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Audi PCP / Finance - Is this a good deal? Opinions appreciated...

Discussion in 'A3/S3/Sportback (8P Chassis)' started by NME, Jan 7, 2012.

  1. NME
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    NME Member

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    Hi all,

    Been thinking about upgrading to a facelift S3 for a while now, and I was having a look at the used approved audi website.

    Seen this Ibis White S3:

    http://www.audi.co.uk/used-cars/use...re-port/602323862-39277.aspx?srcmdc=se_na_fa_

    Now, I have a pre - face lift 1/1/2007 S3 which will be put back to standard - which means no FBMFSW - just the usual BOSE, ipod dock etc which they have said they will give me £11,250 towards it.

    Then, if they give me £4000 back and use the rest as a deposit (£7250) the payments will be £302.92 for 36 months.

    At the end of this, they said the value of the car / balloon payment will be £10,188.

    So by my reckoning, this makes:

    £7,250 deposit + (36 x 302.92) = £10,905 + £10,188 = £28343.12

    Then, this final figure minus the money I got back at the start - £4000 = £24,343 for a car on for a purchase of £22,825?

    I know you are meant to look at this as a way to start again after 3 years on a new car in a similar way, but I was trying to work out how much is being made out of me throughout!

    Is this right? Is it a good deal for what it is?

    Cheers!
    #1
  2. warren_S5
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    warren_S5 Moderator Staff Member Moderator

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    Doesn't seem too bad; what APR are they offering on the finance?
    #2
  3. Kelza
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    Kelza MODERATOR Staff Member Moderator

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    11,250 for a 2007 s3 wow cheap, i,m on pcp good if you keep the car for the 3 years, but as at the start of the contract your paying more interested on the loan so if you want to come out earlier than 3 years it harder to do money wise . I paid 22 k 8 months ago for a facelift model was looking at changing and audi want 4k upfront to do so ,to get out of the contract,, i was told now hp is better than pcp if u want to get out of contract early....
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  4. NME
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    NME Member

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    Thanks for the quick replies, they didn't say what the APR was on the deal, just quoted me the actual figures you would pay.

    HP sounds good, if you want to buy the car, but I'm not sure I would want to pay higher premiums just to sell it after 3 years anyway.

    Its just a bit of a step away from owning the car as I've always been used to, and then moving to a deal where you constantly look to change a car every 3 years.
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  5. Brodster
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    Brodster Shark Performance In Scotland Regional Rep Site Sponsor

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    I would go for an HP contract as they are easier and cheaper to end. As said in S3Kel reply u pay alot more in the 1st year compared to HP. You can still take a balloon payment on HP so at the end of the 3 yrs or however long u take it over u either get another car or keep the old one.
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  6. JtotheD
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    JtotheD Events Moderator

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    The idea of PCP is to keep you in newer cars every 2/3 years. The balloon payment or GFV isn't guaranteeing what the car will be worth at the end it's just a fixed amount of money based on the exact car, how many miles per anum you set the agreement at etc that you pay to keep the car at the end. Then at the end of the 3 years when you look to upgrade you can take it in, get it valued, from the valuation they can pay off the 10,188 leaving you (hopefully) with some equity left to put as a deposit towards the new one - for arguments sake in 3 yrs the say its worth 11,188 which leaves you a grand equity. If you end up in negative equity by a long way, you can simply hand the car the back to finance company and not pay it. This is where the excess mileage charge will come in if you've done more then the prescribed mileage on the agreement. This is a very basic explanation, as yo whether it is a good deal or not it doen't seem to bad. Based on your calculations if you're saying it's costing you £1,518 to borrow £15,645 then it's actually pretty good! However those figures include the 4000 cashback you get at the beginning. If I were you, I'd take more cashback and put less deposit in if you can afford slightly higher payments, because when you come back round it will be easier to get to the same payments again with less cash in from yourself, just thinking for the future! The max deposit generally on PCPs is around 40% anyway and IMO the optimum deposit for PCP is around 10-20%, depending on amount borrowed and what car it is etc. Hope this helps!
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  7. Cruiser89
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    Cruiser89 Advanced In Car Tech Site Sponsor

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    Do it... When it comes to the 2nd or 3rd year get a new one. Your trade in value will go towards the new car and then no balloon payment.

