Spending more to save money?
Discussion
Whatever reason people buy cars is fine by me, but one thing I find strange is that people sometimes say they're buying a new car because it's more economical.
A person from work has just sold their gas guzzler Mazda 2.2L diesel something or the other for £5k and bought a 2019 BMW 4 series 2.0L diesel because it's more economical.
Now, I might be wrong, but I'm going to assume it'll take a lot of driving to recoup that cost. Especially as insurance, tyre prices etc will likely he higher, as well as depreciation?
If they bought it because they fancied a change and wanted something newer..... Then great, nothing wrong with that. Seems odd to me?
A person from work has just sold their gas guzzler Mazda 2.2L diesel something or the other for £5k and bought a 2019 BMW 4 series 2.0L diesel because it's more economical.
Now, I might be wrong, but I'm going to assume it'll take a lot of driving to recoup that cost. Especially as insurance, tyre prices etc will likely he higher, as well as depreciation?
If they bought it because they fancied a change and wanted something newer..... Then great, nothing wrong with that. Seems odd to me?
I would say the savings on fuel running costs etc helps offset the costs of financing the newer vehicle.
If your going from a petrol car that does 30 mpg to a diesel that does 50 that’s £1270 a year over 12k pa.
Tax maybe £500.
Car comes with a warranty so less unexpected repair bills. This could easily save £500 + per year with the cost of repair bills these days.
So that’s potentially a few hundred pounds a month of savings. I would guess loan payments of maybe £400 a month.
Not saying it’s going to save them money overall, but the savings would mean they get a much nicer vehicle for just a couple of hundred pounds a month net with the savings. The reality is they probably aren’t buying out right so are only really paying off the depreciation plus some interest.
That’s man maths right there!
If your going from a petrol car that does 30 mpg to a diesel that does 50 that’s £1270 a year over 12k pa.
Tax maybe £500.
Car comes with a warranty so less unexpected repair bills. This could easily save £500 + per year with the cost of repair bills these days.
So that’s potentially a few hundred pounds a month of savings. I would guess loan payments of maybe £400 a month.
Not saying it’s going to save them money overall, but the savings would mean they get a much nicer vehicle for just a couple of hundred pounds a month net with the savings. The reality is they probably aren’t buying out right so are only really paying off the depreciation plus some interest.
That’s man maths right there!
Edited by anonymous-user on Monday 1st August 12:45
champ54321 said:
I would say the savings on fuel running costs etc helps offset the costs of financing the newer vehicle.
If your going from a petrol car that does 30 mpg to a diesel that does 50 that’s £1270 a year over 12k pa.
Tax maybe £500.
Car comes with a warranty so less unexpected repair bills. This could easily save £500 + per year with the cost of repair bills these days.
So that’s potentially a few hundred pounds a month of saving. I would guess loan payments of maybe £400 a month.
Not saying it’s going to save them money overall, but the savings would mean they get a much nicer vehicle for just a couple of hundred pounds a month net with the savings. The reality is they probably aren’t buying out right so are only really paying off the depreciation plus some interest.
That’s man maths right there!
But they're going from 35-40mpg to 45-50mpg, tax is the same. I don't think many cars cost over £500/year to tax either?If your going from a petrol car that does 30 mpg to a diesel that does 50 that’s £1270 a year over 12k pa.
Tax maybe £500.
Car comes with a warranty so less unexpected repair bills. This could easily save £500 + per year with the cost of repair bills these days.
So that’s potentially a few hundred pounds a month of saving. I would guess loan payments of maybe £400 a month.
Not saying it’s going to save them money overall, but the savings would mean they get a much nicer vehicle for just a couple of hundred pounds a month net with the savings. The reality is they probably aren’t buying out right so are only really paying off the depreciation plus some interest.
That’s man maths right there!
The only way this really used to work was when looking at PCP'ing used vs brand new manufacturer backed PCP/lease deal. Assuming you never intended to pay the balloon to own the car, and it was simply a case of [cost of car = monthly payments x finance period] then often it was cheaper overall to lease, as the tax is included and you've got the warranty. This worked for me a couple of times, the monthly/overall payments for a brand new car on PCH were very close to those offered by independent used car dealers on PCP, where their cars were usually outside of manufacturer warranty.
What I've heard a lot of recently, that really doesn't make sense, is people switching to electric cars to 'save fuel costs'. If you're doing big mileage and can get a very low BIK company car and/or charge for free at work, then fair enough. Otherwise, you're paying £30k+ for a new EV to save a few hundred quid on fuel since it jumped in price. What they tend to forget, is paying 70p per KWH on public chargers is VERY expensive, even home economy rates are shooting up now so the differential isn't really that great. It's far from free to charge an EV - something which people seem to forget! (I own one).
