Idiots guide to car finance.
Discussion
Hi,
Mrs needs a new car. She does about 20k miles a year so need something low millage. Looking at Discovery 4’s.
Anyways I’ve always owned my cars outright. Always had it drummed into me to save then buy but I’m not in that position at the moment to spend £20k on a car. Finance deals seem so tempting these days. Such a mind field with what’s on offer. Can anyone give me a brief idea what to look at? I’ve heard about some deals dealerships do on new cars, a buy back scheme that guarantees a certain amount back after 3 years?? Also am I Better to change every 3 years to avoid to much depreciation??
Thanks
Ian
Mrs needs a new car. She does about 20k miles a year so need something low millage. Looking at Discovery 4’s.
Anyways I’ve always owned my cars outright. Always had it drummed into me to save then buy but I’m not in that position at the moment to spend £20k on a car. Finance deals seem so tempting these days. Such a mind field with what’s on offer. Can anyone give me a brief idea what to look at? I’ve heard about some deals dealerships do on new cars, a buy back scheme that guarantees a certain amount back after 3 years?? Also am I Better to change every 3 years to avoid to much depreciation??
Thanks
Ian
You pay all the depreciation on a newer car, so try to buy 3 years old and get 50% off....try to find 3-4 yr old low mile examples with a dealer warranty for a years piece of mind.
Every time you buy or sell from the trade costs you a certain percentage in the trade margin, you cant get away from that, so changing cars less often is better. You can buy and sell private if you wish, buy you need a bit more experience and more risk that way. Only done that a couple of times with cheaper cars.
I do 15-25k miles a year, so my strategy for cars over the last 20 years has been to buy 3-4 yr old examples and keep them until say 8 to 10 years old. Whatever I buy will plummet in value due to mileage. The depreciation works out less over a longer term. Most of the time you get lucky with just average running costs. Occasionally you get a "good" car where nothing goes wrong, sometimes you get a "bad" car with quite a few faults over those years.
Finance wise, if intending to keep for many years and dont want a never ending cycle of payments, then a low rate loan can be had online from banks or other lenders. Last time I got 2.5% from Zopa for some car finance. A simple loan over 3-4 years then its paid for, keep the car as long as you like after that.
Loads of info out there on a variety of different finance schemes, all designed to help fool you into thinking you can "afford" more car than you really can .....I mean if all us were really rich enough to afford all these fancy cars we dont really need, we wouldn't need finance in the first place
https://www.carwow.co.uk/guides/financing/car-fina...
Every time you buy or sell from the trade costs you a certain percentage in the trade margin, you cant get away from that, so changing cars less often is better. You can buy and sell private if you wish, buy you need a bit more experience and more risk that way. Only done that a couple of times with cheaper cars.
I do 15-25k miles a year, so my strategy for cars over the last 20 years has been to buy 3-4 yr old examples and keep them until say 8 to 10 years old. Whatever I buy will plummet in value due to mileage. The depreciation works out less over a longer term. Most of the time you get lucky with just average running costs. Occasionally you get a "good" car where nothing goes wrong, sometimes you get a "bad" car with quite a few faults over those years.
Finance wise, if intending to keep for many years and dont want a never ending cycle of payments, then a low rate loan can be had online from banks or other lenders. Last time I got 2.5% from Zopa for some car finance. A simple loan over 3-4 years then its paid for, keep the car as long as you like after that.
Loads of info out there on a variety of different finance schemes, all designed to help fool you into thinking you can "afford" more car than you really can .....I mean if all us were really rich enough to afford all these fancy cars we dont really need, we wouldn't need finance in the first place
https://www.carwow.co.uk/guides/financing/car-fina...
Edited by bogie on Monday 6th August 21:20
PCP
I've never PCP'd but seeing as the wife has a BMW the forums are full of info that I've read.
The Guaranteed Final Value (GFV) is based on mileage and condition, so you will pay a penalty at the end of you go over, it's not huge, but take it into account.
You pay APR, but interest free is available, usually on run out models.
The deposit will reduce your monthly payments, but it is accepted that the best way to play PCP is to put the lowest deposit down possible, unless you want to buy the car at the end.
You basically pay depreciation, so a high GFV will reduce your monthly payments. If your car is worth more than the GFV at the end, then you can use that equity in your next deal. If it is lower, you just hand the car back, but take note of the above.
