Best way to pay for ones Yeti?

[Peter a Proud Yorkshireman]

Thought as there are many learned folk on here I would ask the question.

As having driven company cars for the last 35 years I am about to buy my Yeti although we have bought 4 or 5 smaller cars for wonderwoman in the distant past.

The intention is to pay cash and hopefully keep Yorkie for around 5 years as would not expect to do more than 10000 miles pa. We have put down a deposit and are looking just to stump up the balance when she finally arrives (are they female like ships?)

Thankfully the brass is not a great problem (although I don`t like spending it!)but I thought I would just ask for any opinions/advice/ideas from the esteemed readers and posters on this great forum.

Cheers

[Stoofa]

Well the only way to get the best possible price is to pay outright for the vehicle as this is the only method that won't attrack interest.

A loan, personal lease, credit card will all charge you an amount of interest - so cash or debit card paying is the best option.

When I bought my Octy vRS a few months back I borrowed the cash from my mum to pay outright and I'm paying her back as an interest-free loan.

Obviously not an option to many, but anything that doesn't involve interest is good.

[oldstan]

Thought as there are many learned folk on here I would ask the question.

As having driven company cars for the last 35 years I am about to buy my Yeti although we have bought 4 or 5 smaller cars for wonderwoman in the distant past.

The intention is to pay cash and hopefully keep Yorkie for around 5 years as would not expect to do more than 10000 miles pa. We have put down a deposit and are looking just to stump up the balance when she finally arrives (are they female like ships?)

Thankfully the brass is not a great problem (although I don`t like spending it!)but I thought I would just ask for any opinions/advice/ideas from the esteemed readers and posters on this great forum.

Cheers

Debit card on the day you collect. But you might have to go through a security process in order to complete the transaction whereby the dealer may be asked to put you on the phone to answer some security questions. I did go through the procedure with the Yeti but not with previous new cars, but be prepared to know something about the account you're withdrawing from....ie. how long have you had it? what direct debits are there and how much are they for? who is your electric/gas supplier? These are the questions I was asked. Quite frankly, I didn't know half the answers and was starting to get irritated...I pay by direct debit in order NOT to know the minutiae of my monthly payments....but it's for my security as well as the dealers so persevere.

[Peter a Proud Yorkshireman]

Thanks....any chance your mum could perhaps do an interest free loan for me over say 5 years ?

Cheers

Peter

[BossFox]

Interesting the people who have already replied say pay up front if you can.

Popular, but not an efficient use of capital IMO.

Personally I find that the money is better used elsewhere.

On my Fabia I got a 2.5% fixed deal. Invested the money at a guarenteed 8%.

Far more effective use of capital in my view. Pays for a nice share of the running costs.

See if you can get a good finance deal. If you can, I'd not pay up front.

My situation means I do pay a bit of interest and have to pay the monthly payment.

But five years on I get back 40% over the top of what I invested.

From where I am sitting, that's no contest.

It's just like business.

I did pay cash for the Yeti.

But in hindsight that was the wrong option.

[oldstan]

Interesting the people who have already replied say pay up front if you can.

Popular, but not an efficient use of capital IMO.

Personally I find that the money is better used elsewhere.

On my Fabia I got a 2.5% fixed deal. Invested the money at a guarenteed 8%.

Far more effective use of capital in my view. Pays for a nice share of the running costs.

See if you can get a good finance deal. If you can, I'd not pay up front.

My situation means I do pay a bit of interest and have to pay the monthly payment.

But five years on I get back 40% over the top of what I invested.

From where I am sitting, that's no contest.

It's just like business.

I did pay cash for the Yeti.

But in hindsight that was the wrong option.

Not knowing how to invest my money for a guaranteed 8% I was happy to spend some of my accrued funds. TBH I didn't look to see what the rate to borrow was at the time but know what rate I get on my savings and didn't expect the finance rate to be less than my savings rate. But I could be wrong.

Edited 15 July, 2011 by oldstan

[BossFox]

Not knowing how to invest my money for a guaranteed 8% I was happy to spend some of my accrued funds. TBH I didn't look to see what the rate to borrow was at the time but know what rate I get on my savings and didn't expect the finance rate to be less than my savings rate. But I could be wrong.

You are right.

Savings rates are asolutely dire at the moment IMO. So you would be worse off in your situation to finace the car and leave the money in a traditional savings plan.

Unless you can find a decent investment fund (or something similar) with a good rate of return then it's not really worth saving the money.

[Stoofa]

Thanks....any chance your mum could perhaps do an interest free loan for me over say 5 years ?

Cheers

Peter

I asked - but as she's financing my vRS and the brother's Civic she's a little tapped out at the moment

[bahnstormer vrs]

Thanks....any chance your mum could perhaps do an interest free loan for me over say 5 years ?

Cheers

Peter

Are you retiring or getting 'cash in lieu' from your Company?

If the latter then a Skoda Finance PCP 36 months, 10,000 miles is the answer; keep your cash; you never know when you might need it for something important.

After 3 years if you are keeping the Yeti, then either redo the PCP for another 2 years into a Hire Purchase or pay the balloon payment.

Even if you are retiring do the above.

PS> I presume as you have no 'trade-in' you are getting an agreeable level of discount.

PPS> The above was my method of 'purchase' 7 months ago; i came out of Company Car scheme after 24 years and am still working.

