Changing cars... Every 3 years or much longer?

cyclonebri1

I stand by what I said in an earlier post.


It gives the best balance of saving money as against risk of a duffer and still driving a modern desirable car.;)


I would however add that the only financially nous way of buying a car is to get in front and pay cash.

+, never buy a new one:rolleyes:

MJTHFC

I think maybe I'm just too vain. I like to have a new car, though I've just about grown out of that now and would settle for ex-demo to a year or two old. But it seems there is no financial justification. Which is what I expected anyway.

I was being optimistic that some financial whizz like Adrian would come up with a justification! I like the idea of an old X3 but that still costs a load more to start with!

Great spreadsheet. How do you work out residual value?

AdrianHi

MJTHFC wrote: »

I think maybe I'm just too vain. I like to have a new car, though I've just about grown out of that now and would settle for ex-demo to a year or two old. But it seems there is no financial justification. Which is what I expected anyway.

I was being optimistic that some financial whizz like Adrian would come up with a justification! I like the idea of an old X3 but that still costs a load more to start with!

Great spreadsheet. How do you work out residual value?

For residual values I use a combination of www.parkers.co.uk "what's it worth", What Car's statistics on 36 months and 36,000 miles retained value % and what I can actually find cars advertised at for sale. Which source I use depends on the age of the car and type. For example the likes of BMW is more difficult because few people buy the basic spec. with no options. That's where look for what cars are actually advertised at comes in. As a rule you get little (may be 10%) or nothing back on extra options when reselling even on a 3 month old car though certain extras as essential to resell at all. This means What Cars's % are unreliable on a car that can have a lot of options specified.
Bottom line is residual value an inexeact science but at least you get an idea on relative residuals between different cars.

As to never get a new car and pay cash - in general good advice but Vauxhalls can be leased at such a low rate it is better / as good as buying nearly new.

A 3 year old X3 is worth too much (mnore than 42% of original list) on the market at this age IMO. Buy one 3 to 6 months old with at least 20% off the list price of the basic spec. X3 SE and then look for one with as many options as possible which means even bigger discount of what it's list price would have been. After that look for one 6 or 7 years old. Anything in between and in my opinion your paying too much for an out of warranty car.
I've seen the prices of nearly new 5 series other than the super efficient 520d come down a lot in the last 2 months. Not looked at the X3 but I bet it is the same story. Hold out until the last week or two of September and ring around a load of dealers offering say 25% off original list of base X3 SE spec. for any X3 with lots of toys you can find and see if anyone bites.
A 3 year old Vauxhall for example is a different proposition, most are down to 33% of original value and is a good buy at that price - in my opinion of course.

Dan29

AdrianHi wrote: »

What is generally the case, if you get a car that holds at least 43%-44% of value at 36 months old it is just about cheaper to sell it and buy an up to 6 month old, 20% off list price car and run that until 36 months old.

...

So if you want to change cars every 3 years and avoid it costing more than it needs to, find cars with strong residuals, buy at 3 to 6 months old, sell before 36 months old and repeat the process. I'm thinking mostly German cars, off the top of my head, Skoda, BMW, Audi

This makes a lot of sense but would you be aiming for 20% off the list price including options? I was just looking at Audi TTs as an example and many 6 month old cars with a few options are priced at more than the basic list price of a brand new TT.

AdrianHi

Dan29 wrote: »

This makes a lot of sense but would you be aiming for 20% off the list price including options? I was just looking at Audi TTs as an example and many 6 month old cars with a few options are priced at more than the basic list price of a brand new TT.

I'd say 20% off basic spec. price regardless of options, but then allow say £1000 for automatic (people will pay a bit more for that until the car is 6 or so years old) and then 10% to 20% of the orginal cost of other options. This is how I see it working on 3 and 5 series BMW's which is what I watch more than anything else. At less than 3 or 4 months old the dealer might advertise their demonstrator at a very small and not worthwhile discount just to try their luck I think, as they are not serious about shifting it at that point.

