Car Finance - New or Old?

tintin_1929

Hi Everyone,

I need a new/new to me car.  Looking around at the offers and getting a bit confused.  Here are my options:

Option 1
Buy New
60k Vehicle purchase price / 10k miles per annum
0% interest on PCP
£13k downpayment
£500 per month

Option 2
Buy Second Hand
55k Vehicle purchase price / 10k miles per annum
~10% interest on PCP (approx as it depends on vehicle and finance offered)
£13k downpayment
~£500 per month (approx as it depends on vehicle and finance offered)
(Option 2 means the car comes with around 3k to 5k miles)


Right, so on paper, and in a world where depreciation isn't a factor, it seems to me that Option 1 is the best way to go. However, we live in a world where this 'asset' ( ) will depreciate.

Depreciation being a factor and depreciation being linked to the make/model/year/miles/etc, I'm confused.... which is the better option to go for? How do I figure out which is best?

Sorry for the stupid question!

born_again

Don't buy 2nd hand on PCP
Many posts where people have, car is out of warranty & needs expensive work... No choice but to pay & get done. As you can't return car.

eschaton

You didn’t list option 3 - something that you can possibly afford?

Ayr_Rage

I agree with @born_again, don't have a PCP agreement that runs beyond the manufacturer's warranty period.

What is you plan at the end of the PCP?

Nasqueron

If you wanted to buy the car to run to the ground, depreciation can safely be ignored, it's not a cost, it's simply something being worth less as you use it like anything. If you want to keep the car for 3-4 years and trade in for more finance (not the MSE way) then 2nd hand at least had the hit already.

I agree with the others, why do you need to spend £55-60k on a car you can't afford to buy outright and need to pay potentially huge interest on? Buy a £20k car and save yourself £40k

tintin_1929

eschaton said:

You didn’t list option 3 - something that you can possibly afford?

I can afford it... ? Hence why I'm looking.

tintin_1929

Ayr_Rage said:

I agree with @born_again, don't have a PCP agreement that runs beyond the manufacturer's warranty period.

What is you plan at the end of the PCP?

Planning to get into the cycle of using the car as a down payment for the next PCP purchase in 4 years time.

eschaton

tintin_1929 said:

eschaton said:

You didn’t list option 3 - something that you can possibly afford?

I can afford it... ? Hence why I'm looking.

If you could afford it you wouldn’t have to pay £500pm. 

Do you mean you can afford to borrow the car?

tintin_1929

Nasqueron said:

If you wanted to buy the car to run to the ground, depreciation can safely be ignored, it's not a cost, it's simply something being worth less as you use it like anything. If you want to keep the car for 3-4 years and trade in for more finance (not the MSE way) then 2nd hand at least had the hit already.

I agree with the others, why do you need to spend £55-60k on a car you can't afford to buy outright and need to pay potentially huge interest on? Buy a £20k car and save yourself £40k

Thanks. I think I got the answer in the latter part of the bolded sentence; the large part of the depreciation is done in a second hand car. 

Appreciate this isn't the MSE way but for my lifestyle as a disabled car guy (who doesn't qualify for PIP), it suits me better to have a monthly rolling cost to have a new(ish) car every 3 or 4 years with a monthly payment.  

tintin_1929

eschaton said:

tintin_1929 said:

eschaton said:

You didn’t list option 3 - something that you can possibly afford?

I can afford it... ? Hence why I'm looking.

If you could afford it you wouldn’t have to pay £500pm. 

Do you mean you can afford to borrow the car?

I really don't understand what you're asking. Also unsure if you're being rude so I won't be answering, but instead thank you for your time and ask you to move on to someone you could better help. Thanks.

Ayr_Rage

tintin_1929 said:

Ayr_Rage said:

I agree with @born_again, don't have a PCP agreement that runs beyond the manufacturer's warranty period.

What is you plan at the end of the PCP?

Planning to get into the cycle of using the car as a down payment for the next PCP purchase in 4 years time.

Trying to predict if the vehicle is going to be worth more than the balloon payment in 4 years is not going to be easy, especially with K.Smarmer, R.Thieves and Co moving the EV discount goalposts right now.

There's always a chance that you find you have no equity at the end of the deal.

At least with the 0% PCP you aren't paying interest.

However as I said previously, I wouldn't want to have a car that is out of warranty on a PCP agreement.