Finance options on new cars ( UK)

[ludermor]

Looking for advice on getting a new car and the finance options available if paying through a company ( lease hire etc)
Currently not registered for VAT but that will prob change soon, how does affect the different finance options?
Anyone able to summarise the different options available (leasing, contract hire, contract purchase, sale and leaseback) with the pros and cons?

[T Fearon]

As per advice given to Rois, why not ask a car dealership,leasing company?

[ludermor]

Was in one at the weekend and he didnt fill me with confidence, was looking for more info to arm myself for the next time i went in!
I have a massive trust issues with salesmen of all types so find it hard to take at face value what they say.

[T Fearon]

Well, I'd trust them ahead of the "experts" on here . Good luck anyway

[ludermor]

Will give them another go so 

[Milltown Row2]

Wife's car has packed in and I'm considering this route as a possible way of getting a car....

Easy less that 10000 miles per year, so fits in well with most leasing company's I asume...

Anyone any dealings with these types? And pros and cons?? If not its a new car as I cant be bothered with all the crap you get when they start giving you hassle

[DennistheMenace]

Leasing doesn't really work out any cheaper than buying a car that is a few years older and obviously it's not your car.
Not to mention the mileage limits, personally I don't think leasing is a great option for most.

[JohnDenver]

These PCP (Personal Contract Purchase) deals seem to be getting very common these days.  Normally works with a decent deposit, maybe a grand or two, then 3 or 4 years of monthly payments, followed by either a lump sum at the end when you buy the car outright for the remaining balance, or else give it back.

The way they try to sell them to you is to get you into a constant cycle, get you signed up for the first car, then 2-3 years into the deal they will be advising you to enter a new cycle for a new car, using your current car as the deposit / trade in etc.

Some people swear by it - fixed monthly payments, knowing in theory you should be driving a fresh car every few years and should have no issues.

I'm not convinced, as you never actually own the car unless you see out a complete cycle.  By that time, the total amount you have paid, is probably a fair wack more than if you had sourced your own finance from the start and bought the car outright.

You do find that there can be discounts and extras included in these type deals.  If you have access to finance at a better rate than the car company, there is nothing to stop you entering into a PCP type deal, take their extras and special discount - then buy yourself out of the contract within the first few weeks cooling off period.  You will only get charged whatever interest per days you have had the car, plus you have the benefit of any discount or extras 

[laoislad]

These PCP (Personal Contract Purchase) deals seem to be getting very common these days.  Normally works with a decent deposit, maybe a grand or two, then 3 or 4 years of monthly payments, followed by either a lump sum at the end when you buy the car outright for the remaining balance, or else give it back.

The way they try to sell them to you is to get you into a constant cycle, get you signed up for the first car, then 2-3 years into the deal they will be advising you to enter a new cycle for a new car, using your current car as the deposit / trade in etc.

Some people swear by it - fixed monthly payments, knowing in theory you should be driving a fresh car every few years and should have no issues.

I'm not convinced, as you never actually own the car unless you see out a complete cycle.  By that time, the total amount you have paid, is probably a fair wack more than if you had sourced your own finance from the start and bought the car outright.

You do find that there can be discounts and extras included in these type deals.  If you have access to finance at a better rate than the car company, there is nothing to stop you entering into a PCP type deal, take their extras and special discount - then buy yourself out of the contract within the first few weeks cooling off period.  You will only get charged whatever interest per days you have had the car, plus you have the benefit of any discount or extras 

I've been looking at these PCP options myself a lot lately as I've been considering buying a new car.
I'd usually go down the credit union or business loan route but these PCP deals certainly seem tempting especially if you like to change every few years.
I've never had a brand new car but do change regularly enough.
My understanding though is you are better off go with a small deposit and higher monthly repayments rather than a large deposit and lower repayments as you would need to come up with the same big deposit in 3 years to keep the lower repayments.
I'm going between thinking they are a great way of getting into a new car and being very wary of them.
Don't t know what I'll do yet.

