If you buy a car on finance you can not afford it?

[Red 4]

roadsmash said:

Red 4, are you going to be a man and apologise for calling me (and indirectly several others) “stoopid” for correcting you on all of your mistakes relating to the differences been PCP and leasing?

If you can’t/won’t apologise, will you at least admit you know very little on the subject and what you are spouting is mere opinion, rather than fact?

If you won’t admit that, will you do us all a favour and keep your “facts” to yourself?

It takes a real man to admit he was in the wrong.

I'll apologise for conflating the PCP/ lease advert.

I will not apologise to you for anything else for two reasons;

Firstly, you have repeatedly misquoted me.
Shortening/ editing people's previous replies smacks of desperation.
Misrepresenting what I actually said means you are dishonest.
You were abusive to me long before I was abusive to you.

Secondly, you keep telling me I know nothing about finance.
See the points above.
You come across as a Berk.

HTH.

[alorotom]

I lease 3 cars ... the 3 combined (plus the insurances) total less than the HP alone I was paying for my Q7 (that I had minimal intention of keeping beyond ‘halves’ anyway)

Horses for courses.

Personally, at the moment, I have zero inclination to own a car myself. I don’t doubt this will change as/when in the future.

[Graveworm]

Durzel said:

Again, it does depend on the deal. Some PCP deals seem almost too good to be true.

There was a deal posted earlier in the thread on a Aston Martin Vantage at £1k down and £1k a month for 24 months. The car purchase price was, I believe, circa £140k. There's no way in hell a £140k AMV isn't going to depreciate by at least £25k in the space of 2 years, therefore that deal - if its as described - is amazing. You would be mad to buy the car for cash if could avail youself of that deal, even if you had the cash to buy it outright. You'd lose money for sure doing so.

Sometimes there are PCP deals that involve run out models, or cars that haven't been properly gauged yet in terms of depreciation. On a regular PCP deal on a fairly normal car I'd agree that you will likely pay more in the long run. Equally running a car for more than 2-3 years will probably see the depreciation vs finance TCO level off and go in the opposite direction.

In many instances there is a cost to paying for a car with PCP above and beyond what you lose per month in depreciation, but with interest rates being so low that difference is not as stark as some would believe it is. There could be a mere couple of thousand or so in it.

That's great for lot of people, or maybe a few depending on mindset. It's a great deal if it is a cheaper way to gain something that you would otherwise have paid for. Speaking personally, I start out with: this is the best car for me, can I afford it? What's the cheapest way to source and run the car as I want to? If that turns out to be finance cash whatever then that's great.
But being swayed by cut prices, to get something I wouldn't otherwise have bought, smacks of sitcom justification to explain how buying a half price handbag saved money. But it's of course a valid choice for others if it's an informed choice.

[R.Sole]

Red 4 said:

Brooking10 said:

bqf said:

Who gives a sh8t how you pay for things?

Red 4

R Sole

John and Bob the fantasy garage Chuckle brothers.

Incorrect. I only care how I pay for things.

If some random bloke on the internet wants to have his pants pulled down I couldn't care less.

It's bizarre why you think I care.

Why am I being dragged into this as far as I’am concerned it’s the product I don’t like not the usage of it.

[Deesee]

I had a PCP quote in for a client of mine, for a McLaren.

As I’m sure you can imagine with a 25k ‘deposit contribution’ and 2.5k a month he was quite eager to sign up, I check all his documents if I finance it or we sub it out.

I went though it and showed him there was a 57k profit in the finance.... for a 24 month PCP he was shocked..

I got that finance placed elsewhere without the deposit contribution monthly’s around the same and cost of finance was 18k.

[anonymous-user]

Deesee said:

I had a PCP quote in for a client of mine, for a McLaren.

As I’m sure you can imagine with a 25k ‘deposit contribution’ and 2.5k a month he was quite eager to sign up, I check all his documents if I finance it or we sub it out.

I went though it and showed him there was a 57k profit in the finance.... for a 24 month PCP he was shocked..

