I think this might be a deal

[Deleted member 6183]

I've been toying with the idea of a new car for a while and been shopping around.
This is the latest offering against a new CLK:

£33k car.

36 X £350 monthly repayments = £12600
My car as part EX around = £12000
Final, balloon payment = £8500
TOTAL = £33100

Ok, the CLK will be replaced late 2008/early 2009 and I've not negotiated a 320CDi as yet for this money but at face value it looks like I may be able to do a deal (at last!)

Any opinions?

 

[crockers]

What annual mileage do you anticipate doing?

 

[Deleted member 6183]

Around 25k, I imagine 75k over the 3 years.
It's hard to determine as a lot is business miles plus holidays to France.

I don't want to be left with no deposit in 3 years time, the other option is to buy something £10k cheaper and pay by straight HP/bank loan and clear within 3 years. Of course, this option also means driving a less desirable car!

 

[Dieselman]

Of course, this option also means driving a less desirable car!

Surely it means driving the same type of car, just one year old.

 

[verytalldave]

I have considered similar financial deals with a final balloon payment.
What I have noticed with an unerving consistency is that the amount of the balloon payment is always calculated to be not much less that the projected street value of the car at the time. You are then in the situation where you have to choose to hand the car back to the dealer and start a new contract - or hand over a big wedge of cash - not much less than the cars street value. It just feels like you are paying twice for the car. I know its not really like that - its just my perception.
Of course, its all designed to keep you contracted in to the dealer to keep rolling with contract after contract.
You will have to make your mind up which way you want to go in three years in about a year or so's time. That will give you time to save up the balloon payment - without resorting to a further loan.
Personally, I dont like the idea of these type of loans. You never seem to "own" the car. But thats just me.

 

[fuzzer]

Surely it means driving the same type of car, just one year old.

That can sometimes be a false economy. Often the Finance rate is cheaper on a new car than a used one. Discounts on new cars also make it attractive .

 

[Deleted member 6183]

Hi Dieselman,
I hadn't considered an older car - I've convinced myself to go new plus that particular deal is only on new. The rate is 1.9% flat and with the dealer contribution taken into account it shows only £100 interest over the 3 years. I could look at a 1year old and pay bank rates at around 3.5% flat but would mean running a car for relatively high mileages out of warranty in year 3 of my ownership.

Dave,
I've always steered away from baloon deals myself for the same reasons. In this case I've used What Car's assessment of residual value after 3 years and estimate £10k equity in the car. I wonder if a 75k mile CLk would be worth £18k in 3 years time?
There would be a newer version, with a steel folding roof, on the market by then.

Thanks for your responses, I guess I'll lose money either way maybe I'll just run the C class into the ground overf the next 3 years and save the £350 for a new car then.....

 

[Rory]

I wonder if a 75k mile CLk would be worth £18k in 3 years time?

Presumeably MB don't think so, or they'd have set the balloon higher - or did you ask to keep it low?

I'm not very familiar with CLK's but I would have expected that high mileage would impact the value of something like an CLK much more than a saloon.

As another poster said, whenever I've looked at these deals, you always seem to come out of the end of them with pretty much nothing.

What about doing personal contract hire? Not sure how you'd go on with being able to chop in your current car you could offset the value against the higher rentals. I guess your mileage would make the rentals high, though.

 

[Dryce]

That can sometimes be a false economy. Often the Finance rate is cheaper on a new car than a used one. Discounts on new cars also make it attractive .

Generally that first year depreciation is a killer unless there's a waiting list on new.

The headline deals don't always include an auto box. The used cars generally do. Used car prices are further negotiable.

If you buy used and take the finance over a shorter term because the cost is lower then that offsets the total charge of finance. (Remembering that the flat rate costs are cumulative over the whole amount of the whole term). 2% of £30k over three years is £1800 in interest whereas 4% of £20k over 2 years is £1600.

 

[crockers]

Buying new is also a phycological thing - people dont want someone elses left offs....If I had say £25k to spend on a new car....Would be very very tempted to look at 1y - 18 month low mileage used ones and get more car for my money..

As they say -- horses for courses....what ever floats your boat....takes all types to make a world......

