Oatz Posted September 6, 2006 Report Share Posted September 6, 2006 I'm currently toying with the idea of maybe purchasing a new toy and it got me thinking what the general consensus would be on how people fund their habit? Personally I've never had finance on a car but am currently toying with the idea and wanted reassurance that it isn't an irresponsible thing to do... and hence a quick poll to see how we all fund our petrol addiction Link to comment Share on other sites More sharing options...
Chris_B Posted September 6, 2006 Report Share Posted September 6, 2006 There wasn't a "Bit of both" option! My car is leased through my company. My wife's car was bought cash. Link to comment Share on other sites More sharing options...
P_G Posted September 6, 2006 Report Share Posted September 6, 2006 On the drip for me, it would be the only way for me to afford what I'm driving, but haggled hard on the finance and got a decent deal so I'm happy. I'd rather use what cash I have for other things that on a depreciating asset (mortgage etc) Link to comment Share on other sites More sharing options...
Oatz Posted September 6, 2006 Author Report Share Posted September 6, 2006 Also in case anyone is indoubt the never never option does include part cash and part finance Link to comment Share on other sites More sharing options...
P_G Posted September 6, 2006 Report Share Posted September 6, 2006 You'd have to part cash anyway for a deposit in most cases? Link to comment Share on other sites More sharing options...
stevie_d Posted September 6, 2006 Report Share Posted September 6, 2006 I'm very cautious over money, so I'd always go the cash option Link to comment Share on other sites More sharing options...
R32Ash Posted September 6, 2006 Report Share Posted September 6, 2006 Paid cash for the R32. I'm not sure I'd do it again, especially if I could borrow some money cheaply. I'd rather keep the cash for other things, with hindsight. Link to comment Share on other sites More sharing options...
patently Posted September 6, 2006 Report Share Posted September 6, 2006 Finance is more expensive. Paying cash can leave you tight if the unexpected happens. You pays your money (or not) and you takes your choice. I've always paid cash, just because I have a nasty habit of looking at the figure right at the bottom - the total paid over the term of the agreement. I tend to look at that and come out in a nasty rash. Link to comment Share on other sites More sharing options...
Calm Chris Posted September 6, 2006 Report Share Posted September 6, 2006 I tend to not like any debt , and always pay on the nose . Did look at some borrowing a while back, reason being that sometimes the pay £25k, get back £15k a few years later is a slap in the face regarding car costs . Now using £15k cash and £10k loan over the same period means you get ALL your cash back . When £10k can be borrowed over 2 years at £470 a month, a total cost of under £11k it makes you think about it . If my investments are earning more than bank rate, it's silly to cash them in when I can borrow cheaper Problem being:- * Ari will appear and break my delusions regarding debt * Isn't that what most people are doing and explains a lump of the current personal debt (never been higher)stat's When I see what I want, I'll decide then Link to comment Share on other sites More sharing options...
stevie_d Posted September 6, 2006 Report Share Posted September 6, 2006 [ QUOTE ] * Isn't that what most people are doing and explains a lump of the current personal debt (never been higher)stat's [/ QUOTE ] Yeah and that's a big worry atm (imo). I personally couldn't enjoy a car if it was on finance as I would be worrying about losing my job or interest rate increases (affecting mortgage) and taking all my money. I'd much rather buy a cheaper car and own it rather than run the risk of finance. I think that's the problem with these 0% finance schemes; sure you may have the money now to pay for it and sure you're getting a promotion next month, but if things fall through... Christ, I don't even want to get a mortgage, but that's something I'll just have to cope with Link to comment Share on other sites More sharing options...
Soapsuds Posted September 6, 2006 Report Share Posted September 6, 2006 [ QUOTE ] [ QUOTE ] * Isn't that what most people are doing and explains a lump of the current personal debt (never been higher)stat's [/ QUOTE ] Yeah and that's a big worry atm (imo). I personally couldn't enjoy a car if it was on finance as I would be worrying about losing my job or interest rate increases (affecting mortgage) and taking all my money. I'd much rather buy a cheaper car and own it rather than run the risk of finance. I think that's the problem with these 0% finance schemes; sure you may have the money now to pay for it and sure you're getting a promotion next month, but if things fall through... Christ, I don't even want to get a mortgage, but that's something I'll just have to cope with [/ QUOTE ] blimey - you really do worry too much about money....! Life is way too short - enjoy it a little!! (PS - my attitude is like that due to past life experiences and i'm only 29. No offence intended!! ) Link to comment Share on other sites More sharing options...
stevie_d Posted September 6, 2006 Report Share Posted September 6, 2006 [ QUOTE ] blimey - you really do worry too much about money....! Life is way too short - enjoy it a little!! (PS - my attitude is like that due to past life experiences and i'm only 29. No offence intended!! ) [/ QUOTE ] Why would I take offence? You're only telling me what I already know I was being silly about mortgage, as long as it wasn't pushing my limits then it's something that I'd be fine with, everyone needs one etc. Finance for anything else and I'd be very cautious, but that's just me p.s. I do enjoy life to the full, I spend every night counting pennies and making sure that I have enough to last Link to comment Share on other sites More sharing options...