Voluntary Termination (VT). You will be in negative equity for a large part of the term, so if you decide to change for whatever reason, you will have to pay to get out. This varies, so you can get a quote for termination or possibly roll it into a cheaper car/deal. As such, gap insurance is highly recommended, not sure, but it might be a requirement on some deals?
The balloon payment is to be paid at the end if you want to keep the car.
You can also PCP second hand cars, but they are dealer, Approved Used Cars.
I'm sure other people may be along with more information.
I've never PCP'd but seeing as the wife has a BMW the forums are full of info that I've read.
The Guaranteed Final Value (GFV) is based on mileage and condition, so you will pay a penalty at the end of you go over, it's not huge, but take it into account.
You pay APR, but interest free is available, usually on run out models.
The deposit will reduce your monthly payments, but it is accepted that the best way to play PCP is to put the lowest deposit down possible, unless you want to buy the car at the end.
You basically pay depreciation, so a high GFV will reduce your monthly payments. If your car is worth more than the GFV at the end, then you can use that equity in your next deal. If it is lower, you just hand the car back, but take note of the above.
Voluntary Termination (VT). You will be in negative equity for a large part of the term, so if you decide to change for whatever reason, you will have to pay to get out. This varies, so you can get a quote for termination or possibly roll it into a cheaper car/deal. As such, gap insurance is highly recommended, not sure, but it might be a requirement on some deals?
The balloon payment is to be paid at the end if you want to keep the car.
You can also PCP second hand cars, but they are dealer, Approved Used Cars.
I'm sure other people may be along with more information.
bmt216a said:
Hi,
Mrs needs a new car. She does about 20k miles a year so need something low millage. Looking at Discovery 4’s.
Anyways I’ve always owned my cars outright. Always had it drummed into me to save then buy but I’m not in that position at the moment to spend £20k on a car. Finance deals seem so tempting these days. Such a mind field with what’s on offer. Can anyone give me a brief idea what to look at? I’ve heard about some deals dealerships do on new cars, a buy back scheme that guarantees a certain amount back after 3 years?? Also am I Better to change every 3 years to avoid to much depreciation??
Thanks
Ian
Most finance deals are structured to retain a customer within the loop. I think that as you’re looking at used cars you might be better off with the simple and pure clarity of a conventional bank loan and then secure an approved used car with as best a warranty as you can achieve and haggle hard on the price. Retail consumption is slowing. There will be a dealer somewhere keen to move some stock. Mrs needs a new car. She does about 20k miles a year so need something low millage. Looking at Discovery 4’s.
Anyways I’ve always owned my cars outright. Always had it drummed into me to save then buy but I’m not in that position at the moment to spend £20k on a car. Finance deals seem so tempting these days. Such a mind field with what’s on offer. Can anyone give me a brief idea what to look at? I’ve heard about some deals dealerships do on new cars, a buy back scheme that guarantees a certain amount back after 3 years?? Also am I Better to change every 3 years to avoid to much depreciation??
Thanks
Ian
Frankly, even though I am a big LR fan I wouldn’t be considering a modern product from them unless it was warranteed up to the wazoo and the dealer agreed in advance and in writing to bring you a replacement vehicle and take yours away every time it needed fixing.
bmt216a said:
Hi,
Mrs needs a new car. She does about 20k miles a year so need something low millage. Looking at Discovery 4’s.
Anyways I’ve always owned my cars outright. Always had it drummed into me to save then buy but I’m not in that position at the moment to spend £20k on a car. Finance deals seem so tempting these days. Such a mind field with what’s on offer. Can anyone give me a brief idea what to look at? I’ve heard about some deals dealerships do on new cars, a buy back scheme that guarantees a certain amount back after 3 years?? Also am I Better to change every 3 years to avoid to much depreciation??
Thanks
Ian
You'd be much better off buying something a lot cheaper, simpler and easier to maintain and run and better on fuel.Mrs needs a new car. She does about 20k miles a year so need something low millage. Looking at Discovery 4’s.
