Ordered a viper green scirocco!

[Demon]

I wouldn't worry,

He'll pay his £275 per month for 3 years, hopefully get a couple of £K of his deposit back, and driven around in a new Scricco for 3 years.

The real issue is not PCP or anything like that IMO, it's the simple fact a £20K car (at RRP) will be worth close to £10K in 3 years if you are lucky, hence no matter how it's financed, you are throwing away £10K over 3 years..

If you bought the car outright, you'd still throw £10K of financed money down the drain, if you PCP, you are only effectively paying for the £10K depreciation but with the interest owing on the whole £20K, this works out 15%+ more expensive, but obviously means you can get a new £20K car for 3 years whilst keeping payments around the £10K car mark.

We've certainly explained in no uncertain terms, the full implications of his decision, it's up to him to justify to himself if that is acceptable, it's only £275 a month and some of his deposit, it's not ruiness, and since his Mum also finances similarly, I doubt it's going to even register that he's doing anything other then what is normal around him.

I'm failing to see how people can't see the big picture..

A lot of people buy new cars (all horrifically financial messes ), they drive them getting their jollies from partly have a new 1 owner car, then 3 years later sell them on to people like us, who aren't bothered about the new car thing so much, more about the car itself. Would I spit on the man that previously owned the car as a complete moron/idiot/deserves to be shot in the face? No, I'd be thankful that some people are prepared to divert money that may well be just pee'd up down the pub each night and spent it on the depreciation of the car, and if he was happy doing that, I don't have an issue with it.. I don't want to ram my ideals/way of life down other peoples throats..

 

[Mr^B]

I buck the trend by buying a new car and keeping it until it falls to pieces...

...or until I've saved up enough for another new one...which can take a while...



Nothing wrong with either the deal or the car, excepting the weak engine choice, when for a "haggle"'s amount of money more you could have had the FAR better engine.

 

[Irish_Tom]

No, I'd be thankful that some people are prepared to divert money that may well be just pee'd up down the pub each night and spent it on the depreciation of the car, and if he was happy doing that, I don't have an issue with it.. I don't want to ram my ideals/way of life down other peoples throats..

The thing is, in this instance I don't think the OP had considered the depreciation in that much detail. In fact, from his replies, I don't think he really considered the whole deal in that much detail.

Considering he went in looking at second hand Golfs (and from his other comments), it doesn't sound like he's made of the kind of money that can regard the depreciation as an acceptable loss for the sake of the 'only owner - shiny brand new' feeling.

 

[DreXeL]

some people on here suffering from the green monster themselves no doubt

Oh no, you didn't go there

 

[Demon]

The thing is, in this instance I don't think the OP had considered the depreciation in that much detail. In fact, from his replies, I don't think he really considered the whole deal in that much detail.

Considering he went in looking at second hand Golfs (and from his other comments), it doesn't sound like he's made of the kind of money that can regard the depreciation as an acceptable loss for the sake of the 'only owner - shiny brand new' feeling.

There is nothing wrong in politely giving the facts and figures with some gentle advice or even slightly sterner advice about the financial side, I've said this in a previous post, it's good to do this, I'm all for it, and have pointed out this myself.

But clearly, as a point, notice how you personally have assessed that 'shiny brand new' has little weight to a car purchase, which is again trying to ram your own ideals/way of life down his throat..

And even assuming £275 is a lot to him, he went in mentioning £12K secondhand which is certainly around that figure per month as a loan, yet you've ascertained already he can't afford it generalising that the new car is sucking him into some nefarious deal that will stretch him, when clearly it sounds like all along he was willing/happy to pay that monthly amount anyway..

Educating him in a friendly manner, absolutely yes
Ridiculing him due to peoples narrow mindedness and lack of capacity to see the big picture, absolutely not.
Ramming your own ideals/way of life down his throat - hell no

 

[antijoke]

Another epic thread in OcUK motors.

 

[GravyMonster]

And even assuming £275 is a lot to him, he went in mentioning £12K secondhand which is certainly around that figure per month as a loan, yet you've ascertained already he can't afford it generalising that the new car is sucking him into some nefarious deal that will stretch him, when clearly it sounds like all along he was willing/happy to pay that monthly amount anyway..

Yet again, someone looking at the monthly figure only.

If he'd bought the original £12k Golf, yes he would have been paying about the same a month. But after 36 months he'd have been left with a £5k/£6k Golf as his next deposit.

With the Scirocco after 3 years he's left with owing a £10,000 payment to keep it (when it's likely it'll be worth less), or he's left with nothing to put towards his next car.

Anyway this thread is now going round in circles, so for that reason, I'm oooot.

 

[Fr0dders]

There is of course another way of looking at Lease Hire.

Every month you pay £100 for council tax (as an example) and maybe another £100 a month for gas electricity. You will presumably pay another £20 or so for internet, maybe the same again for home phone, and maybe another £30 for Cable / Satellite TV.

