What method of purchase is best for my situation?

[DC101]

Hi all, im looking for a bit of advice and cant find the answers im looking for elsewhere so figured id start a new thread....

First off i have about £800 a month 'spare' cash left over each month after outgoings and some spending money, but im not really comfortable spending more than £400 a month on car repayments, can i even afford an MB realistically!?

Ive been looking into getting either a new A-Class or C-Class on PCP. i was attracted by the low monthly payments, but i do about 25k miles a year, so this doesn't look very compatible with PCP. IF i were to go the PCP route i would probably keep handing the keys back at the end of the term and taking a new one out with a new deposit, are there any down sides to this?

I've also started looking at second hand models as there seem to be some quite good deals to be had; My local MB garage has a 2010 C200 CDI with AMG styling for £16,850 with 20k on the clock. If i were to go this route i would be looking at getting a bank loan and repaying about £450 a month, i would also intend to keep the car for 5+ years.

It might also be worth taking into account that my monthly fuel bill will probably half as i currently drive a 1.6 petrol which gets me about 30mpg.

Taking the above into account which method of purchase would you recommend? Any information on the finer points of PCP would also be appreciated! Thanks,

 

[Rory]

Not sure what to say really, finance is very personal thing.

With 25K miles per year on a PCP then the monthly cost would be much higher than the figures you see advertised. Or you could pay the lower monthly cost and buy the car at the end of the term so avoiding excess mileage charges.

Re fuel consumption - a lot depends on the type of journeys you do and the way you drive. You'll only get very high figures of you do long steady cruising. Shortish journeys around town may well produce not much better than 30MPG, especially if the car is auto.

 

[Simon_M]

Difficult to say without knowing more info.

Do you have a mortgage? you could buy a second hand car for say 17K and take that amount from your mortgage which will be a much lower rate (I hope) than a bank loan. Then dump the £450 or more if you can afford into your mortgage to pay off the 17k.

Lease/PCP/Agility or whatever it is called will be expensive with your mileage.

Or save for a year and buy and early 204 model C Class with cash.

S

 

[V12]

Do you need a new car or is it just so that you will spend less on fuel bills?

To halve your bill on a 30mpg petrol, you will need a diesel averaging almost 65mpg.

If that's what you need, you shouldn't be looking at MB as none of them will achieve that unless you never drive in towns and you are always steady on the throttle.

Are you currently saving the £800 a month or have you been blowing it?

 

[DC101]

Thanks for the responses guys. To answer your questions:

Most of the mileage I do is motorway miles, so should get a higher average mpg, although I'm not buying a new car to lower my fuel bill, I'm just trying to dress it up as another way to justify the purchase. I have only had my mortgage for a year so don't really want to buy the car that way.

I was looking into hire purchase last night, but can't really see any benefit at all compared to an unsecured personal loan, especially on a second hand car where the APR is higher.

To be honest at the moment I've been wasting the money, but the plan is to save it for about 6 months to reduce the amount I borrow, and the. Still manage to save about £400 a month after purchasing the car. I guess from the above it looks like an unsecured personal loan on a second hand car is my best bet. Only thing is at the end of it I'll have a 5 year old car with about 120k on the clock...


Sorry I didn't use quotes they won't work on my phone!

 

[Merc Owner 2B]

Ask yourself if you want a new car or not. This will greatly simplify things.

New cars suffer with higher depreciation. Some people talk about how much new cars "lose" but my view is that's simply the cost of ownership. Personally I like new cars and am prepared to pay for it.

There are some great "approved used" deals around at present and will be many more when the new registrations go out. Some are less than 12 months old and upto 20% off list price.

If you're buying used I'd recommend a good warranty as Mercs, like many prestige vehicles, are expensive to repair.

 

[DC101]

Thanks again for the responses guys.

Just had another thought. As i'm not in a rush to get a new car, would there be any downside to saving up enough to pay off the bubble before taking out a car on PCP and getting a lower APR than you would typically get from a bank? I'm assuming my mileage wouldn't be an issue if i went over if i paid the bubble payment at the end of the term?

Just trying to get my head round the seemingly endless ways to approach this!

 

[bolide]

Personally I'd keep the A3, forget new cars and buy a second property. Why buy or lease a depreciating "asset" when you could buy property?

Nick Froome

 

[redbaron]

PCP doesnt work too well on that kind of mileage... especially with a merc who hammer higher miles

BMW 1er ED with pcp mileage set to 30k would just about be in there and you would/could hit your mpg target once it is run in.

 

[wemorgan]

A180 £362/month 20k/yr

MERCEDES A-CLASS LEASING 1.5 CDI BlueEFFICIENCY 8v (107bhp) A180 AMG Sport Hatchback 5dr 1461cc Diesel Manual contract hire & Car lease offers at LINGsCARS.com

C220 CDi £354/month 20k/yr

MERCEDES E-CLASS SALOON (TO 2013) LEASING 2.2 CDI BlueEFFICIENCY 16v (167bhp) E220 CDI SE Saloon 4dr 2143cc Diesel Tiptronic Automatic contract hire & Car lease offers at LINGsCARS.com

E220 CDI £369/month 20k/yr

MERCEDES E-CLASS SALOON (TO 2013) LEASING 2.2 CDI BlueEFFICIENCY 16v (167bhp) E220 CDI SE Saloon 4dr 2143cc Diesel Tiptronic Automatic contract hire & Car lease offers at LINGsCARS.com
E220

 

[moff]

Please check the difference in cost for excess mileage charge versus paying an increased monthly cost. Sometimes it is cheaper to get a car on 10 or 15k mile contracts and pay the fee at the end - usually 5p - 9p per excess mile.

