Should I Buy New or Am I Being Seduced By Scrappage?

chambta

My car now qualifies for scrappage due to the extension recently given by the government and I was planning to replace it anyway as we have a new baby on the way and I want something bigger and more reliable.

I don't drive more than 4000 miles pa due to (at present) being able to stroll to work although it's possible that could change.

I was looking at getting an Astra/Focus sized car 3-4 years old in the £5,000-£7,000 bracket.

Now all of a sudden I could have a brand new Seat Leon 1.6 from my local dealership for £9999 or a Citroen C4 for under £9k from another.

Am I being silly considering spending more than I was for the number of miles I do or will the resale value later make it worth thinking about?

In terms of financing the deal I'm fortunate to have built up enough cash to ensure borrowing isn't a necessity though I'm likely to choose to borrow some (cheaply as bank staff I can take loan @ 7.3%) to keep cash back for a house move that's also on the horizon.

Thoughts anyone?

LandyAndy

For such a low annual mileage you'll probably be better trying to sell your current car privately and going for a second hand vehicle and negotiating a discount.

Hintza

Have a look for AdrianHi's posts on this subject. You need to really sit down and pop it into a spreadsheet.

But at the end of the day not everything comes down to money. We are about to build a new house and there is the possibility we might need to knock down our house and move into a caravan before we start. I'm trying to figure out how much it is worth to me/us not going down that route.

I'm thinking on about £5k just to stay sane and out of a caravan but that might change if I feel finances are going to be stretched too far.

AdrianHi

The principle I look at is not what does it cost to purchase or otherwise obtain the use of the car but what will it cost you on average per month or year while you have the use of the car. The real cost is depreciation plus all the other expenses. If you can get 20%-25% off a new / nearly new car you can get the average monthly depreciation figure down to near the level it is at for a 3+ year old car and then you don't have to pay for MOT, warranty (or repairs), breakdown cover or any wear and tear maintenance (4000 miles a year brakes, tyres etc. will last a long time on a car from new).

chambta wrote:

Am I being silly considering spending more than I was for the number of miles I do or will the resale value later make it worth thinking about?

No not beeing silly at all in my opinion, worth doing the sums. I frequently do the sums and find nearly new cars or brand new cars with a £2K discount due to scrappage discount do sometimes work out cheaper / about the same or so little extra it's worth doing it to be in the new car.

I've done the excercise enough times to know that for a new car in the up to £12,000 bracket (or even £14,000) discounted by £2000 for whatever reason with 36 months (or more with Kia Ceed) you will almost certainly at least break even compared to buying a 3 year old. The pre-condition is that you are able to fund the purchase price without "financial stress" whch you say you can.

How about this:
at https://www.mazda.co.uk it is unclear exactly what scrappage discount they will give you but they say at least £2000 and can be up to £6000. Mazda finance are offering 50% depsoit (which I think you have) and then 0% finance over 3 years. £13500 - £2000 scrappage = £11500 for a Mazda 3 1.6 S 5 door hatch on the road - before haggling. £35 road tax.

I could bang the numbers into my spreadsheet to prove it if you really want but I'm virutally certain the new car on scappage £2K off is the way to go.

AdrianHi

Have a look at this thread:
http://forums.moneysavingexpert.com/showthread.html?t=1976541

chambta

Thanks Adrian.

Out of interest what's this spread sheet you have and what does it tell you?

I like the idea of a new car but I'm well known for thinking carefully about my financial decisions! I'm also fortunate that my best mate works at a Seat dealership and (presumably!) will do me a good a deal as he can. Also he reckons he can get me a new Leon in 2 weeks which sounds good.

gilbert_and_sullivan

At your mileage i'd take advantage of the amazing value of 8 to 10 year old Lexus 400/430 and Honda Legend.
These really go for buttons now, if you get one with a proper service history around 100 to 140K miles it will last you donkeys years with almost zero depreciation, comfort and very safe too....i hope the pedants don't quote NCAP at this point...don't hit a Lexus 430 with your 5* Ncap supermini to find out why.

I wouldn't be surprised if you can fuel one for the cost of depreciation of a new car.

I only suggest this because used smaller cars are fetching quite ridiculous prices, and you low mileage means you could be on a winner.

chambta

gilbert_and_sullivan wrote: »

At your mileage i'd take advantage of the amazing value of 8 to 10 year old Lexus 400/430 and Honda Legend.
These really go for buttons now, if you get one with a proper service history around 100 to 140K miles it will last you donkeys years with almost zero depreciation, comfort and very safe too....i hope the pedants don't quote NCAP at this point...don't hit a Lexus 430 with your 5* Ncap supermini to find out why.

I wouldn't be surprised if you can fuel one for the cost of depreciation of a new car.

I only suggest this because used smaller cars are fetching quite ridiculous prices, and you low mileage means you could be on a winner.

I was actually thinking of a Lexus but a more recent IS200. To be honest I'm not going to get anything as old as I have now. Decent shout though cheers.

gilbert_and_sullivan

chambta wrote: »

I was actually thinking of a Lexus but a more recent IS200. To be honest I'm not going to get anything as old as I have now. Decent shout though cheers.

I really like the IS200/300 meself and if you've been under them thoroughly they are very well made, but i notice many of them are now in the hands of owners more suited to ageing 3 series BMW's with huge bodykits.
Which is a pity as it makes sifting through to find the proper cars more difficult...not really a problem with the 430's as Barry can't park a bespoilered Pug 106 let alone a proper car..;)

chambta

Bodykits ain't my thing. Some of the IS200's seem really good value in the £6-8k range. Lots of car for the money and I may be wrong but I wouldn't expect my light miles to cause much further depreciation over a 2-3 year period.

AdrianHi

chambta wrote: »

Thanks Adrian.

Out of interest what's this spread sheet you have and what does it tell you?

I like the idea of a new car but I'm well known for thinking carefully about my financial decisions! I'm also fortunate that my best mate works at a Seat dealership and (presumably!) will do me a good a deal as he can. Also he reckons he can get me a new Leon in 2 weeks which sounds good.

The spreadsheet is something I first made up myself about 4 years ago when I wanted to figure out if I could afford to own the car I have now or not.
It includes things like fuel prices, loan interest rates, saving interest rates (so you can work out what it costs you to sink x amount of cash into the car), a way of estimating depreciation, somewhere to note all the other expenses.
The result is figures slightly higher than what What Car used to publish as "real cost" of cars over the first 36 months and 36,000 miles of their life.
4,000 miles helps you out a lot as expected but you will still loose money on a car due to time, it's not goign to help much with depreciation.

Anyway some numbers based on a mixture of fact, data from https://www.parkers.co.uk and reasonable estimates.

4000 miles a year, the figures are not 100% accurate, but a reasonable estimate and one which I would (and have) spent my own money on.
Buying a 52 plate Lexus IS 2.0 SE Auto from a main dealer for about £6000 and trading it in again 3 years later for about £2500. Assuming £350 a year extended warranty / allowance for out of warranty repairs.
compared with
Seat Leon 1.6S bought for £9999 on the road including all discounts for scrappage etc. and traded in 3 years later for about £6000. No need to pay for warranty or allow for out of warranty repairs.
The Lexus is still a fair bit more expensive at £348 a month compared to the Leon at about £301 a month.
If the low mileage got you an extra £600 back on the Lexus it still works out at about £330 a month.