Should You Buy Cash, Lease or Finance a New Car?
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- Опубліковано 7 сер 2024
- BUYING A CAR: Should you buy, lease or finance a new car? PCP vs HP vs Lease vs Cash. Which option is cheapest? What about a used car v new car? Today we visit a car dealership and crunch the numbers so you don't have to.
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I'm married to Ken and we have two boys aged 8 and 6. I'm a Londoner, born in Hackney! :)
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★★ TIME STAMPS ★★
0:00 - Intro
1:00 - Comparing 4 different ways of financing a new car
3:34 - PCP vs HP vs Lease vs Cash. Which is cheapest?
7:00 - Interest rates for buying used vs new car
8:04 - Should you buy a used car or new car?
9:02 - Psychological factors to consider when buying a car
10:20 - Other options for financing a car
10:45 - What financing options do we recommend?
13:11 - Final words
Best, Ken and Mary
#buyingacar #carfinance #carfinancing
★★ WHAT THIS VIDEO IS ABOUT★★
Should You Buy Cash, Lease or Finance a New Car? - Навчання та стиль
How are you financing your current car? Please comment below and do share this video with others :)
Cash savings, bought a 2014 Vauxhall 2 years ago for 2500£ and planning to keep it for at least 5 more years!!
I bought it with a HP finance in 2016 but I've owned it since 2021 and it's still going strong. Ford Focus 13 plate, now 165K miles. Thank God for journey mercies. Spent way too much on the interest though
Excellent video, Ken and Mary.👌
Thank you so much @@vshah4986
We hear you :)@@elmarshall50
This video couldn’t have come at a better time!
Pleased to hear it. What car are you considering? And what options?
Agree
Bought my car for 2k with the aim to run it to the ground. Deprecating assets not for me. Got bigger goals.
I bought my car by cash, I took a £10k loan from my bank to buy my car, road tax and car insurance. I paid £289.00 for three years to my bank, interest was over three years was £320.00 or so and with that I’ve built up my credit score and own my car outright.🎉 It was my driving instructor that gave me that advice as I didn’t know what to do regarding cars. But very happy now, five years down and don’t have to pay anything apart from car insurance which is £500 for a year and road tax (£125.00)
I try to pay cash but via my credit card so I can get bonus/points/avios etc. Bought my used car for£7000. Put the cash in my account, used a credit card to pay the car in total and then transferred the cash over a few days later. Ended up with a mega tonne of points to cover my shopping for a few weeks!
Which credit card do you have?
I love this!
I currently have a low-rate (3%-5%) loan on a used (nearly new car) If you don't have the cash! my choice to do this was down to the cost to repair modern cars that have a lot of ECU's/ microchips as they cost a fortune to repair so a warranty (to me) is very important for piece of mind.
I think the key thing to note is depreciation on EV and PHEV is significantly more than on other ICE cars. (EV actually loses upto 50% of its value in 6 months)
I think the cheapest option would be to pay cash for a 1 to 2-year Kia/Toyota/other long-term warranty cars.
By doing this you gain the safety of warrenty with the advantage of bew initial depreciation.
Note the area not all but some people have access to is business lease (through your work you can make huge savings on tax etc on this eg. EV's are amazing for this)
Also to note a lot of manufacturers offer discounts to NHS, Teachers, Forces, police, fire etc
I finance my vehicle by tapping my debit card on the yellow reader. Luckily, my vehicle also comes with a driver. I just have to share my journeys with lots of strangers. 😩😂
😂😂😂
Is it costing you a lot extra to be ULEZ compliant? :D
I don't want to live in London but the fact we didn't roll out the Oyster card system countrywide is an absolute disgrace. It makes everything so easy while getting around London, except the Docklands Light Railway where some stations didn't have ticket barriers so you can leave without swiping out if you don't know where the scanners are. Infinitely superior to Cardiff buses which have contactless.... but still make you talk to the driver and get a ticket! (which for those who don't know, is not how it's supposed to work - one of the chief benefits is London buses spend dramatically less time taking payments now and are filled up much faster than buses with tickets)
😂🤣🤣
Very useful information here!
