Buying a £20k car, sell in 2 years, just pay off depreciation

MARKMAKAVELI

I'm hungover so go easy....

Let's say I get a loan for £20k which costs me £575pm/3yrs. I use it to buy a £20k car and it looses 2k per year in depreciation.

I could then sell it in 2 years for £16k but I enjoyed a nice, modern, reliable car in this time. I've paid £14k of the loan in that time, use £6k of the sale price to pay I'll loan off, then I'm left with £8k cash.

I appreciate the maths are very much rough but as a guide is this doable or is it a messy, overcomplicated, financially ridiculous pipe dream?

arcon5

What about interest of that £20k per year?

Where's your depreciation figures come from?
It won't fall evenly. It may even drop by £5k in value in the first year then a few £k next year and so on. Also depends how much mileague you put on it.

More like you pay £2k over 2 years interest, sell at £13k, you've paid £4.5k per year for the car. So not really a scenario that makes you financially savvy as you could buy the £20k car, keep for say 5-10 years and over this time the cost works out less per year.

gilbert_and_sullivan

£700 interest on £20k over 3 years? i don't do loans but that rate sounds too good to be true.

£20k car losing £2k per year, only if you choose very wisely, then type of car this might apply to is more than likely going to cost big time in upkeep.

WellKnownSid

MARKMAKAVELI wrote: »

I could then sell it in 2 years for £16k but I enjoyed a nice, modern, reliable car in this time. I've paid £14k of the loan in that time, use £6k of the sale price to pay I'll loan off, then I'm left with £8k cash.

Or you could lease the same car for £175 a month, leaving you with £9,600 at the end from the £400 a month you saved and no risk that you struggle to sell the car for even 50% less in two years because everyone's gone off diesel / gone electric / tax bands have changed in the meantime,

forgotmyname

Even at 3% the interest will exceed £700. Will a £20k car really only depreciate £2k a year?

I bought a 5 year old car for £17k less than its new price.

If you can get more than £12k for it after 2 years you did well.

You forgot to add the interest onto your final payment. And what about servicing costs?

MARKMAKAVELI

Ha pipe dream it is then, thanks for the helpful, non-hungover replies!

As for the lease option, there are some great deals out there which I may well go for, but I was curious about a particular 4x4 which are always over £500pm lease prices. (bmw x6)

konark

Mate, it'll be worth £16k the minute you drive it off the dealer's forecourt. And that's if it's 2nd hand, if it's new it will be worth £10k in 3 years.

bigjl

£20k car that only loses £2k a year in depreciation?

Good luck with that

If you want to have some savings in 2yrs then what you are planning won't work out like you think.

As an example, a £20k is more likely £16k if you were to trade it in right away.

If you bought at Auction and paid no interest on the £20k you might be near the mark. But only if you buy correctly at Auction.

bigjl

MARKMAKAVELI wrote: »

Ha pipe dream it is then, thanks for the helpful, non-hungover replies!

As for the lease option, there are some great deals out there which I may well go for, but I was curious about a particular 4x4 which are always over £500pm lease prices. (bmw x6)

You actually want an X6?

A car so chavvy that even Essex won't buy them.

robatwork

Did you pull that £2k per year figure out of the air (albeit air that is still laced with toxic alcohol fumes)?

If you can point me to the model of £20k new car that loses only £2k for the first 3 years, do let me know.

(I am assuming it's new as you mentioned nice, modern, reliable)

gilbert_and_sullivan

robatwork wrote: »

Did you pull that £2k per year figure out of the air (albeit air that is still laced with toxic alcohol fumes)?

If you can point me to the model of £20k new car that loses only £2k for the first 3 years, do let me know.

(I am assuming it's new as you mentioned nice, modern, reliable)

Toyota Hilux.