[JohnDenver]

These PCP (Personal Contract Purchase) deals seem to be getting very common these days.  Normally works with a decent deposit, maybe a grand or two, then 3 or 4 years of monthly payments, followed by either a lump sum at the end when you buy the car outright for the remaining balance, or else give it back.

The way they try to sell them to you is to get you into a constant cycle, get you signed up for the first car, then 2-3 years into the deal they will be advising you to enter a new cycle for a new car, using your current car as the deposit / trade in etc.

Some people swear by it - fixed monthly payments, knowing in theory you should be driving a fresh car every few years and should have no issues.

I'm not convinced, as you never actually own the car unless you see out a complete cycle.  By that time, the total amount you have paid, is probably a fair wack more than if you had sourced your own finance from the start and bought the car outright.

You do find that there can be discounts and extras included in these type deals.  If you have access to finance at a better rate than the car company, there is nothing to stop you entering into a PCP type deal, take their extras and special discount - then buy yourself out of the contract within the first few weeks cooling off period.  You will only get charged whatever interest per days you have had the car, plus you have the benefit of any discount or extras 

I've been looking at these PCP options myself a lot lately as I've been considering buying a new car.
I'd usually go down the credit union or business loan route but these PCP deals certainly seem tempting especially if you like to change every few years.
I've never had a brand new car but do change regularly enough.
My understanding though is you are better off go with a small deposit and higher monthly repayments rather than a large deposit and lower repayments as you would need to come up with the same big deposit in 3 years to keep the lower repayments.
I'm going between thinking they are a great way of getting into a new car and being very wary of them.
Don't t know what I'll do yet.

I don't know if that is the case - over three years, they low deposit + high monthly probably equates to roughly the same as high deposit and lower monthly payments.  At that point they are basically taking the trade in value of the car (dependant on condition and mileage etc) less the initially agreed lump sum final payment, as your deposit for the next motor in the cycle.

My argument is that, there is nothing stopping you entering this cycle yourself, with a bit of discipline. So you get cheaper personal finance, buy the car outright (even using the method I mentioned above about cancelling the PCP to get extras) tell yourself you will be getting a newer car in two / three years time and stick to that model. Either by trading in or privately selling your current car.

The car salesmen are obviously on good commission for these deals, and keeping you in a constant cycle is guaranteed money for them.

That's my thoughts on it, but I do know there are lots of people who can't see fault with it and are more than happy with the deals

[thebigfella]

These PCP (Personal Contract Purchase) deals seem to be getting very common these days.  Normally works with a decent deposit, maybe a grand or two, then 3 or 4 years of monthly payments, followed by either a lump sum at the end when you buy the car outright for the remaining balance, or else give it back.

The way they try to sell them to you is to get you into a constant cycle, get you signed up for the first car, then 2-3 years into the deal they will be advising you to enter a new cycle for a new car, using your current car as the deposit / trade in etc.

Some people swear by it - fixed monthly payments, knowing in theory you should be driving a fresh car every few years and should have no issues.

I'm not convinced, as you never actually own the car unless you see out a complete cycle.  By that time, the total amount you have paid, is probably a fair wack more than if you had sourced your own finance from the start and bought the car outright.

You do find that there can be discounts and extras included in these type deals.  If you have access to finance at a better rate than the car company, there is nothing to stop you entering into a PCP type deal, take their extras and special discount - then buy yourself out of the contract within the first few weeks cooling off period.  You will only get charged whatever interest per days you have had the car, plus you have the benefit of any discount or extras 

I've been looking at these PCP options myself a lot lately as I've been considering buying a new car.
I'd usually go down the credit union or business loan route but these PCP deals certainly seem tempting especially if you like to change every few years.
I've never had a brand new car but do change regularly enough.
My understanding though is you are better off go with a small deposit and higher monthly repayments rather than a large deposit and lower repayments as you would need to come up with the same big deposit in 3 years to keep the lower repayments.
I'm going between thinking they are a great way of getting into a new car and being very wary of them.
Don't t know what I'll do yet.

