MK5 Golf GTI
General => Random Chat => Topic started by: stealthwolf on December 21, 2010, 10:14:28 pm
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Okay, so I was already out and about in the snow. Decided to head to a dealer to poke around at some cars. We talked through some figures but would appreciate some input from here.
Currently, ED30 is on finance. Will be paying off in full around August 2011 (though can do so earlier). Its three years are up at the beginning of January.
Value of new car = £34,000
Part exchange on ED30 = £13000*
Finance remaining of ED30 = £11000**
Deposit = £1000
Installments = £611*36 (£22000)
No balloon payment.
Total price paid = £36,000
*I know it's worth more than this but this is what the dealer offered and is what we're working with. The car could be sold for a much higher price.
** If paid off now, which is something I can quite conceivably do.
The figures are a little imprecise but enough for the above estimation. Paying £36000 for a £34000 car may be better than any loan I can obtain in terms of rates. I'm tempted to increase the deposit in order to reduce the payments (willing to go up to £8000, payments down to £400pcm). The deal includes free servicing for the three years too.
Just bouncing ideas around. Nothing's in confirmation, though they can green light it as soon as I say yes. The car will be ordered and won't arrive until next year some time and I can drive the ED30 until then.
What do you reckon? Please feel free to mention things I haven't considered.
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Sounds a good deal. What is the new car?
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400 a month is crazy 611 is out of this world , if it was me id say i cant afford it sorry to sound negative but thats my opinion :xmassmiley:
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so in simple terms, £600 a month + £14k deposit ?
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Difficult to say if your dreaming or not Stealth as we dont know how much you earn! if for 400 or 600 pounds you wont be able to eat put fuel in it and insure the car then probably a pointless exercise but only you can really answer that question. Now if you told us what you were buying then im sure we could make that price go up with optional extras :evilgrin:
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Good interest rate for a 20K loan.
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My personal opinion only but another options is to :
sell your ED30 for full market value (sell privately)
Finance the difference to the new car by extending your mortgage and paying it off over 3 years. Mortgage rates are the very cheapest around and are the most officient way of borrowing right now.
You kknow you really want that Golf R :evilgrin:
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Sounds like a lot to spend but if its something you want, can afford and will keep long enough then why not.
If you're not going to keep it long enough you'll likely end up a lot worse off as you'll have no car but still have a debt for it most likely
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you only live once, if you could afford £600 a month why not.
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£600pcm isn't a problem - I have no mortgage and only frivolous expenditure. Just wanted an opinion on the finance calculations.
The sane part of me is telling me to keep my car, buy an extended warranty, pay off the finance and continue saving for a house deposit. The crazy part of me is telling me to buy the car. Even the dealers said if I pre-ordered, paid £500, then cancelled it, they would sell the car on their forecourt.
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Buy a house you can't afford and a car you can afford to throw away. The house will go up, the car will go down.
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Whats the car? 36k is golf R territory ist it?
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If you've got the money now is a great time to buy property. That's where I'd be throwing £600 a month.
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You're presuming of course that I stay with VW.
Anyway, yes the cash would be better spent on a house but the issue is deposits. Saving for a 25% deposit is a complete PITA and I'd rather spend the cash elsewhere. As it stands, the most sensible thing is a house, yet I did not buy an ED30 with my head!
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You can still get 90% LTV mortgages but it's obviously advantageous in terms of interest rates to get a lower LTV. We moved house recently and actually took out a personal loan so we could achieve more equity in the house and get a better interest rate on the mortgage. The repayment on the loan, plus the mortgage payment is cheaper than the higher LTV mortgage, plus we very quickly get more equity in the property.
So I'd borrow the money for the deposit.
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600 is a f**cking massive commitment, while it may seem easy now 3 years of it is an awful long time. Especially on a massively depreciating asset that with such a small deposit will take nearly 2 years before you have equity in it so there is no getting out.
Most I have paid is 450 when I was living with my parents it wasnt even a weeks wages but after 2 of the 3 years i truly resented both the payment and the car, I had to sell it and pay some to clear the finance in the end.
