Revisiting "which hot hatch March 2020"

[monkeyhanger]

^ Yep, but if you're leaving it in the bank, it's going to earn f**k-all anyway. £42k at 1.5%pa is £630 per year, or a little over £1900 per term, taking into account interest on interest - £52pm (if accounting for what's going back in every month, it's more like £40pm loss).

 Add that to the £214 a month my depreciation is costing (I put in £240 a month each to cover inflation on the next one), real cost is equivalent of £254pm with no deposit down. My 2 cars have about £1000 of options each, which would be adding about £28pm on a 3 year lease and about £20pm on PCP.

Some will say you can earn more than that if you invest, but that's not without risk- how much was wiped off the FTSE with Corona virus scares related to potential impact on industrial output?

Either way, I'm saving significantly (£86pm, with loss of capital accounted for) vs PCP that runs to about £341pm over 3 years with nothing down on the same discount basis. Makes far more sense to self finance the cars than chuck it at my 0.94% mortgage. I can change the car on my terms too.

Best terms by far on VW finance calculator are over 4 years rather than 3 right now. I thought VW would be encouraging people to PCP every 3 years, not 4, in order to sell more cars. Having a VW out of warranty is a risky business, VW aren't exactly forthcoming to fix stuff within warranty unless it's a slam-dunk mechanical failure for a part they wouldn't consider remotely attributable to wear.

VW know their product is overpriced when they're already offering deposit contributions for the MK8.

[fredgroves]

The VW 4 year term being cheaper is to get the monthly payments down because the cars are too expensive - as I said before, when mobile phones became too expensive to pay off in a 1 year contract, the contracts became 2 years.... now 3 years.

I am speculating that cars are getting very much like mobile phones - its all about the tech and whilst tech is expensive, its also something that quickly becomes obsolete and not desirable. A secondhand computer is never worth much. The residuals on a current model are no more than 8 years ago (because on a secondhand car nobody is paying money for tech, its obsolete so its just a transport device) so that depreciation gap is simply much larger.

Plus simple maths - even ignoring interest, paying back 26 grand over 3 years is a hell of a lot of money. We've got to the point whereby even PCP is basically funding the same amount of cold hard cash as you were paying back on HP 8 years ago, when cars had a total price of 26 grand. PCP came in to try to handle that problem for consumers.

I looked at one of those "nearly new" TCR's that have popped up this week for around 30k. Das Welt PCP scheme had an interest rate of 9.9% - seriously?

[dubber36]

Makes far more sense to self finance the cars than chuck it at my 0.94% mortgage.

Cars aside, surely it makes more sense to get rid of the mortgage as quickly as possible? The rate maybe low, but you are only getting the capital appreciation on the equity that you have. That appreciation has to be more than your 1.5% interest on your savings.

[Watts]

I'm not rich, I have a reasonable wage coming in, my only financial gains are that the mortgage is near enough non-existent, we enjoy holidays that are cheap (not because they are cheap though, just what we enjoy isn't expensive) and I now have a disinterest in spending. I can't afford to throw money away on cars but when I do buy I like to get what I want (and can afford) and have never given depreciation a thought. Perhaps I should? But who knows what's around the corner? ICE cars could suddenly get banned, petrol might get rationed, the gearbox might explode and I can't get it fixed. Those predicting residuals might be talking out of the arses and be completely wrong. They are experts of course but even they can't get it right all the time. So I'm happy in my new car and will enjoy driving it. What it's worth when I come to sell it will be what it is, sod it, for now it doesn't bother me. I'm a little bit concerned as to why I've spent over £200 in petrol over the last 3 weeks, but I'll get over it

I do appreciate though that for others the costs of ownership is important for various reasons, I'm just giving my view on it.

[fredgroves]

Anyway, back to cars themselves.... I am about to head down to Hyundai to go take a look at a I30N - I've only ever seen them on the road, never sat in one.

I'll report back my feelings later.

[monkeyhanger]

Makes far more sense to self finance the cars than chuck it at my 0.94% mortgage.

Cars aside, surely it makes more sense to get rid of the mortgage as quickly as possible? The rate maybe low, but you are only getting the capital appreciation on the equity that you have. That appreciation has to be more than your 1.5% interest on your savings.

You don't really see that appreciation in your house unless you downsize and pocket the difference or move somewhere cheaper (and quite possibly rougher). When all the other houses are appreciating too, you're no better off. Unless I want to move, I'd rather use that money to save £172pm on 2 cars than £35pm interest on my mortgage.

As I'm putting my depreciation back into the bank every month, I can sell those 2 cars at any time and with the depreciation koney to get my £42k liquid again.

Buying outright will comfortably beat PCP with 4%+ interest rate and usually beat the best lease terms, as long as nothing seriously unexpected happens to affect depreciation (even dieselgate didn't hurt diesel residuals that much because the £0/20 VED rates and high mpg are still desirable on the second hand market.

[jv]

I30N Perf could be had for just over 19k new at the end of the year - makes a hell of a difference to those comparisons. Half the price of a TCR makes you really need to obsess about perceived plastic quality

[monkeyhanger]

The VW 4 year term being cheaper is to get the monthly payments down because the cars are too expensive - as I said before, when mobile phones became too expensive to pay off in a 1 year contract, the contracts became 2 years.... now 3 years.

I am speculating that cars are getting very much like mobile phones - its all about the tech and whilst tech is expensive, its also something that quickly becomes obsolete and not desirable. A secondhand computer is never worth much. The residuals on a current model are no more than 8 years ago (because on a secondhand car nobody is paying money for tech, its obsolete so its just a transport device) so that depreciation gap is simply much larger.

Plus simple maths - even ignoring interest, paying back 26 grand over 3 years is a hell of a lot of money. We've got to the point whereby even PCP is basically funding the same amount of cold hard cash as you were paying back on HP 8 years ago, when cars had a total price of 26 grand. PCP came in to try to handle that problem for consumers.

I looked at one of those "nearly new" TCR's that have popped up this week for around 30k. Das Welt PCP scheme had an interest rate of 9.9% - seriously?

Yep, not many people think of cars as theirs any more. Something most people are effectively renting, and no-one keeps a car forever. There's always something incrementally better around the corner. Not sure how much further they can take tech to make you want to change - absolutely everything touchscreen controlled is a backwards step. I still use the volume knob on the head unit because I prefer a quick twist to multiple presses on the MFSW buttons to change the volume.

I think we'll be keeping those Polos long term, might get a box on mine when the warranty is up.

[monkeyhanger]

I30N Perf could be had for just over 19k new at the end of the year - makes a hell of a difference to those comparisons. Half the price of a TCR makes you really need to obsess about perceived plastic quality

And a 5 year warranty is nothing to be sniffed at. I hear fuel economy is shocking.

[mcmaddy]

I30N Perf could be had for just over 19k new at the end of the year - makes a hell of a difference to those comparisons. Half the price of a TCR makes you really need to obsess about perceived plastic quality

you'll be lucky to find any Hyundai dealer willing to sell you one at around 19k. Coupled with crap finance rates and low value at 3 years the monthly figures just aren't worth it.