GolfGTIforum.co.uk
Model specific boards => Golf mk7 => Topic started by: fredgroves on 19 December 2017, 09:09
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Just wondered how we are financing our beloved Golfs after it came up in another thread...
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Financed for a day for the £1000 contribution and then cash direct to finance company. I would probably lease next time though and get an S3 or something similar.
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Anything other than paying the dealer the full amount with either your own saved up money or the money from a bank loan is really 'bought'...is it?
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Anything other than paying the dealer the full amount with either your own saved up money or the money from a bank loan is really 'bought'...is it?
Well, only PCH is contractually never yours (although you can buy it off the lease company in a separate deal).
PCP its definitely yours if you make the final balloon payment, but only if you want to.
Anyway, that's irrelevant, I'm just looking for data on these items.
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Cash is king. I’ve looked at pcp deals and the interest rates seem pretty steep but I can see the attraction but paying interest to me always seems to me like throwing money down the pan
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Cash is king. I’ve looked at pcp deals and the interest rates seem pretty steep but I can see the attraction but paying interest to me always seems to me like throwing money down the pan
Depends if you are lucky enough to have the cash I guess!
(cue loads of people saying "if you haven't got the money then you can't afford it" but there is a difference between having the lump sum handy and having the monthlies!)
Obviously if you do have a surplus pile of cash then currently its not doing a lot for you (savings rates are poor) and you will save the interest on (whatever) finance.
Its probably still not the smartest financial deal to spend your lump sum cash on a brand new car anyway, but that's another argument :D
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I've seen a few similar threads on other forums and the figures never really tally with reality. Last year something like 85% of new cars were purchased using finance, forums always seem to have lots of cash rich members for some reason.
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Probably because everyone here is an "enthusiast" rather than someone who just bought a car like they bought their TV or sofa!
That probably is a reflection of the wealth of the audience than anything else.
On the other hand, if you compare the totals so far of all the different types of finance vs cash...
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Well if you plan on keeping it for a good few years then i'd say taking the PCP finance then paying off immediately is likely to be the best way forward.
If you swap cars often, and don't do lots of miles then it's worth considering a personal lease. Regardless of how much cash you have in the bank. This is what i've done on my last two cars now, so far no regrets.
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I've seen a few similar threads on other forums and the figures never really tally with reality. Last year something like 85% of new cars were purchased using finance, forums always seem to have lots of cash rich members for some reason.
Cash is actually deflating in a Building Society, might as well use it as I did to buy the wonderful R. I intend keeping it for 7/8 years maybe longer?
It may be worthwhile asking the age of owners and commitments, I'm 70 apparently! with no real commitments as such.
PS By the way, this is by far the most expensive car I've owned. Although I have had some classics in my time. All paid for with cash when I could afford. As stated above the boom in car sales is fake and like most things and only achieved on credit. I wonder for how long?
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Well if you plan on keeping it for a good few years then i'd say taking the PCP finance then paying off immediately is likely to be the best way forward.
If you swap cars often, and don't do lots of miles then it's worth considering a personal lease. Regardless of how much cash you have in the bank. This is what i've done on my last two cars now, so far no regrets.
Paying cash enables you to spec the car to your requirements and get a massive discount (near 20% in my case) while that cash in the Bank/BS is deflating in value. OK if you need to use your cash for a business ventures, house purchase. But IMO a new car should be way down the priority list for most people.
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Not disagreeing, but the cash will deflate more if it's sat on your driveway.
I've bought cars the old fashioned way before, paying cash upfront. But I kept those cars a good few years.
Some of the PCH deals that have been around in the last few years made paying cash look like a very expensive way of doing things. As I said in my previous post though, cash will work out better if it's a car you plan to keep long-term.
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Not disagreeing, but the cash will deflate more if it's sat on your driveway.
Presuming you need a car. You do get to USE it, it's not just an object to look at on the drive. So bound to devalue. As I've said before I intend keeping this one for 7/8 years min. Im convinced my R ,looked after will be desirable for some time and hold a very good resale value.
