Buying a cheap car - false economy?
Discussion
I've recently sold a car worth £33k and looking to get something substabtially cheaper for a while due to a house move and wanting to 'cash in' on high prices before the assumed decline.
Now, it's got my thinking, how cheap is too cheap?
If I buy a£1,500 and anything small needs doing it's say £200, so my £1,500 car now owes me £1,700.
If I buy a £10,000 car, it would only owe me £10,200, much less proportionally.
If we are unlucky and get a major £1-2k issue, a 'cheap' car quickly becomes worthless, whilst the more expensive one is still worth keeping.
So what's the sweet spot between risk of uneconomical repair and expending too much capital?
Anyone else have this dilemma?
Now, it's got my thinking, how cheap is too cheap?
If I buy a£1,500 and anything small needs doing it's say £200, so my £1,500 car now owes me £1,700.
If I buy a £10,000 car, it would only owe me £10,200, much less proportionally.
If we are unlucky and get a major £1-2k issue, a 'cheap' car quickly becomes worthless, whilst the more expensive one is still worth keeping.
So what's the sweet spot between risk of uneconomical repair and expending too much capital?
Anyone else have this dilemma?
It's not been for me so far - albeit I've become willing to tackle issues myself.
We swapped my other half's MINI Cooper which we bought new in 2016 for an old 1 series that we bought from her folks for £2k. It was great if I'm honest until I got bored and swapped it for a 125i cab.
I ditched my my M140i for an old 130i LE and latterly an old E92 335i. Again it was a car that I bought new, but I prefer the older cars.
I've probably not been that economical in my approach to older cars though getting stuck into preventative maintenance.
We swapped my other half's MINI Cooper which we bought new in 2016 for an old 1 series that we bought from her folks for £2k. It was great if I'm honest until I got bored and swapped it for a 125i cab.
I ditched my my M140i for an old 130i LE and latterly an old E92 335i. Again it was a car that I bought new, but I prefer the older cars.
I've probably not been that economical in my approach to older cars though getting stuck into preventative maintenance.
It depends hugely on what sort of car you want and what you're going to use it for doesn't it? If you want an SUV or big barge to do 30k miles per year in then spending just £2k at outset and expecting little more expense is madness. If you want anything that works to do 5k miles per year in then there's plenty for £2k that'll come with very little risk.
Depends how fussy you are really.
I always give my cars a full service when buying no matter what the owner tells me.
You will always get some little niggles here and there.
Most owners sadly run their cars on a shoestring, not saying that's the case on an enthusiasts forum but you get the idea.
I recently picked up a rather tidy 2004 Skoda Fabia Vrs but will end up spending around £400 to get it 100% as I want it.
I always give my cars a full service when buying no matter what the owner tells me.
You will always get some little niggles here and there.
Most owners sadly run their cars on a shoestring, not saying that's the case on an enthusiasts forum but you get the idea.
I recently picked up a rather tidy 2004 Skoda Fabia Vrs but will end up spending around £400 to get it 100% as I want it.
It also depends on the car that you buy at the at price point.
A car that's been through 32 owners with no service history and 4 tyres of different makes and thread depths with 1 months mot left isn't going to be a good car and will empty your pockest extremely quickly
Look carefully and you can find the one owner from new, fsh backed up by folders of receipts, 4 matching tyres or at least matching tyres and thread depth on each axle car and sold with the majority of a years MOT remaining.
Also the mechanical complexity of the car needs to be taken in to consideration.. as simple and straight forward as possible is the way to go, so na petrols or older TD's with out any DPF's etc
A car that's been through 32 owners with no service history and 4 tyres of different makes and thread depths with 1 months mot left isn't going to be a good car and will empty your pockest extremely quickly
Look carefully and you can find the one owner from new, fsh backed up by folders of receipts, 4 matching tyres or at least matching tyres and thread depth on each axle car and sold with the majority of a years MOT remaining.
Also the mechanical complexity of the car needs to be taken in to consideration.. as simple and straight forward as possible is the way to go, so na petrols or older TD's with out any DPF's etc
rotaryjam said:
Now, it's got my thinking, how cheap is too cheap?
If I buy a£1,500 and anything small needs doing it's say £200, so my £1,500 car now owes me £1,700.
If I buy a £10,000 car, it would only owe me £10,200, much less proportionally.
If we are unlucky and get a major £1-2k issue, a 'cheap' car quickly becomes worthless, whilst the more expensive one is still worth keeping.
So what's the sweet spot between risk of uneconomical repair and expending too much capital?
Anyone else have this dilemma?
