To Finance or to Buy?
Discussion
Seems like the everyone is financing cars nowadays and Im wondering if I'm missing something...
Whats the general consensus on here?
Ive never spent over £1000 on a car so considering dropping £15-22k on a nearly new car I am way out of my depth. come to think of it Ive never bought anything with credit either. Do they do stringent checks or just sign you up?
I need a reliable car for work and I was considering something in the range of £15K, but that would get you a 5/6 year old car for what Im looking at.
Just curious about what any finance minded people would do here..
Keep the cash, put it to work somewhere & have a shiny new car under warrantee - no stress?
Or
Spend the dosh, have no monthlies & less depreciation. But the car might need some work or deprecate more than expected?
Am I just being tight?
Whats the general consensus on here?
Ive never spent over £1000 on a car so considering dropping £15-22k on a nearly new car I am way out of my depth. come to think of it Ive never bought anything with credit either. Do they do stringent checks or just sign you up?
I need a reliable car for work and I was considering something in the range of £15K, but that would get you a 5/6 year old car for what Im looking at.
Just curious about what any finance minded people would do here..
Keep the cash, put it to work somewhere & have a shiny new car under warrantee - no stress?
Or
Spend the dosh, have no monthlies & less depreciation. But the car might need some work or deprecate more than expected?
Am I just being tight?
Financing a new car covers the largest amount of depreciation per unit time, the interest on the loan (or lease company profit) and the options etc at full price.
A used car does come without a warranty, but if you're buying cash, you then have the amount you would spend leasing/PCPing to pop into a what if/next car fund. You're not paying masses of depreciation or loan interest and options typically make very little difference to used values. You can get aftermarket warranties, but as many on here will tell you, they're a mixed bag at best.
In your position, I'd go used every time.
A used car does come without a warranty, but if you're buying cash, you then have the amount you would spend leasing/PCPing to pop into a what if/next car fund. You're not paying masses of depreciation or loan interest and options typically make very little difference to used values. You can get aftermarket warranties, but as many on here will tell you, they're a mixed bag at best.
In your position, I'd go used every time.
If going for finance, they’ll do a full credit check to determine if you’re credit worthy or not and whether you're eligible for the headline rate offered.
The only warranty I’d consider would be a manufacturer backed one rather than some third party one. Depending on manufacturer, you may be able to extend this each year at a cost (or maybe try and negotiate an extension as part of the deal)
You have to sit down and do the maths. All cars depreciate and it’s a case of do you want to tie your capital up in a depreciating asset or are you prepared to pay a bit of interest and keep your money in the bank? There is no right or wrong answer before the anti-finance brigade turn up. It’s what works for you.
The only warranty I’d consider would be a manufacturer backed one rather than some third party one. Depending on manufacturer, you may be able to extend this each year at a cost (or maybe try and negotiate an extension as part of the deal)
You have to sit down and do the maths. All cars depreciate and it’s a case of do you want to tie your capital up in a depreciating asset or are you prepared to pay a bit of interest and keep your money in the bank? There is no right or wrong answer before the anti-finance brigade turn up. It’s what works for you.
It’s nice to have a new car. They look good, smell good, feel good (for a few weeks at least) and have a rock solid warranty. You can get it in whatever spec you want. They also depreciate more when new, but you can get a significant discount with finance packages and a reasonable APR.
A nearly new car is almost as good and depreciates less. Unfortunately the finance is nowhere near as good, especially because of the discount given on new cars, though you can get the finance elsewhere to improve the APR, but not as easily as through the dealer - and it’s harder if you are wanting over £25k, when the APR goes up from most banks. It sometimes works out cheaper over a 3-year period to just buy new rather than nearly new!
An older care often doesn’t have the same warranty, has lower tech, may have some faults due to rear their head but it’s a lot cheaper.
You pays your money and takes your choice.
If you finance, expect a discount and get a good APR.
A nearly new car is almost as good and depreciates less. Unfortunately the finance is nowhere near as good, especially because of the discount given on new cars, though you can get the finance elsewhere to improve the APR, but not as easily as through the dealer - and it’s harder if you are wanting over £25k, when the APR goes up from most banks. It sometimes works out cheaper over a 3-year period to just buy new rather than nearly new!
An older care often doesn’t have the same warranty, has lower tech, may have some faults due to rear their head but it’s a lot cheaper.
You pays your money and takes your choice.
If you finance, expect a discount and get a good APR.
moss-jfhhq said:
Seems like the everyone is financing cars nowadays and Im wondering if I'm missing something...
Whats the general consensus on here?
Ive never spent over £1000 on a car so considering dropping £15-22k on a nearly new car I am way out of my depth. come to think of it Ive never bought anything with credit either. Do they do stringent checks or just sign you up?
I need a reliable car for work and I was considering something in the range of £15K, but that would get you a 5/6 year old car for what Im looking at.
Just curious about what any finance minded people would do here..
Keep the cash, put it to work somewhere & have a shiny new car under warrantee - no stress?
Or
Spend the dosh, have no monthlies & less depreciation. But the car might need some work or deprecate more than expected?
