How do you finance your cars?

latercomer2

latercomer2

latercomer2

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12 Feb 2009
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514
Just curious - lots of threads about expensive cars and curious how folks pay for them? I.e.

Do you buy outright?
Deposit + monthly payment?
other?


Last couple of cars we've bought outright second hand Mk4 Golf GTTTDI and an almost new Saab 9-5 V6 TiD. Saab is possibly on its last legs and we are looking at getting something else. Trade in figures are verging on insulting but given its fuel guzzler from a bankrupt manufacturer, probably not that surprising.

Have never considered the deposit + monthly option but I'm wondering whether its the best option at the moment although presumably more expensive overall.
 
I try to live within my means so buy cars outright. The only debts I couldn't do without were my mortgage and student loan.

I may one day extend my mortgage to buy something nicer (my interest rate is 1.49% atm) but not while I'm living in an apartment.
 
I usually buy older cars outright in cash but always had company cars to sit alongside them until recently. Last car was bought with deposit+finance as I was made to pick something sensible and new-ish to keep a certain someone happy, if I had the choice I would have paid cash but didn't quite have enough for the car and spec I wanted whilst keeping a reasonable sum in the bank.

A reasonable deposit should at least ensure that if need be the car can always be sold without leaving money owed, but if you can then a cash purchase is always going to be the most sensible one.
 
All my cars so have have been bought outright with cash.

It probably helps that I'm 31 and have only bought 3 cars in the 14 years I've been driving.
Total spend on those 3 cars is £27K, which works out to around £160 per month over that time.
 
I had finance on a motor about 20+ years ago, It worked well for me as the monthly fee was peanuts over 2 year.
After about a year though I was fed up with the motor & wanted to trade so my advice is if you do go for Finance then get it all Payed in a year.

My current car cost me 324 quid so I payed Cash. :p
 
I've never spent more than 3k on car so they have been purchased outright with savings. I only commute 30 miles a day in total and it's really all I use the car for so I've never had a huge urge to go more expensive/finance.
 
My current car is 24 months straight repayment. I wasn't going to bother with a deposit but there was an offer of matched contribution of up to £1000 so I put 1k in.

I messed up my last car finance and went for a 48 month repayment to keep payments down. Of course it came back to bite me in the ass when I wanted rid of it after three years and it was in negative equity. I was even considering voluntary termination but in the end I over paid for 3 months then sold it for the remaining amount. Meaning it cost me about £450 just to get rid of it.

I don't mind using finance to find a car but from now on I will keep it short. I would also consider 2 years plus PCP. I know a lot of people don't like this method but there is always the option to re finance for a year to pay the bubble or pay it off with savings.
 
Haircut said:
It probably helps that I'm 31 and have only bought 3 cars in the 14 years I've been driving.
Total spend on those 3 cars is £27K, which works out to around £160 per month over that time.
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Very similar to myself (and OH) who are both mid-30s. we've had our current cars for 7 years each and even her Saab has only cost ~£210 per month in depreciation (and about £1 million in fuel and tyres ;) )
 
latercomer2 said:
Whats that? Never used finance of any description
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Well a lot of people call it renting. Essentially you pay a monthly amount for x number of months then give the car back at the end. The dealer guarantees the vehicle will be worth a certain amount at the end of the term and you pay the gap.

There are quite a lot of downsides. You almost certainly won't be able to negotiate a discount of the sticker price. And if you don't pay it off at the end, it will end up as an expensive rental.
 
Ah I'm with you - the Subaru dealer was going on about something similar although I was offer enteraining the boy while OH talked money. Thanks for the explanation.

Never quite understood why someone would pay £x00 a month for something that they probably wont ever own. bit like interest only mortgages I guess.

thinking at the moment that it makes sense to use savings given the utterly tripe interest rates they are getting.
 
imb4tman said:
Well a lot of people call it renting. Essentially you pay a monthly amount for x number of months then give the car back at the end. The dealer guarantees the vehicle will be worth a certain amount at the end of the term and you pay the gap.

There are quite a lot of downsides. You almost certainly won't be able to negotiate a discount of the sticker price. And if you don't pay it off at the end, it will end up as an expensive rental.
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That's not correct. The whole idea of a GFV is that the repayments are worked out on this figure, you should never have anything other than repair/corrective charges to pay at the end of a PCP. That's why the car can be handed back, repayments are worked out to bring the total finance figure back to the value agreed at the start of the term. If they make a mess of that you can give them the car back happy that you've not spent another £xk on the car.

If the value is about right then obviously you can either pay the balance of the car off or if the car is worth more than the GMFV either trade it in or pay the balance and sell it for the higher amount.
 
rodenal said:
That's not correct. The whole idea of a GFV is that the repayments are worked out on this figure, you should never have anything other than repair/corrective charges to pay at the end of a PCP. That's why the car can be handed back, repayments are worked out to bring the total finance figure back to the value agreed at the start of the term. If they make a mess of that you can give them the car back happy that you've not spent another £xk on the car.

If the value is about right then obviously you can either pay the balance of the car off or if the car is worth more than the GMFV either trade it in or pay the balance and sell it for the higher amount.
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Hows it not correct. In simple terms you pay the gap between the sticker price and the GFV. Plus fees, interest and any add ons such as a service pack etc.
 
imb4tman said:
Hows it not correct. In simple terms you pay the gap between the sticker price and the GFV. Plus fees, interest and any add ons such as a service pack etc.
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Ah apologies - you weren't clear with your original post, it read as though you were talking about a payment at the end of the agreement.
 
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