How to loose less money on car buying?

Bachelorplace

Hello,

I have mild numbers discalculia and hence time for the experts.

I have two cars I want to buy.

An Old BMW 7 Series - 2015. Around £32,000
A new BMW 7 Series - late 2015 / 2016. Around £45,000

Both cars are good.

I like them both and this is where I am stuck. I normally buy cars cash. And then calculate my losses based on what the car resells for. This is ALWAYS cheaper than finance.

However which one is the lesser of the drastic buying decision the old one or the newer. Based on the following factors.

1. An old 7 Series has done most of its depreciation, due to the new model arriving in 2015. But is less desirable in 3 years time, because a newer model will have devalued to allow larger market affordablity.

2. The newer 7 series will fetch more money in 3 years because it is more desirable.

3. Both cars will only appeal to certain market share and thus both cars will be hard to sell.

Question:

Do I need to focus on the TOTAL loss of cash on both assets, or the comparable loss?

i.e. A car that costs £32,000 in the first place will loose less than a car that costs £45,000 in the first place - or not really?

dannyrst

Buy the one you can afford. If you can afford both, buy the one you like more. You're going to lose many thousands on either, so why settle for something cheaper if you aren't going to enjoy it as much?

EssexExile

You're not going to "lose" money, you're going to "use" money to get the car you want. That's what money is for.

Herzlos

Bachelorplace wrote: »

i.e. A car that costs £32,000 in the first place will loose less than a car that costs £45,000 in the first place - or not really?

Generally, yes. I mean, the £32k car was £45k a year ago.

The fact the older car is an old model may mean it's not quite as clear cut, some of the value drop will be due to that.

In terms of actual £/month, the older car should be a bit better off depreciation wise, because the fastest falling year has already happened.

Have you had a look at a broker to see how much you can get a new one for? Have you looked at taking out finance for a better deal and then paying it off?

MattTheMoneyGuru

I don't think there is a right or wrong answer here. It a very personal thing. Personally I'd just look at the current cost of both cars and decide whether I can afford it. Then I'd decide whether the newer model is worth the extra cost. I'd take in to account what else I could do with the £13,000. If you're interested in limiting losses use this £13,000 for something more predictable and more likely to appreciate than the second-hand car market.

If you're looking to limit the depreciation, a very general rule I'd suggest is the lower the cost, the lower the depreciation value in £'s. Although there are a number of variables i.e. whether either model becomes a 'classic', whether there is a fault discovered further down the line in either model etc.

AdrianC

Bachelorplace wrote: »

An Old BMW 7 Series - 2015. Around £32,000
A new BMW 7 Series - late 2015 / 2016. Around £45,000

The newer 7 series will fetch more money in 3 years because it is more desirable.

There is £13k difference between them now.

Will there be £13k between them in three years?

If the difference is more, then the newer car has lost you less money.
If the difference is less, then the older car has lost you less money.

This ignores what you could have been doing with the £13k in the interim, of course, or the cost of borrowing that extra money.

It also ignores the minor detail that if you're buying a near-new 7-series, then you are already putting a lot of factors above simple cost of ownership.

foxy-stoat

Buy the £32K one and stick £13K in Premium Bonds.....when you come to sell the £32K car for whatever you get for it in 3 years time you will still have your £13K cash (assuming you dont get a big win).

How did you get on with your 5 Series a couple of years ago that you sold?

MataNui

You say the older one will be less desirable in 3 years time so worth less. Is this because the new one has had a significant facelift in terms of visual appearance or notable equipment or are you just thinking because its a year older?

I can pretty much guarantee you that the difference in value wont be 13k because of either. I think its a reasonable bet that with the additional depreciation hit of a new car that one will 'lose' you the most in a 3 year time span.

But. Buying a car is about a lot more than money so only you can decide if the extra 13k is worth it.