 

[verytalldave]

What you ALWAYS have to remember and bear in mind is that dealer finance offers are never as good as they first appear. There is always something that brings it down. Often the best deals are on models which are near the end of their life and are mainly designed to shift stock before the new model appears. Or its a model thats not selling as well as projected for one reason or another. Dealers only do deals when they have to. They are not a charity.
Perhaps I have an over cautious attitude and maybe even a degree paranoid, but if I see something like you have been offered my first reaction is "where's the catch?" And there usually is one.
I would try to get normal bank finance at the lowest rate possible - even perhaps link it to my mortgage if thats possible - and then with the finance arranged visit the dealer and see what is on offer. Squeeze them until you see tears in their eyes and damp patches on their trousers. You will be surprised I think.
Never link finance with the product - anywhere. That goes for cars, washing machines, double glazing - anything. You NEVER get the best deal.

 

[AbbieCadabra]

i had a quote yesterday on the Personal Contract option, a new CLK 280 Cabrio,

total price OTR £42,817

deposit of £20,000
36 x £289.76 = £10,431.36
final payment/value = £21,550

TOTAL PAID = £51,981.36

needless to say, we WON'T be going down that route! it all sounded so great when it was being explained & i was well up for it, until i actually sat down & worked it out

 

[crockers]

whats the APR ?

 

[AbbieCadabra]

whats the APR ?

i'd only gone in for some basic info & fool that i am, didn't think to ask that at the time!

presumably the APR differs from dealer to dealer? perhaps even the car/value you're having?

 

[verytalldave]

i had a quote yesterday on the Personal Contract option, a new CLK 280 Cabrio,

total price OTR £42,817

deposit of £20,000
36 x £289.76 = £10,431.36
final payment/value = £21,550

TOTAL PAID = £51,981.36

needless to say, we WON'T be going down that route! it all sounded so great when it was being explained & i was well up for it, until i actually sat down & worked it out

So what it boils down to is a £22,817 loan over three years.
And for that you are paying the princely sum of about £9164 interest.
I think a one legged chicken could get a better deal than that - even in Barclays.
HOWEVER - to be fair - it depends what other things are included in the "Personal Contract Option". You may get free servicing included. If this is the case, then you have to factor this into the equation as well. Plus there may be other things as well...............

 

[Dryce]

Buying new is also a phycological thing - people dont want someone elses left offs....If I had say £25k to spend on a new car....Would be very very tempted to look at 1y - 18 month low mileage used ones and get more car for my money..

Also depends on your view of the dealer / manufacturer from the point of view of warranty / aftercare.

 

[A210AMG]

Having bought new, I've seen the light.

I love cars but you do lose a bucket load on them, buying second hand is by FAR the better option.

I also don't like owing on a car, I like it to feel mine so buying outright for me is beter. Or at least pay it off over 6 months say.

If I were you look at ex demos or a year old one, someone would have lost a fortune..their loss is your gain. With a private plate no one will ever know. You will just be happier saving thousands.

If your putting 75K miles on it and a new model comes out also, the value will plumet.

This looks a good buy?

http://www.pistonheads.com/sales/222074.htm

 

[scousetechie]

Flashing £5 notes under the dealer's nose will not always get you the best deal, sometimes vehicle finance is cheaper than a bank loan and the dealer gets a kick-back from the finance company so has more "wriggle room" on the deal. On a cash sale he is pretty much stymied.

 

[Dryce]

i'd only gone in for some basic info & fool that i am, didn't think to ask that at the time!

presumably the APR differs from dealer to dealer? perhaps even the car/value you're having?

The APR can vary while dealing. Dealer may try to make a margin on it and then if pushed may drop the % to get the deal.

When you come a professional dealer will try and figure the likely boundary of the deal and start from a monthly and total term which he thinks you will bear. This will be loaded with paint sealant, upholstery treatment, GAP insurance, mats, road tax, and other extras - all loaded on the finance and all high margin. The suggested term of the loan will be extended to get the monthly to a nice round number.

And so the ritual begins.

*Everything* is likely to be negotiable to some degree. The complications of the deal mean that the dealer can chip away at some of these and still hold some sort of margin on them.

 

[Rory]

Flashing £5 notes under the dealer's nose will not always get you the best deal, sometimes vehicle finance is cheaper than a bank loan and the dealer gets a kick-back from the finance company so has more "wriggle room" on the deal. On a cash sale he is pretty much stymied.

Certainly buying my car from MB Direct in Birmingham they dropped the rate until the dealer commission was 0% (they showed me the screen) - at that point (it was a couple of years and I think was 2.9%) I'd have been marginally better off taking the loan and keeping my money in the bank (in my wife's name as she only pays basic rate tax). And as interest rates have crept up I'd have made slightly more. So even at those levels there must be something in it for the dealer, as they were most dismayed that I wanted to pay cash.