Depreciation vs Maintenance.

Ron240

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What is often overlooked is that apart from substantial depreciation most buyers are also paying interest on a loan. I always buy at three years old and always pay cash.
Interest rates have been relatively low for loans in the past few years, and practically non existant for savings...but I certainly hear what you're saying.
I have been in the habit of buying new and paying cash with my last few cars. This will not be an option for some but it works for me, and its a really great feeling driving out the showroom in a brand new car knowing you don't owe a penny on it. . :)
Just for the record I do not consider myself well off or have a particularly high paid job...but its just personal circumstances that have allowed me to do it this way.
 
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Cash is usually the worst possible way to buy a new car.

If you take a look at most brand new cars, they come with a finance deposit allowance on a pcp.

So take the PCP, take the finance deposit allowance (sometimes as high as £4000) and then pay off the finance within 13 days. Finance will cost you about £20 in “daily charge” and saved you several hundred pounds.

Also as a cash buyer you will certainly not get the best price (much less true on a new car than a used, but still true).

For example, the best price What Car could negotiate on a Skoda Scalia 1.5TSi Se L was £18250 - so pay cash and that’s all you will pay.

Take the PCP though, and you get £2250 deposit allowance, so you only pay £16000 - which is a further 12.3% discount............

Pay it off in less than 13 days and you are way better off taking the PCP.
 
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As soon as I could afford to, I stopped buying old cars. Life is too short to worry about depreciation on a car.
Why is it? And it depends on what you call an “old car” - buy 2-3 years old, sell at about 5 and you can buy a car that was about twice the price of what you can afford new, still with current tech, and it will cost you way less to own and run, than the cheaper car you would have bought.

I ran a clk320 v6 for less in 3 years than most of my customers pay in 3 months on a pcp for a super mini that only has central locking and electric windows.... crazy.
 
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Ron240

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Cash is usually the worst possible way to buy a new car.

If you take a look at most brand new cars, they come with a finance deposit allowance on a pcp.

So take the PCP, take the finance deposit allowance (sometimes as high as £4000) and then pay off the finance within 13 days. Finance will cost you about £20 in “daily charge” and saved you several hundred pounds.

Also as a cash buyer you will certainly not get the best price (much less true on a new car than a used, but still true).
Yes I realise this but still I have never bought a car on PCP.
At least one of my recent cars had no deposit allowance, and as a double whammy was full retail price regardless of where you bought it.
Tell me though because I am genuinely curious about this...assuming I was to do what you said and set up the PCP etc, what happens with my existing car that I would be using as part exchange?
 

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....................... are also paying interest on a loan ..........
Following on from my previous post, I think I only ever financed 2 cars. I saved my pennies and paid cash & the interest I would have paid, went into properties. People talk about depreciation on cars and then fritter their money away in other ways.
 

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Why is it? And it depends on what you call an “old car” - buy 2-3 years old, sell at about 5 and you can buy a car that was about twice the price of what you can afford new, still with current tech, and it will cost you way less to own and run, than the cheaper car you would have bought.

I ran a clk320 v6 for less in 3 years than most of my customers pay in 3 months on a pcp for a super mini that only has central locking and electric windows.... crazy.
I don't care about depreciation or hunting around for the right used car. I want the car I want, when I want it. I like nice cars and like them as new as possible and truthfully I do not sit and count the cost of ownership. I've never been wasteful with money and cars are my treat! If it starts giving trouble, I sell it.

Life is too short.

This came home to me again on the weekend. Our neighbour (50s) dropped dead in his sleep.
 
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Yes I realise this but still I have never bought a car on PCP.
At least one of my recent cars had no deposit allowance, and as a double whammy was full retail price regardless of where you bought it.
Tell me though because I am genuinely curious about this...assuming I was to do what you said and set up the PCP etc, what happens with my existing car that I would be using as part exchange?
Your Part ex will be treated exactly the same whether you pay cash or take a PCP.

I am not saying keep the PCP running, pay it off within 13 days, just take the deposit allowance.....

And yes, its hard if there is no budging on list there is no budging!
 

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Your Part ex will be treated exactly the same whether you pay cash or take a PCP.

I am not saying keep the PCP running, pay it off within 13 days, just take the deposit allowance.....
So take my current car as an example, my part exchange was £25k so I could have done that and set up a pcp and all the benefits would still apply...then pay off the balance within 2 weeks?
Would the benefits be in addition to discount I negotiated on the retail price?
It does all seem too good to be true.
 