Nissan!! I got my Nissan X-Trail, brand new, 6 years ago, cash down and continually blessed by it.
Thank you 😊. Please share with others.
This is really helpful. My current car was purchased with finance 10 years ago, 0% interest over 3 years, balloon payment of £2500. I presume that’s how they want to catch you as they kept offering me a new ‘better’ car but I wasn’t interest so I just paid the balloon payment. Currently slowly saving in order to buy a new used car with cash when this one gives in.
I had car finance with mine. But when I saw the interest rate and the final amount payable, which almost doubled the cost of that, I took a low interest loan, paid off the car and then paid the loan back over a reasonable term. This was helpful thank you
Thank you
Thanks for the info. I have sent to my daughter on car purchase. Hopefully she will consider your excellent presentation. Stay blessed. Lovely couple.
Awesome! Thank you!
Bought outright a used car from a dealer, though it was 10 years old. I have been using it for a year now and have no issues, in all, research properly and go for what you can afford, IMO
Forgot new cars and finance, just bought a 2015 VW polo 1.4l gti, £10k cash, 37k miles, full VW history, sold by VW dealer so serviced right, 1 year warranty. ULEZ, 180bhp, amazing condition with Bluetooth to use phone navigation. Loads of life in older well looked after cars, don't be tricked, buy an older fun car. 0-60 7secs, 45mpg. Paid a bit more, but automatic and warranty piece of mind.
"Older fun car" - love it!
Bought my car cash from a good and trusted used car dealership.
Got 1 year full warranty and breakdown cover for a year included and I even managed to barter down the asking price. And the car was a showroom/ demonstrator car so the mileage was incredibly low but still had all the features I was looking for ( plus extra).
Second time buying a showroom demonstrator car and would highly recommend it. It may not be brand new but it’s always well serviced and looked after and often has all the additional features you’d pay extra for if you opted for brand new.
Great tip 👍🏾
Bargaining down the price is something dealers expect but lots of us aren't comfortable with at all. I know I didn't and I regret it. Definitely worth taking a friend who is good at that sort of thing or researching how to do it.
Mary is a serious bargainer!!@@jonevansauthor
I bought my e46 9 years ago for 3.5k. I’ve done about 70k miles and had minimal issues. Still going strong.
Although I’m tempted to buy a hybrid for improved fuel consumption and cheaper road tax.
9 year on 3.5k. Wow 😳
just in regards to the full MOT history, this is usually now available online for free when knowing the car reg.
Yes, thank you 👍🏾
This video is the perfect timing for me! Thanks. There is another option that you haven’t mentioned - buying a car under the motability scheme which is one I’m considering. Do you know much about this? Is it worth it or better to buy a 2nd hand car?
Thanks for sharing about the Motability scheme. We've been learning more about it
What an apt video! Last week I waved goodbye to my Audi which I had leased for 4 years. I’ve been saving to buy a second hand one outright. Will have to share my husbands car for a few more months. The video confirmed that I have made the right decision 😊.
PCP back in 2018, it was brand new but got £4k discount (approx. 20%) through car wow, moved the PCP on to a 2% loan after about 6 months so saved a fortune on interest, cleared the finance within about 3 years, planning to keep the car at least 10 years so quite frugal to be honest even though it’s an Audi A3 😀
Nice 😊
Interesting numbers...I didn't have the cash when I needed to buy a car & didn't like the interest rates on the car purchase options, so I took out a low interest personal loan and used that to pay for the car in cash. Of course, I'm now paying that off monthly, but I like the idea that after the loan is paid off then I own the car outright without a need for any additional payments.
