New Car vs "Old" Second hand Car

[noby76]

So before buying my daily car which is a second-hand 2003 1 owner Accord 2.4 Executive, I toyed with the idea of actually financing a nearly new or new Lexus.

But after some further investigation researching online and few videos I decided to go with a well looked after second hand car which based on my knowledge packed pretty much anything in terms of toys/gadgets one could find in a 2017 car apart from Bluetooth connectivity, lane keeping assist and reversing camera which truth be told are gadgets I can live without. Majority of my music are still on CD’s so I don’t stream music from my phone.

Having owned about 9 cars in total the youngest car I have owned was 5 years old. And I am the sort that tends to change my cars every 2.5 to 3 years so didn’t want to be locked in or keep driving the same car for the next 4 - 5 years which tends to be the average years car finance/hire contract runs for.

I also couldn’t justify making monthly payments on something which is depreciating faster compared to a 5 year or older second-hand which has done most of its depreciation so not a lot to loose when reselling.

Advance in auto technology has improved mpg figures and emissions which keeps road tax down on newer cars but my maths concluded the savings made on mpg and road tax will be wiped out by monthly payments towards driving the car compared to a less fuel efficient but decent older car bought outright with no monthly payments being made on it.

Also came across this US article which in a way persuaded me more in my decision not to bother with financing a new/ nearly new car.

http://thegarage.jalopnik.com/heres-four-reasons-why-you-should-never-ever-finance-a-1638384343

 

So for those who prefer new cars what’s your reason for making this decision and would you go back to an older car in future or keep financing new and for those who prefer to buy and drive second hand cars would you buy another older car or finance new and what will be your reason?

[Vintagesixtysix]

As a private cash buyer I've graduated to older low mileage higher spec petrol cars as preference.

 

The price of new cars is tremendous nowadays and I believe some of that absolute increase is because no-one buys new cars any more; so the headline retail figure is not really the issue.....it's the monthly figure / balloon payment / guaranteed future value that folks concentrate on..... it's a different mindset to can I afford that £10/20/30k car?

VAT is a whopper in the depreciation also and the new 'new car' additional payments.

 

The wife like a new car only and changes it every couple of years and has recently signed up for BMW Mini scheme after always being a cash buyer.....she likes the thought of not taking as much of the depreciation burden with her own hard earnt cash ....but finds not actually owning it outright a bit disconcerting......like I said I think it's a mind set.

 

For me I think the value is in older better marques which have already taken the price hit......there's plenty of them about nowadays....plus I own it. I'm not anti finance in any way..... quite the opposite I'm a clever finance fan if you can get somebody else's money to work for you even with poor savings rates.....then do it if you can afford it.

 

I'm low mileage and change about every 5 years...so that's an influencing factor.

 

My local Lexus dealer sent me an email the other month on "0%" finance on any CT model........something is not seen before with Lexus.

 

 

 

 

Sent from my iPad using Lexus OC

[steveledzep]

11 minutes ago, Vintagesixtysix said:

As a private cash buyer I've graduated to older low mileage higher spec petrol cars as preference.

That's me too.  I couldn't and wouldn't want to afford a new RX.

 

Mine is 4 years old and reasonable mileage at 55k.  My annual mileage is around 8k, so it will soon be back down to average.  I'll probably keep this vehicle for 3 years and looking at typical prices, my depreciation is going to be around £2k pa.  Cheap motoring for a luxury vehicle.  An extra £500 pa for a Lexus extended warranty and I have controlled outgoings, just like a lease customer, but at a fraction of the cost   Not much above £200 per month !  With interest rates so low, the cost of investment in my RX is virtually zero 

[Malc]

I go with the Honda marque for good secondhand utterly reliable ( hopes ) and cheap to buy ....  my 56 plate Legend with 106k miles and Full Honda Service History was a " no brainer " to purchase  ......  £4k last August

Likewise my Mk3 Ls400, 6 years ago at £1400 and now at 193k miles and costs nearly bugger all in annual maintenance bar simple servicing costs ........  and magical comfort, power and speed when needed and utter, utter reliability 

Depreciation on both cars, well, almost annualise at zero .....  and gadgets a-plenty too   ............ we do about 18k miles a year on average

Malc

[Vintagesixtysix]

I think in the last three posts the case for used is pretty well set out.

