Funding a new car when you can afford to buy it outright
Discussion
All about opportunity cost imo, with length of time you expect to keep the car 2nd. If you can afford to buy outright then you're in the minority where you can choose how best to finance according to your circumstances
These next 2 years are an awful time to buy a car imo as you're overpaying in majority of cases and will have pants pulled down come trade in time, best value will be for cars that generally have little discount applied in normal times or at the budget end of the market.
Edit - I'm assuming when op says new, they mean new, not a 'new' wreck of a £2k 3 series
These next 2 years are an awful time to buy a car imo as you're overpaying in majority of cases and will have pants pulled down come trade in time, best value will be for cars that generally have little discount applied in normal times or at the budget end of the market.
Edit - I'm assuming when op says new, they mean new, not a 'new' wreck of a £2k 3 series
surely it will be down to whether you can earn more from the money than you are paying in interest. No point earning 0.5% on a savings account and paying 6% interest. But bear in mind a PCP will seem cheap as you are only buying depreciation not a whole car, which can impact the relative costs over time.
I understand that one benefit of putting some of the cost on finance is that the finance company is party to the deal, and is capable of putting pressure on a selling dealer to make good problems.
A certain PHer with a certain red Ferrari found that this helped them get partial restitution out of a well known pond-life supercar dealer.
sat1983 said:
… what’s the best way to buy a car these days?
I like owning outright but does it make sense? Or should I perhaps pay say, half as a deposit and have low monthly repayments?
Unless you're trolling just to start a heated debate, then the answer obviously depends on the car, your own personal circumstances, your own attitudes towards risk and investment, the rate of finance you can get, the return you may get for your investment... etc I like owning outright but does it make sense? Or should I perhaps pay say, half as a deposit and have low monthly repayments?
I.e. the average PH forum member who is actually 17 years old but claims he is a company director with a Porsche on finance as he has invested the cash to get a better return from the stock market is not going to give you a targeted response that suits your own circumstance!
ARHarh said:
But bear in mind a PCP will seem cheap as you are only buying depreciation not a whole car, which can impact the relative costs over time.
PCP is designed to be affordable on a monthly cashflow basis, but you are paying interest on the total price of the car so the cost is a lot more than cash. With PCP rates as they are (i.e. normally 6% minimum) it rarely makes sense to PCP.It might make sense if you need to use the cash for something else and can't borrow money elsewhere.
Normal times, take the dealer/manufacturer finance options to get the best discounts and rebates, then either pay off the loan or just roll with whatever the monthlies are at your leisure. Don’t ignore opportunity costs though. 35k cash gets you a lot of opportunity to do other things that might not be so easily financed. Like it maintains a very solid rainy day fund that you can still use to pay for essentials like your mortgage/rent, and other true essentials. In short it buys you a lot of options that you otherwise wouldn’t have, and you still have the use of the car exactly the same as if you owned it outright.
sat1983 said:
We’re talking £35k Electric car.
Not that I'd be tempted by an EV just yet but if I were I think I would try leasing.The technology is improving but still has some way to go IMO. In 5 years time most of the current crop of expensive EV's will be obsolete. By then it should be possible to get a much better one, probably for less money.
ChrisH72 said:
Not that I'd be tempted by an EV just yet but if I were I think I would try leasing.
The technology is improving but still has some way to go IMO. In 5 years time most of the current crop of expensive EV's will be obsolete. By then it should be possible to get a much better one, probably for less money.
This would be my view or a PCP depending on how the figures stack up with a view that I would be handing it back at the end. The technology is improving but still has some way to go IMO. In 5 years time most of the current crop of expensive EV's will be obsolete. By then it should be possible to get a much better one, probably for less money.
I'm not overly interested in electric cars currently but my view if the technology is going to move on so fast that a car which may be cutting edge now could well be very old tech in three years and the value will be reflected.
On that basis I wouldnt want to own it outright.
Personally I plan to spend the next few years with older, more interesting used cars which don't cost too much. But obviously that's not for everyone.
The Cupra Born does look pretty good. I had a very quick look at finance offers and lease seems cheaper.
Over 4 years lease it was just over 3k down and 370pcm bringing the total spend in at 20k.
The PCP was 7k down and very similar monthly payment with a balloon of 17k. So the risk is down to the final value of the car. If it is only worth 17k you've lost out, but if it's worth over 20k then it'll be similar.
Shopping around might get better quotes.
The Cupra Born does look pretty good. I had a very quick look at finance offers and lease seems cheaper.
Over 4 years lease it was just over 3k down and 370pcm bringing the total spend in at 20k.
The PCP was 7k down and very similar monthly payment with a balloon of 17k. So the risk is down to the final value of the car. If it is only worth 17k you've lost out, but if it's worth over 20k then it'll be similar.
Shopping around might get better quotes.
sat1983 said:
All very valid points.
Car in question is a Cupra Born.
Really don’t know what to do. I mean all technologies move on with the times.
I could buy a much cheaper golf TDI…. But who wants a Diesel now?
Hybrid? Would be very old hat in 5 years also.
So on so forth.
What do you buy now?!
Diesel still fits the usage profile for many people - they’re far from obsolete. Car in question is a Cupra Born.
Really don’t know what to do. I mean all technologies move on with the times.
I could buy a much cheaper golf TDI…. But who wants a Diesel now?
Hybrid? Would be very old hat in 5 years also.
So on so forth.
What do you buy now?!
sat1983 said:
All very valid points.
Car in question is a Cupra Born.
Really don’t know what to do. I mean all technologies move on with the times.
I could buy a much cheaper golf TDI…. But who wants a Diesel now?
Hybrid? Would be very old hat in 5 years also.
So on so forth.
What do you buy now?!
Seen one in the local Seat dealership I quite liked it’s asthmatics and it’s seats. Car in question is a Cupra Born.
Really don’t know what to do. I mean all technologies move on with the times.
I could buy a much cheaper golf TDI…. But who wants a Diesel now?
Hybrid? Would be very old hat in 5 years also.
So on so forth.
What do you buy now?!
Didn’t know it’s price but £35k jeez that a lot.
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