    As long as you are happy with the APR then boom. Simples :)
    #7
  8. warren_S5
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    warren_S5 Moderator Staff Member Moderator

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    Get it bought ;-)
    #8
  9. rosco11
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    rosco11 Member

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    Hi seems really expensive to me! You are financing £15325 over 3 years (purchase price of £22825-7500) which you repay £10905 with the balloon payment of £10188 if you wish to keep the car so it would cost you £28343 to keep the car which cost £22825 so about £5.5k on interest over the 3 years. When you consider you only borrowed £15325 that's about 11% flat rate and certainly over 20% APR. The £4000 cannot be deducted as it is your money to begin with as I assume you own the car and there is no finance owing on it?

    The other way to look at it is you can hand it back after paying £17688 (plus associated costs) at the end of 3 years or get another which will leave you with very little equity in the car given that you owe the balloon payment on it of £10188.

    Why not put £7500 down and pay the balance on hp or bank loan with no balloon payment? For example, this would cost £486 per month over 3 years and a total of £17497 based on Barclay's 8.7% loan - The car would then cost you £25000 over 3 years or based on 4 years £25750 with a monthly payment of £380. I am also sure there will be better loan deals available.

    In my opinion, ask the garage for a quote to repay without balloon payment if you can afford to even if this means taking it over a longer period.
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  10. NME
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    NME Member

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    Hi Rosco, Yeah it does seem expensive - if you plan to own the car at the end of the term.

    I think myself and many others plan to do the same thing all over again in 3 years - so we would never really plan to make the balloon payment.

    I included my £7500 and £4000 in the price, as I would do this if I was to sell my car to buy another, so effectively it must form part of the budget for the purchase.

    What it boils down to is that if I want to own the car at the end of the 3 years - I would have to pay £10,188.

    If I never touched the £4000, then this figure becomes £6188 - a bit easier to swallow, but then this money would be put toward the next new motor!

    I know what you mean though, you have to adjust your thinking to "never really owning the car".

    I do own my current S3 outright, as I bought it from Audi about 20 months ago - and I'm wondering if this is the solution to not having to go through the drama of buying and selling a car every 3 years.

    That's all of the opinions are so important - good or bad, as I'm still thinking about the best deal.

    Your solution suits the idea of actually buying the car perfectly though.
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  11. NME
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    NME Member

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    And Warren! Its all your fault anyway! Your new wheels are half the reason I started looking in the first place!!!!!!:shutup2:
    #11
  12. rosco11
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    rosco11 Member

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    Get what you meant now. What a suppose it boils down to is what it costs you to pay over the 3 years - £17688. If it was me going down this route with the figures of £7500 plus over £300 per month, I would be looking at a new S3 on PCP . Just checked broker4cars and on the surface of it a new one looks not much more expensive.

    I'm sure Audi could also be competitive on a new one.
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  13. mojo555
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  14. TripleD
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    TripleD Audi Novice

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    I don't admit to be the most financial savvy person about, but from what I understand about PCP deals is that they are very front loaded, so if you take a PCP deal over 4 years for example, and want to change car after 2 years, you'll probably be in negative equity. As a rule of thumb you need to be 2/3's - 3/4's through your deal before you should look at changing otherwise you'll have hardly any equity to change.
    Dealers make it look so good, but it's only afterwards you find out how they get you such a good deal. I'm currently 2 year into a PCP and am £3000 in negative equity paying £325 per month, so I'm learning the hard way.

    Something like the M&S 'Car Buying Loan' might be worth looking at, they do a deferred baloon type payment, but the interest rate is a lot less that main dealers, and you don't have the fee's either. Starting a PCP costs you an additional £200 on top of your first payment.
    Although this was you don't have a GFV and you can't just hand the car back, but it's also not so front loaded from what I understand.

