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Lessons in car buying


Tayls

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11 minutes ago, Tayls said:

@darrenm @wazzap24

What do I need to be doing here re value at the end of the arrangement? 

The balloon (final value figure) should be reasonably lower than what the car will realistically be worth. Too high and you'll have no equity. There's no major disadvantage to it being too low other than if you want to just give it back at the end they only have to give you that much for it, but you'll have dealers around who'll give you market value for it. It's in the dealer's interest to get it about right too so you shouldn't need to worry too much.

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9 hours ago, Tayls said:

@darrenm @wazzap24

What do I need to be doing here re value at the end of the arrangement? 

@darrenm is probably going to be more help here, but assuming you have the normal 3 options 

1. Pay final payment/balloon and own it

2. Use it as a 'trade in' against the next deal 

3. Hand it back, walk away after the 41 months 

option 1 would only ever be worth it, if you've negotiated a significant discount off the list price and the residual value has held up, otherwise you'll end up paying more than the actual retail price. 

Option 2 is the most popular and the one the dealer loves the most, because it keeps you locked into them on a rolling basis. The key to this is the GFV, they must offer a GFV that will clear the outstanding payment and then you are hoping they sell it for more than that, which then gives you a dipper for the next one. This is risky and although you'll get people saying they got way over the outstanding finance amount etc, I've also heard of people copping for a shortfall. It's a massively competitive market and dealers are setting GFV's closer and closer to market value in order to be competitive at the front end. 

Option 3 is the least risky, but you should really then compare against a PCH, because you have no intention of owing it anyway. The example I have works out slightly cheaper when you factor in 48 months vs 41, but there isn't loads in it. It's case by case, I looked at a 1 series deal for someone yesterday and PCH worked out over £3.5k cheaper over 3 years Vs BMW financed PCP. 

They absolutely do not want you to go for option 3, so check your return conditions 

Who's the finance company behind the deal? 

What's the mileage allowance (I'm assuming 10k p/a?) and what are the excess penalties if you go over this.

Do they adhere to BVRLA standards for wear and tear or apply their own rules? 

Check this with a fine tooth comb, it's all well and good thinking you can just 'walk away', until you get hit with a damage and excess mileage bill. 

Edited by wazzap24
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9 hours ago, darrenm said:

The balloon (final value figure) should be reasonably lower than what the car will realistically be worth. Too high and you'll have no equity. There's no major disadvantage to it being too low other than if you want to just give it back at the end they only have to give you that much for it, but you'll have dealers around who'll give you market value for it. It's in the dealer's interest to get it about right too so you shouldn't need to worry too much.

The lower the value, the more expensive the payment are, but you should come out with an excess as you rightly say. 

Problem is, in order to be competitive on the monthly price, more and more dealers are setting higher GFV's, which are much closer to Market price. 

This lowers the front end and monthly cost, but increases the risk that it won't wipe the finance or leave very little for a dipper. 

Its risky. 

The market is wobbly at the moment. Registrations are down, new tech is coming down the line pretty quickly and legislation is likely to affect RV's on diesel and petrol engines over the next 4/5 years. 

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2 hours ago, wazzap24 said:

@darrenm is probably going to be more help here, but assuming you have the normal 3 options 

1. Pay final payment/balloon and own it

2. Use it as a 'trade in' against the next deal 

3. Hand it back, walk away after the 41 months 

option 1 would only ever be worth it, if you've negotiated a significant discount off the list price and the residual value has held up, otherwise you'll end up paying more than the actual retail price. 

Option 2 is the most popular and the one the dealer loves the most, because it keeps you locked into them on a rolling basis. The key to this is the GFV, they must offer a GFV that will clear the outstanding payment and then you are hoping they sell it for more than that, which then gives you a dipper for the next one. This is risky and although you'll get people saying they got way over the outstanding finance amount etc, I've also heard of people copping for a shortfall. It's a massively competitive market and dealers are setting GFV's closer and closer to market value in order to be competitive at the front end. 

Option 3 is the least risky, but you should really then compare against a PCH, because you have no intention of owing it anyway. The example I have works out slightly cheaper when you factor in 48 months vs 41, but there isn't loads in it. It's case by case, I looked at a 1 series deal for someone yesterday and PCH worked out over £3.5k cheaper over 3 years Vs BMW financed PCP. 

They absolutely do not want you to go for option 3, so check your return conditions 

Who's the finance company behind the deal? 

What's the mileage allowance (I'm assuming 10k p/a?) and what are the excess penalties if you go over this.

Do they adhere to BVRLA standards for wear and tear or apply their own rules? 

Check this with a fine tooth comb, it's all well and good thinking you can just 'walk away', until you get hit with a damage and excess mileage bill. 

So looking at things properly today, the final payment for the car will be £7440 at the end of the 41 months - if I decide to keep it or take on a new one etc. 

So based on this - I have a conversation with them today to discuss all the financials, what do I need to attack with?

