Take out finance or save up and just buy outright

Take out finance or save up and just buy outright

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Discussion

wolves_wanderer

12,356 posts

236 months

Saturday 30th August 2014
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PH answer, we need more details on the 996 and GF wink

Welshbeef

49,633 posts

197 months

Saturday 30th August 2014
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Nervasport said:
ikarl said:
Why do you keep saying meggy?? What's a meggy?
Short for megane
And it lasted 11 years and 90K miles ...

fandango_c

1,914 posts

185 months

Saturday 30th August 2014
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Countdown said:
OP

Saving up and buying in x years time is cheaper as you don't pay interest.

However, if you want something "now" and don't want to wait, and are happy paying interest, then feel free to get a loan smile
Spot on.

Jaroon

1,441 posts

159 months

Saturday 30th August 2014
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I spent the first 10 years of my working life paying off car loans. I had some decent cars for my age and enjoyed them but the last one cost me about 13K in two years with depreciation and maintainance. I don't even regret that one but enough was enough especially with a young family.

I went the route of saving for something modest but likeable (subaru legacy 3.0r spec b) which, fortunately was bomb proof, and allowed me to save for a year for my C55 amg merc whilst suffering no real hardship on the motor front. I now saving for a bigger V8!

Moral- if you're young, can afford it and it's your hobby/pleasure/petrolhead, get the car. If you're priorities change but you're still a petrolhead, save.



Edited by Jaroon on Saturday 30th August 11:54

Countdown

39,688 posts

195 months

Saturday 30th August 2014
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wolves_wanderer said:
PH answer, we need more details on the 996 and GF wink
GF is 10 years+ younger, reasonably tasty, decent income.

996 is (AIUI) a well-used 90,000 miles, bit tatty round the edges, sporting a vanity plate. (Much like the owner it has to be said biggrin)

Nervasport

Original Poster:

227 posts

134 months

Monday 1st September 2014
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Test drove the Monte Carlo edition yesterday and my god it was brilliant! Seriously considering putting my deposit down ASAP!

jdw1234

6,021 posts

214 months

Monday 1st September 2014
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Muzzer79 said:
M1KEY said:
Good to see all the usual balanced responses to borrowing on PH. Of course everyone on here pays for everything cash!

As a more real world example you can borrow £5000 from Tesco over 3 years and repay £5440. That's costing you £12 a month not to have to wait and save!
Quite

And you'll possibly save that £14 in running costs on a newer car.

Finance isn't the devil that some think, as long as it's used properly and in the right circumstances.
But isnt it about levering your exposure to depreciation?

I.e. would someone on £30k a year really buy a £30k car (and be exposed to the depreciation) if finance wasn't available?

Having said that, I pay £300 odd a month on a train ticket and that depreciates quite quickly!!


Muzzer79

9,806 posts

186 months

Monday 1st September 2014
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jdw1234 said:
Muzzer79 said:
M1KEY said:
Good to see all the usual balanced responses to borrowing on PH. Of course everyone on here pays for everything cash!

As a more real world example you can borrow £5000 from Tesco over 3 years and repay £5440. That's costing you £12 a month not to have to wait and save!
Quite

And you'll possibly save that £14 in running costs on a newer car.

Finance isn't the devil that some think, as long as it's used properly and in the right circumstances.
But isnt it about levering your exposure to depreciation?

I.e. would someone on £30k a year really buy a £30k car (and be exposed to the depreciation) if finance wasn't available?

Having said that, I pay £300 odd a month on a train ticket and that depreciates quite quickly!!
You'll pay for depreciation whether you pay cash or take finance - the car will always lose the same amount of money.

Interest on the finance is just a penalty on top which, in relation to the car itself and your circumstances, can be a penalty worth paying.


otolith

55,899 posts

203 months

Monday 1st September 2014
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That's really the question - how do people on modest incomes justify the depreciation costs of new cars, however they fund them?

On the other hand, a twenty a day fag habit costs enough to lease a new Focus ST, and the Focus probably won't kill you.

Zippee

13,440 posts

233 months

Monday 1st September 2014
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Qwert1e said:
The problem with borrowing money to buy a car is that the car depreciates but you continue paying for it at the full original price. Some people say "fine, if you can afford it". But the problem comes when you then want to buy a new car a few years later. You can't afford that one either so the cycle of debt goes on and on.

It's completely the opposite of having a mortgage to buy a house where the loan tends to shrink relative to the value of the house. Opposite way round with a car.
Whether you buy outright or via finance/personal loan you will still suffer the same depreciation. The only difference is the interest payments, get the right finance rate and borrow the right amount and this can be negligible. Nothing wrong with finance so long as it's used sensibly.

jdw1234

6,021 posts

214 months

Monday 1st September 2014
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Muzzer79 said:
jdw1234 said:
Muzzer79 said:
M1KEY said:
Good to see all the usual balanced responses to borrowing on PH. Of course everyone on here pays for everything cash!