My current car, 2017 Yaris I bought on PCP but it was on 0% finance! Can hardly believe I got that now 😂 I bought it completely just before the 3 years was up and still have it now. Hoping to keep it a few more years at least! My intention for my next car was to buy second hand in cash. However, I’m also saving for a flat deposit so realistically can’t afford to save for a car too. I’m hoping I’ll have a sufficient deposit in another 2 years, then when I buy a place, I can start saving for a car, and just hope that my current car lasts long enough for me to save 🤞🏼🤞🏼🤞🏼
Cash, And building up the level of cars which worked for me. I bought an old car in cash £250 (not telling you my age 😆) looked after it and had it serviced etc, but in the mean time I put money away every month so when it did die I just bought a new car but a considerable upgrade, repeated this process all of my life and now have a nice BMW bought in cash.
I always tied if possible to buy cars renowned for reliability and build this then has a knock on effect of lowering repair & services bills, don't use a dealership for anything find a decent local reliable garage. But also by doing this you will have decent sell on value for the car, I found for example VW (Golf) which I had for years and now own a BMW (three series) seriously hold their second hand market value well, its all those factors that really helped me.
But most of all the advice I always say to people, buy a car 3 - 4 years old, buy a car for you not to impress anyone, and try to keep a car for as long as possible NOT 3 years, look after the car and get it serviced etc. All of those factors and you will be laughing!!!
I think really I'm living proof of your advice, so excellent work!
Hiya, I've been watching you guys for a while now. Your wife looks familiar does she have a sister name joy and use to live in the area Hackney ? Keep up with what you are doing its great.
Hey Marsha, yes I grew up in Hackney. No sister called Joy though. And thank you 😊
Toyota Prius, paid half cash, half car loan. Plan is to pay the loan off early in a year.
Hi guys, thanks for this very interesting video as I have been looking to buy a family car. My question are:
1: what do you mean by main dealer? Is it a car sales garages or like Ford, bmw or Nissan sales places ?….
2: I’m looking to take a loan from my bank to finance the car and pay directly to the bank. I think it’s cheapest what do you guys think?
3: Any recommendations for good economic family car…
Thanks you
Bought my hyundai kona through a lease scheme but saving to oyrchase outright in 2 years. Had to lease bcos i didnt wanted a stress free maintenance option and monthly payments were affordable for a brand new car.
Makes sense
When buying a used car at main dealer if you take their finance they’ll often throw in sweeteners like free servicing and then you’ve got 14 days to cancel the finance agreement with the finance company and just pay it outright with savings (or part savings part private bank loan) and still get your free services
Very interesting
Hey The Humble Penny , really nice video! I was wondering if I could help you edit your videos and also make a highly engaging Thumbnail which will help your video to reach to a wider audience .
I absolutely hate direct debits, i absolutely hate finanance and unsercured debt. Unfortunately i have a car on finance. I tried buying second hand cheap cars but they always ended up with issues and wear and tear. In the end i opted for a new car on a finance scheme. Brand new, reliable, safe, and im hoping it will be in my family for a generation or 2.
What car did you settle on?
@@TheHumblePenny
It was a nissan qashqai. When I said a generation or 2 i may have over estimated loll. Maybe 1 generation at least loll.
how do people afford a car on top of a mortgage?
Bank loan is always cheaper than HP. They rip your off on the APR with HP
Yup
If you have the cash to buy outright you could still buy on PCP and have the spare cash generating interest/investment growth (tax free in an ISA) offsetting the monthly payments. The advantage being you still have your cash available not tied up in the vehicle and lower overall payments taking into account the interest. Does that make sense?
This works if you can generate a return above 7.99% being charged for a new car or 12.99% being charged for a used car. What would you invest in?
@@TheHumblePenny I suppose S&P 500 with 12.39% average return over the last 10 years. I know past performance is no guarantee for the future and 4 years is not ‘long term’ but it was just a thought.
Love the channel by the way. It’s always full of great advice. Thank you!
I chose the PCP option for my car, and eventually paid the balloon payment at the end of the term because my family and I really love how practical and reliable it is. I eventually realised that I let my heart rule over my head on that decision as I found out later that I could have bought a used newer version of the same brand of vehicle (with a slightly lower mileage than mine) with around the same amount as the balloon payment.
