To Finance Or Not To Finance...
Discussion
...that is the question.
OK, if you were in the situation that you had enough cash to buy your new car with a wad of £50s, would you do it or would you take one of those balloon finance deals over, say, 3 years? I could put down a hefty deposit and pay next to nothing each month for 3 years but then you're tied in (I assume) with a penalty for getting out of the finance deal before the end of the term, plus you've also the balance to find, which with my financial planning (i.e. what can I buy next
)is likely to have been spent. The finance is attractive but you do end up paying an awful lot over the cash price.
Just thinking out loud. Any experiences/wisdom?
OK, if you were in the situation that you had enough cash to buy your new car with a wad of £50s, would you do it or would you take one of those balloon finance deals over, say, 3 years? I could put down a hefty deposit and pay next to nothing each month for 3 years but then you're tied in (I assume) with a penalty for getting out of the finance deal before the end of the term, plus you've also the balance to find, which with my financial planning (i.e. what can I buy next
)is likely to have been spent. The finance is attractive but you do end up paying an awful lot over the cash price. Just thinking out loud. Any experiences/wisdom?
neil.b said:
...that is the question.
OK, if you were in the situation that you had enough cash to buy your new car with a wad of £50s, would you do it or would you take one of those balloon finance deals over, say, 3 years? I could put down a hefty deposit and pay next to nothing each month for 3 years but then you're tied in (I assume) with a penalty for getting out of the finance deal before the end of the term, plus you've also the balance to find, which with my financial planning (i.e. what can I buy next
Just thinking out loud. Any experiences/wisdom?
Take it out over two years, i did, trouble is finance is just so cheap at the moment you can use your cash to make more than 3.6%
Ever since I have been able to I have always bought cars for cash. That way if you want to alter your plans or if things take an unexpected downturn you can just keep the car and drive it.
With loans so cheap, of course, it might not be financially the best possible plan - but I guarantee you owning your car outright is the least sh*t.
Especially if other aspects of your life are risky (e.g. you own your own business etc)
With loans so cheap, of course, it might not be financially the best possible plan - but I guarantee you owning your car outright is the least sh*t.
Especially if other aspects of your life are risky (e.g. you own your own business etc)
Of course the alternative is to finance part of it with a bank loan - there are some bloody good deals around at the moment e.g. Northern Rock 6.0% over 3 years!!! That would leave me with some liquid cash and the loans are unsecured against your car so I guess that would be preferable to the balloon deal?
The other advantage to paying outright is that you're in a better position to haggle over the price. Anyone any luck getting money off the list price of a T350?
The other advantage to paying outright is that you're in a better position to haggle over the price. Anyone any luck getting money off the list price of a T350?
v8tvr said:
Take it out over two years, i did, trouble is finance is just so cheap at the moment you can use your cash to make more than 3.6%
We've had this discussion on PH before methinks.... Why don't you therefore take out a 50k loan, make more than your 3.6% on it and then pay back the full amount? Instant money!!
Offset loan is another idea to consider like Intelligent Finance - I think Barclays do this too?) - put your cash in a savings account, get a loan for your car and offset them against each other.
pros: pay no interest, keep your cash available if you need it for a rainy day, tax efficient.
Cons: Get no interest on your savings, all your eggs in one basket.
pros: pay no interest, keep your cash available if you need it for a rainy day, tax efficient.
Cons: Get no interest on your savings, all your eggs in one basket.
About time someone brought this up.
I got burnt a couple of years ago with a tuscan on a 3 year balloon deal. At around the 18/19month mark I got fed up with the car and got rid of it. I ended up having to pay 5k to get out of it....ouch.
HOWEVER, the main reason at the time was due to residual. I managed (stupidly) to get a 60% balloon on the deal, and promptly after I bought the car, TVR residuals went through the floor. So if you do go down the balloon route, make sure the residual is realistic.
If you dont want any penalities, go for a variable interest rate and not a fixed.
One thing to note is that thanks to consumer law, Once half the outstanding finance has been repayed, you can legally hand the keys back to the finance company especially if the car is not worth the outstanding finance. This will mean on the average 3 year deal you can walk away at 18 months. (From what I understand of the various contracts I have read, but Im not a solicitor).
When I got rid of my tuscan I didnt know this and now kick myself....painful lesson. Ho hum.
I really fancy a slightly used T350C (3000 miles will save you almost 8 grand) but not sure if I really want to be spending more per month on a car than I do on the mortgage.
On a more mainstream car, finance is probably one the best options, but due to the unpredictable residuals on TVR's at the moment, thanks to the SP6 engine it should be considered carefully.
Ho hum
>> Edited by jedi on Thursday 16th October 13:59
I got burnt a couple of years ago with a tuscan on a 3 year balloon deal. At around the 18/19month mark I got fed up with the car and got rid of it. I ended up having to pay 5k to get out of it....ouch.
HOWEVER, the main reason at the time was due to residual. I managed (stupidly) to get a 60% balloon on the deal, and promptly after I bought the car, TVR residuals went through the floor. So if you do go down the balloon route, make sure the residual is realistic.
If you dont want any penalities, go for a variable interest rate and not a fixed.