Promised I'd never spend over 20k on a motor again broke that since though :ashamed:
I'm considering getting out of home ownership as well. I dont want the commitment of staying put anymore without penalties of mortgages companies and the pain of agents fees and surveys solicitors etc.
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I'm being presumptious here but I'm guessing you're quite young and living at home? A lot can change in 3 years and you wouldn't want to have any future decisions constrained because you bought the car now. As said in a year or so's time the novelty of the car will have passed but the £600 a month will still be there. You could be married with children in three years time!
Life doesn't always go as planned and its best to leave yourself some wiggle room for the unexpected. Expecially when you're young.
Of course, if you can afford the car and leave enough wiggle cash then fill your boots. :smiley:
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You can still get 90% LTV mortgages but it's obviously advantageous in terms of interest rates to get a lower LTV. We moved house recently and actually took out a personal loan so we could achieve more equity in the house and get a better interest rate on the mortgage. The repayment on the loan, plus the mortgage payment is cheaper than the higher LTV mortgage, plus we very quickly get more equity in the property.
So I'd borrow the money for the deposit.
Did the bank ask where the deposit money came from? Do they just take a blind eye to this?
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You're not supposed to do it, and yes, the mortgage company does ask how you are funding your deposit. In reality I don't think they're bothered in the slightest. We simply stated that our deposit was from savings. As far as I know they have no means to check this information anyway.
It's a terrible time to sell a house at the moment. We took marginally less than we bought it for 3 years ago but sold it very quickly, and were also lucky to not get in a chain situation. Our buyers were cash buyers, and the house we bought had no upper chain. The upside to it is we now have a house that we bought for £250K that would have sold for £50K - £75 more two or three years ago.
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taking out a loan to help you qualify for an even bigger debt is not the best practice, especially as the interest rates are considerably higher than the current mortgage rates.
in regards to the car finance, if you are living at home still and considering this then would say your mad
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taking out a loan to help you qualify for an even bigger debt is not the best practice, especially as the interest rates are considerably higher than the current mortgage rates.
That depends really. We compared a 90% LTV mortgage against an 85% LTV mortgage. The 85% mortgage had a far better interest rate, so much so that the difference in the monthly payment was far greater than the repayment on a personal loan over a 2 year period. As far as we're concerned we quickly get 5% equity into the house, something that would have been difficult sticking with the higher LTV mortgage. Also, remember that the difference in the interest rate might be 3%, but on a mortgage that's 3% over a hugely longer term. I'd agree that it's not strictly a good idea (although it was in our case), but there are some absolute bargains to be had at the moment.
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Dont do it, .........keep the ED30 and save your cash mate.
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Thanks for the advice. It can be easy to become too shortsighted with such things and I needed the perspective hence the request for advice.
I moved back home merely out of convenience - it's better to live at home, walk to work and save rather than live alone, pay rent/bills and commute to work every day. Consequently, only about 1/4 of my monthly income is spent, the rest goes into savings.
I've had more of a think about it today and am now leaning towards keeping the ED30. I'm in a contract for another two years and will have to look for work then, so things might become a bit tight.
This place is awesome!
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stealth...think the numbers are a bit mad.
you dont have much "equity" in the ED30 at all...£2k based on those numbers. so You're borrowing £33k for that new car!
You borrow £22k from new car dealer....if they give u £13k for the ED. But the £11k is still outstanding for the ED which you'll have to settle in some way or build it into the new deal (they wont take the ED off you if the loan is secured on the car....but if its personal unsecured loan then ok)
But its all down to your own personal view of what u want and how to enjoy life. If its a new car, then so be it.
Happy decision making :happy2:
PS: re the finance deal itself...£2k interest over 3 years on £20k loan is ok I suppose...around 6.5% APR. Current Personal loan rates are 8% i think (not checked for a while) Still what a margin they're getting when Base rate is 0.5%!!!
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If you want the car though Id seriously consider the pcp option with the minimum deposit minimum term and max final payment. They take the risk on the depreciation. If you are anything like me you'll be bored of it by 12-18 months and looking for the next one anyway. Plus it fits in with your contract
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The dealer said they would take the ED30 and settle the finance on it and offer me £13k for it. Yeah I know it's only £2k equity. As above, needed to bounce ideas. Not bored of the ED30. Yet. My ed30 is on PDP since I didn't know whether I'd keep it or get rid at the time.
