How do you pay for your car?

D

David1234

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Hi,

I am looking for a 2nd hand family car with a decent cash budget of €12,000-€15,000. My last car was purchased second hand 8 years ago and it is on its last legs. I will be doing the same again with this one.

From the 2 dealerships I have been in they were both very surprised that I was a cash buyer and wondering why I wasn't getting a new car on some sort of finance deal. I know that it is obviously in their interest to entice me into getting a new car but how often are people going in with the intension of buying a second hand car and coming out with a brand new car under some finance arrangement? I live in a new estate and the number of new cars that were bought by my neighbours last year was incredible. I would estimate that there is a 172 model or newer in every second driveway. I have also seen quite a large number of 191 cars on the roads already. Is this a new trend in Ireland? Is there stats anywhere that show the % of cars purchased in cash v those that are financed?

How do you pay for your car?
 
Many people are opting for PCPs at various low rates of interest or car manufacturer finance. I have two friends in particular, one avails of PCP and just rolls over the finance every three years. The other is considering 0% finance with Opel. I will pay cash to change as the cash is earning nothing in the bank or CU and I am fortunate to have it.

See key post at the top of this forum. https://www.askaboutmoney.com/threa...finance-a-new-car-pcp-hp-or-term-loan.202240/
 
Bought a 2nd Hand car (Skoda Octavia, from dealership) last year in May, was around 15K.
Cash buyer as well, but got offered a finance deal:
- Paid 5K (thereabouts) in cash
- 10K interest-free(!) credit (from Volkswagen finance) over 2 years

The credit is one of those where the car is only is yours once it is fully paid at the end of the 2 years, but your can pay off early without any drawbacks.
Didn't really want to have a credit for the car (I hate regular monthly outgoings) but zero% is hard to beat.

Reg. your neighbours: many friends and acquaintances use some PCP deal, hence you see many new cars. There's a few discussions on aam on the pros/cons of it thought.
 
newirishman said:
Bought a 2nd Hand car (Skoda Octavia, from dealership) last year in May, was around 15K.
Cash buyer as well, but got offered a finance deal:
- Paid 5K (thereabouts) in cash
- 10K interest-free(!) credit (from Volkswagen finance) over 2 years

The credit is one of those where the car is only is yours once it is fully paid at the end of the 2 years, but your can pay off early without any drawbacks.
Didn't really want to have a credit for the car (I hate regular monthly outgoings) but zero% is hard to beat.

Reg. your neighbours: many friends and acquaintances use some PCP deal, hence you see many new cars. There's a few discussions on aam on the pros/cons of it thought.
Click to expand...

That is a great deal all right, I am yet to see anything similar while looking.
 
David1234 said:
From the 2 dealerships I have been in they were both very surprised that I was a cash buyer and wondering why I wasn't getting a new car on some sort of finance deal.
Click to expand...
I buy with cash, but I never tell salesperson that. It's none of their business whether you've cash lying around, or took a loan from credit union. It's in their interest, generally, to upsell.

I used to work in car finance, and there is no such thing as interest free credit.
 
Slim said:
Many people are opting for PCPs at various low rates of interest or car manufacturer finance. I have two friends in particular, one avails of PCP and just rolls over the finance every three years. The other is considering 0% finance with Opel. I will pay cash to change as the cash is earning nothing in the bank or CU and I am fortunate to have it.

See key post at the top of this forum. https://www.askaboutmoney.com/threa...finance-a-new-car-pcp-hp-or-term-loan.202240/
Click to expand...

Thanks, I have seen a few posts about the pros/cons of PCP financing. It seems to be a bit of a minefield with all the various rates and options across each of the dealers.

I suppose what I am looking to tap into is why people are now inclined to buy a new car v a second hand one.

Is it availability of finance?
Keeping up with the Jones's?
Positive economic outlooks in the papers?
Higher disposable income?
A combination of the above?

What is the driving force behind choosing a new car when the rate of depreciation is so high in the first year
 
RedOnion said:
I buy with cash, but I never tell salesperson that. It's none of their business whether you've cash lying around, or took a loan from credit union. It's in their interest, generally, to upsell.

I used to work in car finance, and there is no such thing as interest free credit.
Click to expand...

This is something that has become very apparent in the last week or so for me. The amount you are paying for a new car on finance v's what you will pay in cash seem to vary considerably... well certainly from the 2 conversations I have had with dealers
 
David1234 said:
Is it availability of finance?
Keeping up with the Jones's?
Click to expand...
It's these 2 mainly.
When someone is buying a car on finance, they generally don't look at the total price: they look at the monthly payment. Ask your neighbours with the new cars, and I'm sure half them are convinced it was cheaper to buy new than 2nd hand.
What they miss is that they are paying half the cost over 3 years under essentially a rental agreement, rather than buying the 2nd hand car outright over the same period.
 
