Advice on buying either nearly new car on finance or older car outright

Mumoffourkids · 16 July 2018 at 12:10PM

I have also posted the below in the motoring forum but I thought I might get some more advice on the finance side by posting here as well.

So I have a dilemma and need some advice. My car which is 13 years old broke down again last night. I think it is either the clutch or gearbox which is probably going to be expensive. I am just looking at options as the best case scenario is that my car can be fixed and isn't too expensive.

So the different options are as follows:

Option 1 - fix my car whatever the cost, hope it lasts another 6 months to a year as by then I will be able to save up a reasonable amount of money to buy a newer car. The downside is that my car isn't worth very much and so the cost of fixing it may outweigh what it is worth. I have however, spent some money on it recently so apart from the current issue, it shouldn't need anything else doing in the next year as it has new tyres, new brakes etc.

Option 2 - scrape together what money I have saved, can lay my hands on at the moment to buy whatever car I can, hope that nothing major goes on it and again it lasts a year or two by which time again I will have a decent amount saved up. The car that I bought would obviously be working but for how long who knows. I could end up having to spend out more money on repairs on a new car than what I would have done on my current car.

Option 3 - try and finance a newer car. This may be hard as my credit rating is poor so will either struggle to find finance or have a really high interest rate. The finance payment would obviously be something I would have to pay each month but in theory I should get a newer car with less to go wrong, and hopefully would be cheaper to run than my current car which does cost a lost to run.

So any advice on thoughts on what I should do. The other thing to mention is that my current car is a 7 seater and I really need a 7 seater as I have six kids so need a way to transport them at the same time.

Thanks in advance for any help or thoughts.

[Deleted User] · 16 July 2018 at 12:13PM

Option 1 seems best, option 2 if cheaper.

Tyler_A._Freeman · 16 July 2018 at 12:22PM

Have you a friend auto mechanic may be, who can check what's actually broken in your car and the approximate cost of repairs? Then you will either have 2 and 3 options or you will repair your car for a reasonable price

System · 16 July 2018 at 1:32PM

Option 1 is always the cheapest even if the repair is a couple of thousand quid and even if the repair is worth more than the car is. Buying an almost new car you'll see depreciation in the thousands of pounds per year. I bought my car at 2 years old for a third of its new price, I've kept it 6 years and even that has had depreciation averaging £1200 a year. The poor mug who bought it new saw depreciation of £8000 a year for the 2 years they owned it. Your car no longer has any depreciation left in it so its not costing you £1000+ a year purely in the value it loses.

The downside is that my car isn't worth very much and so the cost of fixing it may outweigh what it is worth.

Upside is you know how its been looked after, what is wrong with it and the repairs being done are unlikely to ever need doing again.

From a financial point of view it is never cheaper to buy a new/nearly new car. The only reasons for buying one are that its a nicer place to be in on a journey and you most likely won't have the inconvenience of break downs, although that seems to have diminished massively with modern cars, or that your current car no longer meets your needs.

Nothing wrong in buying a newer car if you want one when you've got quite an old one but don't do it in the misplaced belief you're saving money.

Mumoffourkids · 16 July 2018 at 3:10PM

Tarambor wrote: »

Option 1 is always the cheapest even if the repair is a couple of thousand quid and even if the repair is worth more than the car is. Buying an almost new car you'll see depreciation in the thousands of pounds per year. I bought my car at 2 years old for a third of its new price, I've kept it 6 years and even that has had depreciation averaging £1200 a year. The poor mug who bought it new saw depreciation of £8000 a year for the 2 years they owned it. Your car no longer has any depreciation left in it so its not costing you £1000+ a year purely in the value it loses.

Upside is you know how its been looked after, what is wrong with it and the repairs being done are unlikely to ever need doing again.

From a financial point of view it is never cheaper to buy a new/nearly new car. The only reasons for buying one are that its a nicer place to be in on a journey and you most likely won't have the inconvenience of break downs, although that seems to have diminished massively with modern cars, or that your current car no longer meets your needs.

Nothing wrong in buying a newer car if you want one when you've got quite an old one but don't do it in the misplaced belief you're saving money.

Thanks for your advice. It turns out that the car isn’t terminal and is relatively cheap to fix. I understand completely about how it’s better to fix the car you know and the repair won’t need doing again. For its age, the miles aren’t too high and I want to keep it until the kids are a bit older. I think you also make a good point about it being cheaper to repair even if the repair costs more than the car is worth. I think I will still save up once September is out of the way just in case the car ever is terminal and then I will hopefully have a few thousand saved in order to buy a car maybe five or six years old which I can then keep for another 7 or 8 years.

