Outright car ownership: Is it still viable?

blacksta

Late 2006 i paid 13k for two year c class and sold it for 4500 in Apr 2011 - I know cars are depreciating assets - I felt 8500 was a lot to lose in that time.


I am on the look out for another car (vw golf) and would like to mitigate this loss by looking at the lease option. I plan to have the car for a minimum of 4 year.

Is it still viable to buy a car outright nowadays - I cant afford to take that level of loss the second time round. ( Not sure if it is even possible)








sorry if this matter has been discussed before .

Ebe_Scrooge

Doing some quick 'n' dirty maths, the car cost you £8500 over 5 years, so £1700 per year, so £141 per month. What are the lease payments for a similar car - more than £140 I would wager ?

OK, you've got other costs such as insurance, servicing, etc etc etc to factor in, which may be included in the lease payments ?

But at least buying outright, you own the car, albeit it depreciates. If you lease, you still have (similar ??) payments each month but own nothing.

Also, if you buy a 3 year old car in good nick with full history, a large chunk of the depreciation has already happened. And you can keep it for as long as you like.

Another quick 'n' dirty example - I bought my car 8 years ago, 3 years old at the time. Paid 6.5K for it. So it's cost me £800 a year, even if I scrap it and get nothing for it ( again, ignoring the other running costs, if we're just comparing purchase price versus "not purchasing" ). No major repairs in that time, just routine servicing and consumables.

Looking at it that way, it's a no-brainer - buy outright. Of course, I don't have the prestige of driving around in a nice shiny new car all the time, but hey, this is MSE.

I guess the one thing that may sway it is if all servicing, repairs, MOT's and everything are included in the lease cost - these are things you obviously have to pay for yourself if you own the car, so you need to make sure you're comparing like-for-like when your doing the sums.

That's my two-penn'th for what it's worth.

sinbad182

Depends on the onus you place on actually 'owning' your car.

Some people like to have the asset, and cut their cloth accordingly to afford a car that they 'own'.

Some people really dont care who owns the car, and are happy to pay a set fee every month for a new, warrantied vehicle sitting on their drive.

Mr_Mink

It depends really. I did some fairly realistic sums of running a car with a 50 mile round commute that took in pretty much all costs bar depreciation though it wouldn't be hard to add that in. So:

Bangernomics - Mazda 6 1.8 petrol w/ 120,000 ish on the clock, costs around £800, overall running costs for the year are about £2500 provided you self service

Mid range (but would effectively be leasing at £99 a month which is the cheapest lease deal I've seen (Citroen DS3 10k a year mileage limit) - Would be around £3300 a year, so £800 more

New(ish) car - VW Up includes a hefty £256 per month finance, once running costs are factored in (including a paid up service plan so service costs are not in the total) £4100 par year, so another £800 on top and of course there's depreciation to factor in to this total too.

So the moral of my maths is, an old banger is cheapest, followed by leasing, following buy buying a newer car (if you're using finance), take the finance out of the equation and the newer car drops to being the cheapest. These figures are pretty personalised to my situation but I'm sure there's some useful numbers in there.

Weird_Nev

I've kept complete logs of costs of all my cars. A couple of them, I probably could have leased something for cheaper... something very basics. But I love my cars. I've very rarely lost money on them.

Cars depreciate. That's a fact. You seem to begrudge paying £8k for 5 years use of a car. How would those five years have gone without your own transport?

I've owned some really fun cars, some old, some not so old, and kept them in good condition. I've raced them at the track, taken them to the Nurburgring, had a real laugh. I wouldn't do that with a Hyundai i10 at £99/mo.

Toyota MR2 1988 - Bought £1,600, sold after 2 years £1,600
Nissan 200SX 1997 - Bought £4,200, sold 2 years later £3,800
BMW 328i - Bought for £700 with 160,000 miles on it, sold after 2 years and 18,000 mles for £700!
Subaru IMpreza WRX Prodrive: Bought £5,500, sold after a year for £5,000.

Sure, there's some fuel, insurance and maintenence in there, but all cars need that.

I'm a firm believer in buying cars outright and doing as you please with them.

blacksta

I am leaning towards the buying outright as i am concerned about having nothing to show after a 4 year lease term.

I would also like to consider something at least 3 or 4 years old. Will it make sense to wait till March 1st when new plates are issued I understand cost of older cars may even drop further.

forgotmyname

If you want to avoid the losses you need to choose a car that has lost the bulk of its value already.

Lease cars still lose the same amount of value as a privately purchased car and your pay the lease company for that loss.

Buy at 3 years old and the car will have lost the bulk of its depreciation. If you goto 5 years old then it will be even less.
Buying a cheaper car is also the way to go.

Its OK saying buy a Mercedes because they only lose 10% of their value. But that 10% is probably enough to buy a new but pre registered small hatchback.

Every day the hatchback keeps going is saving you money.

My 2004 car was just over £2000 in 2009... Still going strong so even if i throw it away now, Its lost a lot less than most cars lose in a year.

Ebe_Scrooge

blacksta wrote: »

I would also like to consider something at least 3 or 4 years old. Will it make sense to wait till March 1st when new plates are issued I understand cost of older cars may even drop further.

Buying at 3 - 4 years old = sensible ( in general ). Someone else has taken the hit on depreciation, any "new car niggles" will ( should have ) been dealt with. As long as it's been maintained properly you will generally get a decent motor ( the usual caveats apply, of course, there's always a bad apple to spoil the barrel, but we're speaking in general terms here ). Someone who's bought new will **usually** have it serviced regularly, if for no other reason than to keep their warranty valid.

Waiting till March is a good idea. Someone who wants a new car will mostly buy then in order to get the new reg plate, so there will be a relative glut of second hand cars hitting the market. As well as lowering prices slightly, it means you have more choice - if you see a car you like, but the dealer won't give you the deal you want, then the old adage of "walk away, there's plenty of other similar cars to choose from" is especially true. In fact, that's one reason they changed from annual to twice-yearly new registrations, precisely to help reduce this effect and even things out a little.

Wh05apk

Mr_Mink wrote: »

New(ish) car - VW Up includes a hefty £256 per month finance, once running costs are factored in (including a paid up service plan so service costs are not in the total) £4100 par year, so another £800 on top and of course there's depreciation to factor in to this total too.

But presumably after 3 years you would own the car? also you would not need to factor in depreciation, as this is not another up front cost, which you only realise when you sell the car, so possibly in your example, you may have paid £7,000 for the car, but could then sell for say £4,000 in 3 years time, effectively reducing the annual cost to ~ £3,000, also what is £800pa? surely not a service plan for an UP, even at VW rates that seems ridiculously high?

EdGasket

I paid £1,000 for my car 7 years ago. It's just passed it's MoT again so good for another year. It's a Hyundai Lantra; absolutely bullet proof; excellent car. The tax and insurance costs more per year than the depreciation by a long way.
If you lease a car you have to fix any scrapes and scratches before returning it otherwise you get charged a huge wedge. Read the terms and conditions carefully.

Cornucopia

There is a ton of new business out there for any manufacturer/dealer who can offer any kind of guarantee on future depreciation.

For a brand new car, leasing/PCP offers an element of this, but invariably the figures are skewed towards offering a potential deposit for the next purchase, and you are paying interest on the whole of the residual value.