When is it right to finance a car

Elstemed

it good to finance a car if the rate quoted is cheaper than the equilivent money that you are currently borrowing money. last year i spent 60k on a machine and financed it a 5%. now thats 60K at 5%!!!!! where else can you get 60K to spend on business or the likes at 5%

MarkN

AudiChris wrote: »

I'd be interested to see finance penetration figures for a prestige brand versus a mass market brand or used-car superstore.

I think the finance pen figures for the prestige brand would be 30-40%, while a Renault dealer (not picking on them, I just have a mate who works in one and tells me his experience) is experiencing 80%+!

When I got my S3 I traded in a 2006 Golf GTI which I owned every penny of. The sales guy commented how a guy a lot older than me and you'd think with more sense was picking up an RS4 and had it full financed. 115,000 - imagine the interest on that!

You really wouldn't know who does what. Mr. Bentley Conti GT might own every inch of it or he might have a huge final repayment and write a lot of it off in tax and depreciation but then again if he was changing cars regularly (which these wealthy lads clearly do - look at the turnover of prestige cars in Richford for example) then big balloons wouldn't be an option as the nagative equity to change every 6 months would be colossal.

Joebloggs4817 wrote: »

Don't think anyone has mentioned zero % interest finance available from some marques now... opel 50:50 etc

If someone wants a new car, has to finance it and is concerned about interest - thats an option...

That being said you may have less room to maneuver with the garages then in terms of getting a discount.

You have to have a huge deposit though. People desperate enough to have a new car and who are financing the whole thing don't have huge deposits.

Steve

Nobody will have >100k sitting in a bank, so yes, at this scale financing makes sense. Leasing probably makes even more sense as it can be put through business accounts easier. (assuming you're a director or consultant etc that can afford the payments).

The average joe goes with finance because he doesn't have the cash in the first place - it's a lifestyle thing and the same guy is likely living on credit card limits and taking out credit union loans to pay for holidays.

I've always been the opposite, I dont buy things I can't afford. I dont finance stuff that I'm going to lose money on.
I guess I'll never own a brand new car - I can't justify the toll you pay to get out of the garage forecourt. I'll leave that burden to the next guy and buy the car from him in a few years when the depreciation has settled a bit.

unkel

Personally I'm quite prudent. I've never had a term car loan although I've used (pretty large) overdrafts to temporarily finance cash flow issues when buying a new car before selling the old car

Having said that, I don't see a problem with people borrowing to buy a car per se. You need a house and you don't have the money to pay for one, so you get a mortgage. Generations of Irish people saw the 700 pounds they invested in their house turn into 7 figure assets, but recent first time house buyers will never be as lucky

So you pay 5% interest on a mortgage. And 8% on a car. Not much difference between the two in my book, these days

Financial stupidity is paying with store cards or not paying credit card balances off in full each month. We're talking 15-30% interest here. What a waste!

AudiChris wrote: »

Only 10%(ish) of people will pay for cars out of cash they have, everyone else borrows

I take it that's your experience of selling new Audis? I reckoned that kinda percentage but I haven't come across any statistics

unkel

Anan1 wrote: »

i've never gone over €15,000

Not even for the Porsche?

-Chris-

unkel wrote: »

I take it that's your experience of selling new Audis? I reckoned that kinda percentage but I haven't come across any statistics

That's the figure our finance rep gives us, so far it seems relatively accurate...

unkel

Thanks Chris. This forum can do with many more people in the trade that come on here and tell us all the way it is!

Mr.Boots

Here is the way i look at finance,
I would never borrow more than i could afford to pay off if needs be.
I always prefer to buy cars with other peoples money and use my owen money to to earn money for me.As long as im earning more or as much return on my owen money as the interest im paying out on the loan im happy.
Another way to look at it is its like saving in a piggy bank with a l hole in the bottom......buy a 80k car and after 5 years you will have a substantional asset (so long as you didnt blow it on a citroen c6) which you have enjoyed and you now have a good wedge to get another....and a smaller loan if you like.
Of course this only realy refers to cars coasting over 10/15k

MarkN

unkel wrote: »

So you pay 5% interest on a mortgage. And 8% on a car. Not much difference between the two in my book, these days

As low as 6.5% these days ! :eek:

Dub13

What I do is this.My child benefit is around 550 a month,that goes into a account and then gets split into two 250 going into a long term account to pay off the mortgage early and the 300 into another account we use to get a new car.

Every 4 years we have about 16k saved up for the car plus whatever our current car is worth probably going to be about 13k.So that gives us 29k every 4 years for a new car with no loan.

TwoShedsJackson

I'd do something similar to Dub13 there. Never get a loan for something that's only going to decrease in value.