.) There is the option of an additional maintenance and servicing package for premium on the monthly rentals.
You are responsible for paying for fuel and insurance, and on a non maintenance agreement, you'll also need to pay for all maintenance and servicing in accordance with the manufacturer's guidelines. Naturally you are responsible for keeping the vehicle in a roadworthy condition at all times. At the end of the agreement, the finance company will charge for any excess mileage you have covered in the car, and any damage in accordance to the BVRLA guidelines.
Pros. you can get a new car every few years with a low deposit and usually lower monthly rentals than you would achieve on a hire purchase agreement. There are often some extremely competitive contract hire deals that are subsidised by the manufacturer.
Cons. You never own the car and will not benefit from any equity in the vehicle.
Edited by rfoster on Thursday 30th January 10:55
Edited by rfoster on Thursday 30th January 10:59
Cherished plates - very easy on hire purchase, lease purchase, PCP as the V5 registration document is in your name,. You can change this yourself with the DVLA but you must advise the finance company of the change of plate - they will update their records accordingly.
On contract hire you can also put a private plate on though it's a little more complicated - the V5 is in the finance company name. You'll need to get the cherished plate onto a retention certificate with the finance company name as the 'Nominee' - this will allow a plate owned by you to be put on a car owned by the leasing company. the leasing company will have an admin department that will take care of the transfer for you, they may charge you a fee for this. You are responsible for paying transfer charges for the plate on and off the vehicle. At the end of the agreement it's worth starting the plate removal 2 months prior to the end of the term to give DVLA sufficient time to process the paperwork.
On contract hire you can also put a private plate on though it's a little more complicated - the V5 is in the finance company name. You'll need to get the cherished plate onto a retention certificate with the finance company name as the 'Nominee' - this will allow a plate owned by you to be put on a car owned by the leasing company. the leasing company will have an admin department that will take care of the transfer for you, they may charge you a fee for this. You are responsible for paying transfer charges for the plate on and off the vehicle. At the end of the agreement it's worth starting the plate removal 2 months prior to the end of the term to give DVLA sufficient time to process the paperwork.
rfoster said:
Cherished plates - very easy on hire purchase, lease purchase, PCP as the V5 registration document is in your name,. You can change this yourself with the DVLA but you must advise the finance company of the change of plate - they will update their records accordingly.
On contract hire you can also put a private plate on though it's a little more complicated - the V5 is in the finance company name. You'll need to get the cherished plate onto a retention certificate with the finance company name as the 'Nominee' - this will allow a plate owned by you to be put on a car owned by the leasing company. the leasing company will have an admin department that will take care of the transfer for you, they may charge you a fee for this. You are responsible for paying transfer charges for the plate on and off the vehicle. At the end of the agreement it's worth starting the plate removal 2 months prior to the end of the term to give DVLA sufficient time to process the paperwork.
Is this not illegal though, v5 in finance company name? After all it doesn't prove ownership and the keeper is actually the hirer. Drawback with speeding fines etc as they will get sent to finance company.On contract hire you can also put a private plate on though it's a little more complicated - the V5 is in the finance company name. You'll need to get the cherished plate onto a retention certificate with the finance company name as the 'Nominee' - this will allow a plate owned by you to be put on a car owned by the leasing company. the leasing company will have an admin department that will take care of the transfer for you, they may charge you a fee for this. You are responsible for paying transfer charges for the plate on and off the vehicle. At the end of the agreement it's worth starting the plate removal 2 months prior to the end of the term to give DVLA sufficient time to process the paperwork.
worsy said:
Is this not illegal though, v5 in finance company name? After all it doesn't prove ownership and the keeper is actually the hirer. Drawback with speeding fines etc as they will get sent to finance company.
It's not illegal - on a contract hire agreement the finance company are the keepers of the car and are leasing it out to you. You're right - speeding fines go to the finance company and they pass them on (often with an admin fee.)It does amuse me slightly that this thread has now turned into a financial advice thread.
Realistically, the cost of finance is one of the most important things anybody considers when buying a car - whether they are an enthusiast or not.
The price of the finance decides which car you can have. Most people are not wealthy, so cannot just go out and buy what they want outright and since they generally don’t lust after old, unloved and cheap cars (like I do), they need to borrow money.
From an enthusiast's perspective, a good deal on the finance is certainly the cheapest way to more performance. With it, they can afford a bigger engine!
Realistically, the cost of finance is one of the most important things anybody considers when buying a car - whether they are an enthusiast or not.
The price of the finance decides which car you can have. Most people are not wealthy, so cannot just go out and buy what they want outright and since they generally don’t lust after old, unloved and cheap cars (like I do), they need to borrow money.
From an enthusiast's perspective, a good deal on the finance is certainly the cheapest way to more performance. With it, they can afford a bigger engine!
rfoster said:
Note - whilst it is your right to terminate the vehicle and it doesn't have an effect on your credit score, it does leave a footprint on your credit file that can be viewed by any finance company who are considering credit applications. It may or may not have an influence as to whether they will consider lending you money.
Can you expand on this? I assume you mean if you terminate the agreement rather than let it run and pay the balloon?
worsy said:
Can you expand on this? I assume you mean if you terminate the agreement rather than let it run and pay the balloon?
This is only a point to note if you exercise your rights to terminate the agreement once you have paid 50% of the total amount payable. Nothing to do with early settlement (where you pay off the finance agreement early) or handing the car back at the end of the agreement on a PCP term.There was a time not so long ago where a few finance companies would take into account any voluntary termination on a person's credit file when deciding whether to offer a car finance agreement. It was not uncommon around the credit crunch, where car values plummeted, for the finance companies to suffer big losses on voluntarily terminated cars.
Like I say, voluntarily terminating is your right under the consumer credit act and does not adversely affect your credit score - but it does leave a footprint on your credit file. Just thought it was worth mentioning - we hear stories of some dealers pushing this option to get people into cars but it's not always great advice.
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