Does this make sense?
Discussion
I’ve been leasing since 2015 but now looking to buy. In the past 7-8 years I’ve spent around 30k on leasing.
I was looking at getting a car on finance but then thought would I better off getting a personal loan? That way I’ll have the freedom of changing the car when I want, probably every year or 2.
The part which I’m not sure if it makes sense or not is if I should get a “car pot” loan, so for example, say 25k loan over 6 years, considering I’ve “lost” 30k over the past 7-8 years on cars. I was thinking this way I’ll lose less as let’s say I change the car every 2 years that’ll be 3 cars in the 6 year total but unlike leasing I don’t expect them to be worth £0 when it comes to changing them.
The one thing I thought was that each time I sell the car my “car pot” will become less, as whatever I lose on the car during that 1-2 year period, so unless I top it up again to make up for the “loss” each time I change I’d have to get something cheaper.
Does my thinking make sense or am I missing something obvious?
I was looking at getting a car on finance but then thought would I better off getting a personal loan? That way I’ll have the freedom of changing the car when I want, probably every year or 2.
The part which I’m not sure if it makes sense or not is if I should get a “car pot” loan, so for example, say 25k loan over 6 years, considering I’ve “lost” 30k over the past 7-8 years on cars. I was thinking this way I’ll lose less as let’s say I change the car every 2 years that’ll be 3 cars in the 6 year total but unlike leasing I don’t expect them to be worth £0 when it comes to changing them.
The one thing I thought was that each time I sell the car my “car pot” will become less, as whatever I lose on the car during that 1-2 year period, so unless I top it up again to make up for the “loss” each time I change I’d have to get something cheaper.
Does my thinking make sense or am I missing something obvious?
I’ve always personal loaned my cars and still think it’s the best way as long as you get a good interest rate.
What you’ll find is is you change a car every 24months you’ll probably not touch a pool of money if you are sensible.
So if you bought a car at £20K say £400 a month after ~3 years you should have £3-4K of equity. You can then sell the car and clear the loan leaving you with two options:
1. You can either staircase and take out another £20K loan plus your £3-4K equity and get a £23/24K car for the same £400 a month.
2. You could get another £20K car but take out a £16/17K loan and pay less a month.
Worst case scenario you just keep paying the car and own it outright with no payments and decent equity.
What you’ll find is is you change a car every 24months you’ll probably not touch a pool of money if you are sensible.
So if you bought a car at £20K say £400 a month after ~3 years you should have £3-4K of equity. You can then sell the car and clear the loan leaving you with two options:
1. You can either staircase and take out another £20K loan plus your £3-4K equity and get a £23/24K car for the same £400 a month.
2. You could get another £20K car but take out a £16/17K loan and pay less a month.
Worst case scenario you just keep paying the car and own it outright with no payments and decent equity.
ZX10R NIN said:
Why are you changing every two years?
What type of car are you looking at buying?
Annual Mileage?
Type of usage ?
Answer those questions & you may get more concise answers.
I get bored quickly. What type of car are you looking at buying?
Annual Mileage?
Type of usage ?
Answer those questions & you may get more concise answers.
I’ve been looking at X5’s and 5 series touring - higher mileage, one owner types which should fit in with me changing them every 1-2 years.
10k
Daily driver.
Edited by NSS89 on Tuesday 10th January 21:35
CG2020UK said:
I’ve always personal loaned my cars and still think it’s the best way as long as you get a good interest rate.
What you’ll find is is you change a car every 24months you’ll probably not touch a pool of money if you are sensible.
So if you bought a car at £20K say £400 a month after ~3 years you should have £3-4K of equity. You can then sell the car and clear the loan leaving you with two options:
1. You can either staircase and take out another £20K loan plus your £3-4K equity and get a £23/24K car for the same £400 a month.
2. You could get another £20K car but take out a £16/17K loan and pay less a month.
Worst case scenario you just keep paying the car and own it outright with no payments and decent equity.
This was my thinking and sounds like you live it so that’s good to know :-)What you’ll find is is you change a car every 24months you’ll probably not touch a pool of money if you are sensible.