One thing to note is that thanks to consumer law, Once half the outstanding finance has been repayed, you can legally hand the keys back to the finance company especially if the car is not worth the outstanding finance. This will mean on the average 3 year deal you can walk away at 18 months. (From what I understand of the various contracts I have read, but Im not a solicitor).
When I got rid of my tuscan I didnt know this and now kick myself....painful lesson. Ho hum.
I really fancy a slightly used T350C (3000 miles will save you almost 8 grand) but not sure if I really want to be spending more per month on a car than I do on the mortgage.
On a more mainstream car, finance is probably one the best options, but due to the unpredictable residuals on TVR's at the moment, thanks to the SP6 engine it should be considered carefully.
Ho hum
>> Edited by jedi on Thursday 16th October 13:59
From what I gather.
A friend of mine had investigated in detail on his new model M3. My wife has just bought a new pug 206cc and the dealer there confirmed it and even showed me where it was in the contract. Some dealers refer to it as 'halves and thirds'... dont know why.
This is the reason you see on some manufacturers own finance schemes quotes like 'If after 3 years you dont wish to keep the car or the car is not worth the outstanding finance, hand back the keys'.
All they are doing is taking advantage of consumer law.
>> Edited by jedi on Thursday 16th October 14:18
>> Edited by jedi on Thursday 16th October 14:19
So who picks up the difference?
Just thinking out loud. Surely under provision of law they cant force a company to take back a car that they had no idea of the future residuals on?
Not doubting in anyway just seems an odd thing.
Will definately be doing the sums this evening, issue is I dont really know what its worth on the open market, perhaps I'll ask the font that is PH...
Just thinking out loud. Surely under provision of law they cant force a company to take back a car that they had no idea of the future residuals on?
Not doubting in anyway just seems an odd thing.
Will definately be doing the sums this evening, issue is I dont really know what its worth on the open market, perhaps I'll ask the font that is PH...
A few key points:
1) You can currently get 2.7 over FHBR which makes finance as cheap as a mortgage and nobody pays cash for houses.
2) 1/3 rule - (regulated credit ie under 25k) Once you have paid 1/3 it cant be taken back unless a court order is issued.
3) 1/2 rule - (regulated credit ie under 25k) Once you have paid half you can legally give it back and pay no more. Thats a 50% guaranteed baloon after 3/4 years!!
The above is factually accurate as opposed to rumour.
Bennno
>> Edited by bennno on Sunday 19th October 21:51
1) You can currently get 2.7 over FHBR which makes finance as cheap as a mortgage and nobody pays cash for houses.
2) 1/3 rule - (regulated credit ie under 25k) Once you have paid 1/3 it cant be taken back unless a court order is issued.
3) 1/2 rule - (regulated credit ie under 25k) Once you have paid half you can legally give it back and pay no more. Thats a 50% guaranteed baloon after 3/4 years!!
The above is factually accurate as opposed to rumour.
Bennno
>> Edited by bennno on Sunday 19th October 21:51
neil.b said:
...that is the question.
OK, if you were in the situation that you had enough cash to buy your new car with a wad of £50s, would you do it or would you take one of those balloon finance deals over, say, 3 years? I could put down a hefty deposit and pay next to nothing each month for 3 years but then you're tied in (I assume) with a penalty for getting out of the finance deal before the end of the term, plus you've also the balance to find, which with my financial planning (i.e. what can I buy next
Just thinking out loud. Any experiences/wisdom?
Finance is a minefield if you don't seek advice prior to getting into large amounts to borrow.
If you think that you will be changing your car every 12 months and need finance a variable rate is a better opion (IMHO) and also gives you a daily interest rate, therefore saving around £600+ on a £20000 finance outstanding settlment: as opposed to a fixed rate which in many cases penalises you for three months interest on the whole balance left.
but if you intend to run for the whole period then the fixed rate may peg you on a low interest rate and if bank rates rise then you are still on your budgeted plan payment.
Capital bank Finance have a specific arm called TVR Finacial Services who can give you some better information on amounts, drop me an email and I will pass email address and numbers to you.
Otherwise shop around, cheap rates online and look in your magazines for headline APR rates.
Another thing many people don't realise is that if you have a finance company with ties in your car financially you have the clout of them behind you if you have any problems with cars/or suppliers (no matter who the make and how big the firm are)
Rates are very cheap, some people will only buy a car when they own 100% of it, other can't wait...make a decision that suits you....sometimes if you don't do it nowe it never happens.
>> Edited by jamer on Sunday 19th October 22:08
not on a tvr addmittedly but when i bough the disco i looked at all options ( 20k+vat)
1) pay cash
2) l/r ballon finance( 7k deposit, 430pcm 8k residual)
3) half cash half on hp with 299pcm and no residual
i went for option 3 in the end as i saved a massive ammount over the ballon... and got it at 3.8% fixed..
G
1) pay cash
2) l/r ballon finance( 7k deposit, 430pcm 8k residual)
3) half cash half on hp with 299pcm and no residual
i went for option 3 in the end as i saved a massive ammount over the ballon... and got it at 3.8% fixed..
G
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