 

-Buy quality.

-Buy the lowest mileage/serviced to budget.

-Buy when depreciation has sucked up VAT and forecourt drive off price.

-Maintain properly either privately or dealer/warranty to best possible standard.

- it's an individual decision how far you are prepared to stretch the equation.

 

No lightening bolts really.

 

Interesting to hear the reasons for new purchasing..... emotive and practical.

 

 

 

Sent from my Iphone using Lexus OC

[Spacewagon52]

Only ever bought one new car and the depreciation was about £1600 a year. The big question and one that I do struggle with, is how much to spend?

My LS400 has taught be that you can go old and really still enjoy a good car with reliability. A friend bought a secondhand Peugeot 3008, around £12000 he paid. It now has clutch problems and is going to cost quite a bit of money to sort it. Trade-in he will lose a great deal. If you spend a lot, then something major goes wrong, you have little choice but to take the hit. If you buy "cheap" then you can just say goodbye without losing too much. It is a balancing act.

Edited June 9, 2017 by Spacewagon52
poor spelling!

[mikeyv]

10 hours ago, Spacewagon52 said:

Only ever bought one new car and the depreciation was about £1600 a year. The big question and one that I do struggle with, is how much to spend?

My LS400 has taught be that you can go old and really still enjoy a good car with reliability. A friend bought a secondhand Peugeot 3008, around £12000 he paid. It now has clutch problems and is going to cost quite a bit of money to sort it. Trade-in he will lose a great deal. If you spend a lot, then something major goes wrong, you have little choice but to take the hit. If you buy "cheap" then you can just say goodbye without losing too much. It is a balancing act.

Agree with the above.

This is what put me off an LS600 I saw at auction a year or so back.

Looked a lovely car, and was good value in the low teens.

The potential was there though, for some big bills, several thousands of pounds per job.

You'd have no option but to spend the money, which makes the car now seem very poor value.

One important point though, if going the bangernomics route, give yourself a sporting chance by choosing Japanese....... Lexus, Toyota or Honda imo.

[talaipwros]

low rate - or 0% rate - PCP new car is a better option in my view

[steveledzep]

2 hours ago, talaipwros said:

low rate - or 0% rate - PCP new car is a better option in my view

See my post above please.  I'd be pleased for you to explain your viewpoint.....thanks.

[talaipwros]

Just now, steveledzep said:

See my post above please.  I'd be pleased for you to explain your viewpoint.....thanks.

well, you just pay the depreciation every month while you can invest the cash money in other investments.

For instance lets say the Lexus CT+ that did not even have the 0%

2K up front and 299 a month. for a new car that costed 25000

 

with 23000 deposit I buy a 90K BTL three bed that gives me 570 monthy rent -200 interest, gives 370 pounds profit per month.

Covers the PCP and leaves something for the petrol

 

 

[steveledzep]

I live in a different world !  I have a lovely home which I own and I like to own my vehicle too, without spending megabucks.  I like to drive a special vehicle without financial risks too.  Couldn't be doing with tenants who have little or no regard for the property.  Good luck to you.....not for me .

[talaipwros]

well, you do own the vehicle in a PCP. you can sell it as long as you pay the money outstanding.

You are just reducing the net present value of the money you have spent  buying  it by carefully using the PCP

[steveledzep]

Sounds like you own a liability !  I'll continue to do it my way thanks .

[rayaans]

1 hour ago, talaipwros said:

well, you just pay the depreciation every month while you can invest the cash money in other investments.

For instance lets say the Lexus CT+ that did not even have the 0%

2K up front and 299 a month. for a new car that costed 25000

 

with 23000 deposit I buy a 90K BTL three bed that gives me 570 monthy rent -200 interest, gives 370 pounds profit per month.

Covers the PCP and leaves something for the petrol

 

 

You forgot to take tax out though so it wouldn't be £370 profit - depending on tax bracket it could be as low as £167!

On a side note, don't think I'll be buying a new car again. Done it twice - 1st was the RX300 for £32k in 2004 after discounts. Sold for £5700 after 8 years so £3300 yearly. 

2nd was my RX450H.  £50k after discounts - current trade in price is £18k so £6200 each year approx (ouch!). 

