Help -buying a car should I buy new with finance or old with cash?

swimbikerun101

Some advice would be appreciated. I have managed for two years without a car just by cycling/walking, but the time has come where I really do need a car to get about. I only want something small, and would only be doing short journeys every other day- probably no more than 30 miles per week in total. I'm not fussy about what I drive, other than it needs to be small and reliable.

I can access £1200 cash savings instantly, and could borrow a further £1800 instantly from my bank using an overdraft (18.5%APR) - although i know this isn't a good road to go down I would be committed to paying it off as quickly as possible...

These are my choices (as I see them)

1. Buy new car on a 0% finance deal (although I would probably need to put down a sizeable deposit, which would mean accessing the cash in the overdraft - which is high interest). Pay 150-200 monthly, but, after the 3/4 year term I would own the car outright and thus have £3-4000 assett.

2. Seek out a 0% (or low long term %) credit card deal, buy something second hand fro a garage for £2-3000 and aim to pay back enough each month to ensure the card is cleared within the repayment term

3. Use the 1200 cash and buy an old banger outright, in the hope that it will get me through for a year or so of short journeys. No immediate debt, but higher risk of needing repairs...so is this a false economy?!

4. Borrow the extra 1800 from the overdraft and use it buy a friends car for £3000, which I know has been well looked after and is low milage. This would still leave me with monthly repayments, but for less time, altohugh the car would be worth less at the end of the term than option 1.

Any advice would be appreciated. I expect there is some sort of spreadsheet I could build to do the maths on what is the best option, but I am pretty hopeless at that sort of thing.
I don't really want to get into debt, but appreciate that most people do have to borrow for the privilage of having a car....

thick_tom

i would never buy a second-hand car.

swimbikerun101

Would that be for reliability reasons?

harrys_dad

30 miles a week is a negligible mileage. it does not make any sense at all to buy a car that will depreciate over the time you have it. Buy a petrol car as frequent short trips is no good in a diesel.

I would suggest buying the cheapest roadworthy car you can find with 12 months MOT. I assume that cost of insurance is important, so check that first too.

If it lets you down it will be almost as cheap to use a taxi. Are you in a town large enough to have any of the share a car schemes?

Ultrasonic

thick_tom wrote: »

i would never buy a second-hand car.

For balance, I would never buy a new car. FAR too much money wasted on depreciation.

interstellaflyer

swimbikerun101 wrote: »

Would that be for reliability reasons?

In your case not really an issue if you only do 30 miles a week, buy an old banger.

I wouldn't buy a new car or even put a couple of grand into a car that will only do 30 miles a week.

colino

Have a look at the bangeromics thread to see what can be done on a modest, sensible budget, but I do confess, having the costs of insurance, maintenance and tax disc on top of the purchase price hardly seems justified for such a small mileage. Have you considered a good deal with a local private hire company?

Ultrasonic

The original question is a tough one. For such very low mileage Taxis would likely work out cheaper, although I appreciate they are less flexible. You could also investigate if there are any local car share schemes?

At the risk of stating the obvious, you need to budget for insurance as well as buying the car, which depending on your age/driving experience could be pricey.

Buying a car from a friend can be risky, in that if there end up being problems it can cause friction.

The cheapest car buying option would probably be the buying a cheap (<£500) car approach, where if it develops an expensive fault you can scrap it and buy a replacement.

gilbert_and_sullivan

No fancy maths needed here, for your use and mileage fuel economy is of almost no concern, so you can buy a slightly larger engined car bearing in mind keeping it sensible for insurance purposes, the smaller engined very small cars are too popular and often fetch too much money for what they are.

Basically anything Korean or from the far east with a full MOT and a badge/model no longer fashionable, Hyundai Accent Kia Shuma even a Proton, anything along those lines.

£300 to £800 will get you a half decent motor, daughters friend picked up a Proton Wira for £250 with a full MOT recently in good nick and it runs a treat, he's not sad enough to give a toss what anyone else thinks of it.

I would never advise borrowing money to buy an item that depreciates.

Take someone who knows something worthwhile about cars with you to check any potential purchase.

Netwizard

harrys_dad wrote: »

30 miles a week is a negligible mileage. it does not make any sense at all to buy a car that will depreciate over the time you have it. Buy a petrol car as frequent short trips is no good in a diesel.

I would suggest buying the cheapest roadworthy car you can find with 12 months MOT. I assume that cost of insurance is important, so check that first too.

This is exactly what I was going to type but put better!

I do very short mileage too (40-50 miles a week, sometimes less). work is only 2 miles away so its a 4-5 mile round trip there.

I have an old Volvo (2.3 turbo petrol) which does 15mpg round town and can do 30mpg on a long run.

Everyone laughs when I tell them it does 15mpg, whilst they tell me that their diesels do 50mpg, but diesels don't like short runs and you will soon have EGR / DPF problems running a diesel such short mileage.

Obviously the car is paid for. Insurance costs me £220 fully comp, I fill it up once a month @ £80, and it gets serviced once a year which costs £50 or so and a pint to whichever mate is around to help me do it

Bangernomics is the best way to go with this. Pick the right car and you will have very little hassle, and your short trips mean that even if it does break down, a taxi for a few days here and there will not break the bank.

SLITHER99

The new car you buy has the benefit of a warranty, will likely have less problems, etc. However, if the car is over 3 years old (i.e. out of warranty) and you have financed it, you are obligated to fix anything that goes wrong. I was trapped with a 4 year old Mondeo until the finance was up. It cost me a bomb despite doing most of the work myself.

An old junker has advantages. Firstly, if it has major problems, it's no big loss to throw it off. Also, if you have a mind to, you can use it to start your amateur car mechanics efforts.

My rule of thumb. If it's a commute car, as in reliant on it for getting to work, buy a junker which scores high in reliability. So, Nissan, Toyota... anything driven by old people that aren't fashionable. The main reason is that most accidents happen on the way to work. So if you're unlucky enough for it to be you then there's no big loss to go and replace it.

If you are living on the breadline, as in factoring repayments into your monthly outgoing takes yiou right to your limit, you can't afford finance. Go buy a junker.

However, if it's a car you really want, as in it's a life car, and you can afford it then I see no reason not to finance it.

To summarize, financing a car should require a lot of jumping through hoops to justify it. But if you can afford it and you can fully justify it, go for it.