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Working out the exact cost of ownership with all the relevant factors is actually pretty hard to do...
I'm fairly sure that nobody has managed to create a suitable illustration that is accurate for today's market anyway.
BTW, this:
As stated above the boom in car sales is fake and like most things and only achieved on credit. I wonder for how long?
There is nothing wrong with credit. Absolutely nothing at all. If you believe otherwise, you are probably just old. I don't mean that nastily, I just mean that in olden times people thought being in debt was morally wrong. Its not at all.
Providing the lending is responsible (ie lent to people who can afford it) then its perfectly fine.
Sure, the lightning bolt might strike you, but life is full of freak risk.
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Not disagreeing, but the cash will deflate more if it's sat on your driveway.
Presuming you need a car. You do get to USE it, it's not just an object to look at on the drive. So bound to devalue. As I've said before I intend keeping this one for 7/8 years min. Im convinced my R ,looked after will be desirable for some time and hold a very good resale value.
Well I need a car, only I don't have a huge amount of cash tied up in it and I still get to drive it.
I'm not suggesting people shouldn't buy a car the way you've done. I've done it myself and would do so again. I'm merely pointing out doing things another way is just as valid, and can have benefits as long as you've done your homework.
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My view is that credit will ultimately cost more, so if you have the cash, why not use it? Business users will use credit as it frees up working capital which can be used to earn much more money, but for private buyers, what else are you keeping your money in the bank for? A rainy day?
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Working out the exact cost of ownership with all the relevant factors is actually pretty hard to do...
I'm fairly sure that nobody has managed to create a suitable illustration that is accurate for today's market anyway.
BTW, this:
As stated above the boom in car sales is fake and like most things and only achieved on credit. I wonder for how long?
Providing the lending is responsible (ie lent to people who can afford it) then its perfectly fine.
Ah! and there's the rub. It's still lent incredibly irresponsibly, of course, it is in the lender's overall interest.( and interest!!)
The only credit worthwhile is interest-free as I got on a new kitchen recently, obviously mortgages. Yes and for those who have a guarantee of paying it off should the need arise.
Surely some of you folks remember high unemployment, repossessions it's historically cyclical, blimey what with Brexit I think it's maybe better to be old-fashioned and patient.
The credit boom is back in full swing, let's hope the result is not similar to the last.
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So having a house on credit is OK because its needed...
Having a functioning form of personal transportation is not a requirement?
Maybe not if you are retired or live in London... very much a requirement for me, its what enables me to pay for the food on my table and the roof over my head.
Perhaps not if its a toy that sits shiny on the drive....
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Having a functioning form of personal transportation is not a requirement?
A car costing £1000 is a functioning form of transport. In fact bangernomics is the most economical way of driving around. It's not necessary to have a £30k car to drive around in, but we do because that's what we like.
We all have different ways of justifying or affording the cost. Besides, if people didn't have new cars, what would people be able to drive around in in 15-20years time?
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Banger driving isn't cost effective for me. I cannot afford to loose a day's business due to a malfunctioning POS leaving me stranded somewhere.
Just a couple of those a year could amount to any financial savings being lost and its definitely going to happen...
The same goes for buying even a 5 year old car, combining loss of business and repair bills, it just doesn't work (for me)
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It sounds like you are close to the edge if a day or two not earning could tip you over.
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my 2p worth..
I always save a bit every month & I always buy my cars cash no loans or PCP involved...one car I borrowed (bank) a portion of the money to pay for it as my first new car, but first car was 3rd hand I think..
I keep cars as long as possible, & after previous cars was 7yrs old I started to save a bit more each month into an account specifically for the new car...7yrs later had £24k in the account....which went to paying for the current car...only had to scrape around in another newer savings account to get the rest for the car & for the two sets of alloys etc. I intend to keep this car for 10 to 14yrs...
PCP & leasing used to be a very small market as very costly & you had to have high earnings etc...now they give it away
Trouble is its bad for the environment & exacerbates the "me now " selfish attitudes...WHY?
