Some wisdom please (finance related)

TheYoungster

TheYoungster

TheYoungster

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How dos car finance work? Say from audi directly,

Audi A3 - 3 years duration on payments

Deposit of £3200
35 payments of £250

Optional final payment - £10,250

I find this odd, do people actually pay the final payment fee? or is the idea to somehow dodge it by financing another car?

I am really confused I am not on a massive wage (2nd year apprentice) so naturally im not extremely wealthy but I have a keen interest in a Audi S3 I have sen on autotrader which I really like the look of, its £18,000 and I am just wondering how finance works from a place that isnt Audi, like a car dealer (i suppose that depends on the finance company) is that a similar thing? in the end you have a large final lump sum to pay or do you just take longer to pay it back?

I have £4000 for a deposit available and earn ~£1000 a month ish with overtime. Can anyone in a similar circumstance give me some of their experiences and wisdom please :)
 
That's PCP finance.

Basically, the £10,250 final payment is a balloon (or guaranteed minimum future value), this is to lower your monthly payments as you only pay instalments amounting to £8750, but still paying interest on the full amount for the length of the agreement.

You then either hand the car back or pay the balloon, in this case £10,250.

Hire Purchase (HP) is the other type of finance where you just pay monthly payments amounting to the total balance, but obviously your payments will be higher.

It's entirely down to you to decide if the deal is worth it based on your salary.
 
If you are not on a massive wage then is buying an £18,000 Audi really a good idea? It's just a car - one day you'll realise that and probably regret the purchase. You have the rest of your life to buy Audi's.

The finance deal above will have you spending £22500 after the final payment. This is ridiculous - even more so given what you've told us about your financial position. You will be spending a QUARTER of your wage just on the car finance payments, what about the rest of the costs? If its an £18k S3 its going to be over 3 years old, so you'll have to pay for repairs when things go wrong, tyres, insurance, fuel, tax, etc etc. You will probably end up spending quite literally the majority of your earnings running a car. And it's just an Audi S3! It's totally not worth it.

Your profile says you are only 17 - how will you even insure it?

As for how it works, the idea is when you get to the end you either:

a) Finance another car
b) Pay the final value and keep or sell the car
c) Walk away
d) Finance the final payment.

It's an expensive way to run a car.
 
TheYoungster said:
How dos car finance work? Say from audi directly,

Audi A3 - 3 years duration on payments

Deposit of £3200
35 payments of £250

Optional final payment - £10,250

I find this odd, do people actually pay the final payment fee? or is the idea to somehow dodge it by financing another car?

I am really confused I am not on a massive wage (2nd year apprentice) so naturally im not extremely wealthy but I have a keen interest in a Audi S3 I have sen on autotrader which I really like the look of, its £18,000 and I am just wondering how finance works from a place that isnt Audi, like a car dealer (i suppose that depends on the finance company) is that a similar thing? in the end you have a large final lump sum to pay or do you just take longer to pay it back?

I have £4000 for a deposit available and earn ~£1000 a month ish with overtime. Can anyone in a similar circumstance give me some of their experiences and wisdom please :)
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That sounds like a PCP, people I know do not pay the final payment but simply hand the car back and start a new deal.

Good guide here http://forums.overclockers.co.uk/showthread.php?t=18577314
 
I have no intention of buying a brand new audi.

The used one on autotrader I saw was nice and if i had spare income which would give me little monthly payments id possibly consider it. I'm quite happy looking at fiesta ST's at the moment, insurance is a damn sight cheaper too lol
 
Dam beaten life a ginger stepchild. I blame this tablet.

Read that thread though it's useful. I can only echo what fox said it's no expensive way to run a car .
 
TheYoungster said:
I have no intention of buying a brand new audi.

The used one on autotrader I saw was nice and if i had spare income which would give me little monthly payments id possibly consider it. I'm quite happy looking at fiesta ST's at the moment, insurance is a damn sight cheaper too lol
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You are 17 and an apprentice on minmum wage. You've got £4k cash. You don't need finance to get yourself into a decent car for your age. You are in a better position than most 17 year olds simply by having some cash.

Buy a Focus 1.6 Zetec for £2k like everyone else, enjoy it for 2 years or so. You'll need the other £2k for insurance, running costs, etc.

You'll then be 19. You'll have passed your apprenticeship. You'll be earning better money and can go out and buy yourself a nice car without it being a nasty financial noose wrapping itself around your neck.

Cars are cool but never spend significant amounts of your income on one. It's simply not worth it in the long run. It's just a car.
 
Cheers guys. Thanks fox. I'm 20 this year and get a pay rise next month. My apprenticeship sadly is 5 years so I'll be 23 when I qualify. Good advice though thanks
 
Oh yea, I didnt look at the DOB just the bio bit :p

Either way, point still stands.

Keep it modest then when you qualify and get a good job, go for your Audi. You'll enjoy it tons more when its something you enjoy not a financial liabiity.
 
TheYoungster said:
My problem is constantly wanting more, yet I have so much fun in my old corsa :D
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Best advice I can give you is go find your fun elsewhere.
Take up a sport or something, even Karting if you are a petrol head.

'Fun' in cars usually involves breaking the law in some way.

enjoy your car for what it is - A mode of transport that keeps you dry and warm.
 
At the moment I'm left with a spare car with a duff ECU in my drive, could take up track days I suppose, then that's another route, what engine to put in it...
 
TheYoungster said:
At the moment I'm left with a spare car with a duff ECU in my drive, could take up track days I suppose, then that's another route, what engine to put in it...
Click to expand...

Why if it's a corsa? Just buy a bike like any young lad who wants real performance at a reasonable price would do.
 
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