Is it worth actually buying a car outright anymore?
Or would I be better off just doing monthly payments and then cashing in with the future value of the car?
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Original post by uktotalgamer
Or would I be better off just doing monthly payments and then cashing in with the future value of the car?
Far too many variables to give a simple 'yes or no' answer. You've got interest rates, type of agreement, possible future value, the car you actually want...
Usually you'd still owe more than what the car is worth until you are half way into the agreement, so you need to remember you wont be able to cash in anything at all until after that has been reached.
In general, I'd say unless you can get a car for a very good price on a 0% finance deal, then you'd be better buying outright financially.
depends;
do you plan to modify it
do high mileage
abuse it (bumps , scrapes, don't Hoover)
depreciation rate
interest rates are very low currently so even a 4-5pc apr deal can sometimes beat depreciation
do you plan to keep it?
how long is the lease?
sometimes it's beneficial, sometimes not ...
do you plan to modify it
do high mileage
abuse it (bumps , scrapes, don't Hoover)
depreciation rate
interest rates are very low currently so even a 4-5pc apr deal can sometimes beat depreciation
do you plan to keep it?
how long is the lease?
sometimes it's beneficial, sometimes not ...
Original post by uktotalgamer
Or would I be better off just doing monthly payments and then cashing in with the future value of the car?
You would be better buying the car outright.
If you buy a car on finance- then you will actually pay more, as there is interest added on top of the cost of the car.
At least if you but it outright, its your car, its fully paid for, you dont have to worry about being able to afford finance payments, plus you pay less as you only pay for the car, not interest rates on top.
The only way it might be worthwhile is if you got 0% finance.
Original post by Emma:-)
You would be better buying the car outright.
If you buy a car on finance- then you will actually pay more, as there is interest added on top of the cost of the car.
At least if you but it outright, its your car, its fully paid for, you dont have to worry about being able to afford finance payments, plus you pay less as you only pay for the car, not interest rates on top.
The only way it might be worthwhile is if you got 0% finance.
If you buy a car on finance- then you will actually pay more, as there is interest added on top of the cost of the car.
At least if you but it outright, its your car, its fully paid for, you dont have to worry about being able to afford finance payments, plus you pay less as you only pay for the car, not interest rates on top.
The only way it might be worthwhile is if you got 0% finance.
But I assume people aren't intending to have a car on finance for more than a few years, then get a new one after (again on finance)
Original post by Emma:-)
You would be better buying the car outright.
If you buy a car on finance- then you will actually pay more, as there is interest added on top of the cost of the car.
At least if you but it outright, its your car, its fully paid for, you dont have to worry about being able to afford finance payments, plus you pay less as you only pay for the car, not interest rates on top.
The only way it might be worthwhile is if you got 0% finance.
If you buy a car on finance- then you will actually pay more, as there is interest added on top of the cost of the car.
At least if you but it outright, its your car, its fully paid for, you dont have to worry about being able to afford finance payments, plus you pay less as you only pay for the car, not interest rates on top.
The only way it might be worthwhile is if you got 0% finance.
If you sign up to a finance agreement you can't afford, then you're a fool. Finance is a great tool if you live within your means. Whether it works for your not is down to how well you can manage your money.
Original post by MJ1012
But I assume people aren't intending to have a car on finance for more than a few years, then get a new one after (again on finance)
finance deals can be up to 3 or 4 years, depending on the finance deal.
It doesnt matter what finance deal you are on- or if you are intending to have a new car after or not- it still costs more than buying outright as you are charged the interest on top of the cost of the car (which is how the finance companies make their money) unless its a 0% finance deal. Plus you know you will have to pay finance payments every month, whereas if you had paid outright, there is none of that. Plus with some (not all) finance deals (depending on which ones you have) you dont actually own the car.
Original post by FXX
If you sign up to a finance agreement you can't afford, then you're a fool. Finance is a great tool if you live within your means. Whether it works for your not is down to how well you can manage your money.
