Used Car vs New Car

safersaver

Hi,

I typically take cars on PCP and change every 3-4 years for a new model therefore never owning the car.

I am at that stage again where it is time to do the same but am now considering buying used instead, or at the very least buying the new car outright at the end of PCP.

I have worked out that I can either:

1. Buy new - Pay £450 per month PCP - over 3 years, and final optional payment of £16k (where I would then take a further 3 yr loan to pay).
2. Buy used (already 3yrs old) - Pay £450 per month (bank loan) - over 3 years.

It seems like a no-brainer but since I have never went down the used car route before I was wondering what people's thoughts were. Effectively, I would own the car outright in 3 years if I buy used albeit the car would be 6 years old and prone to more issues. I would like to keep it then as long as possible after.

Or should I go with option 1 - it will take me longer to own it but at least I will know the history of the car. The APR for PCP is a lot more than the APR of the bank loan for option 2 and there is obviously the immediate depreciation of the new car.

Thoughts?

Ebe_Scrooge

Personally I've never bought a new car, always buy used. The only time I can see a new car being worthwhile is if you plan to keep it for many years ( say 10 years or more ). For me, I prefer a good used car, maybe 3 years old, bought from a decent dealer. It's a heck of a lot cheaper, a reputable dealer will correct any major faults and stick an MOT on it before they sell it, and there'll be some sort of warranty. It's not a cast-iron guarantee that there won't be any problems - but then, a brand new car can have problems as well.


My current car was bought at 3 years old, I've had it for 7 years, put 130K on the clock and ( touch wood ! ) it's cost me nothing other than standard consumables.

DUTR

safersaver wrote: »

Hi,

I typically take cars on PCP and change every 3-4 years for a new model therefore never owning the car.

I am at that stage again where it is time to do the same but am now considering buying used instead, or at the very least buying the new car outright at the end of PCP.

I have worked out that I can either:

1. Buy new - Pay £450 per month PCP - over 3 years, and final optional payment of £16k (where I would then take a further 3 yr loan to pay).
2. Buy used (already 3yrs old) - Pay £450 per month (bank loan) - over 3 years.

It seems like a no-brainer but since I have never went down the used car route before I was wondering what people's thoughts were. Effectively, I would own the car outright in 3 years if I buy used albeit the car would be 6 years old and prone to more issues. I would like to keep it then as long as possible after.

Or should I go with option 1 - it will take me longer to own it but at least I will know the history of the car. The APR for PCP is a lot more than the APR of the bank loan for option 2 and there is obviously the immediate depreciation of the new car.

Thoughts?

I'm not sure why you need to buy PCP to start with if you intend to keep the car after the term?
Wouldn't some deposit help also?
No qualm in getting a £32k car , but some own contribution to the purchase would be useful, a new car at £450 a month is not so bad, but a 5 yr old car at £450/month is painful.

Herzlos

Surely the best option is to borrow to buy out the car you've currently got; it's got a known heritage from new, and you should be getting a reasonable deal from it.

Unless it's no longer suitable somehow, of course.

bowlhead99

safersaver wrote: »

It seems like a no-brainer but since I have never went down the used car route before I was wondering what people's thoughts were. Effectively, I would own the car outright in 3 years if I buy used albeit the car would be 6 years old and prone to more issues. I would like to keep it then as long as possible after.

Basically if you buy new you are paying for a heck of a lot of initial depreciation which is borne in the first three year as the car halves (or worse) in value - this is the age range when value of a car is being lost the fastest. And you are giving extra profit to the PCP financer who charges more than the rates you would get on a personal loan (example, Sainsbury lend at something like 3.5% on £15k).

And if you want to change your mind after a year you are a bit stuck if you have any form of car finance tied against the car, whereas if you had bought your own private second-hand car with a personal bank loan you could easily just sell it and downsize/upsize to something else without telling anyone else. More flexibility when you own your own car.

As you identified, with the second-hand route (depending on the exact cars being compared) you still pay £450 but on the PCP route you have £16k owing if you want to get the car and with the other route you don't have anything owing, and already own a 6-year old car that's not very far (relatively) through it's 15 or 20 year life.

So, the question is would you prefer to have to be in a position where you have to a) pay £16k for a 3 year old car or walk away and pay £x for an old car; or b) pay £0 for a 6 year old car and have had some extra servicing costs along the way.