Am I just being tight?
Your initial hurdle is that you are trying to contrast the cost of a very old car with that of a new car. The new car is always going to be more expensive simply because of its much higher underlying initial purchase price. Whats the general consensus on here?
Ive never spent over £1000 on a car so considering dropping £15-22k on a nearly new car I am way out of my depth. come to think of it Ive never bought anything with credit either. Do they do stringent checks or just sign you up?
I need a reliable car for work and I was considering something in the range of £15K, but that would get you a 5/6 year old car for what Im looking at.
Just curious about what any finance minded people would do here..
Keep the cash, put it to work somewhere & have a shiny new car under warrantee - no stress?
Or
Spend the dosh, have no monthlies & less depreciation. But the car might need some work or deprecate more than expected?
Am I just being tight?
The starting point would be to put down on paper what your bangernomics costs have been over the last 5-10 years including all the costs that are covered within a typical lease contract. Then divide that figure by the number of months. That will give you your crude monthly cost which you can then use as a reference against lease costs.
Typically speaking if you’ve been running old executive V8s then you can probably lease a basic hatchback for less but if you’ve been running old Japanese hatchbacks then it’s almost certain to be much more etc.
The key points of financing is that in crude terms you are locking yourself into paying the maximum level of a car’s depreciation on an ongoing basis plus paying a financing cost for the privilege.
In short, you need to fully understand your current and future costs in order to make a fair and honest decision as to whether the increased cost is justified.
anonymous said:
[redacted]
Agree completely. The modern spanner in the works being the rigged RRP which is used to hammer people into finance deals by seeking charge more to cash buyers by removing the artificial ‘dealer contribution’. What’s needed is to remove the finance licenses from car vendors so that all purchases are cash with finance, where wanted or needed, being arranged prior by unrelated third parties.
Pretty much apart from my first car have all been on finance, I'm not lucky enough to be able to purchase a car outright, at least not the more desirable type of cars anyway, and as you say it seems a lot of people are financing now anyway.
Only thing i would say is if you are to finance then go for something that's easily affordable whilst reliable if that's what your after.
Too many do the keep up with the joneses, and see a monthly payment only without factoring in running costs, simply because it looks good on the driveway.
Only thing i would say is if you are to finance then go for something that's easily affordable whilst reliable if that's what your after.
Too many do the keep up with the joneses, and see a monthly payment only without factoring in running costs, simply because it looks good on the driveway.
I'm not pro or anti-finance but am in the fortunate position of not needing a car for daily duties/commuting so I just but something interesting & older for cash and do 3-5k miles a year in it.
I just but somthing when I have an injection off cash. The previous on came off the profit on a house sale, the current one from a mix of bonus's and a redundancy payment.
I'v been laid off twice in the last two years and it's great not to have any finance payments and to have nice lump of metal outside that's mine.
If i did commute/do a lot of business miles/have a requirement from work to drive a newer car I'd have a good look at finance as it can make sense.
I just but somthing when I have an injection off cash. The previous on came off the profit on a house sale, the current one from a mix of bonus's and a redundancy payment.
I'v been laid off twice in the last two years and it's great not to have any finance payments and to have nice lump of metal outside that's mine.
If i did commute/do a lot of business miles/have a requirement from work to drive a newer car I'd have a good look at finance as it can make sense.
This is some solid advice, cheers chaps. I agree its kind of smoke and mirrors. My gut says buy 2nd hand as I have always done and don't have any overheads. I can can always sell the car and return to the £500 V40 if needed.
I viewed a £15K Octavia VRS yesterday and it was battered, I mean scratches all over the dash, glitter in the vents (how?) and wheels and panels chipped. Clearly leased and abused. SO it got me thinking are all cars like this, 4 years old or so, going to be so unloved
I'll just keep the search going! The electric car thing has me twitching though..
I viewed a £15K Octavia VRS yesterday and it was battered, I mean scratches all over the dash, glitter in the vents (how?) and wheels and panels chipped. Clearly leased and abused. SO it got me thinking are all cars like this, 4 years old or so, going to be so unloved
I'll just keep the search going! The electric car thing has me twitching though..
Find the right model & you can find some cracking cars for your budget that are only three years old & still nice cars with sensible miles & with a chance to extend the Manufacturer's Warranty:
The Infiniti Q50 would be my first pick they're reliable cars with great build quality (that will rival any German brand) & a range of drivetrains to cover all your needs:
2.0T Q50 Sport Petrol
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
Q50 35h S Sport Hybrid Now these are great cars I've supplied a number of these now & have supplied two to family members who are averaging around 35mpg which for a 3.5 V6 is very good, the Hybrids also come with Adaptive Cruise 360 cameras as standard.
https://www.autotrader.co.uk/classified/advert/201...
2.2d Sport These have the Mercedes drivetrain (the same as a C220) so any Indy can service these & they come loaded with kit as do all Infiniti's in Sport trim.
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
Although Infiniti are pulling out of Europe warranties are still being extended as are service packs, Nissan has said that they'll be honoring all warranties with the Infiniti dealerships becoming Nissan Premium Centres.