I don't know if that is the case - over three years, they low deposit + high monthly probably equates to roughly the same as high deposit and lower monthly payments.  At that point they are basically taking the trade in value of the car (dependant on condition and mileage etc) less the initially agreed lump sum final payment, as your deposit for the next motor in the cycle.

My argument is that, there is nothing stopping you entering this cycle yourself, with a bit of discipline. So you get cheaper personal finance, buy the car outright (even using the method I mentioned above about cancelling the PCP to get extras) tell yourself you will be getting a newer car in two / three years time and stick to that model. Either by trading in or privately selling your current car.

The car salesmen are obviously on good commission for these deals, and keeping you in a constant cycle is guaranteed money for them.

That's my thoughts on it, but I do know there are lots of people who can't see fault with it and are more than happy with the deals

While I agree with most of that; in a lots of cases the manufacturers finance works out much cheaper than other options available. Plus some of the deposit contributions come directly from taking the manufacturer finance on top of any dealer discount. So ultimately any difference in the cost of borrowing would be negated or in fact you would be worse off. 

One thing; you get fcuk all discount buying with cash now. If you want to get huge discount (20%+), you need to go down the finance route. As pointed out though, you can settle the finance straight away once you drive off the forecourt. Be aware your dealer may lose the commission if you settle within a certain period of time (1 month I think with BMW); so sometimes it's best to look at the bigger picture and take a tiny hit for a month or 2 just in case you want to deal with them again. 

[AZOffaly]

What about servicing on these PCP models. I think I've seen some where basically the services are free. That would be tempting.

[nrico2006]

I will more than likely go down the PCP route when I need a new car.  As mentioned, a fixed payment every month and no bother, then every 3/4 years change car.  There are loads of deals out there that are very good.  SERE offer a lot of zero deposit (or 1 or 2 hundred) and low payments.  Howard Abraham in Lurgan also offer a lot of good deals on KIA and Skoda cars.  The like of the Kia Sportage jeep can be got for as little as £160 a month with no deposit.  Both SERE and Howard Abraham have their deals on their websites.

The services are free on a lot of them but if not you can usually negotiate to get them added in for nothing - they ultimately want to look after the car for when you hand it back.

[laoislad]

I will more than likely go down the PCP route when I need a new car.  As mentioned, a fixed payment every month and no bother, then every 3/4 years change car.  There are loads of deals out there that are very good.  SERE offer a lot of zero deposit (or 1 or 2 hundred) and low payments.  Howard Abraham in Lurgan also offer a lot of good deals on KIA and Skoda cars.  The like of the Kia Sportage jeep can be got for as little as £160 a month with no deposit.  Both SERE and Howard Abraham have their deals on their websites.

The services are free on a lot of them but if not you can usually negotiate to get them added in for nothing - they ultimately want to look after the car for when you hand it back.

That seems very cheap.
Are you sure no deposit? The nearest you would get to that here is €334/mth but you have to give over a €8000 deposit to get that repayment.
The lowest deposit allowed is 10% which means you would have to pay around €500/mth with about a €2800 deposit.

Thats on LX model which I think is the lowest spec.

Personally I think the new Sportage is ugly. The old one was much nicer.

[laceer]

I will more than likely go down the PCP route when I need a new car.  As mentioned, a fixed payment every month and no bother, then every 3/4 years change car.  There are loads of deals out there that are very good.  SERE offer a lot of zero deposit (or 1 or 2 hundred) and low payments.  Howard Abraham in Lurgan also offer a lot of good deals on KIA and Skoda cars.  The like of the Kia Sportage jeep can be got for as little as £160 a month with no deposit.  Both SERE and Howard Abraham have their deals on their websites.

The services are free on a lot of them but if not you can usually negotiate to get them added in for nothing - they ultimately want to look after the car for when you hand it back.

Just got a level 2 Kia Sportage on contract hire from Howard Abraham in Lurgan- £250/month with service included. 1 month deposit.