The definitive PH car loan/finance poll
Poll: The definitive PH car loan/finance poll
Total Members Polled: 135
Discussion
There's often heated debate on PH concerning the merits or lack thereof of financing a vehicle. To some, any sort of borrowing is an anathema to a sensible ordered financial lifestyle, whilst others may feel that manageable finance allows them to have something that they would otherwise not be able.
Others may have been caught out by changing their cars too often or being clobbered by unexpectedly savage depreciation.
So - what's your status?
As far as my own situation goes, I have used a small personal loan which is less than 50% of the car's current value. The payments are manageable, the car (hopefully) won't depreciate and I will have put aside enough to pay it off within 12 months.
What say you?
Others may have been caught out by changing their cars too often or being clobbered by unexpectedly savage depreciation.
So - what's your status?
As far as my own situation goes, I have used a small personal loan which is less than 50% of the car's current value. The payments are manageable, the car (hopefully) won't depreciate and I will have put aside enough to pay it off within 12 months.
What say you?
Unless you don't have a mortgage you are always borrowing in one way or another even if you pay with 'cash' and don't take specific finance.
The question should be do you secure any of your borrowing on your car.
Personally I don't but it still costs me interest. If I sold my car I could reduce my outstanding mortgage borrowing and therefore save the interest payments on that amount.
The question should be do you secure any of your borrowing on your car.
Personally I don't but it still costs me interest. If I sold my car I could reduce my outstanding mortgage borrowing and therefore save the interest payments on that amount.
I got a loan to buy the Caterham. I just happened to find my ideal 7 well within budget, so I paid off a couple of credit card debts with the "change".
What with comparative interest rates between loans and credit cards, I am now paying out less per month than I was before I got the loan.
And I have a Caterham to boot.
What with comparative interest rates between loans and credit cards, I am now paying out less per month than I was before I got the loan.
And I have a Caterham to boot.
I think it changes with age... At 24 I had a huge loan with my S2000 but as you grow up and save you can keep adding to your equity and buy outright. Buy carefully, save and you get there quicker than you imagine. The trouble is the money tied up in cars might be better in a high yielding investment but I prefer not to think about that too much...
Have owned the allegro and the mini outright from the start. Have been doing 6month to 2year leasing on the main family car for the last 6 years. However just decided that I'm off the leasing for a bit. Rates have gone up and nothing much i fancy. Most half decent deals are 2 - 3 years now which is too long for me.
Now (as of last wek) drive a 3.0 4wd Shaguar estate for the same as 2 years worth of leasing.
Buying it was a stress and have unexpected big bill risk and tax. When I want rid I'll have the stress of selling too .
The leasing was great and very stress free, I'll let you know how it develops.
Now (as of last wek) drive a 3.0 4wd Shaguar estate for the same as 2 years worth of leasing.
Buying it was a stress and have unexpected big bill risk and tax. When I want rid I'll have the stress of selling too .
The leasing was great and very stress free, I'll let you know how it develops.
Unless by some miracle it is possible to find a car that does not depreciate, leasing makes a great deal of sense. You pay for the depreciation and an amount to cover the cost of funding on a monthly basis with no residual risk. Your own capital can then be used for more profitable investments, or buying things that may appreciate - more difficult than it used to be!
From a business perspective,this is even more sensible. In addition to removing risk and managing cash flow, the monthly lease (contract Hire) payment may be offset against corporation tax (although many rules apply) and a proportion of the VAT can be reclaimed. The cash generated by the business may then be invested to make more profit rather than being tied up in depreciating "assets".
For our Club cars, we put between 30 - 40% of the purchase price down as a deposit and use HP for the balance. This ensures that their is plenty of equity in the cars at resale time and keeps the balance sheet healthier.
Their are also many merits in buying outright, particularly older cars where most depreciation is already experienced. Also for the relatively few individuals who are extremely cash rich - lets hope the lotto comes in tonight!
From a business perspective,this is even more sensible. In addition to removing risk and managing cash flow, the monthly lease (contract Hire) payment may be offset against corporation tax (although many rules apply) and a proportion of the VAT can be reclaimed. The cash generated by the business may then be invested to make more profit rather than being tied up in depreciating "assets".
For our Club cars, we put between 30 - 40% of the purchase price down as a deposit and use HP for the balance. This ensures that their is plenty of equity in the cars at resale time and keeps the balance sheet healthier.
Their are also many merits in buying outright, particularly older cars where most depreciation is already experienced. Also for the relatively few individuals who are extremely cash rich - lets hope the lotto comes in tonight!
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