Car Finance V Lump Sum

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markwilding
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Re: Car Finance V Lump Sum

Postby markwilding » Mon Apr 12, 2021 12:19 pm

Including me as I have bought various new cars in my time in Spain and for the first two it was better not to take out finance. However, the situation was different when I bought a car just over 4 years ago and the one I bought last summer.

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Devils Advocate
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Re: Car Finance V Lump Sum

Postby Devils Advocate » Mon Apr 12, 2021 12:34 pm

Mark I can fully believe that, re things changing, it's all tactics. As I keep on saying there is only so much in a deal when all parameters are taken in to account, the dealer will know this figure to the penny.

I can only assume with the deals we are talking here that a large wedge of the profit is in the finance, hence the dealer cannot knock 3k off screen price for "cash" and lose the finance bonus too.....makes sense and I understand that.

I think the thing that gets to me is the notion dealers are doing a favour steering you in to monthly payments, it's probably the only way the deal can work for them in this instance. However when this subject reared it's head last time the only thing I knew was basically impossible is that the finance is a true 0%. It is impossible to sell a car you cannot discount as it's priced at cost then give 0% finance on top.

I've no doubt whatsoever it is happening there, it happens here too but it's smoke and mirrors, as I have a feeling you already know.
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markwilding
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Re: Car Finance V Lump Sum

Postby markwilding » Mon Apr 12, 2021 12:42 pm

Obviously, it's not 0 per cent in the way we think of it normally. They charge interest but the buyer has to do the sums but only taking into account the discount offered for finance. It might well be that it ends up being 2 per cent instead of 9 per cent but both my cases it was slightly under the cost of paying cash. In fact, it was the free servicing over 5 years that tipped the balance with the last car.

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Re: Car Finance V Lump Sum

Postby El Cid » Mon Apr 12, 2021 6:19 pm

All dealers, anywhere, have to make a profit, but there are many ways of doing that. The business models probably vary by country and manufacturer. My perception based on my experience of buying in Spain and the UK is that in Spain, the dealers are less independent from the manufacturers than in the UK. They seem to have much less negotiating room on price. For example, when I bought a new VAG car a few years ago, the salesman had to get on his computer to see what deals the manufacturer was offering this month. For example, at that time, you could get a free electric tail gate. Next month that offer had been replaced with a new, different, one.

A cash discount was possible but very rare, you are more likely to be offered a free option. Always, without fail, a finance deal was expected and you were effectively penalised if you didn’t take it. Finance deals, on their own, are not attractive as interest rates are typically up to 10% interest. No 0% finance here. As has been pointed out by numerous members, the additional discounts and offers are conditional on having the finance. From the experience of buying my last two new cars, there is no doubt that the finance option ends up with the best overall price if you value the extras such as the warranty and free servicing etc.

Why is it this way round? Personally I’m am guessing that the real reasons are deep in the finance departments of the manufacturers. My loan was from The Volkswagen Bank. There may well be creative accounting reasons for running this business model, but we have to assume that it works well for them or they wouldn’t do it. Clearly it appears to be acceptable to the customers or they wouldn’t be buying the cars.

The UK market is now dominated by PCP finance deals at some amazing prices. You rarely see a cash price, just the monthly payments. It is happening now in Spain, but as yet, not to anything like the degree that it happens in the UK. The other fundamental difference between the two markets is that the UK market is dominated by company cars, even though the company does not buy them, but covers the PCP cost. True private purchases are rare compared to Spain.

The days of buying a car for real money have long gone.

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Re: Car Finance V Lump Sum

Postby Devils Advocate » Mon Apr 12, 2021 7:02 pm

Can't disagree with any of that Sid.
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Re: Car Finance V Lump Sum

Postby Paddy Pumpkin » Mon Apr 12, 2021 9:03 pm

One of the reasons the finance deal can be cheaper is because the car companies don't want your money! It costs them money to have money in the present environment.

