How to Buy a Gas Guzzler

[scumbag]

next

 

[Dieselman]

bummer.

You're confusing me with someone else....

 

[Rory]

hang on.

A, Cash, Car £15k....paid £15k.....car worth market value.

b, HP
Car £15000- £3000 deposit AND £352.18 X 36 =£12678.48 +£3000 = £15678.48 and car worth market value.

c, pcp
Car £15000.- £3000 deposit +£180+£90 =£3270 and £154.66x36 = (£5567.80+£3270) £8833.80. And no car at the end.

Now assuming you used my figures and the car was worth £7500.

In choice a, I have a car worth £7500.

In option b i have a car worth £7500 and its cost me £678.48p for the privilige

In option c I have added the £7500 to the cost so I can keep the car and its total costs are £16333.80, or I give them the car, worth £7500 and I am left with nothing for a cost of £8833.80

Is this right?

Yes. But it assumes certainty of value which is the big advantage of a PCP.
You've paid an extra £655.32 vs HP for the certainty that the car will be worth £7500. Bear in mind that the extra cost is offset somewhat by the lower monthly payments - so if you banked (or left in the bank) the difference, you would get some interest on it.

 

[st4]

bummer.


£16390.91 at 3% I think. (£15k over 3 years ish)

Lets get really technical and assess how that value could increase or decrease on the stock market. Once could say lets PCP the car, and save up the value of the GMFV monthly into a range of collective investment vehicles. If you had done this with the Merrill Lynch world mining trust over 3 years then you'd have seen over 100% growth

http://www.trustnet.com/it/funds/?fund=18910

(remind me how a interest only mortgage is meant to work)

In most situations the interest lost by spending capital on a car will be less than the interest paid on capital used to borrow....(the basis of the western economy)

 

[Dieselman]

If you had done this with the Merrill Lynch world mining trust over 3 years then you'd have seen over 100% growth

He could've filled the boot with drums of crude oil and done better...

 

[scumbag]

hang on.

A, Cash, Car £15k....paid £15k.....car worth market value.

b, HP
Car £15000- £3000 deposit AND £352.18 X 36 =£12678.48 +£3000 = £15678.48 and car worth market value.

c, pcp
Car £15000.- £3000 deposit +£180+£90 =£3270 and £154.66x36 = (£5567.80+£3270) £8833.80. And no car at the end.

Now assuming you used my figures and the car was worth £7500.

In choice a, I have a car worth £7500.

In option b i have a car worth £7500 and its cost me £678.48p for the privilige

In option c I have added the £7500 to the cost so I can keep the car and its total costs are £16333.80, or I give them the car, worth £7500 and I am left with nothing for a cost of £8833.80

Is this right?

So actually.

a cost £15000- £7500 = £7500. I am worth £7500.

b £15678.46 -£7500 = cost £8178.46 but I am still worth £7500

c £16333.80 - £7500 = cost £8833.80 and again I am worth £7500 or I have a choice, worth nothing for a cost of £8833.80.


Now if this was a second hand car worth £15k and 3 years later was worth £7500, why would that be better than a new car worth £15k and worth £7.5 in 3 years?

 

[scumbag]

Lets get really technical and assess how that value could increase or decrease on the stock market. Once could say lets PCP the car, and save up the value of the GMFV monthly into a range of collective investment vehicles. If you had done this with the Merrill Lynch world mining trust over 3 years then you'd have seen over 100% growth

http://www.trustnet.com/it/funds/?fund=18910

(remind me how a interest only mortgage is meant to work)

In most situations the interest lost by spending capital on a car will be less than the interest paid on capital used to borrow....(the basis of the western economy)

errrrr.....are you greek?

 

[st4]

He could've filled the boot with drums of crude oil and done better...

Don't tell me you work for BP

 

[Dieselman]

So actually, I am worth £7500.

Whoever told you that, lied..

 

[Dieselman]

Don't tell me you work for BP

Yep.

Boot Petrolium.

 

[st4]

errrrr.....are you greek?

