# Car finance - opinions needed



## bluevortex (Aug 10, 2007)

I am loooking to finance a Golf GTD 170 5 door

There are 3 options I see open to me

1. HP - Straight finance is expensive without big deposit
2. PCP - Better option but need approx 5K deposit
3. Lease Hire - 3+23 or 3+35 month deals available

The PCP deal is as follows - taken from carselect

Price: £21,893.71
Deposit 30% : £6568 
36 Payment @ £269.69 or £9708
Final payment: £8549.41
Total: £24,826.36
10,000 miles per annum

Pros: lower monthly payments. Option to purchase
Cons: big deposit, Final payment/Pex/private sale at end of period. Depreciation to consider.


Lease Hire

2+35 LH deal
Monthly payment: £315 
Deposit = £945
Total; £11,970

Pros: Small deposit, unaffected by depreciation, No hassle with refinancing or re-sale on after deal ends. car tax paid. Maintenance package?
Cons: No option to buy. Larger monthly payment. Damage & additional mileage chargable. Limited cars & spec. No car after period ends. 


Would be interested in some opinions from people that have done both these options. I have never lease hired before but am seriously interested.


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## toddy2 (Jul 21, 2009)

I'm looking to change my car shortly, and i will definately be leasing my next one. Just out of interest why are you taking out the maintenance back? It should only need one service during the period you have it, everything else would be covered under warranty. I made some inital inquiries regarding leasing and maintenance, the ones I approached didn't require it to be serviced by a main dealer, might save you a bit on the monthly costs. I'll be interested to see which option you choose.


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## tonz (Sep 21, 2008)

bluevortex said:


> I am loooking to finance a Golf GTD 170 5 door
> 
> There are 3 options I see open to me
> 
> ...


Would the £315 on the lease cover the insurance as well ?


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## andy665 (Nov 1, 2005)

Don't rule out Volkswagen for the finance, deposit on a PCP can be zero, certainly 5% would be no problem at all - rates are very competitive. Why the depreciation concerns with PCP, if the bottom falls oiut of the market then you simply hand back the car at the end, any value shortfall is Volkswagen Financial Services problem


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## WHIZZER (Oct 25, 2005)

dont forget to get a quote from [email protected] as well he is very helpful in these sort of things


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## Frothey (Apr 30, 2007)

personally wouldn't go any higher than 15% deposit on a pcp - are you going to have £6k to put down next time? 15% deposit means higher montly payments, but at least you should be able to get the same payments on the same car in 3yrs time just using the equity in the car.

how does the final payment compare to the cost of 3yr old cars?


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## bluevortex (Aug 10, 2007)

In The Detail said:


> personally wouldn't go any higher than 15% deposit on a pcp - are you going to have £6k to put down next time? 15% deposit means higher montly payments, but at least you should be able to get the same payments on the same car in 3yrs time just using the equity in the car.
> 
> how does the final payment compare to the cost of 3yr old cars?


the similar pcp deal with only 15% deposit means that the all important monthly repayment is around £390 nearly £100 more than the lease hire not forgettng still requires a £3000 deposit.

Difficult to guage a 3rd old equivalent as what they are selling for is often a different story to what you can get in a trade in deal as I have found out in the past. At this moment im struggling to see how a PCP is the way to go at all?


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## Frothey (Apr 30, 2007)

are the lease prices inclusive of VAT? Normally they aren't, and once you add VAT it is rare they are cheaper unless it's done through direct invoicing/fleet deals, which private individuals can't do.

the 15% deposit thing is just to ensure you can just swap next time without having to put more down - you *should* have roughly that in equity at the end of the contract - which is why I said try and find the trade value of a 3yr old car. A mk5 GT 170 books at £11300 @ 36k miles - so if the final payment is £8549, you've got just under £3k of deposit next time around, if the market doesn't change. Putting more in is fine, so long as you can do the same next time. 

PCP's give you some flexibility - if there is a couple of grand of equity in the car, you have that as a deposit or whatever later on, or you can buy the car if you want. Leasing it just goes back.


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## RobW (Jul 18, 2009)

IMO

Regular HP would be the best option. You are legally not the actual owner until the full amount has been paid but at least you have something at the end of it, but beware that the set-up fees are normally added to the final payment. The amount you pay every month stays the same and you can put more money into it at any time. This will not reduce the payment but reduce the length of the agreement and you would be entitled to a small rebate on interest.

PCP sounds good on paper but at the end, if you hand the car back you have paid the deposit and all that money for nothing, if you want to keep the car then you will have a 'balloon' payment at the end which, depending on the deal, could be in excess of £3000, a lot to pay to own the car after forking out a big deposit and monthly payments. You are on a limited mileage and they will turn you round and bend you over if you go over the allocated miles, usually in the region of 5-10p per mile. Doesn't sound like a lot but if you go over by 10,000 then thats possibly another £1000 to pay!!

Lease Hire, you never own the car and can do nothing to it. If you wanted to change the stereo or wheels etc. They do pay road tax (and some will even pick up the bills for maintenance ie tyres, brakes etc) but at the end of it you have nothing except the use of a car for 3 years. Payments will stay the same but when you go to renew, they could offer different deals where you'd be paying more.

After paying money every month for something, I would rather own it at the end rather than have to hand it back.

I worked in car sales for 7 months and know that dealers will offer the 'standard package' initially. They will always have room to go lower whether it be with lowering the % rate or the purchase price or whatever. Always haggle and when they say a figure, tell them its too high and if it was lower (always work on monthly payment) then you'd go for it. PM me if you want a bit more detail on good haggling.


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## Frothey (Apr 30, 2007)

RobW said:


> PCP sounds good on paper but at the end, if you hand the car back you have paid the deposit and all that money for nothing


But you will only hand the car back IF it's worth less than the balloon/GFV. If you were on 5yr Finance (to get the same monthly payment) you'd still either hand it back under the halves/thirds rule, or have to carry on paying for another 2 years



RobW said:


> if you want to keep the car then you will have a 'balloon' payment at the end which, depending on the deal, could be in excess of £3000, a lot to pay to own the car after forking out a big deposit and monthly payments.


The balloon/GFV is normally less than the amount you'd still owe with 2yrs of a 5yr areement left - so you've still paid less, or at worst case the same as HP.



RobW said:


> You are on a limited mileage and they will turn you round and bend you over if you go over the allocated miles, usually in the region of 5-10p per mile. Doesn't sound like a lot but if you go over by 10,000 then thats possibly another £1000 to pay!!


Which is why you should get the salesman to be honest about the mileage you are going to do, rather than put a lower one just to get a lower payment. But then you'll only have to pay the excess mileage if you handed the car back, rather than buy/PX it.

Most of the "deals" on finance at the moment are pcp based because dealers want to get back decent 3yr old cars, and there is a high retention rate with pcp - but even if you are going to keep the car, it means you can get 3.9% APR for 3yrs then re-finance the rest. cheaper than the HP rates around at the moment from banks/most dealers.....


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