john007ltd
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| car financing.. |
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There is these financing options that keep troubling me lately...and i try to understand the thinking behind it. First, i logged in a site of TVR and came across 4 choices: Hire purchase, Hire purchase with balloon, Personal Contract Purchase, Contract Hire.. My questions are: what are the differences between these choices? Does leasing have anything to do with one of these finance options? Are there any 'strings' attached once u pay a deposit??(i mean...u pay a deposit and then a fixed amount each month times the months u keep the car?so if u want to sell it in11 months?!?) What is best as a choice?..... Please enlighten me 
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Sun Aug 28, 2005 10:37 pm |
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Lambert
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Joined: 29 Aug 2005
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| Re: car financing.. |
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quote:
Originally posted by john007ltd
There is these financing options that keep troubling me lately...and i try to understand the thinking behind it. First, i logged in a site of TVR and came across 4 choices: Hire purchase, Hire purchase with balloon, Personal Contract Purchase, Contract Hire.. My questions are: what are the differences between these choices? Does leasing have anything to do with one of these finance options? Are there any 'strings' attached once u pay a deposit??(i mean...u pay a deposit and then a fixed amount each month times the months u keep the car?so if u want to sell it in11 months?!?) What is best as a choice?..... Please enlighten me
my opinion .... buy used and pay cash.
other than that, if you insist of financing, keep it simple with a good old fashioned car loan.
marC
Because the Law of Gravity Doesn't Apply to Credit Card Balances!
www.ExperiencingFreedom.com
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Tue Aug 30, 2005 7:45 pm |
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steven77
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Location: Oregon
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Buying used and paying cash is the best way to go!
Take care,
Steven
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Wed Aug 31, 2005 3:07 pm |
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joseanes
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quote:
Originally posted by steven77
Buying used and paying cash is the best way to go!
Buying a one or two year old car is the best way to go since it has done the big deppreciation already.
With regards to cash or credit... It depends. My wife got the other day a car loan for 2.7%. Even if we had placed the cash in a 5 year CD at around 4%, we would have done better than buying car cash
Credit backed up by savings that are doing better than the credit is good.
Credit not backed up, and paying high interest rates is bad.
-- Jose
http://www.MoneyAndInvesting.net
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Wed Aug 31, 2005 6:11 pm |
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InfamousG
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Location: Berkley, MI
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John,
In June I bought my latest car. Before this one I was given a 85 Plymouth Reliant from my grandfather, then I came across a deal I couldn't pass up ($300) for a 90 Plymouth Laser. From what last heard, the Reliant is still running for it's owner... the Laser had a massive problem that was not repairable.
Anyways, I say the above because I really consider this vehicle to by my first real car purchase.
With the "Employee Pricing" plans at almost every car dealership, shiney new cars look great to prospective buyers. However, for every person who buys a new car with these "great deals" they also trade-in their older car.
I purchased a 2001 Chrysler Sebring with good options, low miles, and all-in-all nice car.
New 2005 Sticker Base Price: $20,270
5-year Pamyents: $397/mo
4-year Lease Payments: $305/mo ($14,640)
Edmunds.com True Market Value*: $8,200
Dealer Price: $7,200 + Tax/Title/License
What I paid: $7,000, INCLUDING Tax/title/license
Payments: $135/mo
*Edmunds.com has a resource where you put basic info about the specific car in and it tells you what you SHOULD pay.
That's a savings of nearly $16,000 over 5 years just for buying a 4 year old car that was well taken care of and may last another 10 years.
The worst part about buying or leasing a new car is that after the term of the lease you no longer have a vehicle. You've just paid a load of interest on an object you no longer have!
If you are able to make the lease payments then this is my suggestion:
1) Find the car you'd like to (and can easily afford to) lease and it's monthly payment.
2) Find a comparably equipped (not comparably priced), 2000-2004.
3) Compare the two payments (For example in my case: $305/mo vs $135/mo)
4) Purchase the used vehicle
5a) Invest (Stocks, Mutual Funds, Money Market, something!) the savings each month for the length of what the lease was (In my case: $305-$135 = $170/mo for 4 years).
5b) repeatedly paying the Lease cost until the vehicle is paid off. If this is done in less than the term of the lease, start investing the full amount of the lease until the 4 years is up.
In my case:
5a) $170/mo earning 3% in a Money Market for 4 years: $2,040 that you would not have if you leased!
5b) $308/mo paid on a $7,000 principal = paid off in 2 years.
$308/mo earning 3% in a Money Market for the next 2 years: $7,619!
Massive savings are availible if you can resist the appeal of a "new" car.[/b]
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Fri Sep 16, 2005 4:58 pm |
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gators52
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You also have to add in expected costs when your car breaks down, as it's pretty common with used cars, and how much miles of your warrenty have allready expired. I agree a 1 or 2 year old car is the best buy but you should add in the extra costs to get a better figure.
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Sat Sep 17, 2005 8:51 am |
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Rolo
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| Re: car financing.. |
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Umm...guys...TVR makes really nice performance cars...Überpracticality doesn't apply here...this is not a 'first car' purchase.
quote:
Originally posted by john007ltd
... 4 choices: Hire purchase, Hire purchase with balloon, Personal Contract Purchase, Contract Hire.. My questions are: what are the differences between these choices?
heh...that would be my question to you. Ask the dealer and post the differences and we can analyse them.
I agree with joseanes on financing...better than cash...and with InfamousG on leases. I see leases as a waste of money and do not know why anyone would choose a lease...perhaps there are reasons, I just haven't seen any scenario favourable to leasing.
"Expect me when you see me."
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Sun Sep 18, 2005 4:54 pm |
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