I got that finance placed elsewhere without the deposit contribution monthly’s around the same and cost of finance was 18k.

Are you sure ? Those numbers sound very toppy.

Was that with Santander via McLaren ?

£2.5k per month sounds like no deposit in and a high spec 720. Those cars are currently attracting more than that level of discount/contribution.

Are you saying that cost of finance over the 24 months was £18k meaning the remainder of 24 x 2500 was all used to reduce the balance on the asset ?

[R.Sole]

Deesee said:

I had a PCP quote in for a client of mine, for a McLaren.

As I’m sure you can imagine with a 25k ‘deposit contribution’ and 2.5k a month he was quite eager to sign up, I check all his documents if I finance it or we sub it out.

I went though it and showed him there was a 57k profit in the finance.... for a 24 month PCP he was shocked..

I got that finance placed elsewhere without the deposit contribution monthly’s around the same and cost of finance was 18k.

That’s a very interesting quote!
He would be paying 24x £2.5k = £60k and the profit was £57k
So £3k goes towards the depreciation, how does that work?

[J4CKO]

Deesee said:

I had a PCP quote in for a client of mine, for a McLaren.

As I’m sure you can imagine with a 25k ‘deposit contribution’ and 2.5k a month he was quite eager to sign up, I check all his documents if I finance it or we sub it out.

I went though it and showed him there was a 57k profit in the finance.... for a 24 month PCP he was shocked..

I got that finance placed elsewhere without the deposit contribution monthly’s around the same and cost of finance was 18k.

Thats the rub with PCP, we got the hard sell when buying my wifes car, but we were buying it outright as we had the money and it wasnt all that expensive.

My sons car went wrong so we were looking for a new one, he finds Fiesta ST locally and was eager to sign, we did a bit of due diligence and worked out that with a personal loan it was two and half grand cheaper to buy that same car compared to using the PCP.

I can see why people do it, especially when you have the salesman there like that snake with the hypnotic eyes from Jungle Book giving it the full works.

Its very easy to get caught up in the moment and for a lot they realise that they can get their hands on something really quite nice (and affordable) and its almost like the nice man is doing them a really big favour.

I have nothing against finance, for large purchases, for most people its the only way if they want to have something decent, but we need to weigh up the total cost, not just the monthly payment.

And even then, if they are happy with their Mini for £300 a month and can afford it, does it matter, the salesman gets some commission, the dealership makes a sale, the finance company make a few quid and the world keeps turning.

[Deesee]

R.Sole said:

Deesee said:

I had a PCP quote in for a client of mine, for a McLaren.

As I’m sure you can imagine with a 25k ‘deposit contribution’ and 2.5k a month he was quite eager to sign up, I check all his documents if I finance it or we sub it out.

I went though it and showed him there was a 57k profit in the finance.... for a 24 month PCP he was shocked..

I got that finance placed elsewhere without the deposit contribution monthly’s around the same and cost of finance was 18k.

That’s a very interesting quote!
He would be paying 24x £2.5k = £60k and the profit was £57k
So £3k goes towards the depreciation, how does that work?

Your neglecting his deposit, which to be fair I did not state, and with PCP you pay interest on all the balance (less the ‘purchasers’ deposit).

The depreciation curve was actually not as steep as you would/could imagine, (I suppose the dealer contribution sorted a bit of that).

Anyway client made the same deposit, 24 month HP with a bubble (my risk, may well have a McLaren on the drive/Yard for a bit )

I can buy the money at x, and retail at x + a bit, does change from lender to lender, but McLaren were retailing at 7%, let’s say I sorted it at less than half that (good client)..

[roadsmash]

Red 4 said:

I'll apologise for conflating the PCP/ lease advert.

I will not apologise to you for anything else for two reasons;

Firstly, you have repeatedly misquoted me.
Shortening/ editing people's previous replies smacks of desperation.
Misrepresenting what I actually said means you are dishonest.
You were abusive to me long before I was abusive to you.

Secondly, you keep telling me I know nothing about finance.
See the points above.
You come across as a Berk.

HTH.

