PCP on second hand leaf

GreenHills101

Hi all,

I see the UK offer pcp finance on second hand leaf, do you think ireland will start this soon?

isnottheword

Why bother if you have €11k in cash available to you (currently earning no interest given ecb rate = zero)?

GreenHills101

isnottheword wrote: »

Why bother if you have €11k in cash available to you (currently earning no interest given ecb rate = zero)?

I suppose I would prefer to spend someone else's money rather than using all my savings!

isnottheword

GreenHills101 wrote: »

I suppose I would prefer to spend someone else's money rather than using all my savings!

There's an opportunity cost with money. Your savings are earning you nothing right now. The cost of finance is significant - regardless of how it is packaged.

BoatMad

GreenHills101 wrote: »

I suppose I would prefer to spend someone else's money rather than using all my savings!

Correct. Buying a wasting asset with cash is not s great idea especially if you have a regular income and the credit fits into that. Even at 6% etc money is cheap. Hold your cash

I beleive some of the banks are doing second hand PCPs (BofI). Also if course a credit union loan or good old HP is available

In all cases compute the total cost of credit and decide accordingly. Dbt be suckered by " building equity " nonsense

isnottheword

BoatMad wrote: »

Correct. Buying a wasting asset with cash is not s great idea especially if you have a regular income and the credit fits into that. Even at 6% etc money is cheap. Hold your cash

Have to disagree. If you're sitting on cash that's earning you nothing right now, going out and getting finance at 6% and upwards means you're paying for the privilege of using someone elses money.

Cars are a depreciating asset regardless of whether you buy with cash or credit.

BoatMad

isnottheword wrote: »

Have to disagree. If you're sitting on cash that's earning you nothing right now, going out and getting finance at 6% and upwards means you're paying for the privilege of using someone elses money.

Cars are a depreciating asset regardless of whether you buy with cash or credit.

Certain things are financeable and others are not easily so. Cash in hand is better maintained for such situations. Credit remains comparatively cheap and things like ballon leases ( aka PCP) allow you to deter certain elements of the capital payment etc.

equally there are avenues where a positives return on cash ( albeit small) came be also achieved and cash for example is available for investment etc

again its a simple consideration of the cost of credit , compute the costs and make up your mind

Soarer

So you pay 6% per year on top of the price to pay for something that's losing 15% of it's value per year?

isnottheword

Soarer wrote: »

So you pay 6% per year on top of the price to pay for something that's losing 15% of it's value per year?

I take boatmads point that potentially, there may be opportunity cost gains to be made on savings. However, I'd suggest thats confined to the financially savvy and not for the vast majority of people. i.e. most are not going to gain more than 6% (after taxes - be that dirt, cap. gains, etc.) on savings, shares, etc. If the individual is involved in a business, then perhaps that's a different story - and they can make their money go to work for them in a far more efficient manner. However, for the vast majority, using existing savings (if they are just lying around) is preferable to unnecessarily availing to pay a premium to use someone elses money to pay for a car.

GreenHills101

Thanks everyone. Just to go back to the original point about pcp on second hand cars, I can't see it anywhere online

isnottheword

GreenHills101 wrote: »

Thanks everyone. Just to go back to the original point about pcp on second hand cars, I can't see it anywhere online

If PCP is your bag, approach the Nissan Dealers. Wouldn't be for me - but there are others here that swear that it makes for a more savvy purchase...

unkel

isnottheword wrote: »

I take boatmads point that potentially, there may be opportunity cost gains to be made on savings. However, I'd suggest thats confined to the financially savvy

Like all those financially savvy people in Ireland who borrowed money to speculate in property development / holiday homes in Bulgaria / the financial markets in the mid noughties?

BoatMad

unkel wrote: »

Like all those financially savvy people in Ireland who borrowed money to speculate in property development / holiday homes in Bulgaria / the financial markets in the mid noughties?

many many made a stack of money on properties . Borrowing money is not some form of inherently moronic thing to do . Properly used it has its place in any financing decision. dissing it just "because " is equally ridiculous

BoatMad

isnottheword wrote: »

If PCP is your bag, approach the Nissan Dealers. Wouldn't be for me - but there are others here that swear that it makes for a more savvy purchase...

certainly in Sept 2014 BofI launched a 2nd hand PCP finance vehicle and also several of the german car companies have 2nd hand PCP style financial offerings . Its not available everywhere and typically PCPs are only offered through the trade, so not all marques offer the same

Nissan Garages have access to three or four PCP finance houses unlike many of the other brands that have tied arrangements , though nissan dealers tend to push AIB , as that is who provides the majority of their stock finance

isnottheword

BoatMad wrote: »

Borrowing money is not some form of inherently moronic thing to do . Properly used it has its place in any financing decision. dissing it just "because " is equally ridiculous

You're speaking in general terms here - of course, it's not an inherently moronic thing to do and yes, it has its place in any financing decision.


