New Car v Used Car

[Devils Advocate]

Did you p/x Mark?

Sid, without doubt it's suitable for some people but it's certainly not the smartest of move for others who couldn't have afforded the car anyway. So many snatch backs and debts being caused by this at present I think it'll be investigated shortly, or needs to be.

[markwilding]

I might look at PCP when I buy my next car because I like to change cars regularly.

[alpineSi]

At first the figures confused me a lot too, I spent quite a lot of time in Excel... There are multiple oddities such as charging for the servicing, maintenance, insurance etc and rolling these into the finance contract but then discounting them from the purchase price of the car. So I'm sure we're paying interest on e.g. the 500€ insurance that was itemised as discounted on the purchase invoice, but my Spanish is not up to that argument and they only sent us most of this paperwork weeks after signing it all digitally on a little pad!

I've had a look at our contracts to write this and try to be as clear as possible, so these are the numbers on a car purchased this June:

Cash price of car plus 217€ maintenance package: 21,005
Purchase price of car as negotiated: 15,330
Deposit: 1,000
Down-payment: 3,830
Amount financed: 10,008.88
Interests and other charges included: 1,624.68
Amount to be repaid: 12,107.42

The interest quoted on the finance contract is TAE 11.28% or 9.25% annual which seems borne out by the above figures.
The commission on opening the loan account was 291.25€. This is rolled into the financing but you can save interest on it by paying it cash when you sign the papers.

The purchase contract includes various random discounts and charges, but these two alone seem to cover the interest on financing the purchase: (all before IVA / VAT):
For accepting finance: 1,100
For trade in: 700
n.b. I didn't trade anything in, they just wanted to see the papers! No idea if they'd give you this on a cash only purchase.

[Devils Advocate]

Did you by chance ask them what the price at the death for cash is? Interesting figures you post there but mind boggling to read.

[alpineSi]

what the price at the death for cash is?

Sorry, don't understand you there.

[Devils Advocate]

What would the price have been for cash?

[markwilding]

They were clear with me that if I paid cash I would lose the discount.

[alpineSi]

What would the price have been for cash?

Didn't explicitly ask, no but on the other purchase agreement it says Precio al contado: 21,419.24. I've honestly no idea how much lower they would have gone without the finance, we didn't get into it. It probably means they would charge for the extended warranty and servicing etc too.

Just can't apply UK thinking to credit here. The deals might also explain why young Spanish lads in even poor areas drive around in new reg cars instead of crappy Novas!

[Devils Advocate]

Mark, what I'm getting at is a 21k car gets discounted down to 15,300 for taking finance, that's why I was asking what the best cash price would be. The dealer would be better off just taking 16k cash in the first place rather than switching people to finance as it has been said on this thread, he won't be keeping all the interest paid on it anyway, just a commissioned percentage. Surely the RRP is exploded or false.

[Devils Advocate]

Didn't explicitly ask, no but on the other purchase agreement it says Precio al contado: 21,419.24. I've honestly no idea how much lower they would have gone without the finance, we didn't get into it. It probably means they would charge for the extended warranty and servicing etc too.

Just can't apply UK thinking to credit here. The deals might also explain why young Spanish lads in even poor areas drive around in new reg cars instead of crappy Novas!

No probs and thanks for that. Just really curious as to how this works.

[alpineSi]

Mark, what I'm getting at is a 21k car gets discounted down to 15,300 for taking finance, that's why I was asking what the best cash price would be. The dealer would be better off just taking 16k cash in the first place rather than switching people to finance as it has been said on this thread, he won't be keeping all the interest paid on it anyway, just a commissioned percentage. Surely the RRP is exploded or false.

Ah well hang on, our deal wasn't just for taking finance, we did go in with a low price and on the contact there were lots of other random discounts included to reach that price; the salesman had to handwrite the last one in, presumably because his computer had no more reasons for justifying them (it seems they can't just offer a blanket amount off but have to allocate it all to something). I do think we got an exceptionally good deal with this one as, judging by the paperwork on his desk, there were lower spec cars selling for more.

All the same, the takeaways should be that yes, RRPs are massively inflated, but also that interest on finance is easily recouped by discounts on the RRP and servicing packages thrown in.