Thats £270 a month

what happens when you stop paying ? well you end up with nothing. Your effectively blowing the money away. You have received something quantative in return - ie utilities, council services etc.. but if you pay £275 to lease a car you receive something in return also - a nice shiny 10 plate car.

Whether the £270 a month entirely justifies the return is entirely subjective. Its no different to paying any other bill for a service.

If when the 3 years is up, he just gives the car up, doesnt pay the baloon payment and then takes out another lease, you could technically argue he's been in a better position than if he bought second hand. 10 k later and he's just about to take delivery of another brand new car. Whereas if he bought 2nd hand, he'd still have an old car, not another nice shiny new one.

Again, whether this is desirable or not is entirely subjective, likewise whether £275 / month is good value for what you get or not, is also subjective.

 

[Demon]

Yet again, someone looking at the monthly figure only.

If he'd bought the original £12k Golf, yes he would have been paying about the same a month. But after 36 months he'd have been left with a £5k/£6k Golf as his next deposit.

With the Scirocco after 3 years he's left with owing a £10,000 payment to keep it (when it's likely it'll be worth less), or he's left with nothing to put towards his next car.

Anyway this thread is now going round in circles, so for that reason, I'm oooot.

Nicely taken out of context..

I'm was only looking at the monthly figure in that one post because as far as the term 'stretching' or 'affording' the purchase, that is largely all that matters.. what the cars is worth or how much asset he has at the end of it is here nor there in terms of can he afford it in his life..

We have done the flippin finances to death, everyone knows, I've even stated it myself, so you won't find me disagreeing..

I wonder how long until someone else comes in with the revelation that if you buy something older/second hand it's remarkably better financially then buying newer for the same money..

Shocker

[/sarcasm]

 

[[TW]Fox]

what happens when you stop paying ? well you end up with nothing. Your effectively blowing the money away. You have received something quantative in return - ie utilities, council services etc.. but if you pay £275 to lease a car you receive something in return also - a nice shiny 10 plate car.

Whether the £270 a month entirely justifies the return is entirely subjective. Its no different to paying any other bill for a service.

This is exactly the menatility which leads to people taking deals like this. The monthly payment becomes everything and some pretty bizarre logic gets thrown into the mix to try and justify it. You cannot avoid paying for council tax but you can avoid spending a 5 figure sum to borrow somebody elses bottom of the range hatchback for 3 years. It's only a shiney brand new car until the plate change anyway, then its just another used one.

If when the 3 years is up, he just gives the car up, doesnt pay the baloon payment and then takes out another lease, you could technically argue he's been in a better position than if he bought second hand. 10 k later and he's just about to take delivery of another brand new car. Whereas if he bought 2nd hand, he'd still have another old car, not another nice shiny new one.

Incredible. You don't realise it, but you've just said that month 36 and having nothing (Sure you can take out ANOTHER lease and get ANOTHER car but you can do that irrespective of what you've done over the last 36 months) is better than month 36 and having 'another old car'.

Imagine you had your £7-8k worth of 'old' car instead and then decided to go the lease route only with an £8k deposit. You'd not be driving a base model Scirocco this time, thats for sure (Thought it'd still be a naff deal).

Leasing is best for:

a) Companies who can offset against tax
b) Individuals who wish to pay the lowest monthly rate and cannot afford to pay a higher monthly rate to reduce the total cost of ownership through more conventional financing means. Arguably the answer to these people should be 'You cant afford a new one, what about a used one' but of course this is the UK where everyone thinks they can have everything regardless of financial standing.

Clarification: I have no issue with people financing cars. I just hate to see people ripping themselves off and other people going 'yea yea so what he can afford it' as justification. I could afford to go and spend £10 on a packet of crisps right now with the justification that I simply couldnt be bothered to walk a further 300 yards to a cheaper shop, or that I only had 10p and they'd finance me the crisps for 10p a week for 2 years, but that doesnt suddenly make it a good idea.

 

[Fr0dders]

Incredible. You don't realise it, but you've just said that month 36 and having nothing (Sure you can take out ANOTHER lease and get ANOTHER car but you can do that irrespective of what you've done over the last 36 months) is better than month 36 and having 'another old car'.

Imagine you had your £7-8k worth of 'old' car instead and then decided to go the lease route only with an £8k deposit. You'd not be driving a base model Scirocco this time, thats for sure (Thought it'd still be a naff deal).

i think in a roundabout way, your trying to point out that to take out another lease at the end of the first one you need another deposit, which i hadnt thought of.

 

[Demon]

Incredible. You don't realise it, but you've just said that month 36 and having nothing (Sure you can take out ANOTHER lease and get ANOTHER car but you can do that irrespective of what you've done over the last 36 months) is better than month 36 and having 'another old car'.

But they will be two different cars, one will be shiny and new and only owned by the OP, the other will be much older and had previous owners..

It's incredible that you put so much conviction into placing your own priorities and criteria about the 'worth/reward' of owning a new car over the OP's..

You stance only works if (and I share the same view) you don't place much importance/reward/etc on the car being 'new'..

