Finance options

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SteveRams
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Finance options

Post by SteveRams » Thu Aug 15, 2019 7:50 pm

Hi hope you will bear with me as a new member.

I am just about to retire and am strongly considering a new Macan I have not owned a Porsche previously.

I am setting myself a budget of £55 k but am uncertain about how to finance the car without using a big chunk of my capital

So I am considering a 4 year PCP deal with £15k deposit which will give me repayments around £460 per month with £28 k ish balloon

Or putting in £30k borrowing £25k for 5 years @ 3.2% which is £450 per month repayment which means I pay about £2060 interest plus what I lose on the £30k

Any pointers or considerations would be much appreciated clearly the total cost is much less on the second option if it is that simple

Cheers in advance


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Paul
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Re: Finance options

Post by Paul » Thu Aug 15, 2019 8:07 pm

PCP will always be much more expensive as you are funding more for the whole period. Th3 PCP advantage is a protection against massive residual loss (if that is important to you)
You will only “loose” money if you sell the car for less than you owe.

Look at what you capital is (or might be) earning and compare with the interest you might pay; that’s the key consideration.
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PaulR
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Re: Finance options

Post by PaulR » Thu Aug 15, 2019 8:32 pm

I've been quite vocal about this in another thread! Personally, I'd avoid PCP like the plague. It's a terrible way to finance the car. It will ultimately work out considerably more expensive than financing any other way. As much as I hate it, I can understand PCP if it's the only way you can finance the car, and you absolutely must have that car (as opposed to something else that you can finance differently). It's the finance company and the dealer that benefit from PCP...


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VanB
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Re: Finance options

Post by VanB » Thu Aug 15, 2019 8:40 pm

In fairness there are pros and cons to every type of finance and they need to be weighed against an individual’s personal circumstances which are not always straight forward. Whilst I agree that PCP is expensive and, IMO should not be used to justify purchasing a car you can’t otherwise afford, it does have its place.


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PaulR
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Re: Finance options

Post by PaulR » Thu Aug 15, 2019 8:42 pm

SteveRams wrote:
Thu Aug 15, 2019 7:50 pm
So I am considering a 4 year PCP deal with £15k deposit which will give me repayments around £460 per month with £28 k ish balloon

Or putting in £30k borrowing £25k for 5 years @ 3.2% which is £450 per month repayment which means I pay about £2060 interest plus what I lose on the £30k
PCP - £15,000 + £460pm. But you have nothing at the end of it. You hand the car back or stump up £28,000.
Repayment - £30,000 + £450pm. And the car is yours at the end of it.

The repayment is an extra £15,000 upfront, but saves you finding almost double that (£28,000) at the end. Given the monthly payment is effectively the same, this highlights just how expensive PCP is compared to a repayment.

IMO, PCP is just a means to buy stuff you cannot otherwise afford. So if you can otherwise afford it, that would be my recommendation!


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SAC1
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Re: Finance options

Post by SAC1 » Thu Aug 15, 2019 9:03 pm

Welcome SteveRams

With a Porsche, where there is no discount and no dealer or manufacturing contribution [£'000s] on a factory order Macan, So buy it outright for cash if you can. Treat is a well deserved retirement gift. :D The man maths works because interest rates on bank / building society / ISA etc savings are so low currently.

I came from Mercedes where the PCP worked because there were very generous discounts and subsidies. So not much in it between an outright cash purchase and the PCP package. This is definitely NOT the case with Porsche. Also Macan residual values [historically] are very strong compared to most makes & models.


Clive
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Re: Finance options

Post by Clive » Sat Aug 17, 2019 12:11 pm

Steve, I'm in a very similar situation. I'm months or max one year away from retirement. I won't pay £10k in PCP finance charges over 4 years and as you say there are lower cost ways to borrow.

As much as the initial purchase cost is an issue for myself it's also on-going car purchases during retirement. I'm coming to the view that I need to keep the car for around 10 years (8k miles/year I reckon). It's one thing to pay for depreciation from salary, quite another if it's from a pension (mostly a DC pension in my case).