I believe an identical car like mine was for sale after I collected mine - ex demo 6 months old with 5k miles on it for £43k. Essentially the car managed to lose £11650 off list price in 6 months!

[mikeyv]

2 hours ago, rayaans said:

You forgot to take tax out though so it wouldn't be £370 profit - depending on tax bracket it could be as low as £167!

On a side note, don't think I'll be buying a new car again. Done it twice - 1st was the RX300 for £32k in 2004 after discounts. Sold for £5700 after 8 years so £3300 yearly. 

2nd was my RX450H.  £50k after discounts - current trade in price is £18k so £6200 each year approx (ouch!). 

I believe an identical car like mine was for sale after I collected mine - ex demo 6 months old with 5k miles on it for £43k. Essentially the car managed to lose £11650 off list price in 6 months!

 

3 hours ago, talaipwros said:

well, you just pay the depreciation every month while you can invest the cash money in other investments.

For instance lets say the Lexus CT+ that did not even have the 0%

2K up front and 299 a month. for a new car that costed 25000

 

with 23000 deposit I buy a 90K BTL three bed that gives me 570 monthy rent -200 interest, gives 370 pounds profit per month.

Covers the PCP and leaves something for the petrol

 

 

As Rayaans said, there is tax, insurance, landlord certificates plus maintenance costs, and the possibility of a non paying tenant who also causes damage.

But, really, your argument is more about leasing, or pcp etc, against buying outright, rather than new against old.

Buying an older car leaves you even more money to invest than leasing.

[Spacewagon52]

I think running a vehicle for people on here is a lot more than getting from A to B. Income / money is the BIG factor for all of us. Given a choice, I am sure we would all like to easily afford a new Lexus. Imagine you could buy a new Lexus today for £1,000. ( I appreciate this is very hypothetica but bear with me!) Someone could give an excellent financial argument for NOT buying a new one, as the second-hand ones only cost £250! At that sort of money it would be a no brainer, of course we would all buy the new one - I hope! Owning a car, to me, is more than just practicality. It is more emotional and personal for me. There is also the number plate snob angle for the neighbours for some people. As Rayaans said, he has bought two new cars and when you work out the depreciation, it makes most repairs look insignificant, Rayaaans £6200 for ONE year could buy a lot of repairs, even at a Lexus dealers, so I appreciate why he would think twice before buying new again.

On a side issue, I used AutoTrader to give me a quote for a Trade-in on my 2009 Mitsubishi Grandis diesel with 74,000 miles - they suggested £2400 - If I had the opportunity to buy car like that for £2400 I would jump at it!  Whenever you get a trade-in price, turn it around and ask yourself, Would I buy this car at that price? Food for financial thought - not the heart!

[Spacewagon52]

A very interesting topic may I add! Thanks noby76!

[talaipwros]

6 hours ago, mikeyv said:

 

As Rayaans said, there is tax, insurance, landlord certificates plus maintenance costs, and the possibility of a non paying tenant who also causes damage.

But, really, your argument is more about leasing, or pcp etc, against buying outright, rather than new against old.

Buying an older car leaves you even more money to invest than leasing.

 

well, insurance is £9 a month, gas certificate is 4 pounds a month, tax is 20% in a company, ant maintenance cost usually is less than 10% a year for the whole portfolio if it is well diversified and larger than 25

 

I agree that obviously a used car is cheaper than a new one, but one should consider the extra cost for repairs, servicing etc plus the nuisance of a  break down

Also when I bought the CT, I found in the same Lexus garage, the same model sold  with low mileage at the same - after the discount I got - price...

So , although I respect the decission to buy a used one, unless we are talking about something that costs less than 4K or something like that, a new one is a better proposition in my view due to the PCP, discounts, warranties and peace of mind

But we agree to disagree

[Malc]

9 hours ago, steveledzep said:

I live in a different world !  I have a lovely home which I own and I like to own my vehicle too, without spending megabucks.  I like to drive a special vehicle without financial risks too.  Couldn't be doing with tenants who have little or no regard for the property.  Good luck to you.....not for me .

I agree with this, investments cars are NOT, even Classics can be costly to maintain especially, and you're lucky if they appreciate more than they cost " all-up "

property portfolios, well, unless you're a professional with a suitable sized portfolio I would question the rewards ( after tax ) outweighing the grief ( from poor tenants etc )

other " investments " well ...  buyer beware, values do go up AND down too.