Lost. I was just putting forward another idea of car purchasing. Given these times its probably folly to follow it.

 

[scumbag]

Lost. I was just putting forward another idea of car purchasing. Given these times its probably folly to follow it.

You lost me when you started at the word Technical.

I do simple, pure and simple. Simple as that.

Show me the figures.


What you wrote was "greek" to me. See, simple.

I like simple. it makes things, well, simple.

 

[scumbag]

Whoever told you that, lied..

yep.......I am priceless. I am so priceless God can only afford one of me, hence why there are not hundreds of me roaming the streets.

You should feel priviliged I inhabit the same world as you.:bannana:

 

[st4]

You lost me when you started at the word Technical.

I do simple, pure and simple. Simple as that.

Show me the figures.


What you wrote was "greek" to me. See, simple.

I like simple. it makes things, well, simple.

Very simple, 124% of £15k is c. £34k. If you commited £15k to that fund 3 years ago, thats what you'd have. The you could buy a much nicer car.

 

[Dieselman]

hence why there are not hundreds of me roaming the streets.

I thought people up your way thought you were one of a few exactly the same.
I heard they keep referring to you as a <accent> clone.

 

[scumbag]

Very simple, 124% of £15k is c. £34k. If you commited £15k to that fund 3 years ago, thats what you'd have. The you could buy a much nicer car.

what would a pcp on a £34k car be?

 

[scumbag]

I thought people up your way thought you were one of a few exactly the same.
I heard they keep referring to you as a <accent> clone.

you misheard, although i usually starts with that letter....

 

[st4]

what would a pcp on a £34k car be?

http://www2.mercedes-benz.co.uk/con.../offers_portfolio/e-class_offers_q3_2008.html

The figures done for me (on first impressions it looks okay).

 

[hawk20]

hang on.

A, Cash, Car £15k....paid £15k.....car worth market value.

b, HP
Car £15000- £3000 deposit AND £352.18 X 36 =£12678.48 +£3000 = £15678.48 and car worth market value.

c, pcp
Car £15000.- £3000 deposit +£180+£90 =£3270 and £154.66x36 = (£5567.80+£3270) £8833.80. And no car at the end.

Now assuming you used my figures and the car was worth £7500.

In choice a, I have a car worth £7500.

In option b i have a car worth £7500 and its cost me £678.48p for the privilige

In option c I have added the £7500 to the cost so I can keep the car and its total costs are £16333.80, or I give them the car, worth £7500 and I am left with nothing for a cost of £8833.80

Is this right?

A is definitely right but two things. First you are taking the risk on depreciation. After 3 years it may be worth a lot less than the GFV from the PCP. In fact I would take a sizeable wager that a diesel E class (or more so a petrol one) will be worth much less than the figure MB are guaranteeing in their current offer especially since the new model E will be out. I rate the PCP great value there.

Second you are ignoring the opportunity cost of cash. Is it invested? (If not, why not?) What interest is it earning. Should be at least 6% nowadays. So if you use it to buy the car you lose that interest (less any tax you would pay on it). If you can earn more than 4.6% on it after tax then it pays you to take the PCP. No need to do the sums.

HP is a bit cheaper than a PCP. You buy the whole car. BUT two points: -do you want to? Do you want to change every three years or keep long term? If the former then the PCP may be best as no risk on depreciation and no worries about a car to sell.

And there is the big advantage to some that the payments are much less on the PCP. You may have been promoted in three years time, had a pay rise, or whatever. Low payments now may be useful in your life.

Most of all you are ignoring the great interest rate on the PCP offers. You won't get 4.6% on an MB deal for HP. More like 9.8%.

So to conclude (?) if the APR interest rate is low, if the price is competitive and if the GFV looks good then a PCP can make sense. Just be sure you can make the payments as with any finance deal.

 

[scumbag]

hmmm, i used your figures assuming you had found correct ones. I had to guess the GFV which I based on my original example of £7500.

The value of the car in my example, would depend on the type of car. I big motorway fleet car would lose loads, whereas a sencond Boxster for example, would not lose as much.