Oct
10
Buying a car is an expensive business so it really pays to take the time to find the best deals. Although it took me one and a half days of negotiations with a number of different suppliers, I have found a deal on a new car that will save me thousands of pounds over the next three years.
I also learnt something important how the car industry works that can be used to your advantage to save thousands, as I’m doing.
I’ve discovered that the car manufacturers work against quarterly targets and strive to obtain as many registrations in each quarter as possible. As the quarter ends, some manufacturers release a number of vehicles to their dealers at hugely discounted prices. This gives the dealers massive opportunities to sell cars at very low prices at the end of the quarter to boost the number of new registered vehicles.
Some of these vehicles are released to car leasing companies who can offer them at massively discounted rates. As the car manufacturers want to sell a number of cars as quickly as possible, they often add to the incentive by releasing vehicles with a high specification.
This means that you can lease a high specification car at absolutely rock bottom prices. These prices are way below what you’d pay for a personal contract purchase plan. You can, in effect, save the amount that you’d pay for the deposit in a PCP plan and often get a superior car as well. You save thousands of pounds!
The slight downside is that the cars released by the manufacturers are already built so they are at a set specification, but as long as you aren’t too fussy with your requirements, you can buy an absolute bargain, which is what I have done.
All you need do is to try and time your purchase for the last few weeks of the quarter and then speak to as many car leasing or car brokers as possible. These incredible bargains get snatched up quickly, but huge discounts are there for you, if you do that bit of work.
Oct
9
I mentioned a few weeks ago that you should be wary of hidden credit card charges that banks can spring on you. Well, today another trick that bank use to increase the charges of their credit cards has come to light.
Credit card companies are using an “order of payment” to increase their charges. Basically this means that they pay off low interest earning payments first and those payments that attract the highest charges, last.
For example, a cash withdrawal attracts more charges than a normal purchase so if you do not clear your monthly bill, the credit card company will use your money to clear the cheap debts first, keeping the expensive cash advance unpaid. It can therefore maximise its charges to you, and this is all within their terms and conditions.
So what can you do about it?
Well firstly ask your credit company if the practise of “order of payments” applies to your credit card. If it does then you should consider carefully the impact that cash advances and balance transfers can have on your monthly charges. You could also try and find a credit card that doesn’t use this “order of payments” approach, but they are very hard to find, as our article on MoneyHighStreet.com, points out.
Oct
8
Partners are arguing over heating costs
Filed Under Finance |
It seems that the thermostat is harming domestic bliss, according to a new survey by MoneySupermarket.com.
Apparently 11 percent of couples argue about turning the heating up. Men, it appears are more resilient to the cold and are more likely to give their partner a hard time when they want to warm up the house a bit more.
This strikes a bit of a chord at the moment - not because I am arguing with my wife about the heating costs, but because there is no longer a need to keep turning the heating up in our house after my foray into the loft with rolls of space blanket loft insulation.
It’s not been very cold yet, of course, but the house is noticeably warmer and it heats up much more rapidly now too.
So if you want to avoid domestic strife over the thermostat then I thoroughly recommend insulating the loft!
Oct
5
Diesel now costs more than £1 per litre in the UK
Filed Under Finance |
One of the most popular articles on MoneyHighStreet.com is that petrol may soon cost £5 per gallon. Well it certainly took a lurch towards that disconcerting figure this week.
For the first time, I saw diesel being sold at £1.02 per litre today.
With 4.55 litres to the gallon, this brings the cost of diesel to £4.64 per gallon. The problem is that there will be an additional 2p tax increase on fuel in April. So without any further increases in oil prices, that additional tax increase will drive the cost of diesel upwards to £4.73 per gallon.
Maybe our proficy of £5 per gallon is nearer than we expected, which is not good news to end the week on.
Oct
4
Interest rates were held at 5.75 percent today by the Bank of England, which is welcome news for mortgage owners. As this was the first opportunity for the Bank of England (BoE) to change the base rates since the Northern Rock problems, it seems that the Bank wants to assess the impact of the recent credit problems before making any adjustments.
With the changes to the economy taking time to work through, the BoE is being sensible to act cautiously. As interest rates fell by 0.5 percent in the USA earlier this month, there may even be a case for base rates to fall in the UK slightly, although it is probably more likely that they just won’t be increased.
If we are at the top of this interest rate cycle, then mortgage owners could breathe a sigh of relief as long as lenders don’t tighten credit even further.
Less welcome news to the home owner is that house prices are not growing as fast as they were. The Halifax announced today that annual house price inflation decreased by 0.6% in September. The Halifax is also predicting a further slow down in house prices throughout the autumn.
This is not saying that house prices are falling, but that house prices are not increasing as fast as they were.
So is that two pieces of good news?
I guess it depends on your circumstances, but a period of calm both with interest rates and house prices will probably do us all good.
Oct
3
I’m getting closer to replacing our family car.
I’ve recently written a post about the Ford Mondeo (terrible depreciation) and the Toyota Prius (costly for what it is, despite its green credentials), however I decided to speak to a few car finance companies today to gets some quotes.
There are some good finance deals around at the moment, depending on what car you want, however the wise words of one person I spoke to today have really struck a chord with me.
“If it appreciates - buy it. If it depreciates, rent it.”
Cars depreciate, unless they are sought after by collectors. That depreciation can cost you £5000 per year for a Ford Mondeo and most cars will lose at least 50% of their value over three years. Putting your hard earned savings into such a depreciating asset just doesn’t make sense.