I agree- you would have to have a finance deal that you can afford etc, you would be a fool to sign up to one that you possibly cant afford. But if you ave the money to buy a car outright- then its best to do so, as (unless its a 0% finance deal) you pay more due to interest etc.
There is no such thing as 0% finance. It's a sales gimmick. The price of the car is fixed for a reason - you can't haggle and the cost will already include the interest charged to the manufacturer for providing finance in the first place. So the interest is hidden in the sale price of the car.
If you can get a personal loan (at low interest rates), then buying a main dealer second hand low mileage car offers the best value IMHO.
You will get a guarantee with it, fully serviced and taxed and a big chunk of depreciation will already have been taken off. The bank loan will allow you to haggle the cost down. Best time to buy is right at the end of the month when sales people are under pressure to meet sales targets - especially preceding the date in which the new license year date is changed. e.g. 13/14.
Also buy a late-model registered in the last 6 months of the previous licensing year, especially when that model is superceded with a new model. Never buy that new model: You are taking a gamble that it will hold it's value and has no hidden design flaws that will come back to bite in the months/years to come.
If you can get a personal loan (at low interest rates), then buying a main dealer second hand low mileage car offers the best value IMHO.
You will get a guarantee with it, fully serviced and taxed and a big chunk of depreciation will already have been taken off. The bank loan will allow you to haggle the cost down. Best time to buy is right at the end of the month when sales people are under pressure to meet sales targets - especially preceding the date in which the new license year date is changed. e.g. 13/14.
Also buy a late-model registered in the last 6 months of the previous licensing year, especially when that model is superceded with a new model. Never buy that new model: You are taking a gamble that it will hold it's value and has no hidden design flaws that will come back to bite in the months/years to come.
(edited 10 years ago)
The 0% deal does already include the interest on the price of the car, but if you are getting finance then the amount you pay overall will 9 times out of 10 be less on the 0% deal.
It's a fallacy that you will be able to haggle more by paying 'cash in hand', the dealership get's a commission if they sell you a finance agreement (along with the overpriced gap insurance, extended warranty etc..) which is usually just as valuable to them as the profit they make just on the car.
The best time to buy a car isn't at the end of the month, it's when they have enough time to order the car and get it handed over to you before the end of the quarter. It only registers as a sale to the car manufacturer once the car is handed over, and the dealership doesn't get it's commission until that has happened. They get tiny commissions on brand new cars though, with the big commissions only coming if they hit set targets (and therefore handovers) by the manufacturer.
If you walk into a dealership the day before the end of the quarter, they won't give you much time as they'll be wanting to hand over all the cars they currently have waiting to take delivery so they hit their target they are one or two cars behind on.
It's a fallacy that you will be able to haggle more by paying 'cash in hand', the dealership get's a commission if they sell you a finance agreement (along with the overpriced gap insurance, extended warranty etc..) which is usually just as valuable to them as the profit they make just on the car.
The best time to buy a car isn't at the end of the month, it's when they have enough time to order the car and get it handed over to you before the end of the quarter. It only registers as a sale to the car manufacturer once the car is handed over, and the dealership doesn't get it's commission until that has happened. They get tiny commissions on brand new cars though, with the big commissions only coming if they hit set targets (and therefore handovers) by the manufacturer.
If you walk into a dealership the day before the end of the quarter, they won't give you much time as they'll be wanting to hand over all the cars they currently have waiting to take delivery so they hit their target they are one or two cars behind on.
people have clearly no idea to the benefits of finance -_-
even if you can afford the outright price , it's not always the best option
and who cares "if you own it" does it make any difference if you drive it the same ??
even if you can afford the outright price , it's not always the best option
and who cares "if you own it" does it make any difference if you drive it the same ??
Original post by uktotalgamer
Or would I be better off just doing monthly payments and then cashing in with the future value of the car?
