I?d like some input from you lot ? I?m stuck with a very expensive car that, while being exactly 100% what I want, is not what I now need, and is costing me an arm and a leg and preventing me buying a house.
At the time, a new car made sense for what I needed for my business. I was going to be doing 35k a year, and needed a car that would be utterly reliable apart from routine servicing. At that mileage, buying new or newish doesn't make a lot of difference to monthly costs, as if you buy at 50k miles, you need to pay the smaller sum off quicker before the car turns into a shed, so you don't really save. With CR diesels, you also have the nagging worry that the previous owner got rid after a slight mis-fuelling, or skimped on the oil changes etc.
I got a large estate as my boss/colleague was convinced that we needed one to transport the kit we?re using around the place. We don?t, as it happens, very annoying as a new Golf would have been £190 a month less, and would have done 10 mpg more.
Had I continued to have to drive the above miles, then the car would have been a bargain, the perfect choice, and would have had its costs covered by mileage.
As it is, I?m actually stuck in a bit of a s od of a situation.
Turns out that the partners we?re working with are not those that we expected. I?m doing far fewer miles, and a lot of the miles I?m now doing I can get to much more cheaply by taking the train. I?m a founder / owner / director, so despite it being financially detrimental to me, I have to take the option that saves the company money. So, of the £700 a month I?ve worked out it?s costing me, I maybe get £100 back.
The colleague who pressured me into getting the large car because the company needed it has washed his hands of it, rightly pointing out that it was my decision to get the car before all was 100% sorted. That is true, but my decision was going to save the company £100 a month on lease costs while getting a better car (end of line discount before facelift). I?m a bit bitter, but what can you do? It was my choice and my risk.
I?d welcome suggestions as to the sensible course of action now. I love the car, and it?s hugely useful to have the size at the weekends. But, I don?t need it.
I can?t extend the lease term or reduce the 35k/year mileage I don?t need, I?ve checked.
I could hand the car back, it might cost me £500, but I?d be out of the deal. But, that would mean no car, and I?ve paid £5818 already towards it, include another £500 and I would have poured more than £6k down the drain for no reason.
If I settle, then the part I wasn?t told was the settlement figure is what remains of the entire cost of the deal, including the interest I would have paid over the whole term!!. I?m angry about that, so say the least, it verges on dishonesty that this wasn?t made plain to me, and I?ve read the small print and even now I wouldn?t spot that. Thus buying it on a longer-term loan would reduce my monthly payments, but I?d pay the interest twice over. Saying that, one reason I bought it when I did was that the entire deal costs were still about £200 lower than the list price of the car, so in some ways it?s not so bad.
Anyone have any thoughts as to a sensible course of action? I still need a car that can handle 20k a year without problems, but it doesn?t need to be larger than a golf, although the size I?ve got now would be good. I?m tempted to refinance the car I?ve got now, ignore the double interest, and buy a house. The reduced monthly payments would allow that, and house prices are going up by £2k a month around here in my price bracket. The gain there would dwarf my double interest payments.
Do people have any other ideas?
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I take it you talking about the Accord Tourer? How many miles have you done in itnow and how old is it?.
I can't believe that your lease co won't alter the deal if your mileage is to be so much lower. After all, 15,000 miles pa difference is a lot of depreciation that they won't suffer.
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It now 11 months old and has done 24k miles. It's in pretty pristine condition, so probably still worth £15-16k.
Settlement figure is £16,150, so total cost to me would be £22,150 (or something). List was £22,300, so not outlandish, but certainly would no longer be the bargain it was.
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Speak to the lease co about changing the car with them for something cheaper,possibly used,dont buy a house just yet,they are due a large correction in 2007 and remember to read the small print on any finance doc before you sign it.
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Agreed. Don't lose any sleep about not being tied into a new deal on a house just at the moment.
Ducks back below the parapet...
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I?m doing far fewer miles, and a lot of the miles I?m now doing I can get to much more cheaply by taking the train. I?m a founder / owner / director, so despite it being financially detrimental to me, I have to take the option that saves the company money. So, of the £700 a month I?ve worked out it?s costing me, I maybe get £100 back.
I'm a founder / owner / director - why do you *have* to take the option that saves the company money? We pay ourselves £500/mth (in my last job I was getting £750) car allowance (taxable) and 40/25p mile (tax free).
That is true, but my decision was going to save the company £100 a month on lease costs
Ok, I'm confused now. Who is paying for the car - you or the company?
I?d welcome suggestions as to the sensible course of action now. I love the car, and it?s hugely useful to have the size at the weekends. But, I don?t need it.
People don't need 4x4's, but they still buy them.
If I settle, then the part I wasn?t told was the settlement figure is what remains of the entire cost of the deal, including the interest I would have paid over the whole term!!. I?m angry about that, so say the least, it verges on dishonesty that this wasn?t made plain to me, and I?ve read the small print and even now I wouldn?t spot that.
The lack of flexibility of leases (and PCP's) is well known. It's for that reason that I bought my car cash - if I'd needed a loan I'd have gone for a simple personal loan.
Anyone have any thoughts as to a sensible course of action?
Now that you're in this situation and it's going to cost a lot to get out of it, AND you would still have to have a car anyway, it seems difficult to think of financially advantageous solution. I doubt your car is worth as much as you think, especially if you're trying to sell it.
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I'm a founder / owner / director - why do you *have* to take the option that saves the company money? We pay ourselves £500/mth (in my last job I was getting £750) car allowance (taxable) and 40/25p mile (tax free).
That had been the plan, and may be again in the future, but for the moment we don't have enough cash in the company to do that (we're an Angel funded start-up).