[Devils Advocate]

OK Si thanks for that. I'm just going back to earlier comments of dealers not knocking anything off unless it's on finance. Surely they'd take the deal that makes them the most. Also still amazed at the 21 to 15.3k discount. I assume it was a latest spec and unregistered car?

[alpineSi]

OK Si thanks for that. I'm just going back to earlier comments of dealers not knocking anything off unless it's on finance. Surely they'd take the deal that makes them the most. Also still amazed at the 21 to 15.3k discount. I assume it was a latest spec and unregistered car?

If I bump into the VW salesman we know locally I'll try to ask how they make their money, but honestly my Spanish isn't really up to chatting about this sort of stuff, I much prefer to read it and send e-mails!

The car was a factory order to our spec, though the only thing we changed on the trim was the colour because it comes with pretty much everything anyway. I'd seen the model on a limited launch promo a few months before at around 15k so I knew in theory they could meet that price, and just popped it into the carnovo site to see if any dealers would still do it. The first few came in at around 18-19k, as you'd expect, but then the lower ones started to come through (one dealer went down to 13.5 but I've since read not great things about them online). So we went to our local dealer and basically said, "a guy two hours away has said he can still meet this promotion, can you?" The estimated delivery dates were a bit all over the place, but we finally picked it up in September.

Before the WLTP deadline coming in I saw some pre-registered 40k€ cars with up to 15k€ off splashed on the windscreen, although I'd put that down to desperation to shift stock.

[Devils Advocate]

Si, thanks again. You've solved a couple of points that had me baffled there before. All is clearer now re. the RRP.

Hope you enjoy the new car and it does you proud.

Cheers

[El Cid]

When I bought my latest car I was on at least 6 months delivery with an order book as long as your arm and after 2 years since launch it’s still pretty much the same. Absolutely no chance of a discount at all without taking the finance deal with a minimum loan of 10k. With the finance deal you got a pack of discounts and free offers. At least 3k off plus an extra 2 years warranty and 4 years free servicing and EU roadside assistance etc.

It was a no brainer having worked out the figures.

DA you are quite right about PCP. It is encouraging young drivers with an ageing Novas etc to buy a new Merc for £250 a month. A lot of people are worried that it’s similar to the toxic mortgage situation that led to the financial crash.

Any form of borrowing is potentially a bad deal, but having the knowledge to understand it all is sadly lacking.

Sid

[alpineSi]

Si, thanks again. You've solved a couple of points that had me baffled there before. All is clearer now re. the RRP.

Hope you enjoy the new car and it does you proud.

Cheers

Thanks! If you're thinking about it, remember Carnovo.com - it's really easy and stress free. I'm sure I'll be back on to rant when the free servicing turns out not to be so free!

[Devils Advocate]

No Si, I'm what the people call a part timer in Spain lol. All deals done UK based with no head scratching haha. Just very interested after being heavily involved in the car trade with both new and used vehicles in the past as to what is what over there and the contrasts to here. Not much I'd assume. ie Sell for the best price you can get for it.

[Devils Advocate]

Apologies Sid, only just seen your post in the middle of Si's and mine exchange.

Yes PCP, watch when mortgage rates go up a point to help us with our savings haha. The beautiful people who need the new Qashqai on the drive will be up in arms and rioting. A new car is a privilege and not a right.

As for your deal would you have saved money if you'd payed cash but got the same perks? I know you don't need to finance so I'm guessing you wouldn't have.

[markwilding]

Mark, what I'm getting at is a 21k car gets discounted down to 15,300 for taking finance,

Mine dropped from about 25,000 to about 21,500
they gave me around 700 for being self employed and 500 because I asked for more discount.The rest was the discount for taking out finance.As Sid says the minimum amount to borrow was 10,000 Euros.

Whether or not they would have given me the discount without taking out the fiancé, that's difficult because you have to call their bluff and in my experience, that only works if you are not really interested.
The biggest discount probably only gets offered to time wasters.

[gerrynag]

I guess I am someone who does not believe in a free lunch. So it's nice to see that you get all these discounts for taking out finance, but no one has actually said what the finance has actually cost.
In other words, what is the total cost of the car using finance compared to paying cash ?