Is it that hard to see?

b) Individuals who wish to pay the lowest monthly rate and cannot afford to pay a higher monthly rate to reduce the total cost of ownership through more conventional financing means. Arguably the answer to these people should be 'You cant afford a new one, what about a used one' but of course this is the UK where everyone thinks they can have everything regardless of financial standing.

While I agree that finances in general are poor in this country, it's more the system that is allowing it, as the people that are using it..
And even then, it doesn't apply to everyone, what is the difference between him spending £150 per month on a car and spending the rest on drugs/beer/loose women, or spending £300 a month on a car and not doing the other 3.. in both cases, as long as he hasn't over stretched himself, it's up to him how he 'squanders' his money..

I also see this big 'clinging' onto the obviousness that buying second hand is better value, But where does it stop, because buying an even cheaper/older car is even more preferable, you'd ridicule him almost equally if he said he was getting a £12K golf from a dealer... (aint that the truth!) you'd be telling him to spend less, as a £6K car is 'just as good', but where do you stop, at what point do you stop generalising about his lifestyle and what age/price of car he is 'allowed' to have before being ridiculed? would that be when it's less then yours?

 

[Demon]

i think in a roundabout way, your trying to point out that to take out another lease at the end of the first one you need another deposit, which i hadnt thought of.

The guys in here use some form of PCP/lease/whatever, and their residual values/balloon payments work out that it's just enough as a deposit on the next lease/pcp/whatever..

How much money they've all squandered over the years, I don't know.. having a new 325D Sport every 3 years when they can opt out and take a cash alternative seems madness.. I have had to resist giving them ASDF imprints on their foreheads for many years.. perhaps why I'm more tolerant of such odd purchasing schemes..

 

[Fr0dders]

so you'd have to pay the balloon payment to own the car to then use it as a deposit on another lease ?

 

[GravyMonster]

Pretty much. You give the car back, they take the value of the car minus the balloon payment and the remainder is your next deposit.

If the car is worth less than the balloon, you're ******.

 

[Demon]

so you'd have to pay the balloon payment to own the car to then use it as a deposit on another lease ?

When they hand their cars back, the garage gives them reasonable market value for the car, this has been engineered to be sufficiently above teh 'balloon' payment to yield enough to act as the deposit on the next lease.

We have guys with 535d estates, 325d sports etc that do this all the time, I asked them yesterday about how it all works, and they said it's normal to negiotiate this at the time of the lease, you sometimes have to pay more per month to get the low enough balloon payment to give you the 'offset', but it all comes within their monthly allowance.

Make no bones about it though, I've seen the figures they are currently on, and the balloon payment, and how much the garage gave them, and it's all in favour of the dealer.. they would be better off selling it privately, getting a little more, paying the balloon payment, and they'd end up with a bigger deposit, but I don't think you can do this, as the car isn't yours..

 

[Fr0dders]

ah i see

so rather then selling you the car for 10k, then letting them buy it back for 12, they just give you the 2k.

So you could just go straight into another lease then after your deposit + 36 monthly payments.

So at the start of your 2nd lease, you've got a nice shiny brand new car, but the person who bought the 2nd hand car, now has a (as an example) 5 year old car thats worth a few grand. Wheras the person who'se leased has another brand new car. Person who bought 2nd hand has the same 2nd hand car.

 

[DM]

ah i see

so rather then selling you the car for 10k, then letting them buy it back for 12, they just give you the 2k.

So you could just go straight into another lease then after your deposit + 36 monthly payments.

So at the start of your 2nd lease, you've got a nice shiny brand new car, but the person who bought the 2nd hand car, now has a (as an example) 5 year old car thats worth a few grand. Wheras the person who'se leased has another brand new car. Person who bought 2nd hand has the same 2nd hand car.

But at least its HIS same second hand car. That's basically how people climb the motoring ladder.

This whole leasing things works best for business, but **** it, when it comes to forums you really might as well say if he's happy, good.

You cant make someone drink once you hand them the glass.

 

[Demon]

ah i see

so rather then selling you the car for 10k, then letting them buy it back for 12, they just give you the 2k.

So you could just go straight into another lease then after your deposit + 36 monthly payments.

So at the start of your 2nd lease, you've got a nice shiny brand new car, but the person who bought the 2nd hand car, now has a (as an example) 5 year old car thats worth a few grand. Wheras the person who'se leased has another brand new car. Person who bought 2nd hand has the same 2nd hand car.

Largely, yes.

Of course, like endowments on mortgages, some leasers can give higher balloon payment figures to reduce the monthlies, this is really when they are doubly suckering in you in, you are 'stretching' what your monthly allowance can afford, and it isn't sustainable, as you will need to save for the deposit on the next car (if you are carrying on that way).

The only other difference over standard HP on the full amount is that you are paying interest on the whole cost of the car, just 'repaying' the depreciated capital loss, so it is about 15%+ more expensive on paper in pure money terms (maybe as high as 25%)..