My father in law just bagged an A180 CDI for £292 a month incl. VAT, but his was in stock - there are good deals out there.

 

[moff]

PCP doesnt work too well on that kind of mileage... especially with a merc who hammer higher miles

BMW 1er ED with pcp mileage set to 30k would just about be in there and you would/could hit your mpg target once it is run in.

See my email, it depends on the excess mileage charge.

 

[davidjpowell]

I've tried most options also doing a high mileage.

The one that works best for me financially is running an older car. It's paid for. I get the odd bill - but am not forking out £6k a year in payments so the odd bill does not frighten me.

 

[Spearj]

Personally I'd keep the A3, forget new cars and buy a second property. Why buy or lease a depreciating "asset" when you could buy property?

Nick Froome

Hi
Agree with this so it all comes down to your spending priorities an what "value" you place on a new car. Hence i always finance a car with someone elses money and sink the minimum capital into a depreciating asset. Mileage of 25k per year will make all most deals on new cars unattractive.

I would buy a used car for upto £20k 2-3 years old and finance through your mortgage which should have the lowest rate of interest.

Also consider petrol models where more often than not the lower purchase price compared to a similar spec diesel can outweigh the additional fuel costs. And run it until it dies!!

Good luck
Jeremy

 

[Spearj]

Hi
Agree with this so it all comes down to your spending priorities an what "value" you place on a new car. Hence i always finance a car with someone elses money and sink the minimum capital into a depreciating asset. Mileage of 25k per year will make all most deals on new cars unattractive.

I would buy a used car for upto £20k 2-3 years old and finance through your mortgage which should have the lowest rate of interest.

Also consider petrol models where more often than not the lower purchase price compared to a similar spec diesel can outweigh the additional fuel costs. And run it until it dies!!

Good luck
Jeremy

Doh just seen mortgage not an option! So I'd recommend oracle finance. They are great. Rates of 4-5% dial in inflation at 3.3% and real terms cost of money of less than 2%.
Cheers

 

[Dieselman]

Hi
Agree with this so it all comes down to your spending priorities an what "value" you place on a new car. Hence i always finance a car with someone elses money and sink the minimum capital into a depreciating asset.

So instead of using capital and losing 1% interest, you borrow money at 6% interest.

I think I understand...

 

[Spearj]

So instead of using capital and losing 1% interest, you borrow money at 6% interest.

I think I understand...

Oh dear. Anyone with capital earning only 1% needs to seek financial advice! Similarly anyone paying 6% interest should try harder too.

 

[Dieselman]

Oh dear. Anyone with capital earning only 1% needs to seek financial advice! Similarly anyone paying 6% interest should try harder too.

So are you actually earning more interest on your capital than paying on a loan?

 

[Spearj]

So are you actually earning more interest on your capital than paying on a loan?

Yes but of course it takes effort and time to achieve this. The point made by nick froome of putting your own capital into an appreciating asset everyone understands I was extending this point saying working your own capital harder than the rate you can borrow someone elses money at.

Unsurprisingly banks etc make money from apathy and inertia with the kind of rates you quoted.

Regards
Jeremy

 

[hawk20]

Hi all, im looking for a bit of advice and cant find the answers im looking for elsewhere so figured id start a new thread....

Ive been looking into getting either a new A-Class or C-Class on PCP. i was attracted by the low monthly payments, but i do about 25k miles a year, so this doesn't look very compatible with PCP. IF i were to go the PCP route i would probably keep handing the keys back at the end of the term and taking a new one out with a new deposit, are there any down sides to this?

I've also started looking at second hand models as there seem to be some quite good deals to be had; My local MB garage has a 2010 C200 CDI with AMG styling for £16,850 with 20k on the clock. If i were to go this route i would be looking at getting a bank loan and repaying about £450 a month, i would also intend to keep the car for 5+ years.

Taking the above into account which method of purchase would you recommend? Any information on the finer points of PCP would also be appreciated! Thanks,

First: Do Not Buy the Car on Your Mortgage.
If you lose your job you risk becoming carless and homeless.
Second: Ignore advice to buy a second property unless you are rich and haven't noticed house prices falling in real terms and in nominal terms in most parts of the UK.
Third: You do big miles. In 3 years you will do 75,000 miles and you will likely want to change every 3 years and it could well be sensible to do so.
Fourth: Get a car on PCP. Tell them you only do 10k miles per year. Then you get a 220cdi C class for £309 per month. And only £4k deposit. Haggle for a discount -say 8-10%. You can spend the discount on extras or use it to reduce the payments. The interest charged by MB on a C class is very low at 4.5% APR. ALWAYS ask for the APR. Keep away from the toy cupboard. Extras add ££££'s.
Fifth: - Do your 25k per year and after almost 3 years hunt around for the best part-ex figure you can get and buy another car.
If you want to keep the C class, pay the excess mileage. It won't be more than about £4k (excess charge about 9p per mile but check) for all the 45k miles you are above book. That is quite cheap and you would lose that if bought for cash and did high miles.

If you buy secondhand with 20-30k on the clock you will be up to 100k within 3 years and that means -almost certainly- time off for repairs and bills. And hard to sell at any sensible money.

Do you get a mileage allowance or any help from work? Tax deductible?

Tie the car to its own finance pack, if like 80% plus of new Mercedes buyers you do not have the cash free to buy outright. Then if life changes and times get tough you may get the car repossessed (or you can sell it and settle the settlement figure on the PCP) but you will not lose your home.