I don’t have to have a new car and much prefer an older one with scratches as my kids do tend to scratch the car with their bikes and scooters. So I think keep this car and then save up just in case.

Thank you once again.

Nasqueron · 16 July 2018 at 4:44PM

Tarambor wrote: »

Option 1 is always the cheapest even if the repair is a couple of thousand quid and even if the repair is worth more than the car is. Buying an almost new car you'll see depreciation in the thousands of pounds per year. I bought my car at 2 years old for a third of its new price, I've kept it 6 years and even that has had depreciation averaging £1200 a year. The poor mug who bought it new saw depreciation of £8000 a year for the 2 years they owned it. Your car no longer has any depreciation left in it so its not costing you £1000+ a year purely in the value it loses.

Upside is you know how its been looked after, what is wrong with it and the repairs being done are unlikely to ever need doing again.

From a financial point of view it is never cheaper to buy a new/nearly new car. The only reasons for buying one are that its a nicer place to be in on a journey and you most likely won't have the inconvenience of break downs, although that seems to have diminished massively with modern cars, or that your current car no longer meets your needs.

Nothing wrong in buying a newer car if you want one when you've got quite an old one but don't do it in the misplaced belief you're saving money.

Depreciation is only an issue if you intend to sell the car within a few years, it's a false argument to claim you "lose" money just because a car is not worth as much as it was if you are, like the OP, going to run it for years. A new car with anything from 3-7 years warranty, which will be run for say 10+ years has not lost you anything (fictitious depreciation aside)

System · 17 July 2018 at 2:04PM

Nasqueron wrote: »

Depreciation is only an issue if you intend to sell the car within a few years, it's a false argument to claim you "lose" money just because a car is not worth as much as it was if you are, like the OP, going to run it for years. A new car with anything from 3-7 years warranty, which will be run for say 10+ years has not lost you anything (fictitious depreciation aside)

Depreciation isn't fictitious. If you're not getting back what you paid for it you have had the cost of depreciation. Even if you run it for years you'll suffer depreciation unless it was already so old when you bought it it had reached bottom value. I've run mine for 6 years and if I were to sell it today its cost me roughly £7k in depreciation. My car had depreciated £16,000 in the first 2 years. Had I bought it new and kept it for 8 years it would have cost me £22k or £2750 a year in depreciation. That is real actual money out of my pocket, not a fictitious number. My bank account would be £16k lower than it is today.

People like you who don't factor in depreciation like you do so in order to convince themselves that they're saving money when they buy a new/nearly new car. Whatever helps you sleep at night but you're kidding yourself.

DCFC79 · 17 July 2018 at 3:12PM

annagreen222 wrote: »

Thank you for sharing very helpful suggestion. I appreciate it.

You building up your post count by any chance ?

henrik1971 · 18 July 2018 at 11:38PM

Having just changed my 13 year old car for a newer model, I sympathise with the dilemma. For the very reasons you've settled upon and Tarambor advised, it is often better the devil you know.

My other conclusions about car buying:

Don't make car buying decisions quickly or rashly because current car is beyond economical repair. Plan well in advance the right time to change cars (money, circumstances, life events), not just becuase it needs an exhaust @ £350.
Accept that car buying is a gut wrenching experience. You're parting with lots of hard earned money. Buying a car that's a few years old, you take a risk that the car may or may not be a good buy and reliable, etc. With care you can maximise the chances things will be good, but there are no guarantees. Do your best and don't worry about things you can't control.
A newer car is lovely to float around in, but you'll be reluctant to use it for things like the supermarket, as it will be scratched and dented sooner or later. Don't even mention going to the Tip..! Is the stress and emotional energy really worth it? Life has enough troubles as it is. Keep the old car longer and consider hiring something new for longer trips / odd weekends away.
When you do buy a car, take your time (see point 1 above) and don't "settle". Carefully choose the make, model, the trim level, the colour, engine size, the extras/equipment that you really want. Its an important decision and if you get what you really want, you're more likely to keep it many years and not want to go through all this again. Also, any depreciation is spread over many years and so the impact minimsed and importantly, you don't have to do through this cycle of uncertainty again any time soon.

Advice on buying either nearly new car on finance or older car outright

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