Anyways I’ve always owned my cars outright. Always had it drummed into me to save then buy but I’m not in that position at the moment to spend £20k on a car. Finance deals seem so tempting these days. Such a mind field with what’s on offer. Can anyone give me a brief idea what to look at? I’ve heard about some deals dealerships do on new cars, a buy back scheme that guarantees a certain amount back after 3 years?? Also am I Better to change every 3 years to avoid to much depreciation??
Thanks
Ian
Or yes, a lease deal, but you will be hammered on the payments as the residual price on most cars at 3 years with 60k miles will not be fantastic.
DonkeyApple said:
bmt216a said:
Hi,
Mrs needs a new car. She does about 20k miles a year so need something low millage. Looking at Discovery 4’s.
Anyways I’ve always owned my cars outright. Always had it drummed into me to save then buy but I’m not in that position at the moment to spend £20k on a car. Finance deals seem so tempting these days. Such a mind field with what’s on offer. Can anyone give me a brief idea what to look at? I’ve heard about some deals dealerships do on new cars, a buy back scheme that guarantees a certain amount back after 3 years?? Also am I Better to change every 3 years to avoid to much depreciation??
Thanks
Ian
Most finance deals are structured to retain a customer within the loop. I think that as you’re looking at used cars you might be better off with the simple and pure clarity of a conventional bank loan and then secure an approved used car with as best a warranty as you can achieve and haggle hard on the price. Retail consumption is slowing. There will be a dealer somewhere keen to move some stock. Mrs needs a new car. She does about 20k miles a year so need something low millage. Looking at Discovery 4’s.
Anyways I’ve always owned my cars outright. Always had it drummed into me to save then buy but I’m not in that position at the moment to spend £20k on a car. Finance deals seem so tempting these days. Such a mind field with what’s on offer. Can anyone give me a brief idea what to look at? I’ve heard about some deals dealerships do on new cars, a buy back scheme that guarantees a certain amount back after 3 years?? Also am I Better to change every 3 years to avoid to much depreciation??
Thanks
Ian
Frankly, even though I am a big LR fan I wouldn’t be considering a modern product from them unless it was warranteed up to the wazoo and the dealer agreed in advance and in writing to bring you a replacement vehicle and take yours away every time it needed fixing.
Neighbour has an Evoque - been loads of hassle - but he had some nice courtesy cars.............
DonkeyApple said:
bmt216a said:
Hi,
Mrs needs a new car. She does about 20k miles a year so need something low millage. Looking at Discovery 4’s.
Anyways I’ve always owned my cars outright. Always had it drummed into me to save then buy but I’m not in that position at the moment to spend £20k on a car. Finance deals seem so tempting these days. Such a mind field with what’s on offer. Can anyone give me a brief idea what to look at? I’ve heard about some deals dealerships do on new cars, a buy back scheme that guarantees a certain amount back after 3 years?? Also am I Better to change every 3 years to avoid to much depreciation??
Thanks
Ian
Most finance deals are structured to retain a customer within the loop. I think that as you’re looking at used cars you might be better off with the simple and pure clarity of a conventional bank loan and then secure an approved used car with as best a warranty as you can achieve and haggle hard on the price. Retail consumption is slowing. There will be a dealer somewhere keen to move some stock. Mrs needs a new car. She does about 20k miles a year so need something low millage. Looking at Discovery 4’s.
Anyways I’ve always owned my cars outright. Always had it drummed into me to save then buy but I’m not in that position at the moment to spend £20k on a car. Finance deals seem so tempting these days. Such a mind field with what’s on offer. Can anyone give me a brief idea what to look at? I’ve heard about some deals dealerships do on new cars, a buy back scheme that guarantees a certain amount back after 3 years?? Also am I Better to change every 3 years to avoid to much depreciation??
Thanks
Ian
Frankly, even though I am a big LR fan I wouldn’t be considering a modern product from them unless it was warranteed up to the wazoo and the dealer agreed in advance and in writing to bring you a replacement vehicle and take yours away every time it needed fixing.
I wouldn’t touch an LR that wasn’t from a dealer, with an impeccable history and fully warranted. I would then budget for extended warranty once factory/AUC has expired. I say this not as an LR basher but an owner of 6 in a row from new.
Ref financing dealer supplied money on second hand cars is very expensive compared to on a new car. Per the advice above look at a straight loan or a third party provider of pcp or lease purchase solutions. Clydesdale Bank appear regularly as being a good provider of the latter.
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