My current thinking is that coming into retirement that I should buy new for the lowest cost possible net cost (ie cash) and keep the car a long time. I'd be interested to hear other views...and your thinking Steve.


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SAC1
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Re: Finance options

Post by SAC1 » Sat Aug 17, 2019 5:36 pm

Clive, I had "company" cars all my working life and during the last 20 years these were my choice premium makes. I had a succession of brand new BMWs and Mercedes, each one on a 3 year contract. So my mind set is still to change every 3 years.

While working our 'second' cars were always convertible sports cars - used mainly for weekend and holiday use - MX-5s and SLKs. Acquired on PCPs and for either 2 or 3 yr contracts. The last SLK I bought at the balloon payment price and we ran that one for 6 trouble free years, but only clocking up 40,000 miles.

Then along came the grandchildren - five of them, now aged 3 to 9 yrs - so we had to get cars that could accommodate two child seats per car.

I have had five brand new cars since I retired. Three on PCPs and now both purchased for cash - the 2017 Macan and a November 2018 facelift SEAT Leon 2.0i FR auto. Got a really hefty discount on the factory order to our sopec Leon by using CARWOW via my local dealer who also gave us a great p/ex on our previous Leon FR 1.8i auto..

I'm a car enthusiast and always want something different and sporty, but comfortable and with great handling. I researched Porsche Macans thoroughly and had meetings with four OPC sales execs. But in autumn 2016, when I wanted to place my 7-month lead time factory order with its very specific list of options, none of them would give a discount. Also all their PCP at 7.1% [and HP deals] were overly expensive. I was not prepared to pay £8k just to finance it when I had the cash. So a cash purchase it was and the £8k has and will cover all fuel, my tax, insurance and service costs.

My dilemma now is how long to keep it? It's now 27 months old and done less than 15,000 miles. Come this autumn, I would traditionally be researching a speccing my next car allowing for up to a 6 months lead time. My Macan has been faultless [other than replacing the poor quality rear wiper blade!] and so do I keep it until it's 4 or 5 years and buy the extended warranty? But then it will need new tyres, another service, PDK fluid change, £450 p.a. road tax and MOTs and possibly pads and discs too. If I change at 3 yrs - what to replace it with given the proposed speed limit UI and BEV future long term issue.....decisions, decisions. :o

Good luck with yours Clive. ;)


Clive
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Re: Finance options

Post by Clive » Sat Aug 17, 2019 6:13 pm

SAC1, I've similarly had a string of company cars or more latterly personal lease cars via a company scheme. These were mostly BMWs as the scheme was with Alphabet (BMW FS), hence they had the best prices on BMWs. I had a few 5 series, three 300bhp convertibles and two X3s, the last X3 I bought, it's a 5 year old now, a 35D so about the same 0-60 as a Macan S but the handling and ride is very much inferior.

Now that I'm more transparently funding my car I'm keen to look at the cost per year to me. WIth Porsche it's clear that cash purchase works best due to the APR and lack of discounts. I was going down this route until a hammer blow today. Our dog can't sit up in the back of a Macan. This is a massive issue and knocks out the Macan. It's looking like a new X3 M40M...it is a much better car than my existing X3. It doesn't flow through corners like the Macan and the quality though improved isn't as good and the Macan; it does however have a better engine than the Macan S but not a better gearbox. Handling was a priority for me, more so than the engine so this is a real shame. The BMW might work with PCP as it's 4.9%, and there are good discounts, especially with PCP.
Last edited by Clive on Sat Aug 17, 2019 7:05 pm, edited 1 time in total.


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Paul
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Re: Finance options

Post by Paul » Sat Aug 17, 2019 6:20 pm

A quick comment re the above (BMW on PCP)
There will be discount (up to 20%) and then there will be a further deposit contribution if you take the PCP offer (typically £1000 / £1500...)
If you have the cash take the PCP offer anyway, make one payment and then settle the full balance.
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