What I've heard a lot of recently, that really doesn't make sense, is people switching to electric cars to 'save fuel costs'. If you're doing big mileage and can get a very low BIK company car and/or charge for free at work, then fair enough. Otherwise, you're paying £30k+ for a new EV to save a few hundred quid on fuel since it jumped in price. What they tend to forget, is paying 70p per KWH on public chargers is VERY expensive, even home economy rates are shooting up now so the differential isn't really that great. It's far from free to charge an EV - something which people seem to forget! (I own one).
Shrimpvende said:
The only way this really used to work was when looking at PCP'ing used vs brand new manufacturer backed PCP/lease deal. Assuming you never intended to pay the balloon to own the car, and it was simply a case of [cost of car = monthly payments x finance period] then often it was cheaper overall to lease, as the tax is included and you've got the warranty. This worked for me a couple of times, the monthly/overall payments for a brand new car on PCH were very close to those offered by independent used car dealers on PCP, where their cars were usually outside of manufacturer warranty.
What I've heard a lot of recently, that really doesn't make sense, is people switching to electric cars to 'save fuel costs'. If you're doing big mileage and can get a very low BIK company car and/or charge for free at work, then fair enough. Otherwise, you're paying £30k+ for a new EV to save a few hundred quid on fuel since it jumped in price. What they tend to forget, is paying 70p per KWH on public chargers is VERY expensive, even home economy rates are shooting up now so the differential isn't really that great. It's far from free to charge an EV - something which people seem to forget! (I own one).
I know someone with an EV who’s annual mileage is around 25k and he told me his electric bill jumped noticeably with the constant home charging and this was before the energy crisis kicked in.What I've heard a lot of recently, that really doesn't make sense, is people switching to electric cars to 'save fuel costs'. If you're doing big mileage and can get a very low BIK company car and/or charge for free at work, then fair enough. Otherwise, you're paying £30k+ for a new EV to save a few hundred quid on fuel since it jumped in price. What they tend to forget, is paying 70p per KWH on public chargers is VERY expensive, even home economy rates are shooting up now so the differential isn't really that great. It's far from free to charge an EV - something which people seem to forget! (I own one).
Some people jump on something thinking its a smart move but it is not always the case if they are honest with themselves.
Shrimpvende said:
What I've heard a lot of recently, that really doesn't make sense, is people switching to electric cars to 'save fuel costs'. If you're doing big mileage and can get a very low BIK company car and/or charge for free at work, then fair enough. Otherwise, you're paying £30k+ for a new EV to save a few hundred quid on fuel since it jumped in price. What they tend to forget, is paying 70p per KWH on public chargers is VERY expensive, even home economy rates are shooting up now so the differential isn't really that great. It's far from free to charge an EV - something which people seem to forget! (I own one).
+1My grandfather bought a lightly used hybrid recently, around £15k I think - he gets 60mpg from it. Neighbours bought an electric car 'to save on fuel' - of course they're not factoring the charging cost - but also, it cost £35k. £20k buys you a lot of fuel - even at a pessimistic 40mpg and £2/litre that's 88000 miles! Depreciation of course is a major factor - I wouldn't want to predict where an EV will end up - it might be more, it might not - but I suspect many EVs will face a depreciation 'cliff' when the battery degrades to a point where the useful range goes below a figure most people will tolerate, and the cost of replacement batteries match/exceed the value of the car. Whereas the hybrid remains useable as long as you can still buy petrol at a sensible place (arguably if demand collapses from mass EV take up, the price should fall, until supply falls back).
swamp said:
It's not helpful for people's calculations that we use Miles Per Gallon (MPG) in the UK. This is the wrong way round. We should be using volume (of fuel) per unit distance, like the metric measure of L/100km.
Or even pence per mile.Now with a potential 45 mpg and 4.54litres per gallon, then for me I can divide the fuel price by 10 to get pence per mile. So if fuel is £1.90 per litre, I know it is costing me 19p per mile.
TyrannosauRoss Lex said:
Whatever reason people buy cars is fine by me, but one thing I find strange is that people sometimes say they're buying a new car because it's more economical.
A person from work has just sold their gas guzzler Mazda 2.2L diesel something or the other for £5k and bought a 2019 BMW 4 series 2.0L diesel because it's more economical.
Now, I might be wrong, but I'm going to assume it'll take a lot of driving to recoup that cost. Especially as insurance, tyre prices etc will likely he higher, as well as depreciation?
If they bought it because they fancied a change and wanted something newer..... Then great, nothing wrong with that. Seems odd to me?
It depends... in my case I did. Sort of.A person from work has just sold their gas guzzler Mazda 2.2L diesel something or the other for £5k and bought a 2019 BMW 4 series 2.0L diesel because it's more economical.
Now, I might be wrong, but I'm going to assume it'll take a lot of driving to recoup that cost. Especially as insurance, tyre prices etc will likely he higher, as well as depreciation?
If they bought it because they fancied a change and wanted something newer..... Then great, nothing wrong with that. Seems odd to me?
I needed to replace an elderly Range Rover (which I still have, but don't use). It costs £150 to fill up. £500 to tax. £1,000 or more for every service (there's always 'something'). Roughly £10k a year in fuel and bills. I also drive in and out of London to work.
