Most tax efficient and lowest annual cost to own a new or nearly new car in retirement?

born_again

GazzaBloom said:

westv said:

Would you consider petrol? That will be a lot cheaper than an EV.

Yes sure, I am not locked in and will definitely consider another cycle of an ICE car. 

Depreciation and remaining residual resale value after the 7-8 years is more of a concern with an EV.

If you are keeping 7 or 8 years, then depreciation is not a factor really. 
As you getting round to 2030 & EV's being far more of the market place.
Also if keeping that long why are you even looking at lease?

So long as you can charge at home, have a smart meter to access EV tariffs such as Intelligent Octopus (others available) but with 7p overnight charging & also ability to charge in daytime at same price (includes all house usage) it's a no brainer at around 2p a mile to charge.

Although we did a weeks holiday 800 miles & EV charging cost was the same as Hybrid was on petrol the previous year. Had we have used Tesla chargers it would have been cheaper.🤦‍♀️But went for convivence over saving.. Not very MSE 🤣

ali_bear

What is your reason for going electric? I would caution that unless you are doing it for strong idealistic reasons it may not make sense. [warning! my opinion here] For whatever reason the electric cars we have today are just as expensive and not any more environmentally friendly than the petrol and diesel ones we already have, when taken over the whole vehicle life cycle. Consider the battery alone, the cost of producing them plus the need to expensively replace them after five years or so. 

You see a lot of electric cars around that have been leased as company cars because of generous tax allowances on EV's. But this doesn't apply to you because you're not on PAYE. 

You may want a new car for many reasons, and it's your money, why not get what you want. 

But if you are really being thrifty AND want a new one, I would suggest you choose a make/model and drivetrain/spec level that meets your needs going forward. Then look for the same being discounted by the dealers - usually this will happen when the outgoing model is about to be replaced with a newer version because its been in production for 4-5 years already. Dealers will offer better discounts on stock they already have, especially on a personal finance package you may get a significant deposit contribution. The best deal is to take the finance package and then pay off the entire balance within a couple of weeks, the car is then yours and you pay no interest. 

OldBeanz

If you can have a charger at home then you will be quids in buying an EV. 2nd hand prices for a car a couple of years old are similar to the ICE equivalent (2027 was the expected equivalence year) and you can add 250 miles range for less than £5. We run the dishwasher and washing machine overnight to fully utilise the cheap electricity. Doing more, shorter trips is less hard on an EV than a diesel or petrol car. THey are also very fast off the mark. I drive to Scotland from Cambs and now that Tesla are opening up their chargers to all it costs me £75 return against the cost of 24 gallons of petrol. Charging speeds are now at 100+ while 3 years ago 50 was fast so it takes less than the time to ablute and have a coffee.

400ixl

Why do you need something new / nearly new?

Why not something 3 years old (probably half the price of new) which and petrol which will still be good for 7 years with reasonable mileage. You can then review the EV side when the future is better known.

GazzaBloom

ali_bear said:

What is your reason for going electric? I would caution that unless you are doing it for strong idealistic reasons it may not make sense. [warning! my opinion here] For whatever reason the electric cars we have today are just as expensive and not any more environmentally friendly than the petrol and diesel ones we already have, when taken over the whole vehicle life cycle. Consider the battery alone, the cost of producing them plus the need to expensively replace them after five years or so. 

You see a lot of electric cars around that have been leased as company cars because of generous tax allowances on EV's. But this doesn't apply to you because you're not on PAYE. 

You may want a new car for many reasons, and it's your money, why not get what you want. 

But if you are really being thrifty AND want a new one, I would suggest you choose a make/model and drivetrain/spec level that meets your needs going forward. Then look for the same being discounted by the dealers - usually this will happen when the outgoing model is about to be replaced with a newer version because it's been in production for 4-5 years already. Dealers will offer better discounts on stock they already have, especially on a personal finance package you may get a significant deposit contribution. The best deal is to take the finance package and then pay off the entire balance within a couple of weeks, the car is then yours and you pay no interest. 