Easy,.. people "Want" the latest & newest cars because "you are worth it". so they get them on PCP, don't care about the car don't look after it & ditch it after 2.5yrs...& then get another new car....all the while boasting to their friends about their new cars..."look at me"...etc..
Meanwhile we have 2.5yr old cars stacked knee deep in 1000s of acres of car lots & they are NOT shifting...& they have all consumed various amount of the earths resources to make...& we are supposed to more environmentally aware & consuming LESS...
Buying a car & keeping it running for 14yrs is way better & don't give any "it'll pollute more" BS.....I looked after my cars & the MOT test results for my 14yr old car are better than the MOT test results for my 3yr old car with a newer & better Euro engine...
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It sounds like you are close to the edge if a day or two not earning could tip you over.
I'm just saying that investing in reliable transport is a more manageable cost/risk to me than the intangible unquantifiable risk of unreliable transport.
I like to know what my monthly outgoings are and reduce the "surprise". A little surprise is managable, finding myself a couple of grand out of pocket in a month is not.
Which is perfectly sensible (it comes from my work, my customers don't like financial surprise and failed plant equipment either!)
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my 2p worth..
I always save a bit every month & I always buy my cars cash no loans or PCP involved...one car I borrowed (bank) a portion of the money to pay for it as my first new car, but first car was 3rd hand I think..
I keep cars as long as possible, & after previous cars was 7yrs old I started to save a bit more each month into an account specifically for the new car...7yrs later had £24k in the account....which went to paying for the current car...only had to scrape around in another newer savings account to get the rest for the car & for the two sets of alloys etc. I intend to keep this car for 10 to 14yrs...
PCP & leasing used to be a very small market as very costly & you had to have high earnings etc...now they give it away
Trouble is its bad for the environment & exacerbates the "me now " selfish attitudes...WHY?
Easy,.. people "Want" the latest & newest cars because "you are worth it". so they get them on PCP, don't care about the car don't look after it & ditch it after 2.5yrs...& then get another new car....all the while boasting to their friends about their new cars..."look at me"...etc..
Meanwhile we have 2.5yr old cars stacked knee deep in 1000s of acres of car lots & they are NOT shifting...& they have all consumed various amount of the earths resources to make...& we are supposed to more environmentally aware & consuming LESS...
Buying a car & keeping it running for 14yrs is way better & don't give any "it'll pollute more" BS.....I looked after my cars & the MOT test results for my 14yr old car are better than the MOT test results for my 3yr old car with a newer & better Euro engine...
Good post and I couldn’t agree more.
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Great post, I also agree!
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Banger driving isn't cost effective for me. I cannot afford to loose a day's business due to a malfunctioning POS leaving me stranded somewhere.
Just a couple of those a year could amount to any financial savings being lost and its definitely going to happen...
The same goes for buying even a 5 year old car, combining loss of business and repair bills, it just doesn't work (for me)
Oh dear me, I sold a Lotus Elan to buy a house and drove a Triumph Herald for the next 2 years. And would do so again, I buy cars I can afford without the help of others. New cars are a total luxury in my view. A nice MK5 GTI is still all and more than we all really need.
Then I have changed engines and clutches out in the freezing cold, not being unkind but soft comes to my mind.
The sage retires. :wink:
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You also walked 200 miles to school everyday in the snow, were only fed bread and water, beaten to sleep every night and it never did you any harm?
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You also walked 200 miles to school everyday in the snow, were only fed bread and water, beaten to sleep every night and it never did you any harm?
Something like that :cry: :grin:
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Strange how it can be so incomprehensible that someone depends on reliable transport :rolleyes: I used to do virtually all my own repairs and servicing but although I enjoyed it and in some ways miss it, nothing quite beats being pretty sure when you are off on your holidays that your car will get you there. That's why my current and last car have been new/nearly new.
As for credit, well it's hardly new nor is irresponsible lending, debtors prisons weren't exactly empty. I think some of the attitudes exhibited in this thread are a bit snobbish as in people in a lesser financial position to me shouldn't be allowed a new car. Well why not? We don't all live next to the factory where we work these days and public transport for many is either a non-starter or expensive and unreliable, even in London. So a good reliable car can be essential and financing a necessity.
