Seeking help and guidance r.e. car/house buying

RDane

Hello everyone, thank you for taking the time to help me out.

Background:
I am 21 and will need to buy my own first car soon (previously driven/shared family cars since passed test aged 17). I am still living at home with my parents and the plan is to stay at home until early 2021 - mainly to save money - at which point I will buy a house (not wanting to rent).

The plan is to move out in 2021 and buy a house together with my partner - who is currently a student but will have approx. 5-10k in savings for a house through ISAs/Savings/Family help etc.

I have no debts/loans/bill etc that I have to pay - except small phone/apple music bills. I do not pay "rent" at home - just again pay my part for some small household upkeep/food costs.
This year I will earn circa £35K, then following that approximately 40-50k (pre-tax). I do not go on lots of expensive holidays or splash much money of clothes etc - lead a modest life for the most part.

My Dilema
So my predicament is that I am looking to buy a car but I do not know quite what to do...

Currently, I am planning to buy a car outright and my thinking is as follows buy a "normal" hatchback type car probably spend between 7k-10K, or spend a little more and buy a slightly more expensive "entry-level coupe between" 12k-16k. Used of course (relatively low mileage, however).

Is spending that extra ~5-8k a waste?

My thinking is that while I am young and in a fortunate position to be able to save without any real responsibilities that now may be a good time to spend a little more and get the type of car I have always wanted (I am not into really expensive/flashy but a little more luxury and presence). Due to living at home and earning relatively well I feel I will still be in a fortunate position to save up a good amount for a deposit and have a more expensive car.

I have and will ensure to continue contributing 4k a year to a lifetime ISA regardless.

Should I go for the cheaper car as that 5-8k may come in useful, or shall I live a little while I can?

Am I being naive and should really save and get a house first? Or should I have more confidence in myself, my earning potential and be optimistic about my future?

I'm worried that if I wait and get a house first then I will have more and more real responsibilities and so spending extra on a car will be a bad choice and thus won't happen - until later in life when I am again more secure/settled.

Thank you for reading, not the shortest post I know. I hope my situation is clear, any advice from those of you who are my more experienced and knowledgeable than myself would be gratefully appreciated.

kidmugsy

Cars are a snare and delusion. Buy a motorbike and open a LISA.

colsten

If you have a spare £5-8K, put it straight into a pension. Your older self will be proud you did have the foresight. It could mean the difference between being able to afford to retire in your 50s or early 60s, rather than having to work until you are 70.

DrEskimo

You've got a sensible head on you and you are earning good money at your stage in your life, so whatever decision you do take, I don't think it will have a massive impact on your plans. Potentially might add a year or two to your timelines.

I personally would say £7-10k is a very healthy budget for a car at your age, and would be tempted to stay at the lower end of that. I wasted far too much money on cars in my twenties and is about the only financial regret I have. Having said that, I am 30 now and pretty much exactly where I want to be so..!

Obviously it depends where you are buying, but £10k doesn't sound like an awfully high deposit? I live in the south east, and 6years ago me and my partner saved up 30k each to buy our first flat....

Buying houses are expensive. You have stamp duty, estate agent fees, solicitors fees, etc, then when you move in you want furniture, might buy somewhere that needs work, etc etc. That additional £10k will undoubtably come in very handy! If you are anything like me an my partner, your original house budget will go out the window very quickly....

I suspect with some research on running costs and the cars you are interested in, you will soon find a good middle ground where you can get something you enjoy and will last a long time, that will still mean keeping a healthy budget.

BucksLady

RDane wrote: »

Is spending that extra ~5-8k a waste?



I think it probably is, and after the novelty of the new car has worn off, you may well regret such a decision.

Goudy

You could use up to your max budget to buy something that take you beyond 2021 with as little additional or unexpected costs as possible and save the money that unexpected repairs, MOTs etc that a used car will more than likely rack up.
It would make it much easier to budget like this.

Perhaps consider something with a decent length of warranty, like Toyota's 5 or Kia's 7 years warranties and are efficient and clean enough to also future proof it. (so no diesel)

This way you can virtually pre plan what it'll cost you over the next 5-7 years.

Something like a Toyota Yaris Hybrid would be perfect, though a little dull for a young 'un.
You could easily add up what it would likely cost you over the next 5 years while it's under it's warranty.
You've no big repair bills, tyres and brakes will last at least 25,000 miles if not more, fuel economy is anywhere up to 80 mpg, no MOT for three years.
All for the initial one off cost and a yearly service.

They hardly set the world alight, so insurance shouldn't cripple you either.

Another option would be to lease, same results really without the initial 12k-16k upfront cost.
A lease on a Yaris Hybrid can be as low as £266 a month on a 10,000 mile a year, three year contract.
That's around £10,000 when you factor in the initial 3 month deposit.
As people say, if it depreciates - lease it. If it appreciates - buy it.

LHW99

Personally I would look for a 6-12 month old car, which will have suffered the largeish initial depreciation (ie cheaper than new), but still has a warranty on it.

buyhighselllow

Trust me, when you get older you will not think " so glad I spent that extra money on cars when I was younger"..

Buy a decent 2-3 year old car that has taken the hit of depreciation, a reliable make ( Honda,Toyota, Suzuki would be my preference at the moment ) and run it for 6-7 years. After messing about with cars when younger, chopping and changing, my last 3 cars have been 2 year old Mondeo, ran for 8 years, Toyota, ran for 9 years. My current motor was 1 year old when I bought it, now 5, and I intend to keep it another 5 years at least. My only real regret is getting rid of some of those cars a bit too soon !!

Biggus_Dickus

kidmugsy wrote: »

Cars are a snare and delusion. Buy a motorbike and open a LISA.

...and enough life insurance to at least cover funeral costs.:eek:

Alexland

DrEskimo wrote: »

I wasted far too much money on cars in my twenties and is about the only financial regret I have. Having said that, I am 30 now and pretty much exactly where I want to be so..!

Same here when I bought a nearly new Mazda MX5 in my 20s it was a silly decision but I ran it for 8 years and it didn't stop me achieving my financial objectives.

Alex

Voyager2002

Your first car should be for learning what it is like to own and run a car ... save that 5K - 8K for when you are slightly more experienced driver in a couple of years and ready to trade up. Insurance costs at this stage will be the highest they will be in your life, and you are also quite likely to have minor prangs that cause cosmetic damage but cost hundreds to fix.

Having said that, the difference in car price is not enough to make much difference to a pension or house deposit.