So if you bought a car at £20K say £400 a month after ~3 years you should have £3-4K of equity. You can then sell the car and clear the loan leaving you with two options:
1. You can either staircase and take out another £20K loan plus your £3-4K equity and get a £23/24K car for the same £400 a month.
2. You could get another £20K car but take out a £16/17K loan and pay less a month.
Worst case scenario you just keep paying the car and own it outright with no payments and decent equity.
What kind of term do you go for if you don’t mind me asking?
CG2020UK said:
I’ve always personal loaned my cars and still think it’s the best way as long as you get a good interest rate.
What you’ll find is is you change a car every 24months you’ll probably not touch a pool of money if you are sensible.
So if you bought a car at £20K say £400 a month after ~3 years you should have £3-4K of equity. You can then sell the car and clear the loan leaving you with two options:
1. You can either staircase and take out another £20K loan plus your £3-4K equity and get a £23/24K car for the same £400 a month.
2. You could get another £20K car but take out a £16/17K loan and pay less a month.
Worst case scenario you just keep paying the car and own it outright with no payments and decent equity.
What you’ll find is is you change a car every 24months you’ll probably not touch a pool of money if you are sensible.
So if you bought a car at £20K say £400 a month after ~3 years you should have £3-4K of equity. You can then sell the car and clear the loan leaving you with two options:
1. You can either staircase and take out another £20K loan plus your £3-4K equity and get a £23/24K car for the same £400 a month.
2. You could get another £20K car but take out a £16/17K loan and pay less a month.
Worst case scenario you just keep paying the car and own it outright with no payments and decent equity.
Equity, staircase - that’s PH clowns buying beyond their means bingo right there, that is
NSS89 said:
This was my thinking and sounds like you live it so that’s good to know :-)
What kind of term do you go for if you don’t mind me asking?
I have always done 5 years but I was getting under 4% APR for the GTI and M2 and would be happy enough keeping them permanently. Especially when my GTI was £210 a month and the M2 is £400 compared to leasing. What kind of term do you go for if you don’t mind me asking?
The APR% change obviously changes this and might be worth reducing length as £2K interest I can stomach (usually save that not buying main dealer) but £5K wouldn’t be for me.
visitinglondon said:
Equity, staircase - that’s PH clowns buying beyond their means bingo right there, that is
Great gig as I find the guys are all decent happy blokes and we are just cutting about with our lives fairly comfortable and satisfied.
Only downside is sometimes you get a tiny number of really sad and depressed members in the audience and no matter how hard we try to cheer them up they are still sad and depressed.
We just can’t figure out why they don’t do something to make themselves laugh or be happy. Some people say it’s because they are jealous or angry about something.
Then again maybe I’m not that funny as a clown and my jokes too close to the truth.
I have done something similar with a £20k loan over 5 years, purchased a BMW M135i for £22k in 2015, kept it for 5 years P/Xed it in 2020 for £14k. Took out another £20k loan and put in some cash and got a Mercedes C63S, 2 years in its worth about the same as I paid for it and have £13k loan outstanding on a £45k car so it can be done.
My advice is,
As always, buy the right car to start with at the right price.
Keep it for as long as possible as the P/X / purchase of a new car will cost at least £2k, my BMW went back on the dealer forecourt for £16.5k and sold in a couple of weeks. Assume the same happened to the C63S so that's £5k down the toilet on changeover day.
My advice is,
As always, buy the right car to start with at the right price.
Keep it for as long as possible as the P/X / purchase of a new car will cost at least £2k, my BMW went back on the dealer forecourt for £16.5k and sold in a couple of weeks. Assume the same happened to the C63S so that's £5k down the toilet on changeover day.
CG2020UK said:
I’ve always personal loaned my cars and still think it’s the best way as long as you get a good interest rate.
What you’ll find is is you change a car every 24months you’ll probably not touch a pool of money if you are sensible.
So if you bought a car at £20K say £400 a month after ~3 years you should have £3-4