An example now using VAG. If VAG borrow money by issuing a bond. The current yield is negative (about -0.33%). That means effectively you have to pay VAG to lend them money. So you buy a bond for 100 EUR in a year you will receive back 99.67 EUR.

So if you pay them upfront the whole cash price of the car they don't want it so will reflect that in the price of the finance.

You will be able to earn 1% on that cash in the bank if you don't pay for the car is cash so also factor that in when doing the maths and deciding to use finance.

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Re: Car Finance V Lump Sum

Postby Wicksey » Tue Apr 13, 2021 9:22 am

We found at Peugeot they were offering all sorts of deals but did point out they would be different the following month. They were offering things we didn't want though, and not the things we did and would have had to pay extra for.

We were disappointed that Suzuki didn't offer anything and we had to pay almost 300€ for a spare tyre. We also wanted front parking sensors (it has a rear camera as standard) but were told we couldn't have them as an extra, but we got heated front seats that we didn't need or want! As I say, they didn't even offer us a finance package that we wouldn't have taken unless it was less than the cash price we paid anyway. Our servicing so far has only cost 75€ a year and it comes with a good warranty, so that wouldn't have swayed us on its own to pay any more. We liked that car the best and it was the price we wanted to pay so just stuck with them. It's not something we'll be doing for some years, and my car was a 2 year old ex hirecar which I have been very pleased with, so no plans to buy brand new again.

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Re: Car Finance V Lump Sum

Postby Devils Advocate » Tue Apr 13, 2021 1:49 pm

As an aside and something that I'd hope does not happen in Spain but the OH decided she needed a new car after Christmas.

She's not a car addict like me and just wanted to chuck hers in for a new 21 plate city car....straight deal cash plus p/x, no problem I thought.

So after deciding on the car we called 3 local-ish franchises and spent considerable time taking pics of hers and writing up the appraisal forms as dealer visits were not then allowed. I honestly thought with car sales down 95% it was the time to snag a top bargain.

Upshot..........not one call back from any of the 3 dealers.
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Re: Car Finance V Lump Sum

Postby spanish_lad » Tue Apr 13, 2021 4:11 pm

I was looking at a New Ford Kuga. it was €15,500 "cash" or €14,500 "financed". (new as in km0, it had 6000km on it)

The finance was over 72 months, and directly from Ford in Barcelona, and added up to €32,000 ... :eek: Theres no way that I would of been getting another €15,000 worth of "goodies" had I taken the offer of finance...
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Re: Car Finance V Lump Sum

Postby El Cid » Tue Apr 13, 2021 4:50 pm

Yes, but km 0 deals are entirely different. My wife bought a km 0 VW Up with about 100km on the clock for cash at a huge discount. We wanted to pex her 15 year old Mitsubishi but they weren’t really interested. Strangely though, when we got home there were 3 offers on our answerphone and we sold it that evening. Friends of the dealers I assume.

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Re: Car Finance V Lump Sum

Postby markwilding » Wed Apr 14, 2021 10:36 pm

When I was looking at buying myself a new one they came up with a trade in price in about 10 minutes. There were some government subsidies which meant the deal would have been pretty good,

My son's car failed the ITV, then died on him on the trip back from the ITV centre so instead of the continuingly spending money on it, we decided to buy a new one. Even the useless non-roadworthy car was worth 1,000 euros in the scrapping deal using the government subsidy.

I would assume the subsidies are still available.

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Re: Car Finance V Lump Sum

Postby spanish_lad » Fri Apr 16, 2021 8:30 am

Was that "plan pive" ? they did 14 of them i think, its not running any more
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Re: Car Finance V Lump Sum

Postby qe2ex » Wed Apr 28, 2021 10:37 pm

I ordered a new car about two years ago and I used "https://carnovo.com/es" to do it.

Basically, find the model you want, then request offers via that website. A handful of official dealers contacted me (I think three here in the south/Malaga area), but I ended up buying from a dealer in Madrid who was about 10% cheaper than anyone else (and appeared to have a bit more clue than some of the hopeless/slow/wrong answers I got from the local dealers). Flew there and drove back.


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