cash or finance? how did you finance yours?

[Skd884]

Not all new cars lose £ some gain

Never had finance on a car.

 

[Spider10]

If your quite clever in what you buy then it can work out the opposite ive also never financed a car

 

[Bobby Dazzler]

Quite a number of people I know refer to "buying their car" when they are on a PCP.
Thing is they can never afford the balloon payment at the end of the PCP so just enter into another PCP.

I’d be surprised if many people state outright that they can’t afford to pay off the balloon, certainly nobody I know has ever openly said that about a PCP so it’s difficult to be sure. There’s nothing that says the final balloon payment must be made without further borrowing.

If they really want to keep the same car and could afford the repayments for the duration of the PCP agreement then they could almost certainly afford to refinance the car for another term at the end of the PCP agreement.

I would imagine what is more likely is that those people want a new car and either use the end of the PCP as the trigger, and some change earlier. Until a short time ago, the next equivalent brand new car on PCP could have cost the same or even less (monthly) and so why wouldn’t they.

 

[sgregory124]

Not all new cars lose £ some gain

Never had finance on a car.

Lucky you - not all of us have masses of cash just kicking around to buy cars with…..some of us actually have to spend it on more important things sometimes - imagine that….

 

[Bobby Dazzler]

I never say anything to them but quite frankly unless they can afford to pay for "their car" then it is never theirs and they are simply renting a car.
Nothing wrong with that if it works for you but certainly should not be confused with actually "owning" the car.

Renting a car long term is not financial viable, and the equivalent of a long term rental agreement (for a car) is a personal lease. So based on the suggestion that a PCP is only renting then it might be thought that a personal lease would be better suited to those who never intend to keep the car at the end of PCP agreement.

However based on the reality of personal leases, are not for everyone. Unless things have changed in recent years, personal leases are not as readily available as PCP, because finance companies are more selective. More importantly there’s no option to exit the agreement without settling the full value of the lease, which is not really consumer friendly.

The only car I financed was an Audi and I took out a personal lease, because the deal was incredible. It was much less expensive than buying over the the 2 years I needed it for, however the draw back was I was fully locked in. I enquired with two brokers offering the same deal and they both explained up front that finance companies are more selective:

I’m not sure why that was the case, although I suspect it was at least in part because they view the risk differently, because of the potential for individual to default because they fancy a new car and feel unfairly locked in to the personal lease. That’s just a personal thought though.

 

[Bobby Dazzler]

I never say anything to them but quite frankly unless they can afford to pay for "their car" then it is never theirs and they are simply renting a car.
Nothing wrong with that if it works for you but certainly should not be confused with actually "owning" the car.

A further thought on this. Does that mean that people with a mortgage on their home should say that they rent their home?

A PCP and a mortgage are both loans secured by an asset, and as long as repayments are made and the amount is settled in full, then the charge over the asset is released. If a PCP is renting then buying a house with a mortgage must surely be renting too?

 

[Iggu]

If the % finance cost is less than the % earned on cash/savings (as it often is) then paying with cash is daft.
If the % finance cost is more than the % earned on cash/savings (as it sometimes is) then using finance is daft.
Simple maths.

 

[Skd884]

Lucky you - not all of us have masses of cash just kicking around to buy cars with…..some of us actually have to spend it on more important things sometimes - imagine that….

No luck involved slim but thank you so much.

 

[pmcgsmurf]

A further thought on this. Does that mean that people with a mortgage on their home should say that they rent their home?

A PCP and a mortgage are both loans secured by an asset, and as long as repayments are made and the amount is settled in full, then the charge over the asset is released. If a PCP is renting then buying a house with a mortgage must surely be renting too?

Not the same in my book, someone renting a house and telling folks they have bought it, that would be more comparable.
A big problem that is highlighted by social media and all these influencers and their get rich quick schemes makes a lot of the younger ones want to be seen to be a success.

As I said, I've nothing against PCP, lease or whatever works for you.
I've Leased, PCPd, Lease Purchased and many other things over the years.
Our accountant always told us to use other folks cash if it wash cheap enough and use our own cash for better returns via product development, manufacturing etc.

Speaking of mortgages though I do know a local chap that had to get rid of his BMW M something when he was off sick as he could not afford the car payments and the mortgage, house was more important.

I'm a fan of letting people do what works for them but I'm not going to be fooled that the young local lad paying £700pm for the M competition has actually "bought" this.
Same lad seemed gobsmacked that my mate just bought an M4 and paid cash for it.

 

[liamt]

Not the same in my book, someone renting a house and telling folks they have bought it, that would be more comparable.

If someone lives in a house and decides to move into a new house before they've fully paid off their mortage, then technically they've never owned the first house. The only thing that is theirs is the equity they've built up after the balance of the mortgage is settled when the house is sold, they've never owned the asset in full and in theory never 'bought it'. It is the same with a PCP, you may not own the car outright (unless you pay the balloon at the end), but you will own any equity that is there after the car goes back and the balance of the balloon is settled. You can either put that equity towards another car or simply walk away with it. In my opinion I don't think the term 'renting' is the correct term to describe a PCP agreement because it suggests that you pay monthly for the use of something then come away with nothing at the end which isn't always the case.