Complete and utter nonsense.

No one misquoted you, you were just repeatedly incorrect.

[Deesee]

J4CKO said:

Deesee said:

I had a PCP quote in for a client of mine, for a McLaren.

As I’m sure you can imagine with a 25k ‘deposit contribution’ and 2.5k a month he was quite eager to sign up, I check all his documents if I finance it or we sub it out.

I went though it and showed him there was a 57k profit in the finance.... for a 24 month PCP he was shocked..

I got that finance placed elsewhere without the deposit contribution monthly’s around the same and cost of finance was 18k.

Thats the rub with PCP, we got the hard sell when buying my wifes car, but we were buying it outright as we had the money and it wasnt all that expensive.

My sons car went wrong so we were looking for a new one, he finds Fiesta ST locally and was eager to sign, we did a bit of due diligence and worked out that with a personal loan it was two and half grand cheaper to buy that same car compared to using the PCP.

I can see why people do it, especially when you have the salesman there like that snake with the hypnotic eyes from Jungle Book giving it the full works.

Its very easy to get caught up in the moment and for a lot they realise that they can get their hands on something really quite nice (and affordable) and its almost like the nice man is doing them a really big favour.

I have nothing against finance, for large purchases, for most people its the only way if they want to have something decent, but we need to weigh up the total cost, not just the monthly payment.

And even then, if they are happy with their Mini for £300 a month and can afford it, does it matter, the salesman gets some commission, the dealership makes a sale, the finance company make a few quid and the world keeps turning.

100% it’s all about how you feel and being comfortable with he decision.

[anonymous-user]

Deesee said:

Your neglecting his deposit, which to be fair I did not state, and with PCP you pay interest on all the balance (less the ‘purchasers’ deposit).

The depreciation curve was actually not as steep as you would/could imagine, (I suppose the dealer contribution sorted a bit of that).

Anyway client made the same deposit, 24 month HP with a bubble (my risk, may well have a McLaren on the drive/Yard for a bit )

I can buy the money at x, and retail at x + a bit, does change from lender to lender, but McLaren were retailing at 7%, let’s say I sorted it at less than half that (good client)..

I might be reading this wrong so apologies in advance

Assuming your punter only wants two years’ access to the car then he is still paying the same quantum (albeit admittedly the underlying money on it is a chunk more expensive via one route than the other).

If however he wants to buy it at the end then your deal is clearly advantageous given the reducing asset balance.

If he doesn’t though it boils down to the same total cost to him.

Assuming that is the case the beneficiary is you because you are, one assumes, making a turn on the provision of funding in return for taking the underlying risk, but as I read it he is no better off.

What am I missing ?

Edited by anonymous-user on Monday 10th February 16:35

[Deesee]

Brooking10 said:

I might be reading this wrong so apologies in advance

Assuming your punter only wants two years’ access to the car then he is still paying the same quantum (albeit admittedly the underlying money on it is a chunk more expensive via one route than the other).

If however he wants to buy it at the end then your deal is clearly advantageous given the reducing asset balance.

If he doesn’t though it boils down to the same total cost to him.

Assuming that is the case the beneficiary is you because you are, one assumes, making a turn on the provision of funding in return for taking the underlying risk, but as I read it he is no better off.

What am I missing ?

Edited by Brooking10 on Monday 10th February 16:35

Almost..

Deposit same, Monthly’s (very simular), interest less, bubble lower than the GFV that McLaren were offering, so more fat in the deal for my client, small details than can add up to 10’s of thousands over a term.

2 yrs access yes, but will almost certainly trade up on the date of the bubble, 90% certain will not buy.

My clients are aware that I have access to wholesale cash, that I can convert to retail, I’m quite comfortable will what I have charged and I know the client feels the same.

My risk is a client defaulting, disappearing, car vanishing, my margin has to cover the risk, possible recovery, and it sitting in my yard until I find a buyer...move it on..

We looked at a lease/PCH on this one (no risk for me ) client has had several cars (Ferrari/Maserati) on this type of deal they like this arrangement, I’m happy with the client win win.

