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Posts posted by toodimm

  1. The total cost of welfare (social security) benefits (based on 2009 figures)almost matched the revenue from income tax. The figure amounts to just over £150,000,000,000. The amount of money designated for the BoE's quantitative easing amounts to £100,000,000,000 for each of the last two years (ie approx 67% of that total). The amount of money paid in bankers' bonuses amounts to £9,000,000,000 (ie approx 6% of that total).

    This might help us to gain a sense of perspective.

    Just wondering where you get your figures from?

    welfare total - £135.7bn


    State Pension - £62.677bn

    Housing Benefit - £17.181bn

    Disability Benefit - £16.218bn

    Income Support - £8.687bn

    Pension Credit - £7.798bn

    Council Tax Benifit - £4.23bn

    Jobseeker’s allowance - £2.881bn

    I think that the perspective we can all take from this is that the bankers bonuses could pay for over three years of jobseekers allowance.

  2. Update for anyone who is bothered:

    We went back to the dealer, armed with the info I picked up here. I gave the impression that we were still very interested in the finance deal that he was offering, but that it was my mum (who had come along) that was the stumbling block. After a while I said to the salesman

    "I just can't understand how a new car could ever be a better financial decision than a second hand one".

    His response was,

    "well that's just how the economics works out at the moment, it just is".

    After he had committed himself, I let rip with the information gleaned here, you should have seen his face drop. He did all the typical backtracking you'd expect, lying and distancing himself from his previous comments. My parting shot was

    "If Toyota had not phoned us up, and then tried this trick, we would have come in, in about six months and bought a second hand car from you without a doubt, now you have managed to loose a definite sale, as we will not be coming back".

    It was great fun to watch him stomp off.

    Thanks for steering me clear of this nonsense. Yet again, if something sounds too good to be true, then there is probably a cunty salesman lying to you.

  3. Don't spoil it for him. I've tried to explain it to him three times and now really think they should go for the deal. When in two years time they discover they have spent £11,000 and have no car I believe they might start listening to us. Meanwhile lets let him believe he's got a great deal ;)

    Thanks for trying to steer me right, sorry that I didn't take note of what you were trying to say. It would have been really helpful if you could have said something like:

    'I know about these deals you should be aware that you will not get your money back in cash, but in credit to use with the garage when you part exchange'.

    Looking back on the conversations that took place with the salesman, in the light of the advice I have received here, I cannot say that he outright lied, but he certainly misrepresented the deal. He said things like "At the end of the two years we will buy the car back from you and you can use the money to buy a new car from us, or you can walk away and buy a car from somewhere else". My mum is certain that he explicitly said that they would get the money back in cash at the end of the two years, however I guess this is how good salesmen work, say something that it is easier to misinterpret than to interpret correctly.

    I wonder if there is any mileage (pardon the pun) taping him talking about this deal?

  4. And the spot the scam award goes to oldsport!

    Honourable mentions go to BLOW FLY, South Lorne, eek, and 1888 for trying to point this out to me earlier in the post, unfortunately I didn't listen to them properly, for which I apologise.

    Yup PCP is the funding plan. The salesman categorically stated that we could take the money elsewhere at the end of the two years, so I guess I will be giving him a nasty call tomorrow.

    Thank you so much for pointing this out.

  5. Are you suggesting that a depreciating asset may cost less if you have an old one rather than a new one?

    Wonders will never cease...

    But that is precisely the point that I made in my original post. I was amazed to discover that a one year old depreciating asset actually cost more per year (in depreciation terms), than a new one! It seems ridiculous, however the numbers back it up.

  6. Yup, I agree, if you are happy to buy an old car, then it will depreciate at a far lower amount per year. I have argued that my parents ought to keep their current car (5 years old) as there is nothing wrong with it. However given that they intended to buy a car between 6months and two years old, it appears that a new car is the more financially sound decisions.

    An old car for cash will cost you less and less (in cash terms) over time?

  7. We have been told explicitly that the buy back is in cash and there is no obligation to buy another car from them. But thanks for the warning, we will certainly check the small print to ensure that it is not conditional on buying another car from them.

    But case 1 is wrong as you won't own the car after paying £11700 for it. Instead you will either have to agree another loan to repay what you still owe on the car, or start a new lease agreement.

    yes they will buyback at £8600

    but only if you buy another new car from them

  8. You are absolutely right. Just looked at some of the small print, and the finance arrangement is based on an annual mileage of 10k, which my parents 7k is well within. However, the numbers still stack up in favour of brand new verses second hand.

    So 200,000 miles on the clock and they will still buy it for £8,600 .... what's in the small print??

  9. You present a good case which is in some ways inarguable...but just allow reality to kick in fo a mo'

    We own a Toyota or two and love 'em to bits, but would never consider purchasing a new one..far too much bankster involvement.

    I wish we were in a financial position to be able to take such an admirable moral position. Do you also buy your petrol second hand?

  10. Now it depends on what you want but personally I like the idea of eventually owning things outright rather than continually having to find a monthly payment.

    Eventually owning things that don't depreciate, yes. Owning things that can depreciate to zero, No!

    I think the question that you need to ask is this. If you need the facility of a car, then how much does that facility cost? With the figures I'm working with, then the new car is cheaper! To me, the emotional enjoyment attached with owning verses renting a car is not worth and extra £500 per year.