I'm not seeing it-If I buy a£1,500 and anything small needs doing it's say £200, so my £1,500 car now owes me £1,700.
If I buy a £10,000 car, it would only owe me £10,200, much less proportionally.
If we are unlucky and get a major £1-2k issue, a 'cheap' car quickly becomes worthless, whilst the more expensive one is still worth keeping.
So what's the sweet spot between risk of uneconomical repair and expending too much capital?
Anyone else have this dilemma?
Scenario A:
Buy car for £1500
Spend £500 a year on repairs for three years
Sell car for £500 (~scrap value)
Total cost for 3 years motoring = £1500 + £1500 - £500 = £2500
Scenario B:
But car for £10,000
Spend £500 a year on repairs for three years
Sell car for £7500
Total cost for 3 years motoring = £10000 + £1500 - £7500 = £4000
In this example, how is Scenario A a 'false' economy? Note that even though you've spent the value of the car again in repairs, you still end up well ahead financially compared to B.
For scenario B to be better, one of two things must happen: either you pick a future classic that's worth more than £10k after three years (not that easy given current inflated prices, but who knows). Or car B, being newer and better condition, needs dramatically less money spent on repairs, outweighing the inflation.
The fact that in Scenario A you have the option of cutting your losses and ditching the car if faced with a major issue - the option, not the obligation - is a positive because it gives you more flexibility.
I'd say there are other factors more important than the purchase price.
What kind of car do you want?
How will you use it?
Will you work on it yourself?
How long are you planning to keep it?
Personally I don't want to drive around in a 1500 quid shed but that's just me. I like value but it has to balance with what I want in a car. The kind of driving I do means that small hot hatches work well for me. I spent £9k on my car 2 and a half years ago and it's cost very little to run on my low mileage. Just basic servicing and consumables like tyres and brakes. I like that it's reliable so I can use it daily and because its fairly modern it's also economical for the Performance it offers. It'll lose a bit in depreciation but I'm not that fussed.
You should just find something you like anywhere between your upper and lower price limits and not worry about it.
What kind of car do you want?
How will you use it?
Will you work on it yourself?
How long are you planning to keep it?
Personally I don't want to drive around in a 1500 quid shed but that's just me. I like value but it has to balance with what I want in a car. The kind of driving I do means that small hot hatches work well for me. I spent £9k on my car 2 and a half years ago and it's cost very little to run on my low mileage. Just basic servicing and consumables like tyres and brakes. I like that it's reliable so I can use it daily and because its fairly modern it's also economical for the Performance it offers. It'll lose a bit in depreciation but I'm not that fussed.
You should just find something you like anywhere between your upper and lower price limits and not worry about it.
Think there's a lot to be said in looking for a car which won't depreciate like the rest of the market, or something which might hold firm or even add value. It's probably harder to pick something which won't fall like the rest though without having the Bork factor to consider. Anything desirable at the low end will usually mean big bills.
All depends on the car and how simple / reliable it is and how expensive it is to fix. Buy a cheap car that was cheap to start off with and you could be laughing. Buy the £10,000 car that was £50,000 brand new and things could be very expensive to fix.
For me it’s buying a car that’s done a chunk of its depreciation over the first few years and say 50,000 miles and run it to 150,000 miles. Currently doing this with a Volvo V60 with nothing major required during 80,000 miles cambekt was the biggest bill. Nothing else except servicing and tyres.
For me it’s buying a car that’s done a chunk of its depreciation over the first few years and say 50,000 miles and run it to 150,000 miles. Currently doing this with a Volvo V60 with nothing major required during 80,000 miles cambekt was the biggest bill. Nothing else except servicing and tyres.
It depends on you and how good a mechanic you are. If you're not a mechanic, you're not going to be able to tell a good car from a bad car and you're going to have to pay someone $100/hr to fix it. If you're a good mechanic and can tell the difference between a well cared for car and one needing work.
If you can do your own repairs, you can run a $500-$1000 car on a shoe string and get years out of it. I've had a bunch like that and I've really enjoyed them. It keeps the miles off the nicer cars.