I bought a Tesla through my company - saved maybe £20k in tax, and around £9k a year in fuel and lack of servicing (I haven't included the congestion charge costs). It will have paid for itself quite soon. I intend keeping it until it explodes.
In terms of depreciation, it's worth more than I paid for it, the insurance is about the same - bit cheaper actually and the tyres last as long and are cheaper.
I would not claim to have bought it to save money or newts - I needed a new daily driver and an EV was a bit hard to ignore. But it turns out that I have saved quite a bit - the regular visits to a petrol station are not missed.
My better half was thinking of chopping in her Audi for something more economical - in her case, it wouldn't work at all. She's lose at every corner by slapping cash down, losing money on the Audi and she doesn't do the same mileage. It would take years for her to be better off.
People see what they want to see. Objectively it seems like the original scenario doesn't make financial sense but going on what we see, moving from an old Range Rover to a Tesla does.
Ironically having had a quick look on Autotrader, the 2022 Macan S we picked up earlier this year seems to be selling for more than we paid by more than the cost of the petrol we've put in it and it's not cost us any electric either
The challenge at the moment is depreciation or lack of it, which sadly I don't think is the norm. It's easy to say your new car doesn't depreciate and take the short term view on that meaning the new car is cheaper to run but I don't think this will last forever.
Ironically having had a quick look on Autotrader, the 2022 Macan S we picked up earlier this year seems to be selling for more than we paid by more than the cost of the petrol we've put in it and it's not cost us any electric either
The challenge at the moment is depreciation or lack of it, which sadly I don't think is the norm. It's easy to say your new car doesn't depreciate and take the short term view on that meaning the new car is cheaper to run but I don't think this will last forever.
Man maths. Its pretty easy, I mean, an old car out of warranty 'might' throw up a £5k bill. Better to spend that £5k on shiny shiny you get the benefit of??.
I do like to partake in man maths. I have a 2 litre diesel A4 avant, which does its job brilliantly but is very dull and has no hobby element to it. I do a 90 mile round commute 2-3 days a week, so having an interesting daily car is cost prohibitive really.
So, I recently bought myself an Austin Healey sprite as a fun/hobby car. my line to the Mrs is that I will save money as the sprite wont really go down in value, and I now wont (as I have in the past) get bored of the A4 and change it for something else. Of course I have plans for the Sprite, but keeping that quiet for now...
I do like to partake in man maths. I have a 2 litre diesel A4 avant, which does its job brilliantly but is very dull and has no hobby element to it. I do a 90 mile round commute 2-3 days a week, so having an interesting daily car is cost prohibitive really.
So, I recently bought myself an Austin Healey sprite as a fun/hobby car. my line to the Mrs is that I will save money as the sprite wont really go down in value, and I now wont (as I have in the past) get bored of the A4 and change it for something else. Of course I have plans for the Sprite, but keeping that quiet for now...
Superflow said:
I know someone with an EV who’s annual mileage is around 25k and he told me his electric bill jumped noticeably with the constant home charging and this was before the energy crisis kicked in.
You'd be mad to think you could go from spending 300/mo on fuel and not having a significant bump in leccy costs with an EV. For an average of 68 miles a day is easily going to add up to 18kWh/day (with 10% charging loss). That's a substantial amount of energy as the average household use is just over 10kWh/day.I agree that there's a sentiment that electric cars are always cheaper in TCO, but unless you're running one through a business, WFH and charge with solar panels or are happy to run an older one it's certainly not the case.
JP__FOX said:
People see what they want to see. Objectively it seems like the original scenario doesn't make financial sense but going on what we see, moving from an old Range Rover to a Tesla does.
Ironically having had a quick look on Autotrader, the 2022 Macan S we picked up earlier this year seems to be selling for more than we paid by more than the cost of the petrol we've put in it and it's not cost us any electric either
The challenge at the moment is depreciation or lack of it, which sadly I don't think is the norm. It's easy to say your new car doesn't depreciate and take the short term view on that meaning the new car is cheaper to run but I don't think this will last forever.
True.Ironically having had a quick look on Autotrader, the 2022 Macan S we picked up earlier this year seems to be selling for more than we paid by more than the cost of the petrol we've put in it and it's not cost us any electric either
The challenge at the moment is depreciation or lack of it, which sadly I don't think is the norm. It's easy to say your new car doesn't depreciate and take the short term view on that meaning the new car is cheaper to run but I don't think this will last forever.
Depreciation, in my simplistic view, is only an issue if you intend selling. I've had my Range Rover (for example) from new since 2005. I also have no intention of selling the Tesla. I don't therefore really consider depreciation on my current cars - whilst it's interesting that my Tesla has, at the very least, stayed at the same price, it's a non issue.
In my peculiar case, the Tesla will have paid for itself within three years or so when compared to the costs of a big thirsty Range Rover. But it's not why I bought it.
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