Why Would Anyone Buy A Used Car *Finance*?
Discussion
Hi all,
Looking at getting a new car for the Mrs and having looked online at PCP on new and used cars why would anyone buy a used? Are the pcp prices advertised accurate or can the APR be negotiated on?
As an example looking at an A6 Avant Black Edition, almost 50k of car can be had on pcp for £450 a month. 5.9%
Or an S5 Sportback a couple of years old for approx £600 a month, 30k ish price for the sake of my example at around 12% apr looking at the approved used audi section online.
Personally I would like the S5 but logically it makes no sense when a new A6 can be had so cheaply.
Looking at getting a new car for the Mrs and having looked online at PCP on new and used cars why would anyone buy a used? Are the pcp prices advertised accurate or can the APR be negotiated on?
As an example looking at an A6 Avant Black Edition, almost 50k of car can be had on pcp for £450 a month. 5.9%
Or an S5 Sportback a couple of years old for approx £600 a month, 30k ish price for the sake of my example at around 12% apr looking at the approved used audi section online.
Personally I would like the S5 but logically it makes no sense when a new A6 can be had so cheaply.
makaveli144 said:
Hi all,
Looking at getting a new car for the Mrs and having looked online at PCP on new and used cars why would anyone buy a used? Are the pcp prices advertised accurate or can the APR be negotiated on?
As an example looking at an A6 Avant Black Edition, almost 50k of car can be had on pcp for £450 a month. 5.9%
Or an S5 Sportback a couple of years old for approx £600 a month, 30k ish price for the sake of my example at around 12% apr looking at the approved used audi section online.
Personally I would like the S5 but logically it makes no sense when a new A6 can be had so cheaply.
You're comparing monthly prices only from dealer finance, and PCP against HP.Looking at getting a new car for the Mrs and having looked online at PCP on new and used cars why would anyone buy a used? Are the pcp prices advertised accurate or can the APR be negotiated on?
As an example looking at an A6 Avant Black Edition, almost 50k of car can be had on pcp for £450 a month. 5.9%
Or an S5 Sportback a couple of years old for approx £600 a month, 30k ish price for the sake of my example at around 12% apr looking at the approved used audi section online.
Personally I would like the S5 but logically it makes no sense when a new A6 can be had so cheaply.
Go and compare the total cost of ownership over the term including depreciation and getting a loan of 3-4% from a bank instead of a dealer.
Phunk said:
You're comparing monthly prices only from dealer finance, and PCP against HP.
Go and compare the total cost of ownership over the term including depreciation and getting a loan of 3-4% from a bank instead of a dealer.
Definately PCP vs PCP. Current APR on audi approved used finance calculator is 13.4% vs new of 5.9%Go and compare the total cost of ownership over the term including depreciation and getting a loan of 3-4% from a bank instead of a dealer.
£30k borrowed over 3 years at 12% would mean total repaid would be £35.5k.
£50k over 3 years at 5.9% would mean paying back £54.5k
So older car still massively cheaper, the balloons and monthlies just hide this. The older car likely depreciating slower too.
The numbers might get skewed a bit if you know you want to hand the car back and sometimes GFV’s can be bit pumped up but you can stick all this stuff into excel and make a judgement.
Also worth mentioning that 12% apr on the older car would likely be beaten by a normal lender.
£50k over 3 years at 5.9% would mean paying back £54.5k
So older car still massively cheaper, the balloons and monthlies just hide this. The older car likely depreciating slower too.
The numbers might get skewed a bit if you know you want to hand the car back and sometimes GFV’s can be bit pumped up but you can stick all this stuff into excel and make a judgement.
Also worth mentioning that 12% apr on the older car would likely be beaten by a normal lender.
Used car PCP is always terrible value.
You can get external funding like PCP from some banks (Lloyd’s, Halifax, Bank of Scotland) which was 4.9% last time I looked. Or as others have said, a bank loan will be far cheaper too.
With the discounts available on most new cars, a used car up to 1 year old often doesn’t make financial sense (unless it’s a cracking used car price). At 2 years old, you should get a decent saving versus new, assuming you’re smart on the finance front.
