Opportunity cost of newer cars

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  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    bowlhead99 wrote: »
    Welcome to any one of a number of threads by MatthewAinsworth :D

    ..which some people seem to encourage....
  • jamesd
    jamesd Posts: 26,103 Forumite
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    N1AK wrote: »
    Even if you accept that 9% is a reasonable rate of return to use, which I don't, then running bangers would be pointless because you could make so much money from investing other savings or income that saving a couple of grand per year on car costs would be inconsequential.
    9% is a bit low but not too bad. I'm averaging above 12% from P2P lending and it seems likely that I'll be getting above 9% from VCT investing. Also well above 9% from pension investing or saving once the tax gain is considered and spread over a fairly small number of years.
  • System
    System Posts: 178,094 Community Admin
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    Indeed 9% isn't unreasonable if you take a long term risk, and you can go higher
    The value of a car may be inconsequential to some but not all, by any means
  • fiisch
    fiisch Posts: 510 Forumite
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    What if a car is not just a functional object, but something that you're passionate about?

    I am an unashamed slave to PCP's, but I love cars, particularly fast ones. I have around 20% of our monthly income going out to pay for two new cars, but I overlook the opportunity cost as it's something I enjoy.

    Incidentally, I did run a "banger" for 12 months (albeit, a high performance banger), and it cost me a similar amount in maintenance as to the regular PCP of a new high-performance car.

    However, on this go round, given my annual mileage is extremely low (3k / year), looking to keep one as a garage queen, until something faster takes my fancy...:D
  • System
    System Posts: 178,094 Community Admin
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    Depends what value you assign to your passion :)
  • alwaysready
    alwaysready Posts: 14 Forumite
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    Do whatever you want. that way, opportunity cost will be lowered since you love your decision.
  • Apodemus
    Apodemus Posts: 3,384 Forumite
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    alwaysready wrote: »
    Do whatever you want. that way, opportunity cost will be lowered since you love your decision.

    Eh? No...the opportunity cost remains the same. It may be justifiable, it may be the right decision for the individual in terms of comparing opportunity cost to how they value the joy of ownership, but the opportunity cost does not change.
  • buglawton
    buglawton Posts: 9,235 Forumite
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    Bangernomics discussions never seem to mention the mechanic factor. If you have easy access to an honest, competent and reasonably priced mechanic the bangernomics makes a lot more sense. There's also 'near bangernomics' where you buy a 6 year old vehicle for about 20% of new price yet the car drives as well as a new car and with luck may go for years on just normal servicing.
  • Apodemus
    Apodemus Posts: 3,384 Forumite
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    buglawton wrote: »
    Bangernomics discussions never seem to mention the mechanic factor. If you have easy access to an honest, competent and reasonably priced mechanic the bangernomics makes a lot more sense. There's also 'near bangernomics' where you buy a 6 year old vehicle for about 20% of new price yet the car drives as well as a new car and with luck may go for years on just normal servicing.

    Yep, that's me. Current car was bought at 7 years old with 35k on the clock, now 14 years old and 230k. Starting to get into that age where I am now keeping an eye out for another in the 5-8 year-old bracket. Means I get comfort and never have more than about £5-7k tied up in a depreciating asset.
  • Malthusian
    Malthusian Posts: 10,941 Forumite
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    fiisch wrote: »
    I am an unashamed slave to PCP's

    I'd not heard that version of the acronym and I thought you were talking about something completely different at first.
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