>> That is true, but my decision >> was going to save the company £100 a month on lease >> costs Ok, I'm confused now. Who is paying for the car - you or the company?
Entirely me. But at the time it saved £100 a month on the lease cost, so we could have paid me £100 less on the allowance.
The lack of flexibility of leases (and PCP's) is well known. It's for that reason that I bought my car cash - if I'd needed a loan I'd have gone for a simple personal loan.
Indeed, I was expecting to pay a penalty to settle - I think it was verbally quoted as being 2 months interest, but I couldn't prove it. I *was* told specifically that they would be happy to extend the term or reduce the mileage is appropriate after the first 6 months and as long as I was fully paid up.
>> Anyone have any thoughts as to a sensible course of action? Now that you're in this situation and it's going to cost a lot to get out of it, AND you would still have to have a car anyway, it seems difficult to think of financially advantageous solution. I doubt your car is worth as much as you think, especially if you're trying to sell it.
Trying to sell it would be a stupid option, I'd lose money. It's worth about £15.5k trade, so maybe £14k private? I think I'll just have to accept that I'm stuck with the repayments.
Take note folks - don't get PCP unless you are 110% sure that your circumstances won't change!
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In business and in home life you take decisions.
Some are right / some are wrong.
A start-up "Angel Funded" company you & your colleagues should have bought the minimum car / cars to meet the need.
Business Plans are theory and you have to plan for achieving less and more than "the plan".
Cut your losses - sell the car and put it down to experience - get a 6mth - 2yr old Mondeo / Vectra for under £7 -10K and run it for 3/4 years.
Change of plans
I bought a brand new MGB Sports car - ideal for a young just married 26yr old.
That was 34 years ago as a "Present for myself", a month later I found out that my son was on the way - sold the MG @ 6mths old with great regret but got a wonderful son (followed by 2 others who are just as good!!)
The MGB is still on the road somewhere but is now black & not teal blue.
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In business and in home life you take decisions. Some are right / some are wrong. A start-up "Angel Funded" company you & your colleagues should have bought the minimum car / cars to meet the need.
Indeed. Absolutely was the wrong decision in retrospect, but you live and learn. Had things gone to plan it would have been extremely good value for money. My naivety was to think that things would go to plan - not a mistake I would make again.
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Indeed, I was expecting to pay a penalty to settle - I think it was verbally quoted as being 2 months interest, but I couldn't prove it. I *was* told specifically that they would be happy to extend the term or reduce the mileage is appropriate after the first 6 months and as long as I was fully paid up.
The 2 months thing is the standard personal loan / HP interest penalty for early settlement. PCP's & leases are completely different as you're really hiring the car for an agreed period.
You could try a complaint to the supplier, or else the FSA?, if you were told you could change the terms of the PCP and now can't.
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Gordon, .
If you`re not currently on the housing ladder, that would be my priority as losses on the car would soon be regained.
I was interested that you wrote NEED, presumably excluding wants? but to what degree?
For Example.
In our own situation we needed 1) Best fuel economy 2) small vehicle size 3) low service costs 4)low initial purchase cost 5) luggage carrying capacity of a large car, able to hold our touring luggage without putting the seat down and having it on display. They were the *needs* and I would also prefer, no cambelt.
There are only two of us but we like touring abroad. Lateral thinking excluded ALL cars and led to purchase of a small van........
I had real doubts about it initially ( image etc) but couldnt deny the hard logic......
Only £7.400 new and doing up to 72 MPG on long runs.
I`m not suggesting its your solution, just giving an example to ask, to what extent would you base an alternative car choice on *Needs*?
Because there are MPVs that substantially undercut the Golf on cost and 2 could be bought with £4,000 spare compared with your Honda while exceeding its luggage capacity.
I agree, by the way, about the risk of buying a petrol compromised common rail diesel.
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If you`re not currently on the housing ladder, that would be my priority as losses on the car would soon be regained.
Overall I would agree but I do not know your area so you need to carefully quiz all the local agents re your market situation.
You cannot always guess correctly. See below
My current local Kingston ( Surrey) papers front pages states
There was 25% increase in price of flats in Kingston in a year based on July- September.
Figures were from the land registery and for about 100 flats.prices were £315K last year.
I was surprised at these figures.
But Esher £738K properties, of which there a lot, were down 8%.
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My colleague leased through HSBC Vehicle Finance and to get out of the lease he would have to pay 50% over the outstanding lease payments to walk away.
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just to make the point that if your main income is from a startup which cant afford proper costs yet, is it really the best time to think about substantial financial obligations like mortgages?
Are you really confident that it is all going to fly ?
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"is it really the best time to think about substantial financial obligations like mortgages?"
A very valid question indeed. My gf is in a stable, well paid, secure job, and is due a large pay rise in June, so possibly.
My gut feeling? No. How will it play out - the next 72 hours will tell.
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"My gut feeling? No."
Exactly my feeling before buying any of the houses we have bought. Never thought we would get our money back. That includesa the terraced house in Manchester we bought for £7000 and sold 2 years later for £16,000. Luckily my wife overruled me and went ahead on all the purchases. Never missed out yet. Best thing we ever did was to buy a house for my 2 kids at university in Leeds 7 years ago for £60,000. ridiculous price - never get money back. Similar houses now selling for £180,000. Just helped son buy a house in Nottingham and daughter buy house in NE London for what seem to me incredible prices - but in 5 or 10 years time?? I doubt it. Maybe short-term falls in house prices - but if you intend to keep for 5- 10 years - go ahead. Motoring link - better spend your money on bricks and mortar - they don't depreciate like cars!
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Phil
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