 

[pmcgsmurf]

Think the horse has been well and truly flogged.

I've been in business (the same one) since 1988 and a Director and Trustee of companies since 1993 so like to think I know a little about finance.

As I keep saying, for some it works and is a great model and all the folks with equity in the car, good stuff.

Fact is I know a lot of folks where the equity etc. is of Zero interest, it's the car and the monthly the only thing they are interested in and they 100% come out the end with very little other than perhaps a small amount to rinse and repeat.
No harm in that if it suits.

Think I'll leave it there as I'm obviously coming over as a hater of PCP etc.

 

[liamt]

Think the horse has been well and truly flogged.

I've been in business (the same one) since 1988 and a Director and Trustee of companies since 1993 so like to think I know a little about finance.

As I keep saying, for some it works and is a great model and all the folks with equity in the car, good stuff.

Fact is I know a lot of folks where the equity etc. is of Zero interest, it's the car and the monthly the only thing they are interested in and they 100% come out the end with very little other than perhaps a small amount to rinse and repeat.
No harm in that if it suits.

Think I'll leave it there as I'm obviously coming over as a hater of PCP etc.

No horse flogging or criticism intended from my end, just an exchange of opinions . All I will say is that when it boils down to financing something, whether that be a car or something else, there is no right or wrong way. Everyone's circumstances are different and we all do what is right for us individually and people shouldn't judge others based on their personal financial decisions (I'm not suggesting that you were by the way). I think I'll leave it at that.

 

[Bobby Dazzler]

Think I'll leave it there as I'm obviously coming over as a hater of PCP etc.

Don’t be worry, you’re not

 

[PolishGeorge85]

I've just part exchange my e350 and got my finance paid of also had enough for fairly good deposit for new (current)car. %-went down as I haven't missed single payment etc. Got car I like, bit younger, less mileage and 50quid less a month. I couldn't save this money, but knowing I have to pay it each month isn't in any way difficult.

 

[Red C220]

The internet is full of people who only ever pay in cash in full for their brand new cars. Yet how many new cars are financed? 80% 85%? It doesn't add up does it.

I finance all of mine, We lease the EV's because it's incredibly tax efficient through a Ltd company.

My FF is privately financed. The alternative was drawing the cash out of my company (where it's generating money), paying 40% tax for the priviledge of doing so then tying it up in an asset that isn't exactly liquid. The interest I pay on a finance arrangement pales into insignificance in comparison to the tax I'd pay on drawing dividends combined with the lost income generated by removing that cash from the business.

Of course though, in the internet world everyone pays cash for their cars, outright. Doing anything else means you're clearly living beyond your means.

 

[PolishGeorge85]

The internet is full of people who only ever pay in cash in full for their brand new cars. Yet how many new cars are financed? 80% 85%? It doesn't add up does it.

I finance all of mine, We lease the EV's because it's incredibly tax efficient through a Ltd company.

My FF is privately financed. The alternative was drawing the cash out of my company (where it's generating money), paying 40% tax for the priviledge of doing so then tying it up in an asset that isn't exactly liquid. The interest I pay on a finance arrangement pales into insignificance in comparison to the tax I'd pay on drawing dividends combined with the lost income generated by removing that cash from the business.

Of course though, in the internet world everyone pays cash for their cars, outright. Doing anything else means you're clearly living beyond your means.

I must be exempt ... finance full stop.

Rather be HAPPY "POOR" than unhappy rich.

 

[Fastcar155]

Hi , when I purchased my C207 from a Mercedes dealer my cash purchase very nearly broke our deal.

Refused even to talk about any form of discount , perks etc as the sales person usually obtains a commission on the sale , plus the supplying dealer normally receives a commission on the finance deal.

The sales person kept going back to special deals etc

I wanted the V8 C207 but Mercedes cancelled the order so I had to make do with the V6 M276 engine.

The dealer would only accept payment by electronic transfer of funds !

I was very twitchy about this type of payment because if the dealer goes bust prior to me receiving the car it can be problematic.

I purchased a car from a Subaru dealer for my mother and never received the warranty although I paid for the extended warranty.

On the surface the Mercedes dealer I deal with appears to be straight forward and cannot really complain with the service I received.

 

[DaveE320CDI]

Going back 50 60 years if you cant afford it by paying cash then you dont get it! Simples credit is the slide into trouble same as always we follow the US credit and live for tommorow and theres nothing better then actually owing your own car

 

[sgregory124]

Going back 50 60 years if you cant afford it by paying cash then you dont get it! Simples credit is the slide into trouble same as always we follow the US credit and live for tommorow and theres nothing better then actually owing your own car

What benefit is there in owning a car outright though? Makes absolutely no sense these days, unless you’re buying something old with a horse or bull on the badge….

 

[Fastcar155]

What benefit is there in owning a car outright though? Makes absolutely no sense these days, unless you’re buying something old with a horse or bull on the badge….

Hi , I understand what you are saying but when I was a lad they called it the never never.

I believe in the short term we will all suffer with this type of car purchase but I respect your comment.