Finance or cash?
Discussion
Hoping to get some pointers from the PH collective on our situation:
We're after a new-ish Golf 7R estate, ex-demo or low miles, not fussed about options and there is a lot to choose from. We can afford to purchase in cash but this doesn't seem to be triggering any decent deals (even in the current market situation), and with uncertainty looming I wonder if PCP would be a better choice as depreciation would be locked in.
What would you do in this situation if it were your money?
PS - I'm aware the options are limitless if you change the car, age or mileage but we're keen to stick to this brief
We're after a new-ish Golf 7R estate, ex-demo or low miles, not fussed about options and there is a lot to choose from. We can afford to purchase in cash but this doesn't seem to be triggering any decent deals (even in the current market situation), and with uncertainty looming I wonder if PCP would be a better choice as depreciation would be locked in.
What would you do in this situation if it were your money?
PS - I'm aware the options are limitless if you change the car, age or mileage but we're keen to stick to this brief
I can only speak for what I did having always paid "cash" until my last car which was I took the PCP.
These threads always seem to end up as matters of religious faith but I guess the simplest way I can put it is ask whether you care about owning the car vs. knowing that for a fixed sum you have motoring covered for a period of time.
Not sure about VW but with most marques the offers/deals seem to be on the assumption of finance as that's where they make money and often "lock you in".
The days of "how much for cash?" seem gone.
These threads always seem to end up as matters of religious faith but I guess the simplest way I can put it is ask whether you care about owning the car vs. knowing that for a fixed sum you have motoring covered for a period of time.
Not sure about VW but with most marques the offers/deals seem to be on the assumption of finance as that's where they make money and often "lock you in".
The days of "how much for cash?" seem gone.
You need to calculate over the time you plan on keeping the car how much both will cost.
Don’t forget although your depreciation is “protected” it isn’t because if you get to the end of the term and you are in high negative equity, your only real choice is to hand the car back and be left with nothing. Also you need to factor in the interest payments into the equation.
If you want the “deal” there’s nothing stopping you taking the finance with the perks that come with it, and withdrawing after a few days.
Or look into a bank loan as rates are only 2.x% - I took out a sainsburys loan a few years ago which ends next year, and 9.5k has only cost me 585 quid in interest over 4 years
Don’t forget although your depreciation is “protected” it isn’t because if you get to the end of the term and you are in high negative equity, your only real choice is to hand the car back and be left with nothing. Also you need to factor in the interest payments into the equation.
If you want the “deal” there’s nothing stopping you taking the finance with the perks that come with it, and withdrawing after a few days.
Or look into a bank loan as rates are only 2.x% - I took out a sainsburys loan a few years ago which ends next year, and 9.5k has only cost me 585 quid in interest over 4 years
Brett748 said:
A sensible option. Just don’t dare suggest it in the PCP payment holiday thread...
Quite right.The anti finance guys will tell you that you can't afford the car if you use finance, and in any case you are only "renting" the car to impress your neighbours.
Also, you'll get your comeuppance due to your overstretching on sub-prime borrowing, and you'll be accused of expecting the tax payer to bail you out.
They're a nice bunch of people really, but just blinkered & dim when it comes to their understanding of car finance.
OP, the link to the topic they’re referring to is here if you’re interested:
https://www.pistonheads.com/gassing/topic.asp?h=0&...
https://www.pistonheads.com/gassing/topic.asp?h=0&...
I may buy the same later in the year (if I hand my current PCP back due to a fall in value compared to the GMFV I was given at the outset).
PCP can be a good deal, but almost always on a new car due to manufacturer contributions and subsidised interest rates. If they give you a high GMFV even better, as it will protect against high depreciation (as in my case with the current PCP). Unfortunately you won't get the same manufacturer subsidies on used cars, so PCP is much less likely to be a good deal compared to buying cash, or even using a bank loan.
PCP can be a good deal, but almost always on a new car due to manufacturer contributions and subsidised interest rates. If they give you a high GMFV even better, as it will protect against high depreciation (as in my case with the current PCP). Unfortunately you won't get the same manufacturer subsidies on used cars, so PCP is much less likely to be a good deal compared to buying cash, or even using a bank loan.
I go the PCP route. I could buy outright, but I choose otherwise. I see it as leasing, only I smoke in the car, and don't have to worry about excess charges related to that, or scratches, or mileage. After a year/18 months I go back, deal with the same salesman, and take a new car. He is always happy to sell me another one, on the same or even better terms. I get free servicing, AA, and warranties. And, in the end, I pay the final amount if I want to keep said car. It works for me and them. VW, BTW.
roadsmash said:
OP, the link to the topic they’re referring to is here if you’re interested:
https://www.pistonheads.com/gassing/topic.asp?h=0&...
