# how do people buy cars



## ian222 (May 4, 2007)

Got me thinking about how peeos get their nice cars like cars above 30k. Either they have good well paid jobs or is it on h/p? Is hp tge way forward for buying the nice cars, I mean does anyone have 30k plus in their accounts to buy a car outright or do they get finance but the repayments must be mental.

If you choose hp can you pay whatever you like in monthly payments within reason or is it a set amount? Do you have to put down a deposit? Technically you are just hiring the car so why pay a deposit??


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## J•RED (Feb 10, 2013)

ian222 said:


> Got me thinking about how peeos get their nice cars like cars above 30k. Either they have good well paid jobs or is it on h/p? Is hp tge way forward for buying the nice cars, I mean does anyone have 30k plus in their accounts to buy a car outright or do they get finance but the repayments must be mental.
> 
> If you choose hp can you pay whatever you like in monthly payments within reason or is it a set amount? Do you have to put down a deposit? Technically you are just hiring the car so why pay a deposit??


The bigger the deposit the less the repayments 

The people who buy the nicer cars tend to be in a decent job that pays enough to have the luxury of owning one.

A hp agreement isn't technically just hiring a car. I'd call that a pcp.

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## Hoggy (May 8, 2002)

Hi, I always pay cash, otherwise look for a zero % finance deal..
With HP the longer the repayment period, it means smaller monthly payments but costs alot more.
Hoggy.


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## corradoman (Sep 11, 2010)

Most people have HPI on 30k cars, financial suicide to use your capital


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## YELLOW_TT (Feb 25, 2004)

The way I look at it is the interest earned on cash in the bank can be offset against interest you pay on the loan so you can keep the cash in the bank and get a loan for just a few %


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## jamman (May 6, 2002)

corradoman said:


> Most people have HPI on 30k cars, financial suicide to use your capital


 :? :?

When we bought the new TTs, S4 cab and S5 our accountant said the opposite.

But then again he always struck me as a bit of a dick.


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## Hoggy (May 8, 2002)

Hi, Unless zero % finance, interest on loan, will always be higher than interest from the bank, so if you have it pay cash, may even get a better deal.
Hoggy.


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## Callum-TT (Jun 3, 2013)

jamman said:


> corradoman said:
> 
> 
> > Most people have HPI on 30k cars, financial suicide to use your capital
> ...


The problem is once you spend £30k on a new car then drive it off the forecourt and some dick crashes into you writing it off.

When I bought my 4x4 a few months ago I paid a massive deposit then financed a few grand and opted for gap insurance for 3 years. That way if it did get written off after a few weeks I wouldn't loose out.

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## YELLOW_TT (Feb 25, 2004)

Hoggy said:


> Hi, Unless zero % finance, interest on loan, will always be higher than interest from the bank, so if you have it pay cash, may even get a better deal.
> Hoggy.


Been looking for a TTRS of Golf R for £25/35k and the dealers are not interested in cash they want finance as they get payments from the finance company and will do a much better deal with for example £2k off list and 2 free services if you take out PCP or there HP


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## Hoggy (May 8, 2002)

jamman said:


> corradoman said:
> 
> 
> > Most people have HPI on 30k cars, financial suicide to use your capital
> ...


Hi, I sure your accountant gave you good advice.. Interest from bank will be alot less HP interest.
Hoggy


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## Hoggy (May 8, 2002)

YELLOW_TT said:


> Hoggy said:
> 
> 
> > Hi, Unless zero % finance, interest on loan, will always be higher than interest from the bank, so if you have it pay cash, may even get a better deal.
> ...


Hi, Only If zero % finance.
Most dealers will give £2k off list any way especially if no P/Ex. 
Prices are artificially high, so they can pretend they have given you a discount.
Hoggy.


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## brittan (May 18, 2007)

Instead of GAP you could choose an insurance company that provides a new car if it's written off in the first 2 years.

If dealers are giving a decent discount/contribution for taking the car on finance of some sort you could sign up for that to take the discount and then pay off the finance immediately. Always assuming there's no early pay off penalty clause.


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## YELLOW_TT (Feb 25, 2004)

Hoggy said:


> YELLOW_TT said:
> 
> 
> > Hoggy said:
> ...


