A3 S tronic Cash or Pcp?

[Dakid007]

mrs is looking at a 2013/14 a3 s line sport back s tronic 1.4 tfsi

She has the cash to buy around 20-22k. What is the best option buy cash or pcp?

Thanks for any help

 

[koder]

Unless the deal you acquire is dependant on you taking out PCP and then you intend to pay it off straight away, then I would avoid PCP if I had the spare cash available. The interest on new with Audi is about 7% so will most likely be higher on used cars.

If she can save up a another £2000 then you could get the same spec as me, brand new car for about £24k through online brokers such as Carwow or CarFile etc. Have a look around the forum and you'll be surprised at some of the great deals a lot of us have achieved through brokers.

Depends which 1.4 she's looking at too, obviously the 150 COD version is more expensive. You could probably get a brand new but the lower 1.4 and very few options for 22k.

 

[A3Kent]

Depends on your own financial situation. If you have the cash to buy outright then go that route, if you'd rather keep the money in the bank for a rainy day then go the PCP route. I went the PCP route, paid 50% deposit though to keep the monthly payments down. 50% deposit is the most you can do I believe.

 

[Dakid007]

I was thinking spending so much on a car which is losing value wouldn't be financially good. I thought keeping majority of cash for rainy day and paying payments would be better?

 

[Dakid007]

Depends on your own financial situation. If you have the cash to buy outright then go that route, if you'd rather keep the money in the bank for a rainy day then go the PCP route. I went the PCP route, paid 50% deposit though to keep the monthly payments down. 50% deposit is the most you can do I believe.

Is there any particular reason you went pcp? If it's not too personal to explain on here thx

 

[A3Kent]

I couldn't afford the full 30K in cash basically Plus I wanted to keep some cash back for a rainy day.

Although you do end up paying more for the car on PCP, with the level of discount I got on the new car I took the opinion that I got free finance.

 

[arad85]

Financially, it's quite a simple sum. Going via a broker (for new) and then paying in cash gives the lowest total cost of ownership.

Looking at Audi's website (for want of a better example, a £22100 A3 will cost you £25256 over 3 years (assuming you buy it at the end). The only way it will be cheaper overall is if you think you can turn £22100 into something more than £25256 in 3 years. The only way I know of doing that is investing on the stock market - and that is in NO WAY guaranteed.

Having said that, if you only have £22100 in the bank, and no prospect of saving any more (but then how can you afford PCP) I wouldn't suggest spending it all on a car.

Me? I'd buy the car outright and save the PCP payments for 3 years. Looking at the A3 example on Audi's web site - which is the A3 here: http://www.audi.co.uk/explore-models/latest-offers.html it costs £259/month for 35 months. Saving that every month would give a little over £9k without any interest added over 3 years.

 

[AudiBoy1976]

ok Personally, I'd go down the route of Buying the Car through proper Audi Finance. This will allow you to place a reasonable Deposit down on it, in accordance with what Monthly Payments you feel comfortable with, while your keeping back the rest of the money in your own Bank Account!
By the end of the Term, the Car will be yours & your have decent Equity in it to Trade it in for another one in the future!

PCP is not the same as Finance & is something that I tried once but wouldn't do again, so I wouldn't Recommend it to you. Obviously, some people are happy doing this Scheme, if they want to keep their Payments to a minimum & have no Intensions of keeping the Car after the 1, 2 or 3 year Term. I guess this way is fine if you have no real passion for the Car, excepting that the Balloon at the end of it is too high, making it unaffordable to keep it & topping up whats left of your Deposit(if any), for your next Car! PCP is really a Rent rather than a Purchase!

Ideally, your Best Option would be to Buy a Car that's 6-12 months old, so its already taken its initial loss & you can still get good Finance in it
.........obviously, very difficult to do, if your after a Brand New Model out!!

 

[A3Kent]

Personally, I'd go down the route of Buying the Car through proper Audi Finance. This will allow you to place a reasonable Deposit down on it, in accordance with what Monthly Payments you feel comfortable with, while your keeping back the rest of the money in your own Bank Account!
By the end of the Term, the Car will be yours & your have decent Equity in it to Trade it in for another one in the future!