[Freshacre]

one thing that I learned when running my own business was that when taking out a lease, even if it did have a guaranteed value for the car at the end, you still have to find the monthly payments.

To clarify that further, you take the loan/lease based on how things are going for you/the business at that moment and when the predicted repayments are manageable - then if things take a bit of a downturn, you can find the monthly payments a real stretch. In the vet profession, when Foot and Mouth hit the country we saw all aspects of our practice taking a dive.

If you got the cash - use it. If you can get an interest free loan, then that would be second choice. The final resort would be to get as long a loan (as opposed to hire purchase) as possible to pay for the car, without it being secured on the car itself.

However - going down this route of what sort of finance to use is fraught with technicalities and difficulties. Always - caveat emptier!!

G

[Bobdog]

Debit card on the day you collect. But you might have to go through a security process in order to complete the transaction whereby the dealer may be asked to put you on the phone to answer some security questions. I did go through the procedure with the Yeti but not with previous new cars, but be prepared to know something about the account you're withdrawing from....ie. how long have you had it? what direct debits are there and how much are they for? who is your electric/gas supplier? These are the questions I was asked. Quite frankly, I didn't know half the answers and was starting to get irritated...I pay by direct debit in order NOT to know the minutiae of my monthly payments....but it's for my security as well as the dealers so persevere.

Debit card on the day is fine. Rather than have the hassle of the 'phone call at the dealers I usually give my bank a call the day before and tell them what I'm planning to spend. They're only concerned if what looks like an unusual transaction shows up, so as long as you warn them the dealer can put your card in the machine and it's just like paying for your weekly Tesco visit.

[Freshacre]

and it's just like paying for your weekly Tesco visit.

D'you tell 'em EVERY time you go to Tesco then?????

I knew costs were rising, but.............

[bahnstormer vrs]

............... and it's just like paying for your weekly Tesco visit.

Tesco sell cars now; don't they?

[AlleyCat`]

If you can get a 0% CC and have the cash in the bank then pay on the CC (assuming you can get that sort of credit) and get the best interest on the money you can for the time period before the 0% expires.

Pay it up before it is going to cost you anything to the CC company.

Always better making you (some pitiful) money than someone else money.

Using the CC also makes the CC company liable alongside the dealer should it all go horribly wrong (section 75 i think).

I don't believe that the amount on the CC even has to be very much (£100+) to make the above true.

Personally i'd put the £100 on cc and pay the rest as it all seems like too much work but as a yorkshireman i can also empathise with short arms and deep pockets

Edited 15 July, 2011 by AlleyCat`

['daiking']

Invested the money at a guarenteed 8%

tell me more...

[stanjackos]

Heres a little tip from Martin Lewis at moneysavingexpert.com (Hes the guy on "Watchdog"). Apply for an M&S credit card, they are currently giving a 15 months interest free on purchases offer. Set up a D Debit for the minimum monthly amount and put the money you have spent on the card and would have paid off the monthly bill, into a High Rate savings accouunt. At the end of the 15 Months pay off the balance with the savings and pocket the Interest!

As mentioned in an earlier post, any purchase £100 or over paid for in part or full with a credit card is covered under Section 75 off the Consumer Credit Act 1974. This offers an exceptional level of protection to the buyer.

[rog737]

I doubt you would find many dealers willing to take a credit card for the full balance of a car.

The fees for a debit card are fixed, so the dealer may pay 50p for the transaction, whereas the fees for a credit card will involve a percentage of the amount plus a smaller fixed fee. So lets say it is 2% on a £15000 balance - that would cost the dealer £300 and you could see why they wouldn't be keen!

[bahnstormer vrs]

I doubt you would find many dealers willing to take a credit card for the full balance of a car.

The fees for a debit card are fixed, so the dealer may pay 50p for the transaction, whereas the fees for a credit card will involve a percentage of the amount plus a smaller fixed fee. So lets say it is 2% on a £15000 balance - that would cost the dealer £300 and you could see why they wouldn't be keen!

Plus who, on initial application for a new credit card is going to get £15 - £20,000 credit limit. I guess you'd be lucky to have £1,500 as a limit.

[Bobdog]

D'you tell 'em EVERY time you go to Tesco then?????

I knew costs were rising, but.............

You haven't seen my wine rack!

[stanjackos]

I doubt you would find many dealers willing to take a credit card for the full balance of a car.

The fees for a debit card are fixed, so the dealer may pay 50p for the transaction, whereas the fees for a credit card will involve a percentage of the amount plus a smaller fixed fee. So lets say it is 2% on a £15000 balance - that would cost the dealer £300 and you could see why they wouldn't be keen!

Plus who, on initial application for a new credit card is going to get £15 - £20,000 credit limit. I guess you'd be lucky to have £1,500 as a limit.

rog737 and bahnstormer vrs

You are quite correct, my own company is charged a percentage fee on crdeit card transactions, the fee is based on the volume of transactions and the amount and is normally negotiable up to about 3%. Perhaps I did not make it clear, but it was merely a suggestion for day to day C Card use and the payment of the deposit in order to get Section 75 protection, not the balance for the vehicle. Most dealers will accept £1000 - £1500 as a deposit using a credit card. I obtained a £5000 credit limit with M&S quite easily and expect to receive about £150 in interest.

Edited 18 July, 2011 by stanjackos