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Picking a car: Used or New?

em_z
em_z Posts: 120 Forumite
Hi All

First time poster, long time lurker and I'm hoping someone can help...

I can't decide whether to buy a used car or go for a new one on finance. The most I have to spend upfront is about 3.5k inc part ex value of my current car.

I'm after something small, cheap to run and insure, stylish and also fun to drive. My current car was bought privately and is a complete bag of nails (I've owned it for 8 months and had to spend £800 on it) and I'm worried about getting stung again if I buy something older.

My other option is get a new car on finance - I've never done this before but have recently had a promotion at work and can afford the repayments etc. I really fancy a Fiat 500 and have seen a finace deal offering 2% APR with a final optional payment of 3.5k.

I really don't know what to do for the best...the new car will mean a warranty and no MOT for 3 years, but a finance agreement is a big commitment. An older car will be cheaper initially but I risk buying a donkey again.

I don't know much about cars and have nobody that can come with me and look at any. Any thoughts/advise would be much appreciated!

Comments

  • iolanthe07
    iolanthe07 Posts: 5,493 Forumite
    Although generally you lose a lot of money in depreciation when you buy new, there is nothing like the smell and feel of a new car, and the certainty that it will be looked after properly. The Fiat 500 has received good reviews from the motoring press, and the deal you mention sounds OK. You might want to look at a Fiat Panda as well; the same running gear as a 500, not so stylish perhaps, but much cheaper.
    I used to think that good grammar is important, but now I know that good wine is importanter.
  • pitkin2020
    pitkin2020 Posts: 4,029 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Nobody can answer that question for you. What one person will do will be the opposite of what the other person will do.

    Personally I have no interest in buying a brand new car and certainly not on finance due to the depreciation value. You could buy a car a few years old, better spec and cheaper which has already lost its forecourt value. You obviously have the worry of little to no warranty and the cost of repairs and MOT.

    You can obviously limit the risk of buying used by buying from a reputable dealer offering a decent warranty and having the car AA/RAC inspected. Add on a warranty for when the main dealer warranty runs out can also help.

    You pay your money you take your chance.
    Everyones opinion is the most important.....no wonder nothing is ever agreed on.
  • pinkteapot
    pinkteapot Posts: 8,044 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    The depreciation on brand new cars is crazy. Have you looked into used car finance options? I know they exist, but I've never looked at them so I don't know if the interest rates are significantly higher than those offered by dealers on new car finance.

    The reason I suggest it is so that you could look at a nearly-new car. Last year, we bought a Ford Mondeo which was one year old and had done 11,000 miles. It looked brand new. It didn't have the smell but it was in immaculate condition, still had two years of the manufacturer's warranty left, and cost us £12,500 while the list price brand new was something like £23,000 (obviously no-one pays that, but we still saved at least £6k at a guess).

    The worst depreciation is in the first year. If you bought nearly-new you'd be less likely to end up in negative equity on your loan, just in case something happens and you need to sell the car.

    Obviously as a money-saving site, the best option is to buy second hand and not take out finance. :) I can understand your nervousness though as it is a bit of a lottery with second-hand cars.
  • GolfBravo
    GolfBravo Posts: 1,090 Forumite
    Well, you need to make the final decision, but there are two general rules:
    1. When buying a new car, buy one that keeps it's resale value well (e.g. BMW, VW, Audi, Skoda, etc.). Avoid cars that depreciate fast (e.g.. Renault, Citroen, etc.). You will save a lot of £££ when selling the car later on.
    2. When buying a used car, buy one that has depreciated a lot (e.g.. Citroen, Peugeot, Renault, Kia, Chevrolet, most Fiats, etc.). You save a lot of £££ up front.

    Speaking of Fiat 500, they get very good reviews, are very economical and hold their resale value quite well (our neighbour has one, bought it 3 years ago, very reliable, 60K miles, still looks and drives like brand new). Same with Fiat Panda, but there is a new shape coming soon (next month I think?).

    Nothing really beats the smell and (usual) reliability of a new car, but on the other hand you save a lot of money when buying a good and reliable nearly-new used car. I guess you need to work out your budget very carefully (don't forget insurance, tax disc, fuel consumption, servicing costs) and take it from there. New car depreciation is like throwing money out the window, and with a used car you just don't know what you're buying (there must be a reason why somebody else is selling it).
    "Retail is for suckers"
    Cosmo Kramer
  • I was in the "never buy new" camp until 2 weeks ago when I picked up my brand spanking new Audi A1 and now I am a convert. yes, it will depreciate in the first year yada yada yada, but nothing beats that new car smell lol. No MOT for 3 years, free servicing for 5 years, warranty, Audi Roadside Assistance for 3 years, and a car that is beautiful and will retain its value well. I have mine on a PCP; DH has just come to the end of his PCP and it has worked for him (Audi A4, still had £4K equity as deposit for new car, though of course he could have bought it out right).

    Until now I had used cars (always from approved suppliers though) and they have been fine also.

    It's horses for courses and whatever you decide enjoy your new car :j

    WCL
  • em_z
    em_z Posts: 120 Forumite
    Thanks very much all! Very helpful stuff...and I decided not to buy new, mainly as a result of the info regarding depreciation. I've bought a Fiat 500, 3 years old, 1 owner, beautiful red colour for half the price of a new one. I'm really happy with it, so thanks again!
  • blacksta
    blacksta Posts: 919 Forumite
    em_z wrote: »
    Thanks very much all! Very helpful stuff...and I decided not to buy new, mainly as a result of the info regarding depreciation. I've bought a Fiat 500, 3 years old, 1 owner, beautiful red colour for half the price of a new one. I'm really happy with it, so thanks again!

    Best decision - Always wait for a mug to take the depreciation hit before buying - same car , but major savings :D
    I owe £3233 @ 0%
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