Hi Doctor
I checked carwow, orange and coast and I cant find anything cheap. Most of them are over £24k
Am I missing something here?
I want
S Line
Pref 2.0
New facelift
5DR
and most of the good tech and no cockpit.
I selected all that and the average price is £28k? That is way above my budget
I am thinking to give them a big deposit lets say 8k and monthly £250 for 4 years? Ballon payment should be less than £5k if my maths is correct. I knopw people dont like ballons but what is the best option? is this ok? honestly i am kinda confused right now lol#
I haven't had a search of the different options and good prices, but thought I would pick an example and try and explain the costs to you using different scenarios to help you understand your options.
Using your search criteria, here is a 1.5TFSI I found on AutoTrader for £22,152. I reckon an offer of £21,500 would easily secure it.
According to the Audi Finance calculator, Audi predict it will be worth £11,250 after 48m/40k miles. So if bought for cash, you would spend £21,500, and trade it in to Audi after 48months for £11,250. That makes the total depreciation cost £10,250 over 4yrs. That is stable. Whatever you buy it for, and whatever it is worth in 4years when you sell it is completely independent of how you buy the car (cash, PCP, loan, etc.).
That's the first cost, and usually the biggest cost. The cheaper you get the car, and the more it's predicted to be worth when you sell it, the cheaper this cost will be. Used cars are both cheaper to buy, and depreciate at a slower rate, so will always be cheaper than new cars in terms of depreciation. It's a mathematical certainty 99% of the time.
If you only have £8k in capital, then you are obviously looking to borrow the remaining £13,500, so your next cost is the cost of the finance (interest). You can either borrow the money from Audi direct, or use a high street bank.
Audi offer two types of loans, a Hire Purchase loan (HP) or a Personal Contract Plan (PCP). Both are just ways of borrowing that £13,500, but have different structures. Used car finance from Audi is charged at a high rate of around 12.8%. You can get this lower (they ran promotions offering 5.9% on used car finance), but we will work off this for illustration. Basically the take home is to avoid Audi finance for used cars...they're rubbish!
A HP is just like a standard loan where you pay off the entire amount borrowed and have nothing to pay at the end of 48months. You own the car outright. On the above this would be £356 per month, and will cost you about £3,600 in interest. So if you put down £8,000, paid £356 for 48months you would have paid £24,732 to own the car. You sell it for the predicted trade in price of £11,250, then the car has cost you £13,838.
Basically the £10,250 we calculated for the depreciation cost + the interest of the finance of £3,600!
A PCP has the balloon payment which you don't pay off, but you still pay interest on it. In this case, you are paying £175 per month, but will cost you £6,000 in interest. So in this case, you put £8,000 down, make 47 payments of £175, which is £16,225, and that's it, as the car's value is the same as the balloon payment, you just trade the car in and pay no more or no less.
Again, this is just the £10,250 depreciation cost + the interest of the finance of £6,000!
(Why is the interest so much higher compared to the HP, despite being the same 12.8% APR? Because a PCP is effectively two loans. The first is a standard personal loan where you pay the difference between the amount you are borrowing (£13,500) and the balloon payment (£11,250). On this part you are paying interest and capital (£2,250). As you don't pay down any of the balloon payment, the second part of the PCP loan is effectively an interest only loan on the balloon payment (£11,250).)
Finally you have high street bank loans. There are quite a few banks offering 3% APR on loans between £7,500 and £15,000 (
https://www.moneysavingexpert.com/loans/cheap-personal-loans#75k15k). These can be hard to get, but assuming a good credit score 4% is quite manageable. Let's go with 5% to be safe.
£13,500 borrowed at 5% APR over 48months will cost you £310 per month and cost you £1,390. This means total cost of depreciation + interest is £11,640. Cheaper than Audi's HP by £2,200, and cheaper than Audi's PCP by £4,585.
So what about a new car of the same spec, with good discount using Audi's APR of 6.4%...how much more expensive is this compared to the used car with a personal loan at 5% that cost us £11,640 over 48months?
Well a 1.5TFSI S-Tronic S-Line with Daytona paint has a RRP of £29,385. Coast2Coast gives me a discount of £4063, making it £25,322. With £8k deposit I need to finance £17,322 on a 48month PCP. That would cost me £193 per month with a balloon payment of £11,900. Again, assuming the car is worth the balloon payment, that would mean spending £8,000 + 47 payments of £193 = £17,071.
So actually this is more expensive than any of the options we have looked at, even the used PCP at 12.8% APR.
Is having lower monthly payments and a new version rather than a 6month old version of exactly the same car worth an extra £5,400....? Only you can answer that.
Sorry for the long-winded reply, but hopefully it helps (if you read it all....)! Basically look at calculating the total cost (and you can add servicing, fuel costs, insurance etc.) when trying to determine what the best method is for you. Monthly cost is obviously a consideration, but it's not a good indicator of total cost of ownership (in fact, it's not an indicator at all, which is why everyone is trying to sell you everything based on monthly amounts....!).