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they WHAT!
sounds like its gonna end up like the Twingo/GTI owner debacle.
They will take the ED for £13k (and settle finance for you in process...which is £11k)
and THEN sell you a £36k if you take out a £22k loan payable over 3 years...with no final payment?
Err....where do i sign?
But as long as you know you've only got £2k equity then that's good, cos i think the dealer has messed up his calcs..essentially settling your finance on the ED and not building it into the new finance deal.
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That's why I was confused too. I actually asked them who settles the finance. They buy the ED30 for £13k and settle the finance. I asked them twice (deliberately messing up the words) - twice they verified it.
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pcp plans and other finance options are great if you have the cash in the bank to buy outright in the first place, and like to change regularly as there is no need to raid the savings, but if your using it to buy a car way above your means then they are dangerous and what appears to be a great deal comes back to bite you in the long run
out of interest stealth how much have you been paying monthly for your ed30 and for how long?
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£300pcm for total of 36 months
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if the dealer has quoted you wrong they ll correct it in the paper work , what year , mileage , extra s does your ed 30 have ?
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57-plate poverty spec ED30 - leather armrest, 6CD RCD500. Cruise control (retrofit). iPod connection. I told them I will take out the reversing camera and the RNS510. 24000 miles.
They printed out the paperwork to show it to me. It doesn't look like a mistake.
I imagine they would make £3-4k on the ED30, plus whatever they get from doing the finance deal.
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After a year or so Stealth, once the new car novelty wear's off, you will begrudge paying out that much every month. unless i wanted it really bad, i would be saving up for it, for a year to see if i really still yearn for it. You should not really buy anything so costly with such a low percentage equity/deposit. I know everyone is different, but it's that kind of recklessness that has got the economy in such a mess at the moment. it's so easy to see our neighbours with nice cars and houses and think that we all should have it. :driver:
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Don't worry TC. I've seen sense and am sticking with the ED30. This wasn't about keeping up with the Joneses but more about tickling my fancy. :xmassmiley: Let the house-deposit saving continue!
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Howay then, tell us what you were looking at!
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i think £13k offer from dealer is a good one tbh if and thats if you sold it privately what would you expect £14 k ??????
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if you sold it privately what would you expect £14 k ??????
Figured it'd be around £14-15k. Just done a glass guide valuation and they reckon £13k privately, so the dealer figure is pretty good.
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Howay then, tell us what you were looking at!
:grin:
Yes
It was a Golf R. 5dr. Black Pearl. DSG (really wanted to try this), Colour highline, cruise control, winter pack, luxury pack - basically all of the options I wanted in my current ED30. I think that was the huge appeal - at the time, I wasn't able to pre-order the ED30 and had to choose what was in stock, which ended up being pretty much a poverty spec car.
Maybe, in due course, I can build up my ED30 to the car it should have been!
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You've done the right thing. The are things we all want in life. I loved my ED30, yet I still sold it and ended up with a MK5 Diesel due to the number of miles i do.
Why? Not because I couldn't afford it (I save about £1k per month even after paying my mortgage, bills, and shopping etc for the family), but because we need to consider our future as well. My main priority at the moment is paying off as much of my mortgage as possible. i then need to consider my children's future education etc. On top of that, we want a larger house 5 or so years from now, and i would like to get that and keep our current place to rent out.
Hence, the way I see it, is that im saving hard for our future, to make our future easier. Once im at that stage in 5-6 years, maybe then i can buy myself the car I've always wanted etc. Remember a nice car is a luxury. It won't earn you anything etc.
I know there are those who would say you only live once and to enjoy it etc. But for me, i feel you cant live life like that and not plan for your future. Especially when you have a young family as well.
Keep saving for a deposit mate. You'll be glad you did in the future, trust me.
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I'm glad you have decided to stick with your current car Edition 30 (which many of us on here would love to drive / own). Apart from the financial debate you wouldn't gain much more than what you have now in my opinion.
Enjoy your car