The economics of new car sales
Discussion
Butter Face said:
wolves_wanderer said:
romeogolf said:
Grandfondo said:
romeogolf said:
Grandfondo said:
Are the majority of people leasing/PCP'ing because it's cheaper or is it the fact it gets them into cars they could not afford to own?
I PCP my car because I don't have £36k sitting around to buy it outright. If I saved the £300 a month that I pay out on it, it would take me 10 years to buy it. Which makes no sense to me. So, yeah, I have it on PCP, at an amount I can afford each month to drive the car I'd like to drive and for it to always be relatively new, reliable and comfortable. Simple.Edited by Grandfondo on Friday 21st November 15:02
Grandfondo has a problem understanding affordability.
Antony Moxey said:
I'd have thought you know exactly what the total cost is: deposit, x number of monthly payments, final balloon?
Well it's easy enough, but LOTS of people say/think they pay £300/month, without considering the deposit.And then comparing the cost to the alternatives (cash purchase, used, lease, etc.) is difficult.
KTF said:
liner33 said:
You'd do well to get a return that would match the interest charges made on a credit agreement.
I am not saying it would match it exactly but something is better than nothing.liner33 said:
I dont see how paying interest charges is preferably than investing in a depreciating asset, buying a new car is almost always going to lose money, you can choose to pay it in depreciation or interest but you can rarely avoid it.
That is true as you will 'lose' the money one way or another but: Sinking 30k into something that sits on your drive impressing the neighbours = cant do anything else with the £30k.
Paying £299 a month for something that sits on your drive impressing the neighbours = £29701 - £299 per month that you can use for something else.
Grandfondo said:
Butter Face said:
wolves_wanderer said:
romeogolf said:
Grandfondo said:
romeogolf said:
Grandfondo said:
Are the majority of people leasing/PCP'ing because it's cheaper or is it the fact it gets them into cars they could not afford to own?
I PCP my car because I don't have £36k sitting around to buy it outright. If I saved the £300 a month that I pay out on it, it would take me 10 years to buy it. Which makes no sense to me. So, yeah, I have it on PCP, at an amount I can afford each month to drive the car I'd like to drive and for it to always be relatively new, reliable and comfortable. Simple.Edited by Grandfondo on Friday 21st November 15:02
Grandfondo has a problem understanding affordability.
Buying outright:
It's yours
You can keep it as long as you like.
Then sell it
Finance
It isn't yours
You can keep it as long as you like
Then give it back/sell it.
One is just a more expensive option than the other.
To finance does mean you can't afford to buy outright, but if you can afford the payments, what's the harm?
Those with £500 per month Range Rovers and no food in the fridge deserve everything they get.
The normal man in the street however is just choosing to possess a car in a different way.
I don't own my house. But I live in it, I can afford the payments on it and one day I will pay it off.
How am I different from my next door neighbour who owns his outright? He has more money in his as a possession, but that's all. We both pay bills, we both take care of the house and, given enough years, we would both sell for the same price.
Same with cars. Finance, used sensibly, does not mean one can't afford something. It just means one can't afford something outright, in one go.
Grandfondo said:
"PCP/lease gets some people into cars they can't afford to Own"
That sentence gets "some" people very hot under the collar!
The same quote could be applied to people who rent houses rather than buy/mortgage them and that results in similar 'excitement' from various quarters. That sentence gets "some" people very hot under the collar!
KTF said:
Grandfondo said:
"PCP/lease gets some people into cars they can't afford to Own"
That sentence gets "some" people very hot under the collar!
The same quote could be applied to people who rent houses rather than buy/mortgage them and that results in similar 'excitement' from various quarters. That sentence gets "some" people very hot under the collar!
KTF said:
That is true as you will 'lose' the money one way or another but:
Sinking 30k into something that sits on your drive impressing the neighbours = cant do anything else with the £30k.
Paying £299 a month for something that sits on your drive impressing the neighbours = £29701 - £299 per month that you can use for something else.
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 Sinking 30k into something that sits on your drive impressing the neighbours = cant do anything else with the £30k.
Paying £299 a month for something that sits on your drive impressing the neighbours = £29701 - £299 per month that you can use for something else.
KTF said:
Grandfondo said:
And people that rent TVs and washing machines!
And those people who 'rent' their mobiles phones by paying the contract over 24 months rather than buying it outright from the start...Filthy dole scroungers the lot of them
Muzzer79 said:
What's the benefit of 'ownership'?
Buying outright:
It's yours
You can keep it as long as you like.
Then sell it
Finance
It isn't yours
You can keep it as long as you like or as long as was agreed at the outset, possibly with the option to extend.
Then give it back/sell it.
EFABuying outright:
It's yours
You can keep it as long as you like.
Then sell it
Finance
It isn't yours
You can keep it as long as you like or as long as was agreed at the outset, possibly with the option to extend.
Then give it back/sell it.
thelawnet said:
I didn't say it was a problem, my point was that people signing up for monthly deals haven't got a clue what the total cost is. Like people who want a £50/month Ford Fiesta but then ignore the £2500 up-front payment. Whether it is a good deal for them is completely opaque.
Clearly conveniently packaged finance is a huge factor in getting all those brand new cars on the road, and without it we wouldn't have such a huge supply of cheap second-hand cars, but from an individual (rather than collective) perspective it's hard to account for.
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.Clearly conveniently packaged finance is a huge factor in getting all those brand new cars on the road, and without it we wouldn't have such a huge supply of cheap second-hand cars, but from an individual (rather than collective) perspective it's hard to account for.
I can also assure you that the vast bulk of people know EXACTLY what they're paying and why. As was described to me by my old boss recently whos the dealer principle across several franchises that he owns - people generally come in knowing what they want, what they expect to pay and what their car is worth. 20 years ago when i was in a dealership the average visits to dealers was something like 4.7 before people bought, now its something like 1.6. ie, if they're there they've their homework done already and they KNOW your car is priced correctly.
The fact that theres so little profit left in new cars that its hardly worthwhile selling them shows how price driven the market is and how "aware" customers are of the right deal.
wolves_wanderer said:
His point is to try and feel like the bigger man than someone who finances a car I guess. Pretty pathetic really.
Hes trolling.He used to be called RobSTI on here but had to change his name as he was caused that many rows and people knew he was a bit of a dick.
Unfortunately he hasnt the wit to just keep his head down and people are twigging what hes at.
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?
KTF said:
thelawnet said:
Well it's easy enough, but LOTS of people say/think they pay £300/month, without considering the deposit.
A lot of people spend money on a new car because (they perceive) it will 'save' them money It turned out he'd paid LIST PRICE for a £25,000 Peugeot 308 diesel
to "save" £2,000 in interest.He went a bit quiet when it was pointed out that you could get £5,000 discount off it at broadspeed.com
AND as i've said, we're very lucky on here to be in the presence of all these "better men" who buy their cars new with cash, when in reality if you went into ANY car dealers, they cant remember the last time anyone bought a car for cash.
Whats the odds all of the 0.0001% are on here eh?
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?
KTF said:
liner33 said:
I dont see how paying interest charges is preferably than investing in a depreciating asset, buying a new car is almost always going to lose money, you can choose to pay it in depreciation or interest but you can rarely avoid it.
That is true as you will 'lose' the money one way or another but: Sinking 30k into something that sits on your drive impressing the neighbours = cant do anything else with the £30k.
Paying £299 a month for something that sits on your drive impressing the neighbours = £29701 - £299 per month that you can use for something else.
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
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