Buying a Banger vs Long Term Rental

MaximumFish

Here's a morning teaser for you clever peeps... The missus and I are currently in Oz on a year's working holiday, with just over 8 months remaining. We're sick of getting the bus/train everywhere so have decided to get a car.

For the sake of 8-9 month's of driving we've decided to keep it cheap, so have been looking at spending around $2000-$3000. Of course for that money you don't get much. As an example, tomorrow we're going to look at a 1989 Peugeot 405 for $2500, although it's admittedly a top-of-the-line-at-the-time MI16 edition. Add to that the cost of insurance ($270 third party), "rego", which is essentially the tax and MOT in one (due to expire in March on this car, which is a long time for the price range we're looking at) and the potential risk of breakdowns etc.

This got me thinking... For just over a grand a month we can rent a near new Holden Commodore SV6. All the insurance, rego, servicing etc is included in the price (though admittedly with a high excess), meaning that over the 8 and a bit months we could drive a $37,000 car for just under 9 grand and not have to worry about selling it before we leave.

So, in the grand scheme of things, and ignoring the cost of petrol for a moment (1.9L Peugeot vs the 3.6L Holden), which works out as the better value overall? Obviously if nothing goes wrong with the 405 and it passes the rego in March, it's a whole lot cheaper, but it's a big if...

Any advice from you money savvy lot is much appreciated!

marlot

If you buy you have the hassle of selling at the end of your stay. My cousin (from NZ, when visiting the UK) managed to do a deal with the local trader she bought the car from, that he'd buy it back from her at the end of her stay - they even agreed the price up front (subject to mileage and condition). That meant all she had to do was drop it off with him when she was ready to leave. It was a winner for both of them.

If you do rent, lots of rental companies do very attractive long term rental prices. Certainly for the UK, the price drops dramatically for over a month.

Is there somewhere in the middle between buying a wreck and renting a near new? You may have to be creative and suggest a deal to a local trader, like my cousin did.

mikey72

How much will it cost for the excess if someone puts a dent in it?

MaximumFish

For the rental? Initially $3K, but if it's not my fault then I'd get it back.

vaio

Gut feel is buy the banger and sell (or even give it away) when you leave. Even without the excess on the hire car (a huge potential extra cost) just the hire fee means you could buy two or three bangers for the same money.

Insurance is interesting, as you are on a working holiday I’m guessing you are on the youthful side, what are the chances of a couple of young Australians coming over here and getting insurance for a M16 405 (or indeed anything else) for $270 (=£170)

mikey72

MaximumFish wrote: »

For the rental? Initially $3K, but if it's not my fault then I'd get it back.

With a rental it's always your fault.

mikey72

vaio wrote: »

Gut feel is buy the banger and sell (or even give it away) when you leave. Even without the excess on the hire car (a huge potential extra cost) just the hire fee means you could buy two or three bangers for the same money.

Insurance is interesting, as you are on a working holiday I’m guessing you are on the youthful side, what are the chances of a couple of young Australians coming over here and getting insurance for a M16 405 (or indeed anything else) for $270 (=£170)

Obviously their young driver don't "have acidents that cost £millions"
"have 99% of all accidents, even though they're only 0.1% of all drivers" or whatever the excuses are this week.

MaximumFish

Uh, I'm 31 and my missus is 27. Not sure we count as young drivers, well not me at least.

vaio

Ahh, I’d assumed a 417 visa (and wrongly remembered the upper age limit was 26)

Anyways in my world 40 qualifies as a youngster!

Still, go for the banger

forgotmyname

If the accident is not your fault you get it back but how long will it take them to decide that, 9 months and a day?

If your on a budget you want the cheapest car in the range with the least bells and whilstles to go wrong.

Can you afford to payout $3k if you have a bump? Whay if you had to make a 2nd claim?

My choice would be a cheap budget banger, Tidy condition even if it is a bit basic inside.

Thats better when repairs are needed.

lfc321

In your position I would be buying used, but maybe something a little newer. You're talking about a 22 year old car here - an awful lot of things can go wrong with a car that old = potential big bills.

For $3000 you should be able to get something from the mid-90s. Still no spring chicken, but not quite so ancient and perhaps a slightly lower chance of breakdowns.

Whatever, buying is definitely the way to go. These cars have been through the worst of their depreciation: you will be able to sell it for not that much less than you bought it for. I reckon you could buy, run and sell two cars and still not be anywhere near the $9000 cost of a hire car.