Member Since: 22 Feb 2013
Location: Northants
Posts: 889
Funding a new car purchase. How?
How do people buy new cars?
I’m about average on the earnings scale. Don’t go without but dont live in a huge 5 bed house etc.
The most I’ve ever spent on a car was 35k for a second hand ffrr.
I have brought all my cars outright.
When I see discussions about people buying the new defender etc I wonder how people do it. Yes I know a lot of people earn a lot of money but most cars now seem expensive compared to what the used to be.
In the world we live in I’m amazed that any one would sink 60k into a defender petrol or diesel that may be defunked in a few years if the gov change there minds on whatever is the flavour of pollution at the time. I would love to buy a new car I really would but alas I’ll just keep dreaming for now.
Ive always been keen on buying the best I could and then keeping it for as long as possible. This goes with everything, tv, furnishings etc. But it would seem the wind is blowing in a very different direction with cars, are they going to become throw away I wonder?
SteveYou remind me of a younger me, not much younger mind...perhaps even a little older!
9th Jun 2020 2:18 pm
G3Z
Member Since: 16 Dec 2018
Location: South Wales
Posts: 568
If you’ve spent £35K buying a car outright, I’d say your in the minority. There’s not many people I know that sink or even have £35K spare time buy a car outright. Considering a base model Defender 90 is £40K starting, your not far off?
I think PCP is becoming the norm now. Own the car for 3/4 years and then chop it in for a newer model. Essentially leasing the car, but with the option to pay the ballon and own it at the end.Defender 110 2.4 TDCi Utility Station Wagon.
2007 Disco 3 GS TDV6 Manual
200,000+ mile club 😎
9th Jun 2020 2:41 pm
PROFSR G
Member Since: 06 Mar 2017
Location: Lost
Posts: 5065
There seems to be a number of financial products out there at the moment which can allow those on more modest incomes the means to buy new. One such product over here is the PCP (Personal Contract Plan) available through all the major financial institutions.
In simple terms you don't actually own the car, but have the use of it for 5 years so long as you make the monthly payments. You can walk away at any time within the contract and return the car with no further obligation. Provided there is no serious damage or abuse evident.
At the end of the 5yr contract you then have the option to either return the car, or buy out the residual value and become the legal owner. Or, roll the residual value into a new car and contract.
Alternatively, you can return the car early, say after 3 yrs and get another new car so the contract begins the 5 yr cycle again.
The tricky bit is who decides what the residual value of the car once you have finished with it?
The Central Bank of Ireland and the Financial Regulator have warned lenders there will be zero tolerance for dishonest practices. (Now where did I hear that before)
Still, as yet I have not heard of any malpractices, and up until the emergence of Covid 19 the product continued to do well.
Personally I prefer the old fashioned way, buy outright from savings or do without!yµ (idµ - eAµ) ψ=mψ
9th Jun 2020 2:59 pm
Scott #55
Member Since: 15 Apr 2015
Location: UK
Posts: 1684
I got an exceptionally low HP deal when I got the Disco - 2% fixed for 5 years. The payments worked out to be the same (or as near as) as I was paying for the Freelander, although I was starting over. I'd never have been able to fund it otherwise.
PCP is very popular, but the headline deal prices are usually based on ridiculously low mileage - and you'd need to be very careful if you fancied any sort of off-roading due to damage and wear and tear.
9th Jun 2020 3:04 pm
lynalldiscovery
Member Since: 22 Dec 2009
Location: Maidstone
Posts: 7274
Do not forget PCP will soon be the new PPI!
9th Jun 2020 3:23 pm
MARKW
Member Since: 29 Aug 2008
Location: SW
Posts: 2390
My current 110 was a 50-50 split, company money and a finance. Paid off early it now owes me nothing, so should be a good chunk of a deposit on the new Defender if the commercial variant is BiK qualifying at a sensible rate.HONI SOIT QUI MAL Y PENSE
They shall not grow old as those of us left grow old. Age shall not weary them, nor the years condem. At the going down of the sun, and in the morning WE WILL REMEMBER THEM
9th Jun 2020 3:29 pm
Nasher
Member Since: 07 Mar 2009
Location: Clanfield, North of Pompey - UK
Posts: 2821
Nearly everybody at work with a sub 5yr old car has it on Lease hire or PCP.
It's not something I'd consider, because I'm old fashioned and only buy what I can afford.
My only exception was my Mortgage when I had one, but did mean everything else was done on a shoestring.
My D4 is only mine because I inherited a small amount and used part of it.
In the past I've kept my cars for 8-10yrs, paid good money for them, but them run them until worth very little.
that strategy meant lots of planning and saving and making big jumps in age of cars.
I'm going to try to force myself to change the way I do that now, and will probably only keep my 65 plate D4 @3yrs, but even then it will be 8yrs old.
the only other thing I'd add, is that I always have a limited amount to spend, and would rather have a 3yr old better quality car than a brand new lesser vehicle.
NasherHeaven doesn't want me, and hell is afraid I'll take over.
9th Jun 2020 3:29 pm
sasdiscos
Member Since: 22 Feb 2013
Location: Northants
Posts: 889
Don’t get me wrong. I had to save up for a long time to get that.
I ended up with the d4 I have now, progressively working my way down the ladder as it was.
Even pcp payments seem very expensive. I suppose it’s the same with everything nice in life. Very expensive.
I’m just pondering the future options of car ownership.
SteveYou remind me of a younger me, not much younger mind...perhaps even a little older!
