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[Finance] Car Finance advice

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razer

Members
Mar 10, 2019
630
Ormskirk, Lancashire
Just to update decided on a new Tiguan R line (Delivery next week) via PCH (via a broker on Carwow) managed to get it at £300per month over 4 years with 3 payments upfront and the deal included maintenance at £ 20 p/m for tyres, brakes anything mechanical, servicing and MOT in addition to the 3 year warranty.

Also managed to sell my 18 year old X5 for £2,000 today, which was probably the bigger win!

Does anyone have any views on lease GAP insurance?

Found a quote for 3 years at £140 which will cover the majority of the depreciation over 3 of the 4 years. Seems sensible but open to challenge.

Thanks

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GAP insurance is an excellent product and £140 for three years is not a bad price.
 


Sirnormangall

Members
Sep 21, 2017
2,343
Over the years I’ve concluded that it doesn’t really matter how you acquire a car because you’ll still be screwed, but just in a slightly different way.
 

croydon seagull

Now living in Bournemouth
Sep 26, 2008
4,998
Dead end street
8 in 10 new cars are purchased through PCP, it makes sense because you pay a lower repayment often at very low or 0% Apr when the car is depreciating at the fastest rate in the first 2-3 years, at the end of the term you either trade in for a new vehicle, hand it back or pay the balloon payment and the car is yours. Most people don't opt to pay the balloon payment.

Whatever you choose spend some time to read the small print, agree a realistic annual mileage allowance and look after the car like its a hire car because you could get stung at the end of the agreement.

I'm on my 3rd PCP agreement and they have served me well and meant I can drive a car at an affordable monthly rate but there are some drawbacks that are worth googling.
 

croydon seagull

Now living in Bournemouth
Sep 26, 2008
4,998
Dead end street
One thing that many people don't take into account is how it could potentially affect your ability to obtain as large a mortgage you might usually be able to.

For example you might sign an agreement on a 20k car with a final balloon payment of 7k, your monthly payment will be calculated on the 13k less any deposit you contributed but when a credit check is run it will show up as you owing the full 20l, less your deposit (often you'll pay no deposit)
 

Poojah

Members
Nov 19, 2010
1,783
Leeds
One thing that many people don't take into account is how it could potentially affect your ability to obtain as large a mortgage you might usually be able to.

For example you might sign an agreement on a 20k car with a final balloon payment of 7k, your monthly payment will be calculated on the 13k less any deposit you contributed but when a credit check is run it will show up as you owing the full 20l, less your deposit (often you'll pay no deposit)

Yep, I can vouch for this. I bought a house in the heat of the original lockdown and the mortgage provider was insistent that I paid off both mine and my wife’s outstanding PCP borrowing. Fortunately, I was able to agree a situation whereby I only had to pay off my wife’s, less expensive car but it should be a consideration.

That said, PCP probably has enabled me to afford cars that might otherwise have been financially out of reach, and when used responsibly is a smart financial product.

I’m someone who loves cars but can’t stand the rigmarole that is entering a car showroom in the hope of buying one without being shafted. The last couple of cars I’ve bought with minimum stress and got what I believe to be great deals by:

  • Going to carwow.co.uk, mapping out what I want, filling in the details of the car I want to p/x and re-running the search in a few different locations until you’ve got a picture of the best deal the market has to offer
  • Walking into my nearest showroom with a printout of the deals you’ve been offered, and ask them to better it
It cuts out all of the bullshit if “I’ll go and speak to my manager” (multiple times), saves you hours of time and gives you confidence that the deal you’re being offered is indeed a good one. In my personal experience, I’ve found it a really effective way of doing things.
 

seagully

Cock-knobs!
Jun 30, 2006
2,942
Battle
One thing that many people don't take into account is how it could potentially affect your ability to obtain as large a mortgage you might usually be able to.

For example you might sign an agreement on a 20k car with a final balloon payment of 7k, your monthly payment will be calculated on the 13k less any deposit you contributed but when a credit check is run it will show up as you owing the full 20l, less your deposit (often you'll pay no deposit)

Interesting. Assume this wouldn't be the case with a lease car?
 

Weststander

Members
Aug 25, 2011
53,834
Withdean area
Yep, I can vouch for this. I bought a house in the heat of the original lockdown and the mortgage provider was insistent that I paid off both mine and my wife’s outstanding PCP borrowing. Fortunately, I was able to agree a situation whereby I only had to pay off my wife’s, less expensive car but it should be a consideration.

That said, PCP probably has enabled me to afford cars that might otherwise have been financially out of reach, and when used responsibly is a smart financial product.

I’m someone who loves cars but can’t stand the rigmarole that is entering a car showroom in the hope of buying one without being shafted. The last couple of cars I’ve bought with minimum stress and got what I believe to be great deals by:

  • Going to carwow.co.uk, mapping out what I want, filling in the details of the car I want to p/x and re-running the search in a few different locations until you’ve got a picture of the best deal the market has to offer
  • Walking into my nearest showroom with a printout of the deals you’ve been offered, and ask them to better it
It cuts out all of the bullshit if “I’ll go and speak to my manager” (multiple times), saves you hours of time and gives you confidence that the deal you’re being offered is indeed a good one. In my personal experience, I’ve found it a really effective way of doing things.

I did that second part in 2011, walking into Caffyns VW with an incredible price from drivethedeal.com on a new Golf. The spotty salesman clearly didn’t believe me, he went to that website to check, then the doubting thomas went quiet. He only offered a few hundred quid off plus the proverbial zzzzzzz car mats and full tank of fuel. I saved £4k elsewhere and a new car was delivered to my home a couple of months later.
 

Weststander

Members
Aug 25, 2011
53,834
Withdean area
Interesting. Assume this wouldn't be the case with a lease car?

I lease.

It goes against you in the income and outgoings responsible lending calculations, treated as a fixed outgoing such as monthly mortgage and bank loan payments, cc repayments, elec/gas, council tax, life assurance premiums.
 


croydon seagull

Now living in Bournemouth
Sep 26, 2008
4,998
Dead end street
Interesting. Assume this wouldn't be the case with a lease car?

If I'm honest I'm not too sure but it would definitely be considered as it would be considerable monthly expense that they would take in to account when looking at the affordability of your mortgage, they are pretty tough these days and will stress test your finances with things like interest rate hikes, change in circumstances ect.

From my own experience I cleared all my unsecured debt to zero but kept my PCP with a 6k balance. I have a modest salary but a household income of around 75k, lenders were reluctant to lend so the advice from the broker was to clear the PCP debt with a chunk of the deposit which I did.

I think at the moment if like me you have a relatively modest salary lenders want to see your debt to income ratio as close to 0% as possible, before all this covid/furlough situation the guidance was less than 28% debt to income but they are becoming very strict
 

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