    If the M&S stuff isn't the way you want to go you could use it batter the dealer down as well, because there's lots of tricks and 'going to speak to their managers' stuff that they do to lower the costs in terms of interest rates and commissions. On a recent S3 Sportback deal they managed to slice off a total of £2000 from adjusting things. But make sure that the fundementals like the your mileage etc are fixed at a suitable level to cover you, otherwise if you end up in worst case senario and say loose your job, there are options for volentry termination but the mileage excess charge could do quite a bit of damage!
    A friend of mine recent brought a car with 9000 miles on the contract when he does 23,000 per year to make the payments lower, so 5-6pence per mile car hurt badly!

    If you've worked everything out correctly, and are happy, go for it and enjoy!
    #14
  15. monster_munch
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    monster_munch Member

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    Im a bit old fashioned, and reading half of this thread has fried my brain :wacko:

    When I purchased my A3, and previous cars, I have always gotten a private bank loan, and gone through the money saving expert website to get the very best deal and lowest rate I can.

    If I am buying something on the never never, there are only 2 things I want to know, how much I am paying back altogether, and how much interest I am paying.

    With a loan you are also free to keep the car, sell the car, do as many miles as you like on it, and have the satisfaction of knowing you completely and outright own the car.

    What are the benefits of this PCP you talk about? Also, how come your wanting another S3? I would love a 2007 S3! :racer:
    #15
  16. Ben H
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    Ben H On a journey...

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    I haven't read through all the responses here, but assume that you own your existing S3?

    My S3 was bought on an Audi Finance PCP, with a similar deposit to what you're thinking of. Loan finance is a well-discussed topic over on Pistonheads, where you will find that some people like me will use car finance despite having the funds available elsewhere (mine are tied up in ISA fund-of-funds, so it's not clear-cut that it would be easier / cheaper to use cash for me!).

    The idea with PCP is that in the period of the agreement (3-4 years), you borrow the whole amont - less deposit - but only pay back the difference between the sale value and the car's guaranteed minimum value at the end of the contract. That way, you only "own" the car at the end of the contract. The downside is that because of the "Rule of 78" interest calculation, you are charged more interest towards the start of the term and therefore your car is likely to depreciate quicker than the amount you owe, at the start at least. (Google "Rule of 78 calculator").

    With Hire Purchase, it's the same Rule of 78 calculation - but you are making payments for the whole owed amount from day one, so are paying the interest off quicker. The downside is that repayments will usually be about 50% higher than a PCP over a similar 3-4 year period.

    I'd be tempted to trade-in the S3 and get a long-term bank loan (e.g. 5-6 years) to give similar payments to a PCP - but simply pay the loan off when I sold the car. That said, Audi Finance do usually offer 2 free services and haggle-room that can make their offers competitive overall (that's what I have).
    #16
  17. Spin140
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    Spin140 Active Member

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    I can't recommend highly enough a company called Carfinance.net based in Stoke on Trent, take a look on there site where there is a really useful finance calculator but most refreshing of all the APR quoted is achievable and not just there to gain your attention.

    They fund via Alphera which provides all the BMW finance.

    My PCP was 3.2% lower than Audi best offer, whole process was completed and dealer paid with 72 hours, I never left my desk at work, the icing on the cake was GAP at only £165 x 48 months, £25K claim limit, Audi wanted £350.

    At a risk of sounding like Martin Lewis - "Shop around..."
    #17
  18. TripleD
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    TripleD Audi Novice

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    Not just BMW but Audi and a lot of others, Alphera offered to quote on the S3 but when they asked which garage it was at they said they couldn't quote as that garage was registered with them so any finance quotes would be the same.
    #18
  19. paddy
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    paddy Audi=No fault code, no idea

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    The world has to shift away from living on credit, however attractive it may seem its what got us into this mess. "IF" you must have something before you can afford it then make sure the interest rate is fixed for the length of the deal. I suppose these car 3 year deals are a shift away from credit at least.
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  20. TripleD
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    TripleD Audi Novice

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    But it won't, and if it does, that would be way in the distance!