The way I see it, is unless you can get a 0% loan AND already have the capital to back yourself up for the car AND know you're not going to touch it, until you've "bought" the car
I say this, because if it's 0% Id definitely get a loan, because CPI was 2.5% for 2013
I loan my money out, and it's somewhat shocking when I see people on Zopa spending £15,000 on a car and saying "Life's too short to not have what you want"
Somewhat ironic that when I'm loaning my money out, Im saying not to get a loan
Basically, unless you can get a loan at below inflation rate, go ahead, get a car on finance. (It'd be cheaper) But if you're buying a car where the loan is higher than the rate of inflation, it's not worth it imo
Original post by Emma:-)
finance deals can be up to 3 or 4 years, depending on the finance deal.
It doesnt matter what finance deal you are on- or if you are intending to have a new car after or not- it still costs more than buying outright as you are charged the interest on top of the cost of the car (which is how the finance companies make their money) unless its a 0% finance deal. Plus you know you will have to pay finance payments every month, whereas if you had paid outright, there is none of that. Plus with some (not all) finance deals (depending on which ones you have) you dont actually own the car.
It doesnt matter what finance deal you are on- or if you are intending to have a new car after or not- it still costs more than buying outright as you are charged the interest on top of the cost of the car (which is how the finance companies make their money) unless its a 0% finance deal. Plus you know you will have to pay finance payments every month, whereas if you had paid outright, there is none of that. Plus with some (not all) finance deals (depending on which ones you have) you dont actually own the car.
of course it matters
you essentially fix the depreciation price
you look at the whole life cost of ownership
even at 5pc APR it's not better to buy it outright
Original post by Emma:-)
finance deals can be up to 3 or 4 years, depending on the finance deal.
It doesnt matter what finance deal you are on- or if you are intending to have a new car after or not- it still costs more than buying outright as you are charged the interest on top of the cost of the car (which is how the finance companies make their money) unless its a 0% finance deal. Plus you know you will have to pay finance payments every month, whereas if you had paid outright, there is none of that. Plus with some (not all) finance deals (depending on which ones you have) you dont actually own the car.
It doesnt matter what finance deal you are on- or if you are intending to have a new car after or not- it still costs more than buying outright as you are charged the interest on top of the cost of the car (which is how the finance companies make their money) unless its a 0% finance deal. Plus you know you will have to pay finance payments every month, whereas if you had paid outright, there is none of that. Plus with some (not all) finance deals (depending on which ones you have) you dont actually own the car.
It won't cost more than buying outright if you give it back to the dealers after 3 years, they have made money off you and still own the car. But the driver hasn't spent 15k on that car over 3-5 years.
Excuse my ignorance but other than crashing it and potential inflow of cash when desperate, what are the advantages of owning a car?
Original post by jusdorange
of course it matters
you essentially fix the depreciation price
you look at the whole life cost of ownership
even at 5pc APR it's not better to buy it outright
you essentially fix the depreciation price
you look at the whole life cost of ownership
even at 5pc APR it's not better to buy it outright
I'd be assuming OP is on about used cars which don't devalue as much as brand new cars. For brand new cars, it makes perfect sense to buy cars on finance
good point. people change a car every 3 years. monthly payment. even bmw or jaguar.
its like a mobile phone. you dont pay the full price. you change it every 2 years. they are ex[pecting you to change the car every 3 - 4 years.
its like a mobile phone. you dont pay the full price. you change it every 2 years. they are ex[pecting you to change the car every 3 - 4 years.
(edited 10 years ago)
Original post by Emma:-)
It doesnt matter what finance deal you are on- or if you are intending to have a new car after or not- it still costs more than buying outright as you are charged the interest on top of the cost of the car (which is how the finance companies make their money)
In theory you should be right, in practice its not always the case.
Dealers give better incentives if you take the finance, and there is the option for early repayment. My dad's new Fiesta was £100 cheaper after interest/fees taking the finance than paying cash and thats ignoring the pennies interest he'll get keeping the cash on deposit.
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