You can get external funding like PCP from some banks (Lloyd’s, Halifax, Bank of Scotland) which was 4.9% last time I looked. Or as others have said, a bank loan will be far cheaper too.
With the discounts available on most new cars, a used car up to 1 year old often doesn’t make financial sense (unless it’s a cracking used car price). At 2 years old, you should get a decent saving versus new, assuming you’re smart on the finance front.
Here's a link to an offer similar to the new car offer that the OP describes:
https://www.swanswaygarages.com/audi/new-offers/a6...
£419pm with £7k customer deposit
If you did it with £0 customer deposit ( and there's nothing to say that you can't ) then the payment would be pretty much £600 on the nose.
Assume that you won't have any equity at the end of it, so the monthly payment is the true cost of owning the car over that period. Ditto for the used car example.
Yes, you could get the used car at a lower rate than the OP's figures and it might make £50/60 pm to the monthly payment
So the OP's original point broadly stands. If you don't want to keep the car for longer than the finance period , you can get a very nice car new car for the same outlay as an equally nice used car. You just have to be a little bit flexible to accept the model that is on special offer rather than the one you set out to buy.
https://www.swanswaygarages.com/audi/new-offers/a6...
£419pm with £7k customer deposit
If you did it with £0 customer deposit ( and there's nothing to say that you can't ) then the payment would be pretty much £600 on the nose.
Assume that you won't have any equity at the end of it, so the monthly payment is the true cost of owning the car over that period. Ditto for the used car example.
Yes, you could get the used car at a lower rate than the OP's figures and it might make £50/60 pm to the monthly payment
So the OP's original point broadly stands. If you don't want to keep the car for longer than the finance period , you can get a very nice car new car for the same outlay as an equally nice used car. You just have to be a little bit flexible to accept the model that is on special offer rather than the one you set out to buy.
TTmonkey said:
Mileage restrictions don’t suit everyone. I pay to use my car not to look at it sat on the driveway like some trophy.
If I had alternative, such as suitable public transport or a much shorter commute, I’d consider the pcp more.
Mileage restrictions on a PCP aren't an issue unless you plan to hand the car back, rather than completing the purchase or trading it in.If I had alternative, such as suitable public transport or a much shorter commute, I’d consider the pcp more.
Mandat said:
Mileage restrictions on a PCP aren't an issue unless you plan to hand the car back, rather than completing the purchase or trading it in.
This is why I prefer PCP to leases, the fact you have the option to buy it at the end gives me lots of flexibility.If something changes and I bang on the miles, I can just take a bank loan to pay the balloon at the end, although our PCP is only 5.6p per excess mile so not much.
If the car has any dings or bangs which I know they will charge for, I can also just pay the balloon, with a lease you don’t generally have this option and just have to pay or argue the charges.
stongle said:
Audi offering new car finance rates on cars upto 6months right now.
Just in case ut helps.
Thats great to know actually, thanks. We went to Audi today and think we are going with the A6.Just in case ut helps.
Re "Nuttywobbler" and deposit denial. Your post is a great example of jumping to conclusions, text book even...well done.
Its unlikely we will keep the car come the end of the PCP but atleast the flexibility is there .
Wooda80 said:
What's stopping you, Acksaw?
I'd need a loan of about 19500 to pay off the car and it doesn't appear that I'd be eligible for a loan of a decent APR that would make much difference compared the the current finance. I like the car and can afford the payments but I think it was a financial blunder really as I could do so much more with the money. Hard being a petrol head and being sensible with my finances! makaveli144 said:
stongle said:
Audi offering new car finance rates on cars upto 6months right now.
Just in case ut helps.
Thats great to know actually, thanks. We went to Audi today and think we are going with the A6.Just in case ut helps.
Re "Nuttywobbler" and deposit denial. Your post is a great example of jumping to conclusions, text book even...well done .
Your opening post references a new, near £50k A6 Avant for £450 per month on PCP. I’m afraid such a thing doesn’t exist old bean - not without a large deposit, which makes the amortised monthly payment much higher - but you left that bit out, didn’t you?
Once again, a classic case of head up one’s arse ‘deposit denial’.
Edited by nuttywobbler on Tuesday 3rd September 21:12
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