    I see what you saying, but the PCP PCH type deals that you see now were more brought about for people like me that opt out of company car schemes but have car allowances to use towards new cars.
    They were then released more and more into the 'personal' arena for anyone to use to get a newer car.

    Lets face it, who's really going to have £35000 cash in their back pocket to buy a new S3, and the limited number of people that can actually do that means the S3 would be as rare as hell, plus the car market would die quickly if that was the case.
    #20
  21. warren_S5
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    warren_S5 Moderator Staff Member Moderator

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    Both me & the missus have reasonably well paid corporate jobs, no drain of kids, and we never have £35k spare for a new S3!

    I've been quite lazy with the car, I'm usually very cost conscious, but I just set a figure I was prepared to pay for a car, looked at which spec I wanted from Audi, sorted some discount on the car and then went ahead on another PCP.

    When I got to the end of the PCP agreement on 8P2, rather than pay the bubble I just refinanced through Audi to tide me over until I decided what car I wanted next at 6.9% for 2 yrs, hassle free (but you only get this offer with good credit rating and zero missed finance payments). They're happy to take the money, I'm happy with the car and what I'm paying....

    I think it comes down to acceptable day to day costs of what you are prepared to pay for something. Some folk are obsessive about cost of stuff, but will then go down the boozer every weekend and spend close to a ton which ultimately gets pissed up the wall and fifty quid a week of fags to coke their lungs up without so much as batting an eyelid. Yes the car depreciates, but as long as I've got it I'm grinning like a tw@t! Whilst I'm paying single digit APR's I couldn't really give a monkeys as long as I'm having the craic!
    Last edited: Jan 13, 2012
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  22. jamieswales
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    jamieswales Member

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    Let me get this correct. Surely you don't mean you pay only £165 for a 10 plate S3 on pcp? I'm paying £450 a month for mine and if that's the case, someone pulled my pants down.

    My pcp deal was on a 6 month old S3 black edition with bucket seats. The car was forsale for £28k, I paid £1000 deposit and they gave me £3500 trade in for my old car. I'm paying £450 x 48 with a £10800 balloon payment. I worked out it 15% apr last night. What apr does everyone else have through Audi? I hope they havnt screwed me over
    #22
  23. warren_S5
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    warren_S5 Moderator Staff Member Moderator

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    7.9% APR from memory. Audi Finance PCP. I put down more deposit, and car was £31.3k brand new with 9.7% discount.
    #23
  24. jamieswales
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    jamieswales Member

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    So what kind of payment are you achieving for that then? Probably a lot less on a brand new car
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  25. warren_S5
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    warren_S5 Moderator Staff Member Moderator

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    About a tenner a month less than you from memory. I put down about 2k more deposit but my car was £3k more so it's about comparative.
    #25
  26. paddy
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    paddy Audi=No fault code, no idea

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    I dont think the car market would die but i think the prices would have to drop which would benefit everyone..A large proportion of the cost of an Audi goes on the chrome and glass aircraft style dealership hangers the dealers use to perpetuate the "exclusive " label of the Marque. i bought my car cash but you miss the point i was making. Some here have suggested a bank loan/car loan which i personally don't agree with but the contract hire deals are a much better way of going about things in my opinion.

    the bottom line is no one needs a new car really and no one needs an S3, we have just become accustomed to having things we want straight away and paying later... from cars to sofa's :) the reality is this is a new thing that's only been the norm for the last 25 years and it doesn't really work as we are all finding out now..
    People become totally dependant on their weekly wage packet to keep their head above water at a time when the future of everyone's wage packet is less than secure.
    #26
  27. warren_S5
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    warren_S5 Moderator Staff Member Moderator

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    If my mortgage wasn't reasonably cheap I wouldn't consider paying a mini mortgage on the car!

    £400 odd quid a month + tax + servicing + fuel + wear & tear + depreciation + interest + modifications + general car care is not an inconsiderable cost. People hear the headline PCP figure and think...I can manage that. Fact of the matter is, by the time you add all the incidental costs, if you buy on finance it basically costs about £12-13k a year all told to put an S3 on your drive, & keep it in top condition with a full Audi history. I know this because had to go through security clearance to get a job I ended up working out tedious **** like this so I could demonstrate I wasnt a financial risk, and in control of my finances!
    #27
  28. Ben H
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    Ben H On a journey...