Seen this happen with new very desirable Audi's before - like when the first A3 1.8T came out.
Like the Mini with it's 60% to 69% residual (insane what people will pay for these at 3 years old :eek: ), the Audi TT (56% residual at 3 years though less once options taken into account) if you cannot find it at 20%+ off list up to 6 months old, only makes sense as a brand new purchase to get the benefit of the maximum warranty period or you have to look at what price they are may be at one year old, see if you can find any at 25% off at that age. The Audi TT is appealing to people who will pay new or more price just to avoid the waiting list. The same fickle buyers will be selling them on at some point when the novelty has worn off and the prices will take a bit of a tumble.
I come to this view by calculating the average total outgoings per month for the remainder of the first 36 months of age on the car when the warranty runs and MOT's etc. start to have to be paid for and compare it with the same car's average monthly costs for year 4. When year 4 has the same monthly costs as the first 3 years or 3/6 to 36 months including any finance charges, you know your better off with the new / nearly new car so long as putting up the money for it is possible and not too risky for you.

Year 4 per month on my car which starts November 2008 is only going to be 10% (about £70) cheaper than the average of the first 36 months and that's with me buying the car brand new with no significant discount (none to be had at the time). If I had waited and got a 3 month old at 20% off it would cost be around about the same to just trade in for another 3 month old at 20%+ off.

The picture is very dependant on the car in question and your own financial circumstances - i.e. what is the cost to you of cash tied up in the car.

cyclonebri1

AdrianHi wrote: »

For residual values I use a combination of www.parkers.co.uk "what's it worth", What Car's statistics on 36 months and 36,000 miles retained value % and what I can actually find cars advertised at for sale. Which source I use depends on the age of the car and type. For example the likes of BMW is more difficult because few people buy the basic spec. with no options. That's where look for what cars are actually advertised at comes in. As a rule you get little (may be 10%) or nothing back on extra options when reselling even on a 3 month old car though certain extras as essential to resell at all. This means What Cars's % are unreliable on a car that can have a lot of options specified.
Bottom line is residual value an inexeact science but at least you get an idea on relative residuals between different cars.

As to never get a new car and pay cash - in general good advice but Vauxhalls can be leased at such a low rate it is better / as good as buying nearly new.

A 3 year old X3 is worth too much (mnore than 42% of original list) on the market at this age IMO. Buy one 3 to 6 months old with at least 20% off the list price of the basic spec. X3 SE and then look for one with as many options as possible which means even bigger discount of what it's list price would have been. After that look for one 6 or 7 years old. Anything in between and in my opinion your paying too much for an out of warranty car.
I've seen the prices of nearly new 5 series other than the super efficient 520d come down a lot in the last 2 months. Not looked at the X3 but I bet it is the same story. Hold out until the last week or two of September and ring around a load of dealers offering say 25% off original list of base X3 SE spec. for any X3 with lots of toys you can find and see if anyone bites.
A 3 year old Vauxhall for example is a different proposition, most are down to 33% of original value and is a good buy at that price - in my opinion of course.

Which is the point I was trying to make to you, yes at 20K it will be 30 odd % down but at 80K it will be closer to 70??

Well worth looking at imho;)

AdrianHi

cyclonebri1 wrote: »

Which is the point I was trying to make to you, yes at 20K it will be 30 odd % down but at 80K it will be closer to 70??

Well worth looking at imho;)

Yep, don't think meant to disagree that a 3 year old 33% residual car is not worth having (it's under "the 42%-44% rule"), at that price I think it is.... assuming the car in question is any good / you like it.

cyclonebri1

:T You've got me going with the VX connection, up untill my present car I was a VX only man.

But me site this as a compromise example as it was the exact figures I paid.


In 1999 I bought a good spec 1998 Vectra. It was 9 months old but was a direct VX lease car and had covered 22k miles. Its list price was over 15K but I paid a quid short of 8K.

I kept that car untill a year ago and it was as faultless as any car could possibly be, tyres brakes etc and nothing more than 1 £25 sensor in repairs.

Mileage was not a problem to me as it was still under 70k when I let it go at 9 years old for £1500.;)

Plus there was not a single known fault with that car when I sold it and the new owner is delighted.:T

AdrianHi

cyclonebri1 wrote: »

In 1999 I bought a good spec 1998 Vectra. It was 9 months old but was a direct VX lease car and had covered 22k miles. Its list price was over 15K but I paid a quid short of 8K.

Oh I like the numbers on that one. Sounds like you probably got the benefit of the big discount the VX leasing company got when buying the car off VX and had the benefit of most of the 36 month warranty.

mcjordi

i have a good old reliable ford fiesta 1998 on a r reg 103K on the clock ive owned it now for 15 months and nothing major gone wrong ive replace 2 coil springs (my fault stupid speed bumps) and a idle sensor for a tenner
all for £350 1.3 endura great car i love it to bits