Finance - best options for a 7-8 year old car?

[rossyl]

Hi,

As many of you will know i'm on the hunt for a 4200, yet to find it, but in the meantime i thought it wise to sort out the money side of things.

My plan is to buy a second hand 4200 for around £18-20k. I intend to fund the majority of the purchase on finance, but I've never bought a car on finance and would like a bit of an education on it...if anyone would be so kind!

From reading the below posts "PCP" appears popular, howeverI beieve it is for new or nearly new cars? What do people think would be the best option for a 7-8 year old car?

Thanks again,
R

I have had many cars over the years on Personnal Contract Hire and think it is fine when buying average £20k cars but would rather buy a three/four year old car on HP and build up some equity in my cars, as with most things buying at the right price is important and you have no control over that with a new car. Typical example is our new Audi A6 cost £31k on PCP at £460 per month and hand it back after three years and do the same again. My 4200 will be paid for in the next 18 months on a short HP agreement and still worth £14k hopefully then used for a deposit for a GT and do it all again in two/three years. This way I can convince my wife that the monthly payments are a way of saving some cash away and enjoying the car at the same time.

The key to benefiting from a PCP agreement is to implement the 'half and thirds clause' which lets you hand back the car after you have paid half the payments even if the car is worth less than you owe. We have done this on the last three cars we own, that way the finance company takes a share of the depriciation, the dealers wont tell you this unless you ask them.

and...

PCP is the way to go.....almost every car on the road is paid for like this....

People are putting 10k down for the GTR and paying 500 a month.....afyer the three years they can hand the car back, sort out the balloon and keep it or hand it back and use as dep for the next car.....

Not bad as what you loose would be depreciated anyway....
Like mark said you will loose 30k over 3 years anyway.....

Both from this thread: http://www.sportsmaserati.co.uk/showthread.php/5668-zero-percent-finance!!?highlight=finance

 

[mjheathcote]

I just can't imagine when buying new spending so much money, or should I say loosing so much money on depreciation, your PCP basically going down the pan in depreciation.
Anyway buying a 4200 that is 7 or 8 years old, it would have to be a straight forward bank loan for me if I did not have the cash. To be honest I would be surprised if you can get any balloon type loans for a car that is over 7 years old anyway, and if you can, it will cost you more in interest than a straight forward bank loan.

 

[dickygrace]

I'd agree from experience, bank loan's best.

 

[rossyl]

This is all a bit new to me, but I'm currently trying to work out if somehow buying a newer car via PCP actually makes some form of "financial sense"? Rather than an older car on a bank loan.

 

[Parisien]

Loan rates are good at moment.....perhaps a less complex way of buying.........plus the loan aint tied to car etc


P

 

[DaveT]

PCPs are fine if you a sure you will be changing in a fairly fixed time.
Also need to be pretty sure on expected mileage.

Agree that a 7+ year old car is not likely to be a good option on a PCP.
Buying a nearly new car and changing every three years or so it makes sense.

Only variable is the value of the car in comparison to the expected value. You can find yourself needing to find extra deposit for the next car to keep payments at a similar level.
I'd say bank loan and as Frank says no tie to the car.

 

[Parisien]

Though if you can get this on the books saying you use for business....write it off against tax....a few on the forum do this?!


P

 

[jamesc69]

Though if you can get this on the books saying you use for business....write it off against tax....a few on the forum do this?!


P

I think company car tax and benefits in kind would kill this on a 7 year old car. Company car taxed based on list price and co emissions, so really does not make sense on older car.

J

 

[Parisien]

Easy to see.....I'm not up to speed on this James.....


Can't you write off the interest aspect of a car loan/PCP though?




P

 

[rossyl]

I'm not self employed, I'm a salaryman! So, unless there's something I don't know, I can't write off any costs for tax.

 

[EnzoMC]

Though if you can get this on the books saying you use for business....write it off against tax....a few on the forum do this?!

