Used car buyers want an easy life, which is fair enough, except that I think that the process never ought to be too painless. After all, if you get complacent, that’s when mistakes get made.
Anyway, I notice that there are more companies piling into the ‘guaranteed online sale with added easy finance’ market. This is nothing new; over the years, I’ve looked at countless e-commerce ventures that tried to make the whole used car buying thing less stressful. Many of those companies no longer operate.
Let’s look at the ingredients of one I stumbled across the other day. For starters, it offered vehicles that had undergone a professional inspection, which is good. The prices of the vehicles online were presented as monthly costs, then a personal loan robot did all the financial ruminating on your behalf once you had entered all your details.
Now I understand why some of us need loans to buy cars and there may be some very good reasons to do so. However, I would like to politely suggest that, ideally, we ought to save up and spend what we’ve got, rather than pay interest.
The site I looked at was very good and easy to use, but when I found a 2016 Vauxhall Astra 1.4 petrol in Elite trim with 12,000 miles on the clock at £162.91 pcm, it seemed too good to be true. You had to put £100 down and the balance was to be paid over a mere 84 months. So you’d be financing the car’s overall cost of £10,900 at 6.9% and the actual cost of borrowing was £2784.44.
Obviously you could adjust all the elements, such as the size of deposit and the number of months for repayments, but almost three grand for the finance looks steep. Surely we can buy a clean, inspected car outright for that?
For £2500, a cute Hyundai i10 1.1 Edition from 2010 with 80,000 miles, including recovery and a six-month warranty, is a good way to stay reassuringly mobile. Plus, the car I found was inspected to the same standard as the vehicles offered by the online people.
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My "rules"
I tend to keep cars a long time, so I haven't bought many in my 20+ years of car ownership.
However my rule has owing money on a car more than 4 years old is a mistake, so a new car could be bought over 4 years (but if on PCP I must also put in place a method to pay the balloon payment), but a 2-year-old car would need to be paid off in 2 years, and a 4-year-old car bought with cash. The other thing I look at is paying enough of a deposit to minimise the risk of negative equity as much as possible.
An 84-month payment term for a car that is already 2 years old is ridiculous. After 5 years of payments, there will still be about £3600 outstanding, on a 7-year-old car (and possibly a penaltly to pay if you want to settle early to change the car).
Patronising?
No I don't think it was. There will be some who find themselves in a situation where they need a car and can only afford it on finance. Fair enough. But many seem obsessed with having a new car on their driveway and only look at the monthly payment rather than the whole term cost. Buy something more affordable and then save each month the money you would spend on finance to build up a nice lump sum and spend that on your new car. To save thousands on finance costs is worth delaying that new car you've always dreamed of in my opinion.
So James has never ever
So James has never ever financed a car? Never found himself with a need to buy a car, enough income to pay a monthly, but without a few years buffer to save up £15k? (Or seeing savings needing to be put towards a house deposit, say)?
I'm not one for PCPing up to the eyeballs to buy a status symbol, but find this article an incredibly patronising piece.
You are redeemed by mentioning the 406 coupe, a future classic.
And high mile Jag XFs - all those shiny dials and switches etc. soon wear fairly badly!