As for the OP's question, I bought second hand (ex demo) on a PCP and paid it off shortly after.
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Personally don't think there's anything wrong with finance, so long as you walk into the deal knowing exactly how it works for you. Current finance / PCP deals here in Ireland is virtually "free" money.... 0 to 1% APR in most cases on new R's / GTI's.
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Seeing some of the posts in here, you might think we were still in the 1950's.
But I suppose old habits die hard. I'm sure most think nothing of paying monthly for a mobile phone, yet if you pay for your car that way you are somehow looked down on. It's seemingly because people assume (sometimes wrongly) that it's because you otherwise can't afford.
Having the cash in the bank doesn't guarantee you'll pay less, it simply gives you more options.
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Seeing some of the posts in here, you might think we were still in the 1950's.
But I suppose old habits die hard. I'm sure most think nothing of paying monthly for a mobile phone, yet if you pay for your car that way you are somehow looked down on. It's seemingly because people assume (sometimes wrongly) that it's because you otherwise can't afford.
Having the cash in the bank doesn't guarantee you'll pay less, it simply gives you more options.
Sorry to disappoint, I have only ever purchased a mobilephones and network with a Sim monthly. Cash always means you pay less, if you know how to that is.
Money expert, if you have the cash that earns less where it is, then use it to purchase, Don’t borrow.
You are all to young I guess to remember why HP was called the never never.
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Put in my 'car' savings and got the rest as a loan. When I sell the car in 4 years I should get back my deposit and maybe a little more. That's how it's always worked with the last cars. That way my deposit always goes up for the next
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Seeing some of the posts in here, you might think we were still in the 1950's.
But I suppose old habits die hard. I'm sure most think nothing of paying monthly for a mobile phone, yet if you pay for your car that way you are somehow looked down on. It's seemingly because people assume (sometimes wrongly) that it's because you otherwise can't afford.
Having the cash in the bank doesn't guarantee you'll pay less, it simply gives you more options.
Sorry to disappoint, I have only ever purchased a mobilephones and network with a Sim monthly. Cash always means you pay less, if you know how to that is.
Money expert, if you have the cash that earns less where it is, then use it to purchase, Don’t borrow.
You are all to young I guess to remember why HP was called the never never.
Sim monthly is still monthly.
Sorry to disappoint but cash doesn't always mean you pay less. Let me give you an example.
My Octavia vRS was. £23k, that wasn't list price that was Drive the Deal. My lease cost me £8k over 2 years. I was offered the car for £14.5k at the end of the lease. By my reckoning that's a £500 saving over the best cash price. I also had the £15k in the bank earning a paltry 1.5% interest for 2 years. If i'm not mistaken that's another £453 saved. I also got my second years VED and breakdown cover paid by the lease company. So please educate me as to how cash always means you pay less.
HP is Hire Purchase, which is different to both PCP and PCH.
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The figures are proving interesting.... but we've still got a way to go before we reach the 85% who used finance to buy a new UK car in 2016.
(I found the figures after someone mentioned the vague stats yesterday)
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The figures are proving interesting....
... will be heavily influenced by the demographics of this forum i.e. the average Golf GTI forum member might not be the average car buyer.
Certainly when I was younger buying a Golf GTI for cash was not realistic.
The entire economy seems to based on 'extend and pretend' at this moment in time. I often wonder where it is all going to end. When will the bill become due?
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I paid for mine up front as I did with my last few cars. I tend to be a high milage driver (18-19k) and tend to keep my car for about 7 years or so before getting the urge to change. I only changed from my last diesel Golf because of the emissions problem and because I felt the tide was swinging against diesel.
I do have a mortgage and bringing up a family on just my income so we're not a dinky family. Our holidays are modest in comparison to some so we live within our means.
I've always been of the pay up front mentality rather than credit and I assume the high milage would knobble any PCP scheme anyway so I never looked too deeply into them but I guess that's the current way to go these days.