Notwithstanding that, taking it in the context of the OP's 'investment' in a highly depreciating asset - where he has funds at hand that (insofar as we are aware) are not working for him, then that scenario doesn't look like a case where 'buying' finance at a minimum 6% is savvy when he has funds available most likely earning almost (if not) 0% right now.

GreenHills101

isnottheword wrote: »

You're speaking in general terms here - of course, it's not an inherently moronic thing to do and yes, it has its place in any financing decision.


Notwithstanding that, taking it in the context of the OP's 'investment' in a highly depreciating asset - where he has funds at hand that (insofar as we are aware) are not working for him, then that scenario doesn't look like a case where 'buying' finance at a minimum 6% is savvy when he has funds available most likely earning almost (if not) 0% right now.

Firstly I am a she not he. If I spend all my savings I have no rainy day fund, if the washing machine breaks, something goes wrong with the other car we have, etc then I would have no money to pay for this. If I can borrow a small sum of money at a relatively cheap rate then I feel it is a good idea that while it may cost me 1500 over 3 years I still have my money should something wrong. It would take me 2.5 or 3 years to save this type of money again. I might look at personal loan rather than pcp depending on rates I can get.

kippy

OP.
Put your money into a Credit Union that do a share secured loan. Basicilly a loan can be gotten to match your share stake for any purpose for between 4 and 5 percent interest.
This gives you a relatively cheap line of credit, you own the car outright. You still have your cash and the loan terms are extremely flexible.

GreenHills101

kippy wrote: »

OP.
Put your money into a Credit Union that do a share secured loan. Basicilly a loan can be gotten to match your share stake for any purpose for between 4 and 5 percent interest.
This gives you a relatively cheap line of credit, you own the car outright. You still have your cash and the loan terms are extremely flexible.

Thanks! I will call in to them this morning!

xabi

Never got the scorn at PCP, do the sums, and if you can afford the finance do it. It's a great way to drive a new car. The only issues are people that borrow the deposit and then have to borrow the ballon.

GreenHills101

kippy wrote: »

OP.
Put your money into a Credit Union that do a share secured loan. Basicilly a loan can be gotten to match your share stake for any purpose for between 4 and 5 percent interest.
This gives you a relatively cheap line of credit, you own the car outright. You still have your cash and the loan terms are extremely flexible.

Just looked up their website and their loan rate is 9.92%. I looked up ie and I see kbc and permanenttsb have good rates so I will try them

bmwguy

If taking out low rate finance on a car helps you to pay for other things in cash that would otherwise need to be financed at a higher rate then it's good

If you have loads of cash just sitting there in excess of what you need to live your life, don't finance anything at all.

If you have loads of cash make it work for you too!

kippy

GreenHills101 wrote: »

Just looked up their website and their loan rate is 9.92%. I looked up ie and I see kbc and permanenttsb have good rates so I will try them

I am not sure where you are based but only some credit unions offer this type of rate. CUs have many types of loan products. Id keep looking for one that does the type of loan mentioned and see if you can join etc etc as it is by far the best scenario in your situation and with your requirements.

GreenHills101

kippy wrote: »

I am not sure where you are based but only some credit unions offer this type of rate. CUs have many types of loan products. Id keep looking for one that does the type of loan mentioned and see if you can join etc etc as it is by far the best scenario in your situation and with your requirements.

Thanks, there is only 1 credit union in my area and I think you can only join credit unions if you live in the area.

kippy

GreenHills101 wrote: »

Thanks, there is only 1 credit union in my area and I think you can only join credit unions if you live in the area.

Not necessarily.

isnottheword

GreenHills101 wrote: »

Firstly I am a she not he.

Thanks for clarifying info we had no way of knowing. :-)

GreenHills101 wrote: »

If I spend all my savings I have no rainy day fund, if the washing machine breaks, something goes wrong with the other car we have, etc then I would have no money to pay for this.

If the washing machine breaks, get an overdraft, buy a 2nd hand washing machine off donedeal or adverts.ie or buy from the retailer on finance (yes, on finance - when you actually have no other option - not when you have the means available to you lying around in hard cash).

If your car breaks down, again overdraft or credit union, etc. Perhaps more savvy is to reduce your current budget below your total savings amount (which if I recall correctly is €11K) and hold back a could of K. I bought a 142 Leaf Acenta for €9300 (inclusive of ALL costs of flying over and driving it back - to include ferry ticket, etc) back in August. The minimum I've saved thus far in fuel alone is €640 (and that's based on what I was paying out in diesel on what was one of the most frugal 1.4 TDCi diesels on the market).

GreenHills101 wrote:

If I can borrow a small sum of money at a relatively cheap rate then I feel it is a good idea that while it may cost me 1500 over 3 years I still have my money should something wrong. It would take me 2.5 or 3 years to save this type of money again. I might look at personal loan rather than pcp depending on rates I can get.