Oh yes Petrol & Diesels have folding seats the Hybrid doesn't.
The other option is the Mondeo in Vignale trim, they're the best FWD steer in class:
2.0t
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
2.0d Vignale
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
You can only get the Hybrid in Titanium spec:
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
The Infiniti Q50 would be my first pick they're reliable cars with great build quality (that will rival any German brand) & a range of drivetrains to cover all your needs:
2.0T Q50 Sport Petrol
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
Q50 35h S Sport Hybrid Now these are great cars I've supplied a number of these now & have supplied two to family members who are averaging around 35mpg which for a 3.5 V6 is very good, the Hybrids also come with Adaptive Cruise 360 cameras as standard.
https://www.autotrader.co.uk/classified/advert/201...
2.2d Sport These have the Mercedes drivetrain (the same as a C220) so any Indy can service these & they come loaded with kit as do all Infiniti's in Sport trim.
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
Although Infiniti are pulling out of Europe warranties are still being extended as are service packs, Nissan has said that they'll be honoring all warranties with the Infiniti dealerships becoming Nissan Premium Centres.
Oh yes Petrol & Diesels have folding seats the Hybrid doesn't.
The other option is the Mondeo in Vignale trim, they're the best FWD steer in class:
2.0t
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
2.0d Vignale
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
You can only get the Hybrid in Titanium spec:
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
moss-jfhhq said:
I viewed a £15K Octavia VRS yesterday and it was battered, I mean scratches all over the dash, glitter in the vents (how?) and wheels and panels chipped. Clearly leased and abused. SO it got me thinking are all cars like this, 4 years old or so, going to be so unloved
Not all ex-lease cars are shagged. Whoever buys my vRS once it’s fired into an auction will get a good car that has been looked after. Other than a few kerb marks, it’s been serviced on time and I even wax the damn thing. say you put 15k away for 2 years should earn 1k interest total.(best rate 3%)
there are a couple of lease deals for 2 years, a seat leon 1.5 tsi 4k or astra 200 bhp at 4.6k total.
so take off gained interest you will pay 1.5 - 1.8k per year for a brand new car on lease, and may be able to negotiate an extension. that is probably what a 2nd hand car will lose in depreciation alone plus at least another 300-500 for servicing tyres etc..
that's what i would do and will allow you to keep capital.
there are a couple of lease deals for 2 years, a seat leon 1.5 tsi 4k or astra 200 bhp at 4.6k total.
so take off gained interest you will pay 1.5 - 1.8k per year for a brand new car on lease, and may be able to negotiate an extension. that is probably what a 2nd hand car will lose in depreciation alone plus at least another 300-500 for servicing tyres etc..
that's what i would do and will allow you to keep capital.
Edited by Thesprucegoose on Saturday 1st June 23:41
Thesprucegoose said:
say you put 15k away for 2 years should earn 1k interest total.(best rate 3%)
there are a couple of lease deals for 2 years, a seat leon 1.5 tsi 4k or astra 200 bhp at 4.6k total.
so take off gained interest you will pay 1.5 - 1.8k per year for a brand new car on lease, and may be able to negotiate an extension. that is probably what a 2nd hand car will lose in depreciation alone plus at least another 300-500 for servicing tyres etc..
that's what i would do and will allow you to keep capital.
Until you ask yourself the one important question which what is the hidden interest rate you’re paying on the lend? there are a couple of lease deals for 2 years, a seat leon 1.5 tsi 4k or astra 200 bhp at 4.6k total.
so take off gained interest you will pay 1.5 - 1.8k per year for a brand new car on lease, and may be able to negotiate an extension. that is probably what a 2nd hand car will lose in depreciation alone plus at least another 300-500 for servicing tyres etc..
that's what i would do and will allow you to keep capital.
Edited by Thesprucegoose on Saturday 1st June 23:41
ZX10R NIN said:
At 15k I'd get a bank loan which will be at a lower interest rate than finance deals & you'll have a better car than if you lease a brand new model & you still get the peace of mind of a Manufacturer's Warranty.
The problem being that the vendors know this and can rig the price against those able to source third party finance. Just look at how intelligent and car savvy PHers oft talk about ‘dealer contributions’ as if they’ve won a discount when it’s just a tool to inflate the price in the first instance to force self financers into the much high cost house debt package. moss-jfhhq said:
I viewed a £15K Octavia VRS yesterday and it was battered, I mean scratches all over the dash, glitter in the vents (how?) and wheels and panels chipped. Clearly leased and abused. SO it got me thinking are all cars like this, 4 years old or so, going to be so unloved
I can't help but wonder myself, why would someone who is only going to keep the car from new for three years spend anymore than they have to? Obviously there will be exceptions but is a car which has had a second ownership be a safer bet where the owner may have originally intended to keep it longer and therefore looked after it properly?I suppose it's all just guessing in the end, so the best thing for any car is the obvious and buy on condition with as thorough an inspection as possible?
Gassing Station | Car Buying | Top of Page | What's New | My Stuff