That was on top of the no PX discount it was offered after it had got the best price I could as a cash sale if I wanted to take a % on HP


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## Skeee (Jun 9, 2009)

YELLOW_TT said:


> ................... the dealers are not interested in cash they want finance as they get payments from the finance company and will do a much better deal with for example £2k off list and 2 free services if you take out PCP or their HP


 Negotiate a final selling price offering cash then ask about the finance and see if they can reduce the price further.
If they can, then make sure you report them to Trading Standards and the FSA.


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## brian1978 (Jul 10, 2013)

I've worked in retail and sales for many years, no such thing as interest free finance. If they don't make £££ on normal finance they make it on inflated prices.

For e.g. after a few months a dealer might choose to discount price by say £2k or keep the same price and offer the cars with 0% finance and pay the finance company off the profit margin.


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## Hilly10 (Feb 4, 2004)

Pay cash for mine. The salesman looked a bit surprised when I said when do you need the BT. I say what my Nan said if you can't afford it you can't have it. Always done me right


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## ag (Sep 12, 2002)

I always pay cash and never spend more than I could afford to lose completely if something bad happened. I'm the first to admit that this means I don't run fabulous cars or motorcycles, but I am also able to enjoy what I do run knowing that whatever happens I can cope with it financially.

Employees of mine would rather take a loan out and buy an 8 year old car than a lower spec. 2 year old model. The problem is that if they can't afford a new one, then they certainly can't afford to run that same vehicle now that it is probably 2 years into borrowed time! It happens over and over again, so much so that it is boring.

I know I seem like an old fart, but experience has told me that getting into financial difficulty because you like a nice car is spectacularly stupid and, well, just a little bit "gay".


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## Hark (Aug 23, 2007)

You actually sounded quite mature and sensible until you said it was 'a bit gay'. Then I 
thought you must be 12 years old.


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## igotone (Mar 10, 2010)

It makes absolute sense to pay cash if you can. You're buying an asset which will depreciate spectacularly anyway, the last thing you need is an inflated initial price due to HP interest. The money you would have paid in HP instalments goes instead towards replacing the cash you just parted with. Of course dealers don't like it, they make their money out of interest on loans.


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## Spandex (Feb 20, 2009)

ag said:


> I always pay cash and never spend more than I could afford to lose completely if something bad happened. I'm the first to admit that this means I don't run fabulous cars or motorcycles, but I am also able to enjoy what I do run knowing that whatever happens I can cope with it financially.
> 
> Employees of mine would rather take a loan out and buy an 8 year old car than a lower spec. 2 year old model. The problem is that if they can't afford a new one, then they certainly can't afford to run that same vehicle now that it is probably 2 years into borrowed time! It happens over and over again, so much so that it is boring.


An 8 year old car is "2 years into borrowed time"?? Have we really reached the stage where we think cars aren't economical to run after 6 years?

Back to the original question, there are numerous ways to buy a new car, and paying cash is probably the least financially sensible. Lease companies negotiate special rates from the manufactures and avoid some of the tax, so if you chose well, you can have a new car for a few years which will cost less than the amount you'd lose in depreciation if you'd bought it outright.

That being said, buying new is never the best financial option, no matter which method you chose. I personally can't understand the appeal, but I'm glad people are willing to piss their money away so there are loads of nice 2nd hand bargains around for me to choose from. :wink:


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## Lollypop86 (Oct 26, 2013)

I'd never been in a position to buy a nice car outright always had an ok car on finance, then spent the last year saving like a crazy woman to buy a car I'd always wanted with no financial overhead (apart from the one off battering on my debit card)

There are a lot of people near my parents who lease cars and I'm not talking ford or anything so I guess if you have the money why not, a lot of people also have nice company cars and get stitched on tax for it

J
Xx


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## Skeee (Jun 9, 2009)

Lollypop86 said:


> ............ like a crazy woman ..........


 [smiley=mexicanwave.gif] We agree on something then!


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## Skeee (Jun 9, 2009)

Spandex said:


> An 8 year old car is "2 years into borrowed time"?? Have we really reached the stage where we think cars aren't economical to run after 6 years?