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    My "base cost" calculation to run a nearly-new S3, taking account of all of the above on 8k miles is about £9k annually. The financing costs and depreciation are one and the same thing - unless the car depereciates quicker than your repayments pay off the loan.

    I can understand Paddy's comments about the "buy now, pay later" culture - but with a car we're hardly talking about day-to-day expenditure, which I would absolutely never borrow to fund. You can easily argue that a car is a form of capital and is therefore more like housing; we don't argue that we should save up 100% of the cost of a house before buying one!

    As I said earlier, some people (including me) will arrange finance for their cars despite having the funds elsewhere. The main cost of a car like an S3 is depreciation, so for me it's about how cost-effectively I can pay for that. In my case, it really is a matter of looking at the opportunity cost of losing ISA tax exemption (forever) on existing savings versus other options, which are often very close in overall cost.
    #28
  29. warren_S5
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    warren_S5 Moderator Staff Member Moderator

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    Fair shout about depreciation, it's not a huge cost and it was only in the last months of ownership it went up beyond level of repayments.

    I don't think S2+ modifications, over servicing (oil change every 6k), and running 19's help my cause (based on 15k miles a year - Optimax)!
    #29
  30. paddy
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    paddy Audi=No fault code, no idea

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    Its all a personal thing i suppose and will vary from person to person. I waited 50 years to get my first new car ( this S3), I paid off the mortgage first and got myself in a position where i can afford it. When i say afford it i mean i haver recently become unemployed and my car, house in fact everything i own is paid for which means my monthly outgoings are basic minimum and the car and my life style is safe :) unemployment is something i am thoroughly enjoying :) as i know i dont have any payment to meet for anything.
    I had a neighbour who was a city high flyer, he had an amazing house, 2 cars and the obligatory range rover, 2 kids in private school and a wife who made a big play of their envious position..... Then he lost his job !! within a couple of months his house was on the market and his kids pulled out of prep school. Bottom line was his idyllic life style was not sustainable beyond a couple of months wages. I have been unemployed for 2 months, prior to this i had been in employment for 36 years without a break with the same company yet this week i has a call from the bank, ostensibly to see if i wanted home insurance but they very quickly swung the conversation round to my employment situation as they had noticed my current account deposits had stopped ........lol..the vultures are circling :), they dont miss a thing :)
    #30
  31. warren_S5
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    warren_S5 Moderator Staff Member Moderator

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    Envy you Pad, I'd love to be able to take a sabbatical!

    Nowhere near the end of our mortgage, but its very affordable at present we run one car to keep costs low and keep our options wide open. Means we can take 3 overseas holidays a year, tick off life experience aspirations at the weekends, and not be prisoners to our finances. Plan is to get out of Britain in 10-12 years having done all the things we wanted to do. Got a 911 itch to scratch, but all in good time.

    I've had a couple of mates die really young (mid 30's), and both have been adamant they wished they'd done more with their lives rather than putting things off till tomorrow. Turns out tomorrow was too late. You should NEVER put yourself in trouble to get something, but problem is sometimes if you leave things too long you grow out of them or never do them so I think sometimes you just have to jump on the opportunities that present themselves. Fully respect those who have the patience and control to wait, but if I'd have waited the chances are I'd not have done it due to where we may end up living.
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  32. paddy
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    paddy Audi=No fault code, no idea

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    LOL.......we are very much alike mate, i tried to scratch the 911 itch and couldn't believe how small they are inside. To much trouble getting my knees under the wheel. Defo a need fore a FBSW in a porker.:)
    #32
  33. Spin140
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    Spin140 Active Member

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    The £165 I referred to was the one off cost of the GAP insurance, if only my payments were that low! In an ideal world I agree we would all perhaps wait until we have the money in the bank before we have something but life is short and a 'balance' is called for. As long as the payments are affordable Go enjoy...:)
    #33

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