PCP is not the same as Finance & is something that I tried once but wouldn't do again, so I wouldn't Recommend it to you. Obviously, some people are happy doing this Scheme, if they want to keep their Payments to a minimum & have no Intensions of keeping the Car after the 1, 2 or 3 year Term. I guess this way is fine if you have no real passion for the Car, excepting that the Balloon at the end of it is too high, making it unaffordable to keep it & topping up whats left of your Deposit(if any), for your next Car! PCP is really a Rent rather than a Purchase!

You don't always have a large balloon payment though. I want to own the car after 3 years and In my case I had enough cash to pay 50% which is the largest amount of deposit I could pay. I was also able to keep the monthly payments to a sensible level, £250 and the final balloon payment 9K.

It's up to you how you want to spread the cost of the car on a PCP, not what the dealer expects or wants you to do.

 

[glospete]

As arad85 says if you have the spare cash (as we did because my wife likes to keep a large cash reserve) and you plan to keep the car for a longish time and with saver interest rates so low currently then buying for cash is the most economical route. But if you don't have the spare cash then you can get yourself into a better car for lower cost by going the PCP route because you're only financing part of the car cost.

 

[msdmjb]

Cash

 

[steeve]

Cash if you have it and can afford to spend it, unless you can get 0% finance. Its much more simple these days as bank interest rates are so low they will be well below finance interest rates.
There's also the freedom to do what ever you wish with the car if you own it.

 

[A3Kent]

Without doubt cash is the best bet if you have it! As I say though you can pay 50% deposit cash and the rest on PCP leaving the monthly payments to be very manageable and the final balloon payment won't be much either. I'd rather keep some cash in the bank for an emergency but that's my thought process!

 

[MA3RC]

Why wouldn't you get PCP? When you can keep your cash in an ISA for example and make good money on it.

 

[ToniqR]

I've been looking into both options as well, and although the low monthly payments of a PCP look great on the face of it, the total costs just didn't look great in my opinion compared with a cash purchase.

To give you an example, I recently got a quote for an A3 s-line COD total RRP of £26,995.

I was offered a cash price of £23,743
To pay for the same car on PCP over 3 years would cost me £27,282.91

So if you can afford the cash upfront that's a saving of £3539.91 (in my case). So for me this makes it worth it to wait a little longer and save up enough to still have a comfortable buffer of reserves and pay upfront.

This works for me, but everyone has their own specific circumstances to work around.

 

[glospete]

Why wouldn't you get PCP? When you can keep your cash in an ISA for example and make good money on it.

If you can get finance at 2% (which is typical rate on an ISA) then I agree but I don't know of any company offering that. Anything higher than that means it's costing you versus cash.

 

[A3Kent]

I've been looking into both options as well, and although the low monthly payments of a PCP look great on the face of it, the total costs just didn't look great in my opinion compared with a cash purchase.

To give you an example, I recently got a quote for an A3 s-line COD total RRP of £26,995.

I was offered a cash price of £23,743
To pay for the same car on PCP over 3 years would cost me £27,282.91

So if you can afford the cash upfront that's a saving of £3539.91 (in my case). So for me this makes it worth it to wait a little longer and save up enough to still have a comfortable buffer of reserves and pay upfront.

This works for me, but everyone has their own specific circumstances to work around.

Agreed but the other way of looking at it is that if you get a 10-12% discount on the car the PCP hasn't cost you anything.

 

[Martin L]

Why wouldn't you get PCP? When you can keep your cash in an ISA for example and make good money on it.

Because you don't have to pay interest on money you don't need to borrow.
PCP is on average, what 7%? It's impossible to get 7% risk free interest on savings.

 

[glospete]

Agreed but the other way of looking at it is that if you get a 10-12% discount on the car the PCP hasn't cost you anything.

But you can get the same discount on a cash purchase so that surely means that's not relevant.

 

[A3Kent]

Like I say, depends how you look at it.