As I mentioned I am not settled on EV and will consider ICE cars.

Samuelsjourney

Plenty of good 5+ year cars out there. I run a large (old) Volvo estate as my main car. Cost less than 2k, spent £900 on tyres, service, alternator in the two years I've had it. Plan on keeping it for another 4 years till i retire then something slightly newer around 8k mark. Like yourself been there done it with company cars and never ending PCP deals.
its relatively cheap motoring and have used this approach the last 13 years.

GazzaBloom

400ixl said:

Why do you need something new / nearly new?

Why not something 3 years old (probably half the price of new) which and petrol which will still be good for 7 years with reasonable mileage. You can then review the EV side when the future is better known.

There are many things in life we don't need but desire. If it was all down to need I could buy a £1,000 beater and take my chances. After a lifetime of working I desire to have at least a nearly new car but yes maybe a clean, low mileage 3 year old car is a definite option. Something I can enjoy over and above its utility purpose. We will keep our old 2015 Citroen C4 Picasso that we will run into the ground and use for lifting and shifting and chucking in the mother-in-law's wheel chair.

I'm really looking for some objective assessment of the differing methods of cost of ownership/leasing etc. less of the subjective.

Pat38493

I have recently purchased a new car, partly funded by tax free cash from DC pension.  This was part of my pre-retirement plan as I needed a new car around that time anyway due to the current one being 14 years old.

I went through a lot of the same analysis as you.  The additional factor for us is that we will probably be buying a caravan for the first few years of retirement (again already budgeted).  Towing a caravan with an EV can be a bit of a pain because you often have to unhitch to charge up if you are on a long journey.

In the end I settled on an PHEV car as the tow vehicle (my wife already has an EV anyway).  I ended up buying a new Volvo as they were offering about 8K of finance contribution and 0% finance over 3 years if you paid half the cost of the vehicle - this was pretty optimal for the situation I was in.

Also it's worth noting that with all those kind of car finance packages, you have a legal right to settle the loan early if you decide to do so and they are only allowed to charge you a month or two of interest to settle - therefore in some cases if the interest rate is pretty low, it can be an idea to use PCP but then keep the option open to pay the loan off at the right moment.

Main thing is to avoid car finance packages with high interest rates (which means most of them).

I examined various PCP and finance scenarios in cash flow planning (Timeline and Voyant).  Everyone's situation will be unique but in some cases, you might have a better probability of success by taking out finance on the car, than by paying all the cost up front, as you will be spreading your sequence of return risk.  The only way to know is to get some real numbers and run some scenarios.

If you are trying to hedge SORR, the trick is probably to go for PCP with the lowest interest rate you can get, and maximum end of term payment (by setting the mileage to the minimum allows) - this gives you the flexibility to pay it off whenever you think is the right time.  All this only works if you can get a decently low APR.

Silvertabby

We also buy a brand new car every 5 years.  Yes, I know it's not very MSE - but being able to choose the exact model, colour, extras etc we want gives us joy.  Horses for courses.

Plus, if it weren't for the likes of us, there wouldn't be any immaculate (no kids, no dogs, no smoking) 5 year old low mileage cars for the rest of you to buy!  

Sarahspangles

GazzaBloom said:

I am retiring at the end of the year and have tentatively put a lump sum of tax free drawdown cash in our plan to purchase a new or probably nearly new car in new tax year from April 2026. I am considering getting an EV but not absolutely set on it yet.

OH retired a couple of years ago, and we assumed that he would be replacing his ‘commute car’ (a diesel estate) within months. While he was working he was spending lots of time/miles in it, and it was developing a few niggles, so this was on his mind.

However it’s still on the drive because we find we’re driving a lot less, and the diesel is perfect for transporting his/friends’ mountain bikes to the beginning of rides. We are taking some longer trips in the UK, as we expected, but as we have more time, the train is a nicer alternative and advance booking with a Two Together railcard is cost effective for city breaks.

I’m retiring in the Spring and want to ‘wait and see’ whether I need to keep my car. As things stand, we’ll probably defer a decision until one of the cars develops an expensive issue!