Many people would be happy doing b) and three years from now if you no longer really want that particular 6 year old car you will at least have value in it that can be put towards something you do want, rather than having nothing to really show for your last three years of £450 a month.

Basically if you want to drive around in a newer and shinier car now, you are simply borrowing from your future self - Because 'future you' is in three years time going to be an owner of a perfectly decent 6-yr-old car if he buys it now, but is not going to be a car owner if he has blown the money on PCPing instead.

Only you can make that decision but there are tens of millions of people around the country who are not on PCP deals so second-hand car ownership is not something to be afraid of.

reeac

safersaver wrote: »

Hi,

I typically take cars on PCP and change every 3-4 years for a new model therefore never owning the car.

I am at that stage again where it is time to do the same but am now considering buying used instead, or at the very least buying the new car outright at the end of PCP.

I have worked out that I can either:

1. Buy new - Pay £450 per month PCP - over 3 years, and final optional payment of £16k (where I would then take a further 3 yr loan to pay).
2. Buy used (already 3yrs old) - Pay £450 per month (bank loan) - over 3 years.

It seems like a no-brainer but since I have never went down the used car route before I was wondering what people's thoughts were. Effectively, I would own the car outright in 3 years if I buy used albeit the car would be 6 years old and prone to more issues. I would like to keep it then as long as possible after.

Or should I go with option 1 - it will take me longer to own it but at least I will know the history of the car. The APR for PCP is a lot more than the APR of the bank loan for option 2 and there is obviously the immediate depreciation of the new car.

Thoughts?

I've never gone in for PCP but as I see it it gives you a car on approval for 3 years so you can establish whether it's a good'un that you'd be happy to hang on to and at a known price. Takes away the risk.

peter12345678910

The thing is that old cars, have been tested. People know their problems, even with 3 year old cars some problems may appear outside the warranty.

I was looking at a Honda civic 2.2 tdi sport 2006 at 2,200 in very good condition. It did have a very cool space age look. But because it was an old car, I was aware of problems such clutch failure, and the cost of a turbo pump failure, and weak rear vision so I thought, forget it. Now if you bought it New you would not be aware of these problems.

http://kingstandingcarsales.co.uk/vehicle/name/honda-civic-sport-i-ctdi/

Iceweasel

Up until now I have always bought at 2 year old and sold at 5 year old - thereby avoiding the worst of the depreciation.

However due to big dealer and manufacturer 'contributions' (they never use the word 'discount') to the price of a new model this time I am buying new.

So I get the latest technology and exactly the spec and options I want - no more, no less.

My last few cars have all had some option missing or had some extra option I simply didn't need.

I'm taking delivery of a new car next week with 22.5% off the list price.

I'm putting the biggest deposit I can afford and spreading the rest on hire purchase - not PCP - over 3 years.

reeac

peter12345678910 wrote: »

The thing is that old cars, have been tested. People know their problems, even with 3 year old cars some problems may appear outside the warranty.

I was looking at a Honda civic 2.2 tdi sport 2006 at 2,200 in very good condition. It did have a very cool space age look. But because it was an old car, I was aware of problems such clutch failure, and the cost of a turbo pump failure, and weak rear vision so I thought, forget it. Now if you bought it New you would not be aware of these problems.

http://kingstandingcarsales.co.uk/vehicle/name/honda-civic-sport-i-ctdi/

Okay, so owning and driving a vehicle for 3 years tells you less about that particular vehicle than you can pick up from forums.

thescouselander

I used to buy nearly new cars until I discovered all of the discounts available on new ones. For me I prefer having something covered by the manufacturers warranty - especially on today's complicated cars where there is a lot to go wrong. Also, as already mentioned £450 pm is a lot to pay for an older car which could then hit you with a large and unexpected repairs bill.

Aletank

Your used to changing your car every 3 years, people change their car most of the time because they get bored / want a change.
Buying a brand new car, planning on keeping for at least 6 years, you'd be bored after the 3 years.
Buying a 3 year old car and keeping a further 3 years, you'll have some maintenance to pay for that your not used to and could be buying someone else's problem.
I'd go for a 1 year old with 4 years finance - bit of a compromise.


Brand New, 6 Years - £450 X 72 = £32400
1 Year Old , 4 Years - £450 X 48 = £21600
3 Year Old, 3 Years - £450 X 36 = £16200


Some high end cars available to you ! Just out of interest, What cars have you been leasing the last couple of times ?