Oatz Posted September 6, 2006 Author Report Share Posted September 6, 2006 [ QUOTE ] Finance is more expensive. Paying cash can leave you tight if the unexpected happens. You pays your money (or not) and you takes your choice. I've always paid cash, just because I have a nasty habit of looking at the figure right at the bottom - the total paid over the term of the agreement. I tend to look at that and come out in a nasty rash. [/ QUOTE ] Do you own a 911 by any chance ironically you've just made your 911th post... (I need to get out more) Link to comment Share on other sites More sharing options...
sidicks Posted September 6, 2006 Report Share Posted September 6, 2006 [ QUOTE ] If my investments are earning more than bank rate, it's silly to cash them in when I can borrow cheaper [/ QUOTE ] Not really a fair comparison unless the investment earnings are guaranteed! sidicks Link to comment Share on other sites More sharing options...
patently Posted September 6, 2006 Report Share Posted September 6, 2006 [ QUOTE ] Do you own a 911 by any chance ironically you've just made your 911th post... (I need to get out more) [/ QUOTE ] Yes, gosh, didn't notice, oops I've ruined it now. Link to comment Share on other sites More sharing options...
P_G Posted September 6, 2006 Report Share Posted September 6, 2006 I'd still finance my car rather than pay the money if the deal was good. As for the threat of redundancy or long term illness, we if that does happen the worst that could happen is you give the car back, have to pay extra because it is in negative equity but then that is a choice on what car you have. I would only finance if I knew the residuals would be good, i.e not a Rover for example. Like I said I would rather use the money like I am doing currently to pay off my mortgage on an appreciating asset and pay the nominal interest (£6K over 4 years on £22K) on a depreciating asset. Much like keeping my money in a high interst savings account instead of paying off a balance on a credit card that has a 0% APR for the next 12 months. Link to comment Share on other sites More sharing options...
Sponge Posted September 6, 2006 Report Share Posted September 6, 2006 [ QUOTE ] blimey - you really do worry too much about money....! Life is way too short - enjoy it a little!! (PS - my attitude is like that due to past life experiences and i'm only 29. No offence intended!! ) [/ QUOTE ] Life's too short to worry about money. As long as you're not stupid (many are) there's nothing wrong with financing a few of the nicer things in life. What's the point on sitting on large savings, if you're living like a pauper? Only to be knocked down by a bus and have it all go to the tax man or some distant relative you didn't like or even know. Link to comment Share on other sites More sharing options...
ACA_Chap Posted September 6, 2006 Report Share Posted September 6, 2006 [ QUOTE ] [ QUOTE ] blimey - you really do worry too much about money....! Life is way too short - enjoy it a little!! (PS - my attitude is like that due to past life experiences and i'm only 29. No offence intended!! ) [/ QUOTE ] Why would I take offence? You're only telling me what I already know I was being silly about mortgage, as long as it wasn't pushing my limits then it's something that I'd be fine with, everyone needs one etc. Finance for anything else and I'd be very cautious, but that's just me p.s. I do enjoy life to the full, I spend every night counting pennies and making sure that I have enough to last [/ QUOTE ] Your views will change. Wait til you study advanced finance. PG is right on this one. Most people don't consider the real incremental costs of using your own money to purchase your car. The net present value is usually better through finance. The main reason people use their own money to finance a car is because they *think* it's cheaper. Cost of capital anyone? Link to comment Share on other sites More sharing options...
stevie_d Posted September 6, 2006 Report Share Posted September 6, 2006 [ QUOTE ] The main reason people use their own money to finance a car is because they *think* it's cheaper. Cost of capital anyone? [/ QUOTE ] Not for me mate. I know it's an extreme case, but I've got two mates who have gotten into real financial trouble with financing items, not just cars. Their income rapidly dropped off and they suddenly had huge debts. I had to pay, cash, just over £12k for my car with trade-in. Even if VW had offered a 0% option I wouldn't have taken it. Sure I could have invested in an ISA or high interest account, but I'd rather know that I own the car on my drive and no matter what I'll still own it come next year. I guess this mirrors my investments, generally into property, which is a fairly "safe" long term investment. Link to comment Share on other sites More sharing options...
