£40K purchase - sanity check!

[N-y5y1b]

I'm looking for a nice exec to serve me during the next 12 months (at least). A new contract with a long motorway journey is the main reason. I'll be doing up to 18k miles.

What I'm not sure of is how to structure a deal so I'm not in negative equity should I lease, and then after a year (if contract is not extended) have to get rid of the car.

Have got the following dealer offer at present:-

OTR price - £40,000
deposit - £2500
dealer contribution - £5500
Finance - £32000 @ 24x£620pm with a £20000 baloon

Now the way I look at this deal is that I'll be paying £10000 (2500 deposit plus 7500 (620x12)) after 12 months.

Based on parkers, the car will be worth around £30000 sold privately (based on a 65 plate guide price) after a year, so I'll have to pay 24500 to settle the finance, and still have 5500 'equity' after selling the car. So effectively I've "hired" the car for £4500 through 12 months (or 375 pm).

Am I missing something? looks like a great deal on paper! Obviously there's no guarantee on future value, so is parkers price a good indicative guide to use?

Would appreciate your input! as they say - if it's too good to be true, it probably isn't...;)

Cheers,

NC11

[SWoll]

Can I ask what the car in question is?

[Legacywr]

What car?

[BeeGT]

I think you're seeing the numbers you want to see, perfect man maths, but in practice I would expect the £10k Parkers depreciation to be applied to your purchase price, not the recommended on the road price.

[jkh112]

where does the figure of £24500 to settle the finance after a year come from?

[nc11]

SWoll said:

Can I ask what the car in question is?

Merc c-class

[nc11]

BeeGT said:

I think you're seeing the numbers you want to see, perfect man maths, but in practice I would expect the £10k Parkers depreciation to be applied to your purchase price, not the recommended on the road price.

Sorry not sure I understand... The values on Parkers guide were based on the exact model, inc mileage and options. The 'private good' value was actually £30,800. The purchase price is £40,010.

[nc11]

jkh112 said:

where does the figure of £24500 to settle the finance after a year come from?

£32000 to finance minus the total payments (£620x12=7440).

[jkh112]

24x 620 plus 20,000 balloon is not 32,000. It is 34,880.
Therefore after 12 months you would still owe 27,440 (unless you get a lower settlement figure).
So your equity is around £2,500.

[nc11]

jkh112 said:

24x 620 plus 20,000 balloon is not 32,000. It is 34,880.
Therefore after 12 months you would still owe 27,440 (unless you get a lower settlement figure).
So your equity is around £2,500.

Understood, thanks. Still not bad...

[BlueHave]

Personally I would never buy a car new or used that had £10k or 25% depreciation after the first year.

If you can afford to take the hit then by all means but it just seems a lot for a £40k car.

I know supercars and ultimate lux barges say £80k+ have depreciation on that scale but those that buy them can obviously afford to take a big hit.

[chr15b]

Does it have to be a merc c class? If you took a Vw or Audi via VWFS then generally the excess mileage is 7.2p, or 72 quid per 1k miles. Take a 1 year lease on an a4 or a6 on say 8 or 10k mileage and budget in the excess payment at the end.

Might be worth looking at Mercedes excess mileage costs but I'm sure it's much higher.

[nc11]

BlueHave said:

Personally I would never buy a car new or used that had £10k or 25% depreciation after the first year.

If you can afford to take the hit then by all means but it just seems a lot for a £40k car.

I know supercars and ultimate lux barges say £80k+ have depreciation on that scale but those that buy them can obviously afford to take a big hit.

The thing is, if I lease the same car but a year old, the monthly payments are similar. What I won't be getting is the dealer contribution, so whilst the total cost would be less I'm not sure I'll be better off at in a year's time. So as a guide the purchase price would be 31000 with Parkers suggest 23000 after a year..

[NickCQ]

nc11 said:

£32000 to finance minus the total payments (£620x12=7440).

Yeah, as the other guy said not all of your cash payment goes to pay down the principal, there will be interest as well.

[nc11]

chr15b said:

Does it have to be a merc c class? If you took a Vw or Audi via VWFS then generally the excess mileage is 7.2p, or 72 quid per 1k miles. Take a 1 year lease on an a4 or a6 on say 8 or 10k mileage and budget in the excess payment at the end.

Might be worth looking at Mercedes excess mileage costs but I'm sure it's much higher.

Now, doesn't have to be a merc. Actually I've tried the a4 and liked it a lot! Will check out a 1yr lease costs now thanks!

[SWoll]

nc11 said:

jkh112 said:

24x 620 plus 20,000 balloon is not 32,000. It is 34,880.
Therefore after 12 months you would still owe 27,440 (unless you get a lower settlement figure).
So your equity is around £2,500.

Understood, thanks. Still not bad...

So having already handed over £10K for a years motoring this equity assumes you have the cash to settle the finance, can find a buyer and get Parkers book value? Sounds like a lot of assumptions to me.

You could lease an E Class for 2 years for a similar deposit and approx. £320 a month on a 15KPA deal. So basically the same expense (10K) for 2 years motoring in a better car with no worries over finance settlements and depreciation.

nc11 said:

Now, doesn't have to be a merc. Actually I've tried the a4 and liked it a lot! Will check out a 1yr lease costs now thanks!

Good luck but IME 1 year deals are very rare and usually very expensive.

Edited by SWoll on Saturday 10th September 22:25

[nc11]

SWoll said:

You could lease an E Class for 2 years for a similar deposit and approx. £320 a month on a 15KPA deal. So basically the same expense (10K) for 2 years motoring in a better car with no worries over finance settlements and depreciation.

Edited by SWoll on Saturday 10th September 22:25

That's an interesting option. Is it an e-class with similar specs/engine? Can you share a link to that offer?

And you're right - the minimum Audi term is 18 months.

Edited by nc11 on Saturday 10th September 22:38

[TooMany2cvs]

nc11 said:

SWoll said:

Can I ask what the car in question is?

Merc c-class

So the year-old ones now are among the first W205s to be hitting the used market. In a year, there'll be a lot more of them, so the residuals will take a hit. And who buys a £30k year-old Merc privately?

[SWoll]

nc11 said:

SWoll said:

You could lease an E Class for 2 years for a similar deposit and approx. £320 a month on a 15KPA deal. So basically the same expense (10K) for 2 years motoring in a better car with no worries over finance settlements and depreciation.

Edited by SWoll on Saturday 10th September 22:25

That's an interesting option. Is it an e-class with similar specs/engine? Can you share a loping to that offer?

And you're right - the minimum Audi term is 18 months.

Thought so. Been in a similar position and was staggered at the 12 month lease costs.

Car in question is the new E Class 220CDi AMG Line with the new 9G autobox. Having had 2 x E Class previously and my wife currently having the new C class I can assure you the E is a much nicer place to spend 18K a year, even with the 4 cylinder diesel engine (drove the new one a few weeks back as about to order a new CC and was very impressed with the powertrain).

The deal is here and is actually £287 a month, I adjusted for the extra 5k miles so could be cheaper than my guess.

TooMany2cvs said:

So the year-old ones now are among the first W205s to be hitting the used market. In a year, there'll be a lot more of them, so the residuals will take a hit. And who buys a £30k year-old Merc privately?

This.

Edited by SWoll on Saturday 10th September 22:49

[nc11]

So I've checked that link for the same car I quoted in the OP, and it works out at £12k cost after 24 months (364x12+3278 deposit). So as you said - 2 yrs of motoring without unpredicted depreciation and settlement values.

Think I'll get a quote from them!

Thanks again

NC11