How much can i borrow?

How much can i borrow?

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Discussion

christmc

Original Poster:

452 posts

244 months

Thursday 11th February 2010
quotequote all
I appreciate this depends on the age and make model of car but i have lots of cars i quite fancy but i cant decide what i can afford. So could someone give me a ball park please?

5k deposit

£800 per month to spend

With/without balloon

= £ ???

bogie

16,566 posts

278 months

Thursday 11th February 2010
quotequote all
depends on your definition of "afford"

but that amount of car will let you rent say, a £90 K car on PCP, give it back in 3 years

or borrow £25K on a personal loan, and you could own something for £30K outright in 3 years

lots of examples

http://www.oraclefinance.co.uk


christmc

Original Poster:

452 posts

244 months

Thursday 11th February 2010
quotequote all
is pcp the deal with a balloon figure? or is it literally just renting the car?

christmc

Original Poster:

452 posts

244 months

Thursday 11th February 2010
quotequote all
Sorry i should have been clearer, I have 5k deposit and £800 a month to spend purley on the finance, I have the tax ,fuel,insurance already covered.

christmc

Original Poster:

452 posts

244 months

Thursday 11th February 2010
quotequote all
Why does that seem odd? I earn good money but only have 20k savings so im not going to put all that into a deposit which i may lose in a finance deal, hence only want to use 5 k deposit.

i want either 2nd hand 911, AMV8, M3, Or C63 AMG

bogwoppit

705 posts

187 months

Thursday 11th February 2010
quotequote all
PCP is a type of finance with a balloon payment at the end, yes. So you pay A in deposit plus B per month, then after C months you can either pay D balloon payment to keep the car, or hand it back. The deal will be connected to the car, so it's hard to come up with a definitive value for the car you could get. It's probably fair to say that PCP is more prevalent on new cars.

On a straight personal loan, you could probably borrow about 25k to add to your 5k. But some would say you might as well use your savings and get a loan later if you need the money.

Ribol

11,507 posts

264 months

Friday 12th February 2010
quotequote all
christmc said:
Why does that seem odd? I earn good money but only have 20k savings so im not going to put all that into a deposit which i may lose in a finance deal, hence only want to use 5 k deposit.
Must be missing something obvious here but how would you lose your savings in a finance deal?

Tiggsy

10,261 posts

258 months

Friday 12th February 2010
quotequote all
Put your savings in the deal...or are you "saving up" for something???? If you are, use the saving on your monthly debt to re-build your savings...if its just rainy day emergency money, get a CC.

bogie

16,566 posts

278 months

Friday 12th February 2010
quotequote all
christmc said:
is pcp the deal with a balloon figure? or is it literally just renting the car?
PCP has a ballon - but unless you can afford £800 a month, and save up the £45K in 3 years too for the final payment, you have to give the car back, or sell it...hence you are just renting it for 36 months, you will never "own" it as an asset (even a depreciating one)

to really "afford" the car to "own" you need £5K down and about £2600 a month payment ...and 3 years later, you will own it outright ...or pay cash of course ...but to be fair, if you have access to £100k pots of cash, you likely have better places to invest it, as finance is relatively cheap still

PCP is a way to "defer" half the value of the car so you dont pay off the capital - its like an interest only mortage on a depreciating asset - so it makes the finance company more money in interest, and you get to drive a car 2x as expensive as what you could "afford" on straight HP/finance