Spend savings on brand new car

A friend of mine recently purchased a brand new car even though they told me they were very happy with their previous car. Although it was 8 years old, it had a very low mileage and nothing wrong with it

The only reason they traded it in for a new car was that their financial advisor told them it made sense to use some of their savings on a brand new car now, in order to beat inflation.

I am wondering if I should do the same? (my car is 6 years old with a very low mileage and nothing wrong with it)
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Replies

  • RobM99RobM99 Forumite
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    Beat inflation?!   Maybe I'm daft but that seems outrageous!
    Now a gainfully employed bassist.
  • edited 1 November 2022 at 11:34AM
    SaverRateSaverRate Forumite
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    edited 1 November 2022 at 11:34AM
    Seems strange advice to give considering cars are no longer appreciating in most cases, only depreciating. 

    If the demand of cars drop (due to people having less disposable cash etc) then it could mean better deals on cars etc. I must admit I have seen more garages local to me offering discounts and deals recently than in the past couple of years. This could mean more/better deals are on the way, possibly?

    Personally I would keep the car you have and ensure I have the money in the best savings account possible but thats up to you
    FTB - April 2020 
  • edited 1 November 2022 at 11:38AM
    sevenhillssevenhills Forumite
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    edited 1 November 2022 at 11:38AM
    RobM99 said:
    Beat inflation?!   Maybe I'm daft but that seems outrageous!
    If you were to buy a new vehicle in 2024, the price could be 20% higher
    Will your money in the bank increase by 20%
  • DullGreyGuyDullGreyGuy Forumite
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    Presumably you werent in on the conversation the advisor?

    Problem with chinese whispers is that key elements are missed... it could be the advisor suggested using savings -v- finance rather that saying a car is some form of investment vehicle 
  • jaypersjaypers Forumite
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    I bought a brand new car and picked up in June. It’s a car I was buying anyway, and it’s hard to get. £70k and I could sell it now at a 10% profit. I know that won’t last but car manufacturers are having difficulty sourcing parts. 
  • AlbermarleAlbermarle Forumite
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    Probably they meant, if you were thinking anyway of buying a brand new car, it might be better to get one now, rather than wait.
    However new car prices had already gone up quite a lot before this bout of general inflation, due to chronic supply problems. 
    So with a recession looming, maybe they will not go up as much in the coming year.
  • edited 1 November 2022 at 11:54AM
    phillwphillw Forumite
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    edited 1 November 2022 at 11:54AM
    The only reason they traded it in for a new car was that their financial advisor told them it made sense to use some of their savings on a brand new car now, in order to beat inflation.

    I am wondering if I should do the same? (my car is 6 years old with a very low mileage and nothing wrong with it)
    The question you need to ask yourself is if you were planning on buying a new car.

    If you are sitting on savings earning up to 5% and will spend the next 12 months waiting to buy a new car, which in the mean time could go up by 10%. Then sure buy it now.

    However there is nothing to say that cars will definitely go up by 10%.

    If you buy the car from a dealer then it will probably depreciate faster than inflation.

  • MX5huggyMX5huggy Forumite
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    If you’re going to buy a new car anyway (say in 2 years) then yes buying now will “beat” inflation it’s the same with almost every thing ATM. 

    Quite a lot of people in retirement struggle to spend money maybe the “advice” was in this context.
  • AlbermarleAlbermarle Forumite
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    If you buy the car from a dealer then it will probably depreciate faster than inflation.

    In recent times this has been turned on its head due to the car supply shortage. Some owners of new cars find they have actually gone up in value.

    18 months ago I bought a 'nearly new' car . 3 months old with 100 miles on the clock. After a year I could have sold it for the same price with 8000 miles on the clock. It is not anything special either.

    This situation will not last indefinitely of course.

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