Lease vs. Banger vs Loan spreadsheets?

[BERGS2]

HI All -

I'm about to hand back Mrs BERGS lease car after 2 years of (relatively) trouble free motoring.

As is my bent - i have had to create a spreadsheet for 'Total Ownership Costs' - i.e. Lease costs/Fuel/Tax/Servicing/Insurance etc. to get a 'cost per month' and a 'cost per mile' for each of our cars -

The Pathfinder 4.0 LPG converted has cost (on average) £2,700 per year over the last two years (mostly fuel & depreciation)

The Skoda Citigo 1.0 Sport has cost £3,584 per year (mostly lease payments)

So (unsurprisingly) ownership has cost less than lease between the above two cars - but what i'd now like to get a handle on is what 'opportunity cost' we could swap out the Skoda for?

Have been playing around with the spreadsheet & a thirsty old V8 like an RS4 or early E90 M3 at £15k is quite tempting, where i'm struggling is how to account for the cost of the money in an annualised comparison - i.e. buying for 'X' in year one - & selling for 'Y' in year three gives 'Z' as a depreciation number (budgeting c. 40%)

Trouble is with this in comparison to the above is that it does not account for the interest - i.e. financed with a loan of, say, £15k over four years @ 5% gives a total interest payment of c. £1600 -but i cant work out how best to apply this to an annual number....

At the other end of the scale - i'm looking at the lowest cost second car options out there - I figure you can really stretch to below £100 per month (doing about 7k miles per year) - but would be interested to hear if anyone has managed different!

on the outside chance that i'm not the only geek on here who obsesses over cars & numbers has anyone got a good 'beermat' method?

cheers y'all!

[walm]

Can't you just get a loan for a period that exactly matches your ownership period - in this case 3 years.
Then just divide the interest cost by 3, obviously.

Otherwise you are in a slightly odd situation where in year 4 of the loan you are paying interest for something you no longer own.
In which case you should divide the FULL £1,600 over just 3 years since you are forced to pay that much (unless there are some particularly generous early repayment terms...).

[BERGS2]

walm said:

Can't you just get a loan for a period that exactly matches your ownership period - in this case 3 years.
Then just divide the interest cost by 3, obviously.

Otherwise you are in a slightly odd situation where in year 4 of the loan you are paying interest for something you no longer own.
In which case you should divide the FULL £1,600 over just 3 years since you are forced to pay that much (unless there are some particularly generous early repayment terms...).

Hi

I get that - but my ownership period is undefined & I'm unlikely to keep the car for three years/ the loan term.

Payments keeping track/ahead of of the outstanding balance would do just fine, as such selling would allow the loan to be paid off in full.

I just really want the most accurate way to get this costed, as on the above model - i'd be left with a £9k or so asset at the end of the term which would then need to be deducted from the ownership costs....

(apologies if i'm not making this clear!).

[walm]

=CUMIPMT(0.05/12,48,15000,1,24,0)

That's the interest you pay over 24 months at a 5% rate for a 4-year loan of £15k.
Roughly £1,200 or £600 a year.

[Jon39]

BERGS2 said:

At the other end of the scale - i'm looking at the lowest cost second car options out there - I figure you can really stretch to below £100 per month (doing about 7k miles per year) ...

on the outside chance that i'm not the only geek on here who obsesses over cars & numbers has anyone got a good 'beermat' method?

You say you are seeking 'lowest cost second car', but then refer to £3,584 per year for a Skoda. You are not really trying Sir. That would of course be £36,000 spent in ten years.

I am not really sure that you will be interested in my low-cost method, because if your car was purchased new, it appears you always want your cars to be less than two years old. With such heavy depreciating
assets, that is never going to be 'low-cost'.

I will tell you more if you want me to, but I doubt that you will be interested.

The method used, does eventually lead to ownership of one of those beautiful 007 cars though.

Edited by Jon39 on Tuesday 2nd February 14:35

[JapanRed]

You could buy a car that is appreciating in value....
My Porsche 911 has cost less than your skoda in the last 12 months.

[BERGS2]

JapanRed said:

You could buy a car that is appreciating in value....
My Porsche 911 has cost less than your skoda in the last 12 months.

I believe that ship has sailed...