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Your Part ex will be treated exactly the same whether you pay cash or take a PCP.

I am not saying keep the PCP running, pay it off within 13 days, just take the deposit allowance.....

And yes, its hard if there is no budging on list there is no budging!
Thats what my son did on his new car. No discount paying cash so financed it with a discount, then paid it off straight away.
 
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So take my current car as an example, my part exchange was £25k so I could have done that and set up a pcp and all the benefits would still apply...then pay off the balance within 2 weeks?
Would the benefits be in addition to discount I negotiated on the retail price?
It does all seem too good to be true.
Yep, the deposit allowance is a fixed set offer open to anyone who takes the finance it applies to.

If your px is more than the max deposit on the pcp then you get cashback.

There is no catch, PCP is the only way car manufacturers can make even fairly cheap cars affordable - when you get to £40k cars they are vital. So the manufacturers have to incentivise people to do what they like them to do, because they can't force them.......

BUT they can't beat the consumer credit act! So you have the legal right to pay off a finance agreement within 14 days (so I always say 13) and have the agreement completely rescinded. They are allowed to charge a nominal "daily charge" this is usually about £2-3 per day ( could be slightly higher on very high balances), but won't be more than £5 per day.
 
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On a used car its slightly different, there often is no deposit allowance, but you can still get a much better deal buying on finance than cash.....
 

Ron240

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OK I will try it next time. I will negotiate as I always do obtaining the best discount that I can and agreeing my part exchange price....then I will say I want to buy the car on pcp and see how it all goes.
If it works then great...but I can't help thinking it might not be quite as simple as that and still get all the benefits.
 
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OK I will try it next time. I will negotiate as I always do obtaining the best discount that I can and agreeing my part exchange price....then I will say I want to buy the car on pcp and see how it all goes.
If it works then great...but I can't help thinking it might not be quite as simple as that and still get all the benefits.
On a brand new car that will work, but do not let on you are going to pay it off.....

On a used one, if they think you could pay cash you won't get the discount......

Do you buy New or used cars?
 
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Much easier. The deposit allowances come from the manufacturer not the dealer, the discount comes out of the dealers profit margin - they often get a doc fee of a couple of hundred on a pcp so even a 0% one still pays them money.

So haggle any way you want to, the PCP will be pushed, say you haven’t decided which way you want to pay but can they show you the cash, PCP and HP offerings.

The dealer SHOULD give you the same cost to change for cash as PCP (that’s the law) but there will almost certainly be a Finance Deposit allowance offered, which will come off the balance to finance.

When you feel you have negotiated the very best deal you can, tell them you’ll go the PCP route, read the finance doc carefully and then do it that way! Just make sure the daily charge isn’t excessive (it shouldn’t be) - it will be under “cancellation - your rights” in the doc.
 

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Much easier. The deposit allowances come from the manufacturer not the dealer, the discount comes out of the dealers profit margin - they often get a doc fee of a couple of hundred on a pcp so even a 0% one still pays them money.

So haggle any way you want to, the PCP will be pushed, say you haven’t decided which way you want to pay but can they show you the cash, PCP and HP offerings.

The dealer SHOULD give you the same cost to change for cash as PCP (that’s the law) but there will almost certainly be a Finance Deposit allowance offered, which will come off the balance to finance.

When you feel you have negotiated the very best deal you can, tell them you’ll go the PCP route, read the finance doc carefully and then do it that way! Just make sure the daily charge isn’t excessive (it shouldn’t be) - it will be under “cancellation - your rights” in the doc.
I'm going to have to take you with me if I ever buy another car!! :cool:
 

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On a brand new car that will work, but do not let on you are going to pay it off.....

On a used one, if they think you could pay cash you won't get the discount......

Do you buy New or used cars?

I have heard that if you pay off very early it could affect your credit rating?


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I have heard that if you pay off very early it could affect your credit rating?


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My son always buys his cars on a loan and then pays for them in full a few months later. Seems to get better deals that way and no penalties (btw he knows what he is doing - he is the CFO for a listed company) . The credit rating thing is probably a myth concocted by the finance houses.
 

rorywquin

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Thats what my son did on his new car. No discount paying cash so financed it with a discount, then paid it off straight away.
See my post #39. He knows what he is doing and buys a new car for him and his wife every ~3 years (currently Q8 and E53 AMG Coupe). Going financing seems to be the best way at the moment because they (think that they) will make their money on the finance package and are prepared to offer something better than on a cash deal.
 
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