As a more real world example you can borrow £5000 from Tesco over 3 years and repay £5440. That's costing you £12 a month not to have to wait and save!
Quite

And you'll possibly save that £14 in running costs on a newer car.

Finance isn't the devil that some think, as long as it's used properly and in the right circumstances.
But isnt it about levering your exposure to depreciation?

I.e. would someone on £30k a year really buy a £30k car (and be exposed to the depreciation) if finance wasn't available?

Having said that, I pay £300 odd a month on a train ticket and that depreciates quite quickly!!
You'll pay for depreciation whether you pay cash or take finance - the car will always lose the same amount of money.

Interest on the finance is just a penalty on top which, in relation to the car itself and your circumstances, can be a penalty worth paying.
I wasn't disputing that.


chris watton

22,477 posts

259 months

Monday 1st September 2014
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What about saving for half of the cost, and having the rest on finance via a personal loan?

otolith

55,899 posts

203 months

Monday 1st September 2014
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Zippee said:
Qwert1e said:
The problem with borrowing money to buy a car is that the car depreciates but you continue paying for it at the full original price. Some people say "fine, if you can afford it". But the problem comes when you then want to buy a new car a few years later. You can't afford that one either so the cycle of debt goes on and on.

It's completely the opposite of having a mortgage to buy a house where the loan tends to shrink relative to the value of the house. Opposite way round with a car.
Whether you buy outright or via finance/personal loan you will still suffer the same depreciation. The only difference is the interest payments, get the right finance rate and borrow the right amount and this can be negligible. Nothing wrong with finance so long as it's used sensibly.
And finance should be arranged over such a period that the car is still worth something when it is paid for - and ideally with a large enough cash contribution to ensure that the car is never in negative equity.

Scootersp

3,107 posts

187 months

Monday 1st September 2014
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For me it's all about avoiding negative equity. You should have enough savings to put down say a 20% deposit and then this would mean a distressed sale shortly after purchase will leave you down but not in trouble. Your loan amounts amounts being paid off will keep you the right side of the depreciation curve, so if you want to sell or trade in at any time you'll clear your debts plus a bit.







Dbest92

300 posts

132 months

Monday 1st September 2014
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Just a point to note: A lot of new car finance deals include 0% finance or a substantial finance contribution. So overall using a bit of man maths, it doesn't work out too bad as you don't end up paying a massive amount more. Well this was the case on newer superminis anyway!

MajorProblem

4,700 posts

163 months

Monday 1st September 2014
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Yup and not having to deal with the dheads saying 'wots your best price m8?' '£1000 cash today (car is £10k)' etc

That's worth an easy 1k to me.

TVRJAS

2,391 posts

128 months

Monday 1st September 2014
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otolith said:
That's really the question - how do people on modest incomes justify the depreciation costs of new cars, however they fund them?

On the other hand, a twenty a day fag habit costs enough to lease a new Focus ST, and the Focus probably won't kill you.
Your obviously a non smoker.

People who drink alcohol on a regular basis spend far more than a smoker. I am a smoker (Roll ups) and a 25gm pouch lasts me 4 days £7.63 + 1 pack of tips makes an average of £2 a day. Less than the cost of 1 pint

I'm not quite a teetotal,so occasionally if out have a glass of red wine at £6.75 and gone in 30-45 mins.

People who take a taxi to and from the pub plus what they spend in the pub would be a better comparison.

otolith

55,899 posts

203 months

Monday 1st September 2014
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20 fags is nearly a tenner. Leasing a Focus ST is under 300 a month. Yes, rollies are cheaper, as are smuggled fags, but plenty of people still buy packs of 20.

TVRJAS

2,391 posts

128 months

Monday 1st September 2014
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otolith said:
20 fags is nearly a tenner. Leasing a Focus ST is under 300 a month. Yes, rollies are cheaper, as are smuggled fags, but plenty of people still buy packs of 20.
Agreed if you buy a packet of 20... But many still spend £100 a week or more on alcohol,so stop the drink and they could lease a Jaguar XF.smile

Strange for me as I used to drink on a regular basis and could spend over £100 just on a Friday night including taxi.

I can go months without consuming any alcohol so for me it's a massive saving,and far more than if i quit the smoking. We all have our vices and pleasures in certain areas and if we didn't life could get pretty boring.

So OP... stop smoking stop drinking and stop looking at nicer cars and stop smiling and live a sad boring lifesmile


Welshbeef

49,633 posts

197 months

Monday 1st September 2014
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TVRJAS said:
Agreed if you buy a packet of 20... But many still spend £100 a week or more on alcohol,so stop the drink and they could lease a Jaguar XF.smile

Strange for me as I used to drink on a regular basis and could spend over £100 just on a Friday night including taxi.

I can go months without consuming any alcohol so for me it's a massive saving,and far more than if i quit the smoking. We all have our vices and pleasures in certain areas and if we didn't life could get pretty boring.

So OP... stop smoking stop drinking and stop looking at nicer cars and stop smiling and live a sad boring lifesmile

Just read your profile - I must say what an amazing story am very envious. Do you have any pics of the areas of Thailand