1. You certainly haven't used my figures and principles.
But I have, I have used exactly the deal you referred to in this thread from the Mercedes website, in order to substantiate your claims.
2. The PCP buyer can invest the money he would have paid out if he had been a cash buyer. That was my choice. Pay cash or invest the cash and borrow on a PCP.
Indeed, which is exactly what I have based the calculations on. However, that is offset by (1) the montly payments, which include (2) the cost of the credit and (2) the remaining balloon payment at the end if you want to own the car,
or the loss of the car's remaining value if you hand it back (you cannot hand it back
and sell it on...)
The cash buyer sees their savings hit badly at the first day, but of course does not have to pay the monthly payments, so have that money extra left over per month.
3.No wonder your cash buyer appears to do so well if you first put his cash into buying the car and make the £329 per month payments as well. That is not a fair comparison.
Ha, ha, ha, ha! Brilliant!
So where is that 329/month exactly coming from? You can only pay cash if you have the cash in the bank. If you have the cash in the bank and you buy the car, then you do not have to make monthly payments, surely even you should see that? Where exactly, Hawk, do you think money comes from? If you borrow, do you think that the money you use to pay of your loan is "magically" appearing in your bank account.
I have simply compared like for like: someone who has the choice, are they better of borrowing money or buying cash? If they borrow, they will have to pay a monthly sum that will not pay if they pay cash. You can't have your cake and eat it. The cash buyer will have that monthly payment extra to put back in their savings. Of course, if you have no cash, then PCP will look like the better option
.
The money has to come from somewhere, Hawk. It's basic arithmetic, really.
4. You need to look at how much interest (after tax) a cash buyer foregoes if he buys for cash and compare that with what the PCP payer spends in payments and deposit.
Which is exactly what I did and said. What you however forget is that in
both cases, the purchases (PCP or cash)
pays for the car. In the case of a cash purchase, the money comes from your savings
today. In the PCP case, the money comes from your
future earnings. But in both cases, you end up paying for the car, not the fairies at the bottom of the garden. For the privilege of using money you don't yet have, you will pay a premium to the lender. Those future earnings that the PCP buyer uses for monthly payments, the cash buyer
does not have to make and they go back into the savings, accumulating compound interest and without being subjected to the premium that the PCP buyer will have to pay for the cost of the borrowings.
5. Then you need to ask what the car is worth after 3 years because the cash buyer owns it while the PCP payer does not. Some want the guaranteed residual that a PCP offers. Hope this helps.
Again, if you would have read my postings, you would have seen that I had worked exactly that into the numbers. The guaranteed residual that PCP offers is by the way calculated on only about 95% of the actual market value, as lenders don't actually want to get the car handed back at the end. But you miss the key point: the cash buyer has nothing else to pay at the point in time where the PCP buyer has to either pay the balloon if they want to own the car (i.e. have to cough up another x amount of money at that point, coming directly out of the savings that they initially didn't have to use), or hand it back and thus lose the remaining value of the car. Whatever that exact value, it's money they don't get (as you cannot sell what you do not have).
You say I have not set out any figures. Just see the first posting.
Maybe you should start using some hard figures as opposed to an overly active imagination.