 Indeed it depends on how it's run/maintained etc.
Has "ag" never been to the Goodwood Revival?



Spandex said:


> .............................. paying cash is probably the least financially sensible. Lease companies negotiate special rates from the manufactures and avoid some of the tax, so if you chose well, you can have a new car for a few years which will cost less than the amount you'd lose in depreciation if you'd bought it outright.


 For new cars maybe, but not used.



Spandex said:


> .............That being said, buying new is never the best financial option, no matter which method you chose. I personally can't understand the appeal, but I'm glad people are willing to piss their money away so there are loads of nice 2nd hand bargains around for me to choose from. :wink:


 +1 Agree. It's about time we got rid of the elitist no plate year identifier also.


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## Lollypop86 (Oct 26, 2013)

Crazy woman with a sore head today!

It was soooo satisfying when I paid for my tt but to me that's a higher end car (my Ibiza was middle ground) but each to their own

J
Xx


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## brian1978 (Jul 10, 2013)

I've only ever bought a car on finance once.

Never again. The depreciation in value of cars just doesn't justify it.


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## Shug750S (Feb 6, 2012)

Cash, as others have said interest on savings is always lower than the loan rates.


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## denTTed (Feb 21, 2007)

If you're self employed like me it's a tax break, so we've just bought a new amarok so we don't pay corp or income tax on it...


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## YELLOW_TT (Feb 25, 2004)

igotone said:


> It makes absolute sense to pay cash if you can. You're buying an asset which will depreciate spectacularly anyway, the last thing you need is an inflated initial price due to HP interest. The money you would have paid in HP instalments goes instead towards replacing the cash you just parted with. Of course dealers don't like it, they make their money out of interest on loans.


Not always I bought a new Escort RS turbo back in 1987 and the interest on new car HP that Ford was charging at the time was 2% less than my money in the bank was earning so it was cheaper the take the loan than to pay cash


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## Hoggy (May 8, 2002)

YELLOW_TT said:


> igotone said:
> 
> 
> > It makes absolute sense to pay cash if you can. You're buying an asset which will depreciate spectacularly anyway, the last thing you need is an inflated initial price due to HP interest. The money you would have paid in HP instalments goes instead towards replacing the cash you just parted with. Of course dealers don't like it, they make their money out of interest on loans.
> ...


Hi, 1987 fair enough, but not in 2013.
Hoggy.


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## Pugwash69 (Jun 12, 2012)

I've taken a short term bank loan on the last two. My credit rating just improves when I pay one off.


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## Hilly10 (Feb 4, 2004)

denTTed said:


> If you're self employed like me it's a tax break, so we've just bought a new amarok so we don't pay corp or income tax on it...


You forgot. You dont pay VAT either


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## ian222 (May 4, 2007)

Ok thanks, some good answers there.


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## denTTed (Feb 21, 2007)

Hilly10 said:


> denTTed said:
> 
> 
> > If you're self employed like me it's a tax break, so we've just bought a new amarok so we don't pay corp or income tax on it...
> ...


Only if you're vat registered, which I am. So yes it makes a big difference. I just can't wait to see my accountants face when I lease a Porsche...


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## Livlifetothemax (Jun 4, 2013)

I've always bought cars on forms of loans, and to be honest I only ever see the price of the car as a monthly payment (which works well with my car allowance from work). I would never do the PCP option with a final payment at the end as I never do consistent miles so you are always gambling on the trade in value for the end of the agreement. I know some will think it's the same on how I do it, but for these PCP agreements they are quite obviously for cars you can't afford. As someone mentioned earlier, if you lose your job, you'd be knackered in one of those. On what I get, I make sure that the deposit I put down covers the depreciation, so if the worse happens then my car value is at least the value of the trade in on the car.

I know this doesn't sit well with others, but it's always worked with me


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## shao_khan (May 7, 2002)

My Insignia is 100% on finance. I'd normally put a chunk of cash into a car, but the Vauxhall deal with 0% deposit / 0% finance there is no reason I would throw my own money away on a motorway cruiser - its the main reason I don't haev a VAG car as my main car now because i'd have needed several £k more to get the same so monthly more or my own capital being thrown away.


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