ACA_Chap Posted September 6, 2006 Report Share Posted September 6, 2006 [ QUOTE ] Even if VW had offered a 0% option I wouldn't have taken it. [/ QUOTE ] This is illogical. 0% should always be taken if handled sensibly. [ QUOTE ] I guess this mirrors my investments, generally into property, which is a fairly "safe" long term investment. [/ QUOTE ] Alot of people would disagree with you there. Generally the portfolios which are least exposed to systematic risk are those which are diversified. I'm not going to start on the UK property market as this is a can of worms (plus I'd sh1t myself over some rather significant exposure in London ) Link to comment Share on other sites More sharing options...
sidicks Posted September 6, 2006 Report Share Posted September 6, 2006 [ QUOTE ] [ QUOTE ] The main reason people use their own money to finance a car is because they *think* it's cheaper. Cost of capital anyone? [/ QUOTE ] Not for me mate. I know it's an extreme case, but I've got two mates who have gotten into real financial trouble with financing items, not just cars. Their income rapidly dropped off and they suddenly had huge debts. I had to pay, cash, just over £12k for my car with trade-in. Even if VW had offered a 0% option I wouldn't have taken it. Sure I could have invested in an ISA or high interest account, but I'd rather know that I own the car on my drive and no matter what I'll still own it come next year. I guess this mirrors my investments, generally into property, which is a fairly "safe" long term investment. [/ QUOTE ] Economically, financing a car is more expensive overall than paying cash, when the risk-free (or risk-adjusted) return on the cash invested is lower than the cost of the finance. The exception occurs on special deals e.g. 0% APR deals, where you'd be silly not to take the finance and tuck the money away in an interest bearing account, rather than to pay cash up front. Despite the economic rationale, many people (myself included) prefer to use some form of finance when buying a car as they liquid the liquidity that cash offers, and with interest rates quite low, the utlity benefit of having the cash available exceeds the cost of finance. sidicks Link to comment Share on other sites More sharing options...
Brabus Posted September 6, 2006 Report Share Posted September 6, 2006 Paid cash for the RS6+ and am leasing the Golf 2.0 TDI. Link to comment Share on other sites More sharing options...
Torino101 Posted September 6, 2006 Report Share Posted September 6, 2006 [ QUOTE ] [ QUOTE ] The main reason people use their own money to finance a car is because they *think* it's cheaper. Cost of capital anyone? [/ QUOTE ] Not for me mate. I know it's an extreme case, but I've got two mates who have gotten into real financial trouble with financing items, not just cars. Their income rapidly dropped off and they suddenly had huge debts. I had to pay, cash, just over £12k for my car with trade-in. Even if VW had offered a 0% option I wouldn't have taken it. Sure I could have invested in an ISA or high interest account, but I'd rather know that I own the car on my drive and no matter what I'll still own it come next year. I guess this mirrors my investments, generally into property, which is a fairly "safe" long term investment. [/ QUOTE ] I'm exactly the same as you Steve. It does limit how nice a car I can buy, as I always want to pay cash up front. But the plus side to me is the peace of mind that no matter what happens i'm not going to suddenly find myself in huge finacial difficulty because of my car. Link to comment Share on other sites More sharing options...
sidicks Posted September 6, 2006 Report Share Posted September 6, 2006 [ QUOTE ] It does limit how nice a car I can buy, as I always want to pay cash up front. But the plus side to me is the peace of mind that no matter what happens i'm not going to suddenly find myself in huge finacial difficulty because of my car. [/ QUOTE ] That's a commendable approach. I always ensure that I have less than 50% of the car's value on finance, and always pay this off over 3 years or less. That way, if anything major happened, and I could no longer afford the payments, I could sell the car and still have some money left over, not be burdened with a significant debt. Sidicks Link to comment Share on other sites More sharing options...
patently Posted September 6, 2006 Report Share Posted September 6, 2006 People are different. Some are happy with the risk attached to a finance agreement, some are not. For me, there was also the factor of wanting to know that the car was mine, 100% mine, no qualifications. I also knew that being self-employed, I have no guarantee of future earnings - so the knowledge that the car is in the garage and nothing needs to be spent on it is reassuring. Some people are also more receptive than others to deferred enjoyment, whereas others are happier to accept less, but get it today. I simply looked at the final total figure for a financed 911 Carrera and saw the price of a 911 turbo. So rather than finance it, I would have waited for the turbo. As it was, I got the 911 in 2004 rather than a Z3 or SLK in 2001. There's no right or wrong answer. Just different answers for different people. And yes, I know what NPV is and the difference between money today and money tomorrow*. But even so, given the difference between the finance house rate and my savings rate, I would not have been convinceable that cash was more expensive, despite the best efforts of a very determined dealership business manager! ----------------------------- *how do you think I managed to accumulate the cash to buy a 911 outright? Link to comment Share on other sites More sharing options...
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