(Skoda cost is Lease/Insurance/Fuel BTW, but well done on scoring on an appreciating motor - they are few and far between!)

Incidentally, the skoda had the added benefit of being everything that your 80's schoolyard gag foretold... it really was pretty rubbish

[JapanRed]

BERGS2 said:

I believe that ship has sailed...

(Skoda cost is Lease/Insurance/Fuel BTW, but well done on scoring on an appreciating motor - they are few and far between!)

Incidentally, the skoda had the added benefit of being everything that your 80's schoolyard gag foretold... it really was pretty rubbish

Sorry I think I've confused things. My Porsche is non-turbo so not appreciating, but still not costing the same as OPs Skoda.

[BERGS2]

JapanRed said:

Sorry I think I've confused things. My Porsche is non-turbo so not appreciating, but still not costing the same as OPs Skoda.

To be fair - stripping out the lease payments - the Skoda is very cheap to run: no tax/c. £200 insurance & only c. £600 quid in fuel....

I suspect that the road tax on a 997 runs close to the fuel bill alone? ;-)

[Jon39]

BERGS2 said:

To be fair - stripping out the lease payments - the Skoda is very cheap to run: no tax/c. £200 insurance & only c. £600 quid in fuel....

You have 'cracked it'.
Take out lease payments (which represent the anticipated depreciation) and any car would be cheap to use.
I think on the Pistonheads car forums, this technique seems to be called 'Man Maths'.

You suggested the days of appreciating cars are over.
Buy a three year old Aston Martin, often they are as new with under 10,000 miles.
You will pay about 60% of the original price, but at that stage depreciation becomes minimal.
The model appreciating at present is the V12 Vantage. Reason - too many people want them.
Before Christmas £70,000, the last sale £85,000. None are now listed for sale.

Edited by Jon39 on Friday 5th February 18:22

[jonny70]

Jon39 said:

I will tell you more if you want me to, but I doubt that you will be interested.

The method used, does eventually lead to ownership of one of those beautiful 007 cars though.

Go on, whats your method?

Edited by Jon39 on Tuesday 2nd February 14:35

[Jon39]

Jon39 said:

I will tell you more if you want me to, but I doubt that you will be interested.

The method used, does eventually lead to ownership of one of those beautiful 007 cars though.

jonny70 said:

Go on, whats your method?

Most motorists now don't like to drive a car that is more than 3 years old.
It might be some kind of fear that cars break down as soon as the warranty runs out,
or perhaps they just don't like to be seen in an older car.
The motor trade of course encourage owners to buy new cars as often as possible, and the recent rental plans (PCP are they called) are ideal to make owners change to another new car every three years.

The continual talk of fuel consumption, takes motorists' minds away from the most costly part of motoring, depreciation.

Say you drive an average new car for about 12,000 miles per year.
During three years you will probably spend about £4,000 on fuel.
BUT YOU WILL HAVE SPENT ABOUT £12,000 IN DEPRECIATION, so therefore £60,000 during fifteen years.

I like to buy cars that are about 3 years old when they are then half price, and run them until they are at least ten years old.
You may be amazed that they don't seem to go wrong. Some have still been in use at 15 years old and one at 20 years old.
The most economical of all was a popular 1990s reps car, in excellent condition, bought for just £600 and then ran for 60,000 miles without any fault. One penny a mile depreciation. Try to beat that.

If you really want value cars, go where the trade buy. Almost new cars are sold through the big company auctions at remarkably low prices. I bought a 1 year old Fiat Grande Punto with list price £10,000, for just £4,300, still with 2 years warranty. Supposedly an economical car, but a retail new buyer would have lost £5,000 in year one. It was an ideal purchase as a first car for a child, and that vehicle has now been running without trouble for six years.

The depreciation savings over time using this method can add up to a considerable sum, so with all that money you have saved, you will be ready for your Aston Martin. Using exactly the same buying technique now works even better, because most of these cars are usually very lightly used, and extremely carefully looked after. Most 3 year olds will be indistinguishable from new, except for the 40% off the new price. It then gets even better, because the depreciation after three years becomes very slow, and in some cases the value may even increase.

What does it matter if your daily driver is a little old, when you have such a treat waiting every weekend?

Eccentric perhaps, but it does work.

Edited by Jon39 on Thursday 11th February 23:30