 

[MA3RC]

Because you don't have to pay interest on money you don't need to borrow.
PCP is on average, what 7%? It's impossible to get 7% risk free interest on savings.

Fair point, I was on the mindset that when buying the car in cash you'll be hit heaviest in depreciation, whereas with PCP it doesn't affect you as badly if the car depreciates loads. About the safest interest rates of banking are around 4%?

 

[glospete]

About the safest interest rates of banking are around 4%?

I don't think you'll get 4% from a bank on an unlimited amount or where you don't have to pay a minimum amount in each month.

 

[Martin L]

About the safest interest rates of banking are around 4%?

Show me a link and I'm in!
...bearing in mind I'm not looking at those current account offers where the amounts are small and you need to pay in regularly.

Best fixed rate bonds you can get is 1.75% according to moneysupermarket.

 

[RichardT]

It's almost always best to use cash than borrow. But you may have other issues. It's maybe not a good idea to use ALL of your savings to buy a car for example.

4% on deposit is really good. Pensioner bonds for 3 years give that - limited to £10K. I'm not aware of any more that give anywhere near, and I have looked!!

 

[h5djr]

I'm in the position of being able to get two 3 year 65+ fixed rate bond at 4% and two one year bonds at 2.8% with up to £10,000 in each at the moment together with the 4% I can get on three current accounts (up to £5,000 each) and one regular savings account at 4% on £400 added every month. Takes a little bit of juggling but reasonably straight forward using internet banking.

Having said that I may well use a PCP for my next A3 rather than use my capital as I tend to change my car every three years and being retired it is more difficult to replace the capital than pay the monthly amounts..

 

[glospete]

I'm in the position of being able to get two 3 year 65+ fixed rate bond at 4% and two one year bonds at 2.8% with up to £10,000 in each at the moment together with the 4% I can get on three current accounts (up to £5,000 each) and one regular savings account at 4% on £400 added every month. Takes a little bit of juggling but reasonably straight forward using internet banking.

Having said that I may well use a PCP for my next A3 rather than use my capital as I tend to change my car every three years and being retired it is more difficult to replace the capital than pay the monthly amounts..

I'm not 65 until 27 February so suspect that all the Pensioner Bonds will be gone by then else I'll be filling my boots also!

 

[h5djr]

I not 65 until 27 February so suspect that all the Pensioner Bonds will be gone by then else I'll be filling my boots also!

It's nice to know I not the only 'pensioner' in the forum.

Hopefully their will be some of the bonds available for you.

 

[arad85]

Best rate on savings is 3% on balances between £3k and £20k in a Santander 123 account.

If you put your money in an ISA, the only way you'll get 7+% is in stocks and shares in some way. If you'd really like a bumpy ride, put your money in an ISA and invest in India or Biotech. Some funds in India gained 90% last year. All bar one of last years highest returning funds were in India (50%-90% return). Next highest is biotech....

Be prepared to lose money though

 

[Dakid007]

Appreciate all the input

 

[S32B]

Agreed but the other way of looking at it is that if you get a 10-12% discount on the car the PCP hasn't cost you anything.

Exactly how I see it, I managed just under 10.5% on mine. No matter what you do owning a car will cost you money. Just set a figure what you are prepared to lose each month and live with it!I I was happy to spend £400 per month, I got the S3 for £380 with £1000 down. £380/4 weeks = £95 per week on enjoyment! Some people spend that on football/gambling/beer/drugs etc.

If you are looking to change every few years PCP. I'm getting £13500 for my current car but only putting £1000 down. Out of the rest I'm buying a new kitchen for the wife and putting the rest back in the bank for a rainy day...keeps us both happy! new car for me and a new kitchen for her. Being morbid: If I was down to my last £30k there is no way I'd blow it all on a car, you could take delivery and then find out you have 6 months left to live! At least if you had the car on PCP and most of the £30k left you could have a great 6 months doing whatever you wanted.

 

[Relliott6879]

Me? I'd buy the car outright and save the PCP payments for 3 years.

Definitely what I'd do, were I in a position to do so.