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Strange how it can be so incomprehensible that someone depends on reliable transport :rolleyes: I used to do virtually all my own repairs and servicing but although I enjoyed it and in some ways miss it, nothing quite beats being pretty sure when you are off on your holidays that your car will get you there. That's why my current and last car have been new/nearly new.
As for credit, well it's hardly new nor is irresponsible lending, debtors prisons weren't exactly empty. I think some of the attitudes exhibited in this thread are a bit snobbish as in people in a lesser financial position to me shouldn't be allowed a new car. Well why not? We don't all live next to the factory where we work these days and public transport for many is either a non-starter or expensive and unreliable, even in London. So a good reliable car can be essential and financing a necessity.
As for the OP's question, I bought second hand (ex demo) on a PCP and paid it off shortly after.
Post of the thread for me.
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Strange how it can be so incomprehensible that someone depends on reliable transport :rolleyes:
Probably speaks tons about how the users of this forum differ from the majority car owning population of the UK...
I've always said, my car is an essential tool that I use for work. Mine is not a plaything or a luxury I don't need.
Sure I could probably drive a 1.0 Fiesta L but getting to my jobs in a fit state of work and not letting driving fatigue overcome me leaving my family without a bread winner after I crash through the central reservation is also high on my priority list.
I should point out I've driven all sorts from crappy bangers to much more luxury items than a Golf, but here I am with a reasonable car that does what I need it to do.
Whoever honestly ever dreamt that the successor to the People's Car would be considered a luxury? The Golf being the biggest selling model of car of all time... you know, something as rare and exotic as that.
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Cash is no longer king when it comes to buying cars. I've bought using all methods, cash, lease, pcp, bank loans and balanced payments, There is no right or wrong, you just need to know how they work and use what best suits your situation at the time. If your eating beans on toast everyday to pay for a car then you obviously can't afford it, if you have a healthy income then I see no wrong in using finance so long as it's a reasonable interest rate.
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Has anyone considered going without a new car to replace your current one when you get to the end of the deal and if on PCP, paying the settlement figure and keeping it? If you've had it from new, you'll know where it's been, so it's not such a lottery that buying a new car could be.
The reason I ask is that I upped my mortgage payments by what most pay monthly for a PCP on a new car a few years back. It took years off the term of my mortgage and it got paid off in no time. Now with no mortgage to pay and having being used to finding £££s each month, putting money aside for nice things is not such a strain.
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Cash has it's advantages.... If a private seller wants to buy out of their contract, a genuine cash transfer can be advantageous and the provider liquidity may also get a deal.
I know that's what I did! :)
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Has anyone considered going without a new car to replace your current one when you get to the end of the deal and if on PCP, paying the settlement figure and keeping it? If you've had it from new, you'll know where it's been, so it's not such a lottery that buying a new car could be.
The reason I ask is that I upped my mortgage payments by what most pay monthly for a PCP on a new car a few years back. It took years off the term of my mortgage and it got paid off in no time. Now with no mortgage to pay and having being used to finding £££s each month, putting money aside for nice things is not such a strain.
Thats assuming two things:
1) You have the cash for the final balloon payment
2) That the PCP interest rate is more than your mortgage interest rate. If it isn't then you are actually better served using whatever cash you have to pay a lump off of your mortgage.
Always best to use cash to relieve the highest interest loans you have - credit cards being the main menace!
This is my first ever PCP car. In fact its the first car I've had on any finance at all (I've driven company cars since the year dot and only bailed now because HMRC have finally cranked the tax up to the point at which its simply not cost effective to drive a company car, unless you want a milkfloat!).
Jury is still out with me on whether purchasing a possibly faultness, or at least "known quantity" at the end or not. Lots of factors yet unknowable about that for me yet - but it will largely depend on just how little over GFV I can get for it at the end of 3 years (either as a VW tradein or selling it privately). If its really rock bottom GFV, maybe purchase and keep another 2 years might be an option worth doing. I'm certainly not about to end up paying another deposit on PCP if I've just effectively lost the last one.