Chuka, very interesting. Thank you for sharing :)
Very good video Humble Penny team but GFV stands for Guaranteed Future Value not General Minimum Final Value.
Thank you 😊. We have "Guaranteed Minimum Future Value" in the document we shared on the screen but said the words.
Thank you for this video....unfortunately, my currently car which is 11 years old and I have had for 4 years is not ULEZ compliant. I'm not in London anymore but I have family and friends in London whom I need to visit. This video has helped me make a decision of which way to go to get a new car that is ULEZ compliant. Thanks guys!
ULEZ is a pain for a lot of people right now.
@@TheHumblePenny I looked it up earlier and found a ULEZ compliant car for £250 on Autotrader. Everything with EURO 4 is compliant, and that means from 2005 onwards. I suspect many people who are complaining about the cost have car aspirations beyond what's actually rational. Some of the loudest voices are just petrolheads. There are a lot of people spreading FUD about it which distorts the data.
This article is from petrolheads and covers cars that are under £2,000 (the scrappage allowance) and starts with a BMW.
www.carmagazine.co.uk/best/ulez-compliant-cars-for-2000/
Thank you for sharing the link@@jonevansauthor
I have a PCP from Nissan and I am making that balloon payment afterwards. Tired of changing cars
Wow, that's pretty rare from what we hear. What car do you have?
@TheHumblePenny it's a Nissan Juke bought last year. I have done 3 cars with Nissan on PCP since 2019. Fed up with the PCP business, and I am owning this one outrightly now, but like you said, I would be doing all the servicing and MOT with Nissan.
Got a loan from the bank via the dealership.
I buy all my cars cash, and have never owned a new car, don't see the point. My last car was 3 years old, had only, 9,000 on the clock, and cost me less than 50 percent of the price of a new model. The car was immaculate and for all intents and purposes was as new to me. Plus, I absolutely hate monthly payments....I prefer to invest my money, stay debt free, and have nice holidays, than to give my money to a car dealer.
Bought in cash but it was used
Good move 👍🏾
I bought my vehicle 24 years ago for cash and I still have it
Wowza! What make and model is it?
@@TheHumblePenny 1973 Vw T2 Late Bay
Mine is 125 a month for 3 years then a 325 balloon payment. I don't care about cars so I will never buy on on finance again. I can't believe anyone leases their car, you may as well burn your money and at least the flames will keep you warm and save you money on energy.
You'd be very surprised. Leasing is pretty popular mainly because it's a lower cost way of affording a car.
@@TheHumblePenny Maybe in the short term, but long term it's like paying rent forever.
You should do a video on the total cost of ownership over say, ten years. Electric cars are far cheaper, and anyone not buying one who could, is just throwing money down the drain while also giving everyone they love lung diseases.
You can get a Renault Zoe from 2015 (with battery lease sadly) for £2,495. Or a 2011 Mitsubishi i-Miev for £3,090. I'm not recommending either of those cars but it shows that the prices have plummeted.
Apparently leasing companies with EV fleets have offloaded some of their older cars because they've reached the end of their leasing lifespan which may have helped lower prices. EVs last longer than ICE vehicles because they have fewer moving parts and requires minimal maintenance beyond the normal stuff like checking the tyres. Which means you should be able to find extremely reliable cars that are vastly cheaper to run than the fossil fuel equivalents.
Anyone buying an ICE vehicle now and planning to keep it long term, is going to take a massive financial bath at some point because they just won't be a thing. You might get away with keeping one until 2030 and still be able to sell it for what you think is a fair price. But since 100% of all new cars then will be electric, and all those people who went for EVs now have more money than you because they weren't wasting so much, sooner or later the ICE owners will find that they have a car they think is worth £5K or £10K or whatever, and that the price just dropped out of the market because unless it's a Rolls Royce Silver Ghost it's aging like fine milk.
Spot on point! We made a video 3 years ago about Electric Cars and all the savings that we're making. However, I do like your suggestion about a 10 year outlook. Noted ✅️.
Don’t purchase new.
Yup