Even with a low APR finance deal, such as Nissan are offering at the moment, you still have to supply a hefty deposit for a personal contract plan with a balloon payment after two or three years. Invariably that deposit will be whittled away by the dreaded depreciation.
So how am I going to finance our next car?
It will almost certainly be by taking out a three year personal car leasing contract. I’ll pay three months deposit and then 35 monthly rentals. At the end of the three years I just hand the car back and sort out another car and finance deal.
I’ll literally save thousands of pounds with a personal contract hire plan.
Here are three car leasing companies that I spoke to today:
Oct
2
Who wants to be a buy to let investor?
Filed Under Finance |
A block of 24 quality flats is being built two minutes walk from the main line station in our town. Most of the building work is nearly completed and the inevitable estate agents hoarding is displayed to sell as many of the flats “off plan” as possible.
At this stage of the development you’d expect to see that at least half the flats had been sold. Not with these flats. As far as I know, not any of them have been sold yet, which must be causing the developers a few sleepless nights.
A few months ago these flats would have been snapped up by buy to let investors, given the great location and high specification.
It is not just newly built flats in this area that are no longer attracting buy to let investors. A friend runs a property management business, specialising mainly in maintenance work for buy to let investors owning large portfolios. At least two of his customers are selling up - if they can.
With mortgages starting to get more expensive and lenders tightening their criteria to minimise their risks, buy to let investors are starting to feel the pinch.
The TV property programmes such as Homes under the hammer are still packed with eager investors, however these were filmed at least six months ago. Things seem to be changing and from what I’m seeing, there are less people wanting to become buy to let investors now.
Oct
1
New Ford Mondeo - good car but terrible depreciation
Filed Under Finance |
As I’m looking to change our car at the moment, I’ve been trying out a few cars such as the Toyota Prius, Ford S-Max and the new Ford Mondeo.
The Prius, as good as it is, seems too expensive for the hybrid technology at the moment. The S-Max, which seemed to tick all the boxes with space and seating for a family with two children, suffered from very bad road noise at speeds above 55 mph. So that leaves the Ford Mondeo as the best contender so far.
I must admit that it is a really good car for the price. It’s big and quiet and comfortable and is reasonably priced. No wonder Audi and BMW drivers are considering it seriously now. The hatchback boot is so big that you don’t need an estate car, even with two children, and the 2.0 diesel engine seems superb and delivers good fuel efficiency.
So that’s that then. The Mondeo is the car to go for!
Well not quite. Talking to the salesman about various finance and purchase option soon turned up a horrifying fact about this good car.
Depreciation.
I was shocked. We ran some figures on a Ford Mondeo costing just over £23,000 new. After three years, having only done 30,000 miles, that same car would be worth £6,800! That car would lose around £16,000, 66 percent, in value in three years.
At a depreciation cost of £100 per week, buying a new Ford Mondeo is plain daft, unless someone else is paying for it. Buying a “nearly new” or second hand one with that first tranche of depreciation paid by someone else, would make sense, however.
The latest Mondeos are very rare on the second hand market at the moment as they are so new, however I have just been contacted by our local Ford dealer who has one coming into their showroom later this week. With only 3000 miles on the clock, it could be interesting……
Sep
27
In a short and to the point sentence, the Nationwide has summed up the new situation for mortgage borrowers following the recent credit crunch problems
“From now on risk must have its price”
This is what they mean by this statement:
- High loan to value (LTV) mortgages, which are inherently more risky than those with lower LTV’s, will be more expensive from now on. For example 95% mortgages now have 0.45 percent higher rates than 75% mortgages.
- Sub prime borrowers, who also represent more risk to the lender, will also pay more for their mortgages from now on.
The Nationwide also predicts that as highly leveraged borrowing (mortgages with high LTV’s) will become more expensive, the number of these mortgages will decline in the future. This will probably impact the property market, particularly the buy to let sector, which depends on high LTV’s to raise funds to purchase property for growing portfolios.
It is not just budding property entrepreneurs who may be affected by this tightening of lending criteria. First time buyers largely depend on 95 percent or even 100 percent mortgages to buy their first home. They too will find mortgages more expensive and more difficult to obtain, particularly if they have any credit impairment.
So there do appear to be a number of factors that could force house prices downwards, or, at least, slow the rate at which they increase in value.
All is not bleak, though. The Nationwide also predicts that Bank of England interest rates are less likely to rise now, which is good news for those who are willing to borrow less and have taken care of their credit records.
Sep
26
Major building company warns of falling house prices
Filed Under Finance |
Barratt Developments, one of the largest house builders in the UK, is warning that house prices may fall in the short term as a result of the recent interest rate rises and a squeeze on credit resulting from the recent problems with Northern Rock.
This is a quote from the Barratt Chief Executive:
“The recent credit squeeze has further affected customer sentiment and pressure on lending institutions has led to a tightening of lending criteria and mortgage availability.
“It is not yet clear how quickly the market will recover but we have to assume that there will be downward pressure on [house] volumes and price inflation in the short-term.”
I guess that this is to be expected after the recent turmoil in the financial markets, however it is interesting to note that Barratt are not mentioning home information packs (HIPs) as a factor that might depress market demand.
It is too early to see how the credit crunch is affecting consumers, however the Bank of England seems to think that it is corporate, rather than consumer lending, that will be squeezed the most.
So if one of the largest house builders is preparing for falling house prices in the near future - though they remain confident that housing demand will outstrip supply - then we, too, should prepare for a fall in the value of our homes.