Car Finance - pay off or get another car?

Chloe_G

I am paying 0% monthly payments on my car and after two years I have to pay off the balance. Some of my friends say I'd be better off swapping it for a new car when the two years is up in December and carrying on the payments (assuming 0% finance again). But would I be better paying off the balance and owning the car? I pay £209 per month and mainly use it to drive to work which is 110 miles per week.

Thanks for any advice.

Ectophile

A half-decent car should last at least 10 years or 100 000 miles (probably more). So a two year old car is still nearly new.


So given the choice of paying £209 a month on a new car, or not paying £209 a month and having a slightly older car, I know which i would choose.

System

Pay off the car and keep it. Ignore your friends, they're idiots and every month you own it after paying the finance off you'll be another £200 better off than they will be.

And just because its not a new car doesn't mean it'll be a money pit. Service it when it should be, repair things when they come to light instead of leaving them and it'll serve you well. Modern cars serviced properly are easily capable of over 200,000 miles. I bought mine at 2 years old, I've done almost 100,000 miles on it myself in the last 6 years and other than servicing its had under £200 of repairs even though its now on 132,000 miles. The last main dealer service at 125,000 miles highlighted nothing else but slight play in a track rod end which didn't come as a surprise as the previous MOT highlighted the dust cover was deteriorating but still working OK. Other than that it got a clean bill of health. I got it changed that week for £70 (and which comes in that £200) and the MOT it had 4 months after was yet another pass just like every MOT before.

debtdebt

Ectophile wrote: »

A half-decent car should last at least 10 years or 100 000 miles (probably more). So a two year old car is still nearly new.


So given the choice of paying £209 a month on a new car, or not paying £209 a month and having a slightly older car, I know which i would choose.

If he keeps the old car, its true he won't be paying £209 a month but he still needs to find the outstanding balance for the balloon payment of the current car.

[Deleted User]

debtdebt wrote: »

If he keeps the old car, its true he won't be paying £209 a month but he still needs to find the outstanding balance for the balloon payment of the current car.

Chloe may be offended by that


True though

foxy-stoat

Whats the balloon payment and what is the realistic value on the open market for the car?

facade

Chloe_G wrote: »

Some of my friends say I'd be better off swapping it for a new car when the two years is up in December and carrying on the payments

Just like they are better off getting a new mobile at £63 a month rather than getting a "sim only" contract at £8 and continuing to use the old one I suppose




Yes, if you really will die if you are forced to use anything older than 2 years, then by all means change, but you won't be better off.


Cars lose the most money in the first 2 years, which you will have paid anyway with your £209 a month.


The thing to do is compare what you need to pay to keep the car with what you could buy the identical car for (not what WBAC will give you for it, or some online guide reckons it is "worth")


If your settlement figure is less, or close to this figure, and you like the car- buy it with a cheap loan or your savings and enjoy many more years of cheap motoring.

(If the settlement figure is hundreds more, hand it back and buy that identical one and keep the imaginary "profit")



If you like, when you repay the final cost, save the £209 a month in a new saver account, and then when the wheels finally fall off this car in 10 or more years time you will have thousands towards a new one, even if you took money out to pay for tyres etc..

Arklight

This is the thing with leasing cars on PCP, it doesn't make financial sense. It doesn't add up doing it in the first place, it doesn't add up keeping it after the three years, it doesn't add up giving it back, and it doesn't add up to put yourself back on the treadmill with a new one.

You're basically subsidising the motor industry, like it's a big worthy charity.

If you're looking at PCP to fund a new car, you can't afford a new car. Go and find something cheaper.

alan_d

I do enjoy posts with anyone trying to justify buying a new car.
Bottom line is they are the fastest way to lose money, in exchange for the image of being seen in a new car. Quite pathetic,
A otters have said, most depreciation is in the first few years. Just because it hits 2 or 3 years old doesn't mean it's going to get any less reliable.
For me the sweet spot is 3-5 years old, you can get so much more for your money.
I bought a V70 in 2007 at 3 years old on 120k miles for £7k - so it had lost about £25k in the first 3 years - thanks to the first owner.
I still have it, 11 years later now on 257k miles, and it's not needed much other than servicing in that time. Tarambor's £200/year is very similar to my average repair/tyre costs over the years. It's now worth about £1k, so has depreciated about £545 a year... less than 3 months of the OP's PCP payments
Or, to put it another way, if I was paying £209 per month for ongoing new cars I'd never own I would have paid out nearly £28k... (and that must be a small runabout??)

foxy-stoat

Arklight wrote: »

This is the thing with leasing cars on PCP, it doesn't make financial sense. It doesn't add up doing it in the first place, it doesn't add up keeping it after the three years, it doesn't add up giving it back, and it doesn't add up to put yourself back on the treadmill with a new one.

You're basically subsidising the motor industry, like it's a big worthy charity.

If you're looking at PCP to fund a new car, you can't afford a new car. Go and find something cheaper.

Arrr but this deal puts you into a new car that you could not afford without money from above landing on your lap. If driving a new car is one of the important things in your life then PCP's serve a purpose.

Chloe_G

Thank you everyone for your views!