Replace car now, or wait?

patp

Hi,

I am trying to decide whether to replace the car now, or wait a year and leave the money in the bank. Currently driving an eleven year old Citroen with 90k miles, which I've had for most of its life. It's reasonably well maintained and in good condition. But at that age, seems likely it will let me down sometime in the near future.

I have cash to buy a new car, which would have some benefits: it would be a lot newer and hopefully then more reliable; it will be diesel, so cheaper to run, and also cheaper to tax; and I will enjoy having it (S-Max - more seats for the kids and allegedly more fun to drive).

Financial acumen suggests I should keep the loyal old Citroen as long as possible, but I'm wondering if that's right. Inflation is high and interest is low, so that cash is getting less valuable compared to an S-Max. Suppose I can only get £100 interest on the cash in a year, but the price of the car goes up substantially more than that (or in other words, I can not get such a good one for my money). Coupled with the cheaper tax (£75 less) and fuel costs (£200ish) this suggests that, weirdly, I'd be better off buying a new car now than later.

I must be missing something, what is it?

OddballJamie

You're missing depreciation, you longer you put off buying a new car the less you will lose.

Has the Citroen become unreliable or started costing money in repairs?

patp

OddballJamie wrote: »

You're missing depreciation, you longer you put off buying a new car the less you will lose.

Has the Citroen become unreliable or started costing money in repairs?

Am I though? How much difference is there between the depreciation on a 3-year-old car costing £10000, and the depreciation of that money's buying power due to inflation? It looks to me that a year down the line, taking into account inflation and the difference in running costs, I would be looking at buying a car a bit worse than the one I'd buy now. In other words, one that had depreciated relative to what I'd buy now. If I estimate inflation at 5% (I think it is that for high value items), then my £10000 will be worth about £9500. It I subtract the £275 I will have to spend extra to drive the petrol-thirsty Citroen, I get a buying power of £9225.

No, the Citroen is doing fine, but it's 12 years old, and when I was first driving, a car of that age would be falling apart. But maybe they are better now.

fivetide

It might fall apart but it isn't worth much at all. It might not fall apart other than wear and tear bits that happen to any car, including any used replacement.

Personally I'd drive it until the wheels fall off and not worry about might.

OddballJamie

patp wrote: »

Am I though? How much difference is there between the depreciation on a 3-year-old car costing £10000, and the depreciation of that money's buying power due to inflation? It looks to me that a year down the line, taking into account inflation and the difference in running costs, I would be looking at buying a car a bit worse than the one I'd buy now. In other words, one that had depreciated relative to what I'd buy now. If I estimate inflation at 5% (I think it is that for high value items), then my £10000 will be worth about £9500. It I subtract the £275 I will have to spend extra to drive the petrol-thirsty Citroen, I get a buying power of £9225.

No, the Citroen is doing fine, but it's 12 years old, and when I was first driving, a car of that age would be falling apart. But maybe they are better now.

Maybe it's late but reading that hurt my head.

Strange thing about cars I've noticed is they don't seem to be going up in price anywhere near the rate of inflation. If you look over the last 20 years, cars are actually a bargain when you take inflation into account.

Anyway back to the point, if you buy a £10,000 car now it will lose more money in depreciation than your money could ever do due to inflation.

If you want to treat yourself and buy a newer car then do it, just don't try to justify it by claiming you're saving money. Because you wont.

SCO

OddballJamie wrote: »

If you want to treat yourself and buy a newer car then do it, just don't try to justify it by claiming you're saving money. Because you wont.

I agree.

If the car is 10k this year, in 3 years it will prob be worth between 4-5k if your lucky.

Richard53

fivetide wrote: »

It might fall apart but it isn't worth much at all. It might not fall apart other than wear and tear bits that happen to any car, including any used replacement.

Personally I'd drive it until the wheels fall off and not worry about might.

Spot on. Save your money until the Citroen starts going wrong (mind you, judging when that happens is an art, but it's not yet).

And have you checked with owners on the real fuel costs of the S-max (not the manufacturer's figures)? It's a big, heavy car. When my OH was thinking of changing her Focus, she was warned off the S-max by the salesman, who hinted that the fuel consumption would be frightening compared to the Focus. In the end, she changed to another Focus and he did himself out of a better sale, so he was probably telling the truth.

OddballJamie

Real MPG for the S-Max
http://www.honestjohn.co.uk/realmpg/ford/s-max-2006

patp

Thanks everyone for talking me some sense!

DKLS

If its running ok, I would keep it til it throws a big bill, bil had an s-max as a company car which had to go back as it was costing the firm too much.

Strider590

Think of it this way.......... The car your driving, is not worth its market value, it's worth what it'd cost to replace it with a newer car.
It may throw up a £1000 bill in the future, but your newer car will throw that down the drain in depreciation, thats spending money and getting nothing in return, which to me is pretty stupid.

If it's doing fine i'd say stick with it.

Warning - At that age, I wouldn't be surprised if it's on it's 2nd battery (roughly every 5-6 years), in which case it'll likely fail to start at some point in the next 3 months. £50 for a battery is still cheaper than a new car.

Diesels aren't cheaper to run, not if you do short journeys, look up DMF and DPF failures.
http://www.theaa.com/motoring_advice/car-buyers-guide/cbg_fuel.html
When one of these goes, your looking at £1000-£2000 repair bills, which means you might as well have just bought a petrol.

Diesels being more reliable and cheaper to run, is becoming as outdated as "VW Golf is the most reliable car", it was true decades ago, but is entirely false now that they have so much unreliable emissions junk bolted onto them.