If you can do your own repairs, you can run a $500-$1000 car on a shoe string and get years out of it. I've had a bunch like that and I've really enjoyed them. It keeps the miles off the nicer cars.
samoht said:
I'm not seeing it-
Scenario A:
Buy car for £1500
Spend £500 a year on repairs for three years
Sell car for £500 (~scrap value)
Total cost for 3 years motoring = £1500 + £1500 - £500 = £2500
Scenario B:
But car for £10,000
Spend £500 a year on repairs for three years
Sell car for £7500
Total cost for 3 years motoring = £10000 + £1500 - £7500 = £4000
Where have these £500 a year repair costs come from?Scenario A:
Buy car for £1500
Spend £500 a year on repairs for three years
Sell car for £500 (~scrap value)
Total cost for 3 years motoring = £1500 + £1500 - £500 = £2500
Scenario B:
But car for £10,000
Spend £500 a year on repairs for three years
Sell car for £7500
Total cost for 3 years motoring = £10000 + £1500 - £7500 = £4000
I bought a car for around £10k-ish and it certainly hasn't cost me £500 a year in repairs, more like £200 a year in servicing and that's it. Also further complicated at the moment by the fact that cars are not depreciating - mine hasn't lost any value at all.
It's also a possibility that a £1500 shed could well need way more than £500 spending on a repair, for example clutch/flywheel, turbo, suspension parts, welding, etc.
georgeyboy12345 said:
samoht said:
I'm not seeing it-
Scenario A:
Buy car for £1500
Spend £500 a year on repairs for three years
Sell car for £500 (~scrap value)
Total cost for 3 years motoring = £1500 + £1500 - £500 = £2500
Scenario B:
But car for £10,000
Spend £500 a year on repairs for three years
Sell car for £7500
Total cost for 3 years motoring = £10000 + £1500 - £7500 = £4000
Where have these £500 a year repair costs come from?Scenario A:
Buy car for £1500
Spend £500 a year on repairs for three years
Sell car for £500 (~scrap value)
Total cost for 3 years motoring = £1500 + £1500 - £500 = £2500
Scenario B:
But car for £10,000
Spend £500 a year on repairs for three years
Sell car for £7500
Total cost for 3 years motoring = £10000 + £1500 - £7500 = £4000
I bought a car for around £10k-ish and it certainly hasn't cost me £500 a year in repairs, more like £200 a year in servicing and that's it.
The annual maintenance costs don't affect my point either way, which is that maintenance is more or less constant and typically less significant than depreciation on the higher-valued car.
georgeyboy12345 said:
Also further complicated at the moment by the fact that cars are not depreciating - mine hasn't lost any value at all.
Sure, and I sold my car for more than four times what I paid for it, but the fact that values are inflated currently wouldn't lead me to recommend others base their financial planning on the bubble continuing to inflate, especially given all the economic headwinds rising at present.georgeyboy12345 said:
It's also a possibility that a £1500 shed could well need way more than £500 spending on a repair, for example clutch/flywheel, turbo, suspension parts, welding, etc.
I explicitly mentioned the possibility that "car B, being newer and better condition, needs dramatically less money spent on repairs".However the OP was talking about values, not age, condition etc. Plenty of expensive cars with high maintenance costs too.
If car A was a £1500 K11 Micra, and car B was a £10k Merc S500, then the balance of maintenance would in no way compensate for the purchase price difference.
The higher budget only helps if you use it to buy newer, as opposed to getting something nicer of a similar age.
None of which is to say everyone should drive a shed, there are real benefits to spending more. However the original argument against buying cheap, that the repairs could look pricey against the car's value, is IMO null and void.
So its actually more like this as I only really buy cars only enough to have stopped depreciating so its basically not a factor.
Scenario A:
Buy car £1,500
Spend £200
Sell car for £1,500
I'm down £200 on a car only worth £1,500
Scenario B:
Buy car £10,000
Spend £200
Sell car for £10,000
I'm still down £200, but on a car worth £10,000 so proportionally a much lower loss which feels more palatable.
If you scale it up to say a £1000 bill, realistically I wouldn't put that much money in to a £1,500 car as the risk of not getting it back is higher (likely closer to being scrap than the £10,000 car).
That's the logic of the dilema and trying to find that sweet spot between keeping the capital outlay low whilst reducing the risk that a big bill makes a repair non viable
Scenario A:
Buy car £1,500
Spend £200
Sell car for £1,500
I'm down £200 on a car only worth £1,500
Scenario B:
Buy car £10,000
Spend £200
Sell car for £10,000
I'm still down £200, but on a car worth £10,000 so proportionally a much lower loss which feels more palatable.
If you scale it up to say a £1000 bill, realistically I wouldn't put that much money in to a £1,500 car as the risk of not getting it back is higher (likely closer to being scrap than the £10,000 car).
That's the logic of the dilema and trying to find that sweet spot between keeping the capital outlay low whilst reducing the risk that a big bill makes a repair non viable
Edited by rotaryjam on Tuesday 18th October 21:30
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