NEW CARS  a crap way to invest imho .............  good and well considered used cars can be brilliant to run, rarely in the garage for repairs, less technology to go " pop " and can be minimal cost to purchase, often from spare cash that's earning  zero interest anyway !

 

Amongst other jobs/ careers I was a used car dealer for 10 years following being a let property owner and a career City banker.

I have by choice NOT bought myself ( with cash ) a new Lexus or any other marque, nor would I. I couldn't be arsed having to spend so much time in the garage/main dealer getting things " fixed "

I'm retired, started a new business ( 2 years now ) and happily running my brilliant used cars  ............  brand new cars are for companies with tax sparing capacity and personally, the thought of  using monthly payments that just cover depreciation, blimey, why would you want to just throw away all that depreciation in your hard earned cash.

Hope I'm not too " off the ball " here ...  maybe I'm just "old" with different life values eh 

Malc

 

[Spacewagon52]

38 minutes ago, Malc said:

NEW CARS  a crap way to invest imho .............  good and well considered used cars can be brilliant to run, rarely in the garage for repairs, less technology to go " pop " and can be minimal cost to purchase, often from spare cash that's earning  zero interest anyway !

Malc

 

I agree. Interestingly I get more of a kick out of buying cheaper cars - the expectations are low - and when you find out how good they are you get a very warm feeling. I bought a 1998 Jeep Grand Cherokee for £500, it was in such good condition and everything worked, I was more excited than when I bought my new car - never again new for me.

[mikeyv]

1 hour ago, talaipwros said:

 

well, insurance is £9 a month, gas certificate is 4 pounds a month, tax is 20% in a company, ant maintenance cost usually is less than 10% a year for the whole portfolio if it is well diversified and larger than 25

 

I agree that obviously a used car is cheaper than a new one, but one should consider the extra cost for repairs, servicing etc plus the nuisance of a  break down

Also when I bought the CT, I found in the same Lexus garage, the same model sold  with low mileage at the same - after the discount I got - price...

So , although I respect the decission to buy a used one, unless we are talking about something that costs less than 4K or something like that, a new one is a better proposition in my view due to the PCP, discounts, warranties and peace of mind

But we agree to disagree

I was talking about something less than 4K, but, as you say, we can agree to disagree, it's all about choice.

[noby76]

So from what i gather from responses so far it seems both new car buyers like Rayanns and vasileios and used car buyers all favour buying second hand rather than new. so one could say besides the feel good factor of driving a brand new car and manufactures warranty, 9 times out of 10, financing a new car Privately not as a company car is essentially flushing £££'s down the toilet regardless of the finance option one went for i.e HP or PCP? surely there should be instances where financing privately works out in favour of the buyer considering the number of new cars on UK roads?

[Spacewagon52]

2 minutes ago, noby76 said:

So from what i gather from responses so far it seems both new car buyers like Rayanns and vasileios and used car buyers all favour buying second hand rather than new. so one could say besides the feel good factor of driving a brand new car and manufactures warranty, 9 times out of 10, financing a new car Privately not as a company car is essentially flushing £££'s down the toilet regardless of the finance option one went for i.e HP or PCP?

Yes! IMHO!

[Malc]

there sure is a feel good factor in having a brand new car, I do know, having had company cars and early on in life buying my own brand new too ...... a  Hillman Imp 

BUT that feel good factor soon vanishes, coz the car isn't new after a few months................ and the need for a manufacturer's warranty with a brand new car just tells me that the buyer maybe NEEDS that ..........  so much to go wrong these days  ......  that's why one can buy an extended warranty to protect oneself against the inevitability of something serious going wrong ...............  and they can charge the earth for that, didn't someone pay £1495 for another years warranty on a new'ish Ls recently on these forums and the warranty costs suffered by Lexus were in excess of £15,000 ?

My Ls400 cost me £1400 some 6 years ago and since then I've done 70k miles in her at relatively tiny repair and servicing costs.........................  no depreciation there to worry about 

Malc

[Spacewagon52]

29 minutes ago, Malc said:

there sure is a feel good factor in having a brand new car, I do know, having had company cars and early on in life buying my own brand new too ...... a  Hillman Imp 

 

Hilman Imp - yes I had one. But we have both matured a little since then!