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

[roadsmash]

Deep Thought said:

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.

This really is the golden rule.

When I found my current lease I was actually looking for a totally different car, saw it pop up and went for it.

[roadsmash]

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.

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

That sounds like a good deal, but I agree that it’s not particularly phenomenal.

jimPH said:

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.

It’s certainly a negative of leasing and you’re not wrong.

[Durzel]

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.

The big scam, if you want to call it that, with PCP/lease is the initial payment. People can easily end up looking at the monthly and think "that's not too bad", but forget the initial payment. When you factor that into the calculations the amortised monthly often goes up considerably. That mega deal you think is costing only £500 a month is actually a few hundred pounds a month more.

[jimPH]

Deep Thought said:

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.

Aye, certainly looks that way, I'll keep my eye out but cash looks the way to go at the moment.

And thanks for your time!

[Deep Thought]

jimPH said:

Aye, certainly looks that way, I'll keep my eye out but cash looks the way to go at the moment.

And thanks for your time!

No problem

"some" discount about on the RS via brokers, though i'm sure you've picked up on that already.

https://broadspeed.com/new_cars/Renault/Megane/Cho...

Lovely car by the way. Health and strength to enjoy when you get it.

[Jasey_]

Deep Thought said:

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.

I worked for Hertz Leasing selling ex-lease cars and a really dodgy dealer paid actual cash for 20 odd 2-3 year old cars - I think it was roughly £220k.

We then had to take the cash to the bank in Feltham.

I was stting myself !!!

[Deesee]

Durzel said:

The big scam, if you want to call it that, with PCP/lease is the initial payment. People can easily end up looking at the monthly and think "that's not too bad", but forget the initial payment. When you factor that into the calculations the amortised monthly often goes up considerably. That mega deal you think is costing only £500 a month is actually a few hundred pounds a month more.

I’ve put more than a few people on a ‘proper’ lease say 9+27 and the 9 months you get at the end with no monthlies...it’s your car for 3 yrs..

PCP is not a lease.. it’s a rolled up debt obligation that should not be offered to the regular retail client.

[R.Sole]

Deesee said:

I’ve put more than a few people on a ‘proper’ lease say 9+27 and the 9 months you get at the end with no monthlies...it’s your car for 3 yrs..

PCP is not a lease.. it’s a rolled up debt obligation that should not be offered to the regular retail client.

But PCP is now the largest proportion of new car sales in the UK.

[anonymous-user]

R.Sole said:

But PCP is now the largest proportion of new car sales in the UK.

What’s your proposed solution ?

[JaredVannett]

R.Sole said:

Deesee said:

I’ve put more than a few people on a ‘proper’ lease say 9+27 and the 9 months you get at the end with no monthlies...it’s your car for 3 yrs..

PCP is not a lease.. it’s a rolled up debt obligation that should not be offered to the regular retail client.

But PCP is now the largest proportion of new car sales in the UK.

Is a "pcp crash" even possible?

I remember from similar discussions it's not likely due to how the capital market is structured, something to do with insourced finance houses?

[Court_S]

Deep Thought said:

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.

BMW when my father in law bought a car last summer would t accept more than £5k via a card. They wanted as much as possible via a bank transfer a few days before collection.

[Deesee]

R.Sole said:

Deesee said:

I’ve put more than a few people on a ‘proper’ lease say 9+27 and the 9 months you get at the end with no monthlies...it’s your car for 3 yrs..

PCP is not a lease.. it’s a rolled up debt obligation that should not be offered to the regular retail client.

But PCP is now the largest proportion of new car sales in the UK.

Does not mean it’s the most appropriate form of finance for the client.

[R.Sole]

I have been saying that for years.

[ian-r]

Trying to find a new Z4 on a good deal at the minute, doesn't seem to exist!

[anonymous-user]

R.Sole said:

I have been saying that for years.

But never once have you advanced any kind of meaningful remedy or alternative.

You clearly give it a lot of thought so what do you think the industry should do ?

[R.Sole]

Standard HP with at least 20% deposit!

[Deesee]

R.Sole said:

I have been saying that for years.

Cheapest/lowest better/worse, consumers needs should be unique to that individual, not a one size fits all 300£ a month, no deposit, don’t worry about the final payment, we’ll be in touch after 15/18 months when you may have a bit of equity (you won’t but well roll it into the new deal on the %) and we can upgrade you mentality..

If your going to do monthlies do the term, look at PCH/Lease.

If your buying with ‘cash’ understand deprecation.

Dealers (and there lending divisions) have a choice, responsible lending, affordable cars, giving individual proper advise/guidance, or just carry on as they are and risk not being able to trade.

I can see a future super complaint aimed at the car dealers in the near future.

[Gojira]

Brooking10 said:

R.Sole said:

I have been saying that for years.

But never once have you advanced any kind of meaningful remedy or alternative.

You clearly give it a lot of thought so what do you think the industry should do ?

Not let folks like me have an XE on a PCP, obviously

The fact that under the circumstances at the time, the 0% APR, £0.00 deposit PCP means I will be paying out 2k less than the best cash deal I could find, and with enough interest earned on the cash not spent immediately to pay the "Extra Toys" tax, and some left over, is not so important as stopping folks having cars he thinks they can't afford, because PCPs are baaad, m'kay?

Yep, I was in the right place at the right time

[jimPH]

Court_S said:

Deep Thought said:

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.

BMW when my father in law bought a car last summer would t accept more than £5k via a card. They wanted as much as possible via a bank transfer a few days before collection.

Took the part of a week to transfer funds for my Merc. The bank cancelled some payments, then froze my account, then I had to wait for funds to clear as they were held. Thinking they had gone through, then calls from the dealer asking for payment. Calls to bank, calls to dealer...

Sold my GTR for cash the week before, they counted the whole lot behind the counter in Santander, complete with one fake £20. Won't be going through that again if I'm honest.

[Deep Thought]

JaredVannett said:

Is a "pcp crash" even possible?

I remember from similar discussions it's not likely due to how the capital market is structured, something to do with insourced finance houses?

Back in 2009 / 2010 BMW (and other manufacturers) took a massive hit when cars were worth considerably worth less than the residual value and people were handing them back in droves. Cost them hundreds of millions.

Technically there "could" be something similar happen again but it wouldnt particularly impact the end customer. Deals would probably tighten up so you might not get as much "bangs for your buck" per se, but i dont think the market would collapse.