[Justin Case]

Could it be that some folk would prefer to lease rather than buy as there may be some questions asked as to how they came by the £40k cash to drop on a new Audi. After all even with a good evening it would be difficult to win that amount on the dogs 😂

[Red 4]

Justin Case said:

Could it be that some folk would prefer to lease rather than buy as there may be some questions asked as to how they came by the £40k cash to drop on a new Audi. After all even with a good evening it would be difficult to win that amount on the dogs ??

People don't walk into dealerships with a suitcase full of used notes.
Dealers also have limits on how much they can accept in cash.
"Cash" just means a money transfer from your bank account.
In other words, no finance involved.

[Justin Case]

Red 4 said:

People don't walk into dealerships with a suitcase full of used notes.
"Cash" just means a money transfer from your bank account.

Ah, so that's where I've been going wrong

[Deep Thought]

Justin Case said:

Red 4 said:

People don't walk into dealerships with a suitcase full of used notes.
"Cash" just means a money transfer from your bank account.

Ah, so that's where I've been going wrong

Yeah i think anything over about £7K they get jumpy.

Bank transfer and they're happy enough.

My BIL got an XJ for (apparently) a really good price as it was a cancelled out. The buyer was insisting on paying in actual cash and they refused so he cancelled.

[jimPH]

So my quote is in on a leased Mégane trophy 300:

£359/month for 24 months. Includes road tax. 16k miles total.

Doesn't list all the options I ticked so I suspect there are a few missing.

It says I pay £2150 the first month (equivalent to 6 months), then 23 installments of £359. But no total figure, which appears a bit misleading..

So between 8600 - 10700 for two years ownership.

By my reckoning, cash will cost around 15k over 4 years. It might tie up a lump sum, but i get the better cash flow over the term and I suspect, a much better spec.

I'm not ruling out finance on this purchase, but I'm yet to be bowled over by these mega deals people talk about.

It would appear that to get a good finance deal you need to be flexible on spec or even model. Which completely goes against the whole point of buying new.

[blueg33]

Deep Thought said:

R.Sole said:

Going by that theory the people on here with PCP/lease that say they have the purchase price but choose to invest it in their pension or others investments are telling porky pies?

True.

However i think whilst many people on this thread were saying other things that could be done with cash - which is the case lets be honest, there was maybe only one who said thats what they'd done with a lump sum amount.

I've no reason to doubt that particular person.

I have cash tied up in investment properties and a Puma fund. They all yield more than the interest on my wife’s PCP Volvo, plus the investment properties have equity growth as well as NIY.

I’d be mad to liquidate an investment to buy a depreciating asset cash.

[Deep Thought]

jimPH said:

So my quote is in on a leased Mégane trophy 300:

£359/month for 24 months. Includes road tax. 16k miles total.

Doesn't list all the options I ticked so I suspect there are a few missing.

It says I pay £2150 the first month (equivalent to 6 months), then 23 installments of £359. But no total figure, which appears a bit misleading..

So between 8600 - 10700 for two years ownership.

By my reckoning, cash will cost around 15k over 4 years. It might tie up a lump sum, but i get the better cash flow over the term and I suspect, a much better spec.

Is it 6+23 as opposed to initial rental + 24?

£10,411 then (plus any admin fees), so £433 per month amortised.

jimPH said:

I'm not ruling out finance on this purchase, but I'm yet to be bowled over by these mega deals people talk about.

It would appear that to get a good finance deal you need to be flexible on spec or even model. Which completely goes against the whole point of buying new.

Yes. i think to get a depreciation busting mega deal you really have to accept the deal when it comes up rather than try for a specific car and specific spec.

Also options seem to kick leasing a bit in the nuts as they often add on the full cost of the option to the payments.

I think the "win" is like what NickFrog did / does - eg 5 seater people carrier then just get the one with the best deal.

Specific low volume car, specific options, not so much.

I think a Megane RS is something to own rather than to lease TBH.

Edited by Deep Thought on Monday 10th February 18:56