P

interesting, have a small side business and new to the tax thing, are you saying I can write off the loan interrest on the company


anyway back to the thread - I would say get a loan that would be equal to an esitmated car value after 2-3 years, example I put down over £8k for my car so that if the worst happened the car would still pay the loan, sadly I could loss my savings. I am hoping that Miles is right that the GS wouldn't lose to much.

good luck and the smile when driving makes up for the effort

 

[Easyplan66]

I think you will find that pcp is only available on cars that will be no more than five years old after the agreement ends, therefore good old fashioned HP is the best option, or even better borrow the money from a relative and pay them back at 5% interest which will be better than they can get in the bank and half what you will pay a bank for a personal loan, everyone's a winner

 

[Easyplan66]

Ps if you need a bank loan you can get up to £15k in your branch or online almost instant if your credit rating is okay, over £15K and the branch have to send it to head office for approval and it takes longer, that's with HSBC others may be different.

 

[Emtee]

The older the car, the worse the PCP deal will be, if indeed you can get one in today's financial climate. If the seller has it as a finance option, then it will probably be available on all their stock, as they have a vested interest in completing the sale and a commission to make on the finance deal, but the rates will be pretty poor, as you're paying both a margin and a commission. Alternatively you could look at the likes of Oracle where the rates will (potentially) be better, but on a car that age they would cover all their margin and administration costs in the deposit and there-after you would be financing the depreciation. Your only potential upside would be a higher value at completion than the deal assumes, but this is rarely the case. More than ever cash is king, so the more readies you can wave under their noses at the outset, the more options you'll have to flex the deal to your liking.

For an alternative route I'd agree with the comments above and approach your bank in the first instance.

You could also consider an hour or two with a good financial adviser. There are all sorts of options out there; the ones you hear about are those that are loaded against you......

 

[Emtee]

I think you will find that pcp is only available on cars that will be no more than five years old after the agreement ends, therefore good old fashioned HP is the best option, or even better borrow the money from a relative and pay them back at 5% interest which will be better than they can get in the bank and half what you will pay a bank for a personal loan, everyone's a winner

I've seen deals that offer 6 years at commencement Andrew, but the terms are atrocious. I wouldn't touch them with a barge pole.

 

[dem maser]

PCL is the best way to go if buying a newish car, upto 1 years old!!

For abything over id say get a bank loan tyats not secured on the car & try to make it so that your in negative equity! Example, a GS is 25k, in my opinion they wont be below 15k anytime soon so try to put down 10k, that way your alright if you need to sell and pay back.....

 

[dem maser]

PCP is excellent on new cars though....

I had people buying GTRs from me that were throwing down 7k and paying £400 p/m over 3 years then hand it back as they never wanted to pay the baloon....some people would say what a waste of 15k over 3 years to not own a car but think of it like this....

A new one is 70k, a 3 year old is 40k thats 30k loss!!

 

[Emtee]

I would say get a loan that would be equal to an esitmated car value after 2-3 years, example I put down over £8k for my car so that if the worst happened the car would still pay the loan, sadly I could loss my savings. I am hoping that Miles is right that the GS wouldn't lose to much.

Exactly right Enzo,.. effectively a PCP at bank rates,.. when that avenue is open.

Hmmmm? Not sure I'm liking the assumption that I'm the oracle on GS residuals. Happy to stick to my guns, but would be better pleased if people didn't lend large sums of money based on it!!

 

[EnzoMC]

Exactly right Enzo,.. effectively a PCP at bank rates,.. when that avenue is open.

Hmmmm? Not sure I'm liking the assumption that I'm the oracle on GS residuals. Happy to stick to my guns, but would be better pleased if people didn't lend large sums of money based on it!!

the oracle maybe, based on your assumption na I was working on GS residuals being lowed by the GTs, but fingers crossed

 

[Emtee]

fingers crossed

You and me too Enzo! I'm not overly concerned by the 4.2 GT's, it's the 4.7's I'm watching. Given the difference in age and technology (oh how people like their toys) and the lag whilst the indi's get to grips them (and Matt doing his concerted best to seek out those equivalences), I reckon we have until close of play 2013 before they start to directly influence good GS values. Even then I'm hoping they peg closer to the MC shift, but what do I know? I make wallpaper for a living!!!