Cor they're an angry bunch. https://www.pistonheads.com/gassing/topic.asp?h=0&...
icekay said:
Hoping to get some pointers from the PH collective on our situation:
We're after a new-ish Golf 7R estate, ex-demo or low miles, not fussed about options and there is a lot to choose from. We can afford to purchase in cash but this doesn't seem to be triggering any decent deals (even in the current market situation), and with uncertainty looming I wonder if PCP would be a better choice as depreciation would be locked in.
What would you do in this situation if it were your money?
PS - I'm aware the options are limitless if you change the car, age or mileage but we're keen to stick to this brief
The best option for you will very much depend on your personal circumstances and the offers available to you, which may be completely different to the options available to the next person in terms of APR, deposit contributions and other discounts, term length and fees/charges.We're after a new-ish Golf 7R estate, ex-demo or low miles, not fussed about options and there is a lot to choose from. We can afford to purchase in cash but this doesn't seem to be triggering any decent deals (even in the current market situation), and with uncertainty looming I wonder if PCP would be a better choice as depreciation would be locked in.
What would you do in this situation if it were your money?
PS - I'm aware the options are limitless if you change the car, age or mileage but we're keen to stick to this brief
Best bet is to get comparative quotes for PCP, PCH, HP and a personal loan. Put the kettle on. Spend a painful hour or so poring over them all in detail until you are fully confident you understand the implications for each. One will be more advantageous than the others, but it depends on how much money you want to put in up-front, how much debt you're prepared to carry, how much you can comfortably afford to spend each month.
FWIW, we bought a new-ish car a couple of months ago, ended up financing half the amount on a three-year HP at 0% APR and the rest in cash/part-exchange equity. But that's what worked for us compared to a brand-new version of the same car on a PCP. For another household with less up-front cash, that wouldn't have been possible.
Thanks everyone who contributed so far, great range of opinions!
The plan is that we would keep the car for a typical 4 year period, at which point we're just as likely to keep it as we would be to swap to a newer model.
Personal loan didn't occur to me, definitely works out cheaper than the PCP figures (Sainsbury's current offer is 2.9%), and the balance between deposit/finance is similar. The drawback I see vs. PCP specifically is that I would be funding the full depreciation just as if paying cash.
The GMFV on the deals I've seen is roughly in line with similar 4 year models up for sale currently, of course if the market took a tumble in the next 4 years it could work out cheaper to hand the car back at the end of the agreement - I suppose this is mainly why I am considering the PCP route.
The plan is that we would keep the car for a typical 4 year period, at which point we're just as likely to keep it as we would be to swap to a newer model.
Personal loan didn't occur to me, definitely works out cheaper than the PCP figures (Sainsbury's current offer is 2.9%), and the balance between deposit/finance is similar. The drawback I see vs. PCP specifically is that I would be funding the full depreciation just as if paying cash.
The GMFV on the deals I've seen is roughly in line with similar 4 year models up for sale currently, of course if the market took a tumble in the next 4 years it could work out cheaper to hand the car back at the end of the agreement - I suppose this is mainly why I am considering the PCP route.
DoubleD said:
roadsmash said:
OP, the link to the topic they’re referring to is here if you’re interested:
https://www.pistonheads.com/gassing/topic.asp?h=0&...
Cor they're an angry bunch. https://www.pistonheads.com/gassing/topic.asp?h=0&...
icekay said:
Personal loan didn't occur to me, definitely works out cheaper than the PCP figures (Sainsbury's current offer is 2.9%), and the balance between deposit/finance is similar. The drawback I see vs. PCP specifically is that I would be funding the full depreciation just as if paying cash.
On a PCP you are funding the whole car, just like cash or a personal loan. The difference is that your monthly payments only cover the predicted depreciation, with a big balloon payment that you have still borrowed but are not repaying. So you've borrowed just as much but are repaying much less, which means that if you hit financial trouble you will have a much bigger debt problem. This is why the industry is currently panicking, because nearly a million consumers a year buy new cars on PCP finance – plus hundreds of thousands of used car buyers as well. If large numbers of those people start defaulting in coming months, the sticky brown stuff will hit the recirculating cooling device and splatter everyone in sight.
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