9th Jun 2020 3:35 pm
sasdiscos
Member Since: 22 Feb 2013
Location: Northants
Posts: 889
I’m assuming that the car ind might change after all this. The gov are hinting towards another scrappage scheme as well.You remind me of a younger me, not much younger mind...perhaps even a little older!
9th Jun 2020 3:38 pm
sasdiscos
Member Since: 22 Feb 2013
Location: Northants
Posts: 889
On pcp, a reasonably specced Ford galaxy is coming in at 1k a month payments.
That seems mad.
SteveYou remind me of a younger me, not much younger mind...perhaps even a little older!
9th Jun 2020 3:43 pm
pjm-84
Member Since: 04 Oct 2016
Location: Hampshire
Posts: 2608
PCP doesn't help cash buyers! It manipulates the market. So whilst you may obtain low rate finance, the car may have sufficient money in the vehicle to allow this.
We've paid outright for our vehicles since 2008. This allows some collateral when it comes to change. That said it does dictate buying habits and some painful lessons.
Best - 4yr old Defender XS in 2008. Lost £400 in 3.5years. Worst - SWMBO buying a new 6series convertible in the same year and losing £33.5k in 3.5year and 21k miles. (That's with a 10k discount on RRP!)
9th Jun 2020 3:50 pm
joness7
Member Since: 09 Feb 2006
Location: West London
Posts: 233
When I traded my D4 in for a ex-demo D5 12 months ago I decided to take out my first PCP. I wanted a 3ltr diesel. for towing etc.
At that time, diesel was being portrayed as the most evil thing going. Fearing a further degradation of diesel residuals etc, I thought a PCP was a good way of transferring the depreciation risk onto Land Rover. If used diesels are unsellable in 3 yrs time when my PCP ends, I will hand the car back to Land Rover. If things stabilise a bit and the car is worth more than my settlement amount, I might keep it.
Just a different view on PCP....2018 1.5Ti Skoda Octavia - dull as f&ck
2019 D5 SdV6 SE Anniversary - black/black - good riddance!!
2010 D4 TDV6 HSE - Nara Bronze with black - now gone!!
2006 D3 TDV6 HSE - Buckingham Blue with Alpaca - now gone!!
BMW R1200GS - also blue, also gone!!
Honda CRF1000L Africa Twin DCT - Dakar colours
Husqvarna Svartpilen 401 - the Black Arrow
10th Jun 2020 8:53 am
DrRobH
Member Since: 10 Oct 2015
Location: Hampshire
Posts: 927
Tesco Personal Loan. More flexibility than a PCP but you have to finance whole car and not just a portion of it like a PCP. Tesco usually lower % than any PCP thoughVisitor from fullfatrr.com
RR Vogue SE 2011 4.4 TDV8
1974 Lightweight
10th Jun 2020 9:25 am
Pelyma
Member Since: 06 Jan 2005
Location: Patching, Sussex
Posts: 15496
They say, "Buy what goes up in value, rent what goes down."
In either case only spend what you can afford. With PCP put the minimum amount down and be honest with your mileage but only do it if you want to regularly change cars, if you want to keep a car then buying outright makes more sense IMHO.DS3 TDV6 HSE - Silver with Alpaca (old one) Gone
DS3 TDV6 HSE- Silver with Alpaca (new one) Gone
D4 HSE Lux - Montalcino Red Gone
Porsche Cayenne V8 Diesel S
It's been a long time coming - and I'm not convinced it will go down this route.
Ford were the first to bring a PCP into the UK with Options from Ford Credit. I was part of the team that helped roll it out to dealers. From day one, it was mandatory that the Minimum Guaranteed Future Value was subject to mileage and condition - and that any equity to use towards your next car was to be considered possible/potential equity, not an absolute guarantee. We used to mystery-shop the living daylights out of dealers to make sure this message got across - and that was in 1992/93
The contracts make it very clear, the illustrations make it very clear, and more recently additional disclosure makes it very clear that *you do not own the car and you do not have guaranteed equity*
However, there are plenty of dealers that will attempt to get you to sign stuff without properly going through it. And there are plenty of people who have it explained to them, but are so excited about their new shiny that they miss the significance, or simply ignore/forget it.
A good dealer will encourage a small deposit, manage expectations around the car you can afford based on your stated budget, and in 2-3 years will hope to see enough left in the deal to roll you into a new car again. A bad one will get your max monthly budget from you, push you for as big a deposit as possible and over-sell you into something aspirational with nil hope of equity at the end of the contract just to get that deal today. That's where we see folks wander in to a dealer looking to buy a mid spec Disco Sport at £500pm and get pushed to "just over £600. sir" (£639 or other random number) plus a much larger deposit (using a credit card to bridge the gap) for a wrong spec/colour D5 that's been sat around in stock for too long.
And as customers we justify our decisions because we live in the expectation of continual growth - of economy, of income, of the value of our houses. So we borrow today against what we hope to be able to repay tomorrow. And that means we're indebted and have to work hard, like good little citizens. Consume, consume, consume....
Every time I vow not to repeat this I stick with it for a couple of years, running older cars, get bored of repair bills then see a headline rate for something shiny and jump back on the finance wagon. I know enough about the process to miss the bigger pitfalls - but I still run that risk of being without a car or deposit at the end of the term - although mitigate this by putting some of the notional monthly saving (PCP cheaper than outright loan) to one side each month so I have some form of cash lump as a deposit at a later date if needed.
As an aside, I played a big part in PPI remediation design and implementation for some of the bigger names in high street banking, so the parallels are clear to me!I know it's not considered "kind" to say no these days, but no. Just no, ok? And if it's not ok, still no.
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