Finance is rarely 'cheap'. Even if 6% seems attractive, remember the ecb rate right now is zero. You can do a lot with €1500 euro in your back pocket.

kippy wrote: »

OP.
Put your money into a Credit Union that do a share secured loan. Basicilly a loan can be gotten to match your share stake for any purpose for between 4 and 5 percent interest.

The 4-5% they quote is misleading if they insist that you have to have X% of your own cash lodged with them in order to secure that financing. i.e. 4-5% is not the true cost of financing in this instance.

Soarer

GreenHills101 wrote: »

Firstly I am a she not he. If I spend all my savings I have no rainy day fund, if the washing machine breaks, something goes wrong with the other car we have, etc then I would have no money to pay for this. If I can borrow a small sum of money at a relatively cheap rate then I feel it is a good idea that while it may cost me 1500 over 3 years I still have my money should something wrong. It would take me 2.5 or 3 years to save this type of money again. I might look at personal loan rather than pcp depending on rates I can get.

So you want to keep your money in case something happens, and pay €10 per week in interest (on top of the principal) for the privilege of doing it?

If I were you.....
- I'd keep €1000 of your savings as your rainy day fund. That should cover the majority of any issues that might occur in the short term.
- Spend the remaining €10k of savings on a secondhand Leaf.
- Use the planned monthly PCP repayments to rebuild your savings.

Your logic is a little off to me. You'd rather keep a big lump sum of cash, earning no interest, in case something goes wrong. And instead you'd rather go into debt, paying 5% pa on interest, on a depreciating asset?

But each to their own.

Soarer

Or what isnottheword said above. We seem to be singing off the same hymn sheet.

Wouldn't be surprised if he watches Dave Ramsay too!

kippy

isnottheword wrote: »

Thanks for clarifying info we had no way of knowing. :-)


If the washing machine breaks, get an overdraft, buy a 2nd hand washing machine off donedeal or adverts.ie or buy from the retailer on finance (yes, on finance - when you actually have no other option - not when you have the means available to you lying around in hard cash).

If your car breaks down, again overdraft or credit union, etc. Perhaps more savvy is to reduce your current budget below your total savings amount (which if I recall correctly is €11K) and hold back a could of K. I bought a 142 Leaf Acenta for €9300 (inclusive of ALL costs of flying over and driving it back - to include ferry ticket, etc) back in August. The minimum I've saved thus far in fuel alone is €640 (and that's based on what I was paying out in diesel on what was one of the most frugal 1.4 TDCi diesels on the market).

Finance is rarely 'cheap'. Even if 6% seems attractive, remember the ecb rate right now is zero. You can do a lot with €1500 euro in your back pocket.

The 4-5% they quote is misleading if they insist that you have to have X% of your own cash lodged with them in order to secure that financing. i.e. 4-5% is not the true cost of financing in this instance.

As I said I was replying based on what I see the OP s requirements and circumstances as being. The true cost is a hell of a lot lower than and PCP and the product comes with a lot more flexibility.

isnottheword

kippy wrote: »

The true cost is a hell of a lot lower than and PCP and the product comes with a lot more flexibility.

That's no problem at all - I'm quite happy to accept that if you ran the numbers on it, then that was the case.

However, I think it's important to debunk one of the myths with credit union financing i.e. this ability they have to advertise lower rates when a major component of that deal involves you having lodged a sizeable proportion of your own funds with them. In effect, they get to lease you back your own money - topped up with a portion of other funds!

kippy

isnottheword wrote: »

That's no problem at all - I'm quite happy to accept that if you ran the numbers on it, then that was the case.

However, I think it's important to debunk one of the myths with credit union financing i.e. this ability they have to advertise lower rates when a major component of that deal involves you having lodged a sizeable proportion of your own funds with them. In effect, they get to lease you back your own money - topped up with a portion of other funds!

I don't disagree. However in the OPs circumstance - where by they have the cash on hand to buy the product without a loan yet want a loan product, it's an ideal solution - in my own opinion.
They offer a product with clear terms and conditions laid out that is very flexible and that may suit various folks.

BoatMad

isnottheword wrote: »

You're speaking in general terms here - of course, it's not an inherently moronic thing to do and yes, it has its place in any financing decision.


Notwithstanding that, taking it in the context of the OP's 'investment' in a highly depreciating asset - where he has funds at hand that (insofar as we are aware) are not working for him, then that scenario doesn't look like a case where 'buying' finance at a minimum 6% is savvy when he has funds available most likely earning almost (if not) 0% right now.

Personally if I have a cash nest egg and I can afford the cost of credit , I would tend to take out the finance. ( which is exactly my situation ) Using valuable cash resources on a wasting asset is not a good thing n my opinion. Reserve cash for situations where credit may be unsuitable or hard to justify / acquire