  11. new car - £4200 + £7500 leaves you with a car that you still owe a £8600 balloon payment on. That can then be used as a deposit on another new car (which is what the guarantee buy back really means).

    Nope, we asked, and you can take the money anywhere else you want, it does not have to be spent on a new car with toyota.

    old car - £4200 + loan of £8300 say (£10000 in total) gives you a car that you own outright.

    Note the really problem with the new car deal?

    What I'm talking about is the price it costs to have a car for two years, consider the following two cases:

    Case 1: New car

    Start with old car with trade in value of £4200

    Give old car to the dealer and then join the finance scheme on new car @ £312 per month for two years (£7500 total)

    At the end of the two years accept the dealers offer to buy the car back for a minimum of £8600

    Finish: Paid a total (including trade in) of (4200+7500-8600=) £3100 and have no car

    Case 2: Second hand car

    Start with old car with trade in value of £4200

    Give old car to the dealer and and buy second hand car for £12,500, less the £4200 trade in giving a balance to pay of £8300

    At the end of two years sell the (3 year old car) for estimated devaluation price of £8500

    Finish: Paid a total (including trade in) of (4200+8300-8500=) £4000 and have no car

    Both scenarios we have a car for a two year period, both scenarios finish with us owning no car, but the new car scenario is significantly cheaper. If my calculations are incorrect I can't see where, maybe you can point it out.

  12. It is nonsense...there is simply no way that buying a new car rather than a used one makes financial sense..ever...end of.

    If you mean in absolute price, then yes obviously you are correct, the new car is significantly more expensive than the second hand one, however in terms of the devaluation cost, this doesn't seem to be the case.

    When my parents got back from the dealership I expressed an identical sentiment to them. However after looking at the offer, and prices on the internet, it does seem to be the case. According to the dealer, people like you and I have been propping up the used car market. There are some people who will never look at a new car, no matter what the deal is on offer, they are so sure that second hand must be cheaper than new that they just refuse to even consider the alternative.

    I've checked and rechecked the numbers, and with the exception of dodgy number for the devaluation, then yup, a brand new toyota is really cheaper (in devaluation terms) than a second hand one.

  13. Parents just got back from the Toyota garage, and apparently brand new cars are cheaper than an identical model second hand car, because of finance deals.

    They are looking to enter into a deal where they put up £4200 deposit (trade in value), then pay £312 per month for two years (£7500 total) at the end of which the garage will guarantee to buy the car back for £8600 minimum. By my reckoning this works out at £1550 per year for the facility of having a car for two years that is on average one year old.

    There is also a one year old second hand car (identical model) available without finance for £12,500. The dealer has told us will devalue at about £2000 per year for the first two years.

    I simply don't understand how it can be £450 per year cheaper to own a brand new car verses a second hand car (identical model). As far as I can tell, the only options are

    1) The devaluation estimate is way off, but this doesn't seem to be the case

    2) Toyota (and I assume other manufacturers) are desperate to sell new cars, and are offering subsidies/incentives so large as to actually make new cars cheaper than second hand ones.

    Are car manufacturers really still in this much trouble? Or have I just been the victim of good salesman ship?

    Interested in any input from you all

  14. Not at all. Not related, didn't even know the bloke before we moved.

    I was joking when I suggested that. I'm just trying to make the point that you are being charged an amazingly low rent relative to the price you claim the house would sell for.

    You're looking at it from the wrong angle - it's not that the rent is too low... the house price is too high.

    Different sides of the same coin, rent too low/price too high. Clearly whilst people are using houses as an investment, then house prices, rental prices and interest rates will be inextricably linked.

    Anyway, like I said above, the spreadsheet is a tool - put in the numbers that you feel are reasonable for your area. It's not for me to tell you what is right or wrong for your personal circumstances. Just use the tool for what it is - one of a vast number of other inputs to your decision making process.

    But you seem to be using your sheet to try and justify an argument. Whilst I agree with your argument, that it can be more economical to buy than rent, I don't think that the case is quite as clear cut as the numbers you have used suggest.

    As an aside, £2,000 per month for my area (NE) would give you a stonkingly good rental pad!

    And I imagine the same would be true for buying, if you had a £350,000 budget.

    A simple BTL rent calculator can be found here, and for a £350,000 house, they recon £2100 needs to be charged per month.

    Alternately if you just have a look on rightmove for some properties to rent (in almost any area of the country), then use google street view to find the house number, then use ourproperty to find the price that that house last sold for, then I think that you would find £350,000 houses do not get rented out for £805

    Have a look at this property in the north east, does your £805 per month get you a four bedroom detached house with a double garage?

    Your numbers give 2.6% yield before tax, which is very very low. Most landlords would charge a rent that would give a yield of at least 5% otherwise its not worth doing.

  15. I still think that you are grossly underestimating the rent that you would have to pay to live in a property that would sell for £350,000, I think that £2,000 pcm would be neared the mark and even that is probably on the low side. Are you renting from a friend or family member?

    Just for you, in this version, I've put in some extreme figures the other direction. even doing this, the breakeven time period, with some modest HPC of only 2% falls per year, is just under 13 years!!!!

    In both instances, the losses are huge, at just over £200,000 (average of about £16,000 loss per year).

    Of course, renting is just dead money, isn't it?

    any Bulls care to comment on the analysis...?

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