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2 hours ago, Tayls said:

So looking at things properly today, the final payment for the car will be £7440 at the end of the 41 months - if I decide to keep it or take on a new one etc. 

So based on this - I have a conversation with them today to discuss all the financials, what do I need to attack with?

It's not so much having something to attack with, more just checking all the T's and C's to make sure you are 100% comfortable with the commitment you are taking on. They are giving you a good price for your old car, but it doesn't stop you asking for a bit more money off the OTR price, it's worth a go. 

As per previous post, check your mileage allowance and ask them about return standards and if they adhere to BVRLA standards or set their own 

The deal is ok, I think it's a lot of money for the car, but that's just personal opinion 

The only way you might be able to negotiate a 'cheaper' deal, would be to get funding elsewhere and negotiate a straight purchase price. It doesn't sound like there is much discount being chucked in. To do this you'd have to fund the whole lot upfront though, which could be prohibitively expensive, but you'd be in complete control then (assuming you keep up with the loan repayments) 

One final thing is credit. One issue with PCP is some lenders put the full balance on your credit file (all the monthlies + the ballloon), so if you need a mortgage or a loan for something else, it can affect how much you can borrow. Just something to consider really that's all. 

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1 hour ago, Xela said:

 

Ha, a guy used to work with years ago used to use that line all the time. 

Totally true though. 

Unless it's something just for pleasure or the economics of leasing an item doesn't stack up vs buying it, it's a rule you won't go far wrong with. 

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On 24/01/2018 at 11:31, Tayls said:

So looking at things properly today, the final payment for the car will be £7440 at the end of the 41 months - if I decide to keep it or take on a new one etc. 

So based on this - I have a conversation with them today to discuss all the financials, what do I need to attack with?

How did you get on? 

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7 hours ago, wazzap24 said:

How did you get on? 

We struck a deal. Managed to get an extra £300 off during the conversation which took it below X thousand, which was a psychological win for me. Collect it in March, can’t wait! Gonna be a crazy month with the arrival of a mini me! 

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3 minutes ago, Tayls said:

We struck a deal. Managed to get an extra £300 off during the conversation which took it below X thousand, which was a psychological win for me. Collect it in March, can’t wait! Gonna be a crazy month with the arrival of a mini me! 

Good stuff, enjoy both! :thumb:

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  • 2 weeks later...

anybody recommend some sites they have used for leasing/PCH?

I have searched google and as usual there are loads of them. Feel it would be better looking at ones that people recommend and have used or are using.

 

Thanks in advance

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1 hour ago, imavillan said:

anybody recommend some sites they have used for leasing/PCH?

I have searched google and as usual there are loads of them. Feel it would be better looking at ones that people recommend and have used or are using.

 

Thanks in advance

HotUKDeals often have good deals on lease and PCP.

https://www.hotukdeals.com/search?q=lease

 

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What Car car leasing deals, that'll give you a good starting point that sets the bar.

Once you've got the best internet deal you would actually genuinely consider, take it to your local dealership. Worked for me, eventually. But I had to be patient and wait for the dealer to want the deal more than me.

 

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  • 1 month later...

Looking at getting a new car over the next month or so. Bit confused on how it works with trading in my current car though as i dont want to stick with the same manufacturer. Currently have around 1.3k 'equity' in it (bought it on a 5 year 0% deal, 15 months left to go). Do i part-ex it, signing over the finance deal for the new manufacturer to settle and then sell it on? Or am i stuck? 

Probably looking at  Qashqai, Captur, Kadjar, Kodiaq or 2008. Hopefully you get an idea of the type we are looking at. 

The main thing we really arent sure on is buying a used one or leasing. Theres some great cars 15/16 plates with low mileage (20000 and less) for a good price but does that leave less flexibility on financing? If we were to buy it would most likely be on the bigger side of the cars above as it would be a longer term option. Quite happy to go for the smaller options if it is a good lease deal. 

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  • 1 month later...

Have the rules changed on buying cars recently?

I know dealers ideally want you to finance the deal through them but I’ve gone in for three different cars at different dealers in the last few weeks and walked away from all three because they’re not remotely interested in negotiating. 

Cash deal/ part exchange. They low-ball the value of my motor and offer nothing off the sticker price on theirs and don’t budge an inch on price. 

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42 minutes ago, choffer said:

Have the rules changed on buying cars recently?

I know dealers ideally want you to finance the deal through them but I’ve gone in for three different cars at different dealers in the last few weeks and walked away from all three because they’re not remotely interested in negotiating. 

Cash deal/ part exchange. They low-ball the value of my motor and offer nothing off the sticker price on theirs and don’t budge an inch on price. 

Been like that for ages, the wriggle room is in the financing deals these days, it's where they make their money

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11 hours ago, Ikantcpell said:

Dont buy one, buy a bicycle instead and save the planet.

I did consider that option but I prefer the thought of choking the planet with my noxious emissions.

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