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Cash!
But then Im going to keep it for atleast ten years when I will trade it for a eco dsg whatever.
Cash combined with WOW competition gave me a huge lever which I used to obtain a decent trade-in price, a big discount off the new car and get plenty of free add-ons like rubber mats, boot liner, etc.
The best thing about leased cars is their drivers are more likely to look after them resulting in them being far more careful when they open their doors!!
New Years good wishes to all, especially the Forum owner.
:smiley:
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I was a cash buyer too in 2013, as money in the bank is constantly depreciating in real terms and I have no need to retain it for other purposes as I am now retired.
In the past I have bought cars under business lease in the 90’s when it was tax efficient and later on PCPs or loans. In these cases the cars were doing about 20k miles each year and a replacement every 2 or 3 years seemed reasonable and sensible. If you wish to keep a car long term (I put the 5 year warranty on my GTi and see myself keeping it much longer as it only does about 4K miles each year) then paying the interest on a PCP and then the balloon payment makes no sense.
However, I entirely see the point of a fixed price 2 or 3 year agreement where you don’t have to guess the residual at the end if your intention is to keep owning a newish vehicle. Sometimes I bought a car outright or using a loan only to see the residual tumble by the time I intended to sell and replace which would have made a PCP better...and other times I think I won. It is a gamble.
Interest free credit is always worth taking, as I did on my other current car (Citroen C4 Cactus - don’t laugh, it has been incredibly unreliable) as when taking the 3 year interest free deal this gave me an extra £500 finance discount...although perhaps on balance I should have done the PCP and handed it back in a couple of months time as it is such a PoS.
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Interesting reading people’s opinions on this subject.
Over the years I’ve bought cars for cash, on HP and PCP, both used and new.
In my opinions it’s what best suits your needs at the time.
My current car is used on a PCP but for less than 5%. I would never sign up to a PCP on an interest rate that was significantly more than that. For most used cars PCP interest rates are 9% plus which is madness.
When I buy a car I only ever work out how much the car will cost me each year on average for the period of time I plan to keep it. When I get rid of it I then look at what it actually cost me for the past x years. The figures are usually not too dissimilar.
I would only ever PCP if I was in a steady job with other comfortable commitments however.
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Been a interesting read this. I would always say cash is best but in reality most of us don't have that kind of money laying around. Last few cars I bought I paid on a interest free credit card and just make sure I stay disciplined with the payments. Good thing that is way is if I have a good month I can overpay or if money was tight pay a bit less. It's worth asking your credit card companies (if you have good credit) what offers they have and what your limit can go up to? Also if you want the cash some of them like MBNA can transfer the money to your account and its interest free for 12-24 months
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Mines on pcp as that's what was best for me at the time. I purchased it with the intention of keeping it for at least 5 years so I will be paying off the balloon when it gets to 3 years old in October. I put the maximum deposit in possible and the monthly payments are covered by a car allowance from work. I've been budgeting for the balloon right from the start so once it's paid off I'll continue to bank all the money and see what the situation is when the car is 5 years old and out of the warranty.
Overall it's cost me extra to do pcp but I'm happy with my decision. I've ended up with an amazing car which I still love driving now as much as I did when I drove it out of the showroom.
This is the first car I have ever ordered to my specification and also the most expensive car I've bought. The only thing I can think to replace it with is another gti but I won't gain anything other than some styling tweaks and a lower number on the odometer so there's absolutely no point in doing that.
Also since I bought the golf I've restored my classic mini and passed my motorbike test. If I hadn't gone for pcp I might not have had the liquid cash to allow me to do this.
Pcp might not be for everyone but it was right for me and I'm happy to have paid the low rate of interest to use it.
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5 year warranty? It's only 3 in the UK...
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I think he simply means it'll be out of warranty when swapped at 5 years old, rather than under 5yr warranty???
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I've got the 5 year warranty on my car. The factory specified one so it's exactly the same as the standard 3 year one but for 2 extra years. I think it was about £500 before discount.