RedOnion said:
I used to work in car finance, and there is no such thing as interest free credit.
Click to expand...

Well maybe in the same way as there is no "free lunch".

The interest rate is 0%. finance = 10k, payment term = 24 monthly payments of 416.66 / 416.67.
No fee for credit setup or additional final payment.
That is pretty much interest free credit for met.
 
David1234 said:
I suppose what I am looking to tap into is why people are now inclined to buy a new car v a second hand one.

Is it availability of finance?
Keeping up with the Jones's?
Positive economic outlooks in the papers?
Higher disposable income?
A combination of the above?

What is the driving force behind choosing a new car when the rate of depreciation is so high in the first year
Click to expand...

None of the above influence me. I need a reliable car and I have experienced problems when out of warranty on the previous 2 cars and just made it inside the warranty on the current model. I am changing for 7 year warranty, 2 years free servicing and a year's road tax. The depreciation on leaving the forecourt is legendary but only relevant if you have to sell for cash. Try to buy a year old car at a dealer and you will not get the legendary depreciation, just one year off the new price. Import secondhand from the UK for best value but the problem of selling your current car remains.
 
RedOnion said:
Except you could probably buy the 10k car for 9.5k if you have your own finance.
Click to expand...
To be honest i've been down that road and believe it or not the cash made absolutely no difference in my case. By the way the car was new and I had a trade in. Never let the salesman know if I was going with cash or not, got his absolute bottom line and had been in a few other dealerships as well so knew what would be good or bad. Told me what the 0% finance would work out at when I asked him, then asked what it was for cash and as I said, it made no difference at all. Spoke with quite a few others about this type of buying from car dealers and very much the same from everyone I talked to. You'll find they won't be chasing you for a deal either. It's take it or leave it as far as I can see nowdays in the motor industry.
 
noproblem said:
To be honest i've been down that road and believe it or not the cash made absolutely no difference in my case. By the way the car was new and I had a trade in. Never let the salesman know if I was going with cash or not, got his absolute bottom line and had been in a few other dealerships as well so knew what would be good or bad. Told me what the 0% finance would work out at when I asked him, then asked what it was for cash and as I said, it made no difference at all. Spoke with quite a few others about this type of buying from car dealers and very much the same from everyone I talked to. You'll find they won't be chasing you for a deal either. It's take it or leave it as far as I can see nowdays in the motor industry.
Click to expand...

Yes,I went to 3 different Skoda garages in 2016.I talked cash only at 2,but got no discount on price for cash up front.I went with 0% finance,no issues with it yet,final payment later this year.
 
theo67 said:
Yes,I went to 3 different Skoda garages in 2016.I talked cash only at 2,but got no discount on price for cash up front.I went with 0% finance,no issues with it yet,final payment later this year.
Click to expand...

What are the requirements for someone to be approved for finance on a new car. I’m not talking specifically about your 0% but more the people who opt for higher rates of PCP. Are there set guidelines similar to mortgage lending?
 
Blackrock1 said:
someone has to buy a new car, how else will you buy your second hand one?
Click to expand...

It could come from the UK. It could of been purchased in cash by someone else. I’m happy for someone else to take the hit for the first few years, I’m just curious about what influences them to opt for such an expensive way to finance their car
 
David1234 said:
Are there set guidelines similar to mortgage lending?
Click to expand...
No. PCP is a form of HP finance, which is not regulated by CBI.
The car can be repossessed easily if you fall behind on repayments (basically anywhere except your private property).
 
RedOnion said:
I buy with cash, but I never tell salesperson that. It's none of their business whether you've cash lying around, or took a loan from credit union. It's in their interest, generally, to upsell.

I used to work in car finance, and there is no such thing as interest free credit.
Click to expand...

Former sales guy I know told me there is no such thing as "scrappage scheme " either,if you pay 25 k cash for a new car, you pay no more than the guy with the 1999 micra trading in?
 
RedOnion said:
It's these 2 mainly.
When someone is buying a car on finance, they generally don't look at the total price: they look at the monthly payment. Ask your neighbours with the new cars, and I'm sure half them are convinced it was cheaper to buy new than 2nd hand.
What they miss is that they are paying half the cost over 3 years under essentially a rental agreement, rather than buying the 2nd hand car outright over the same period.
Click to expand...

That they don't own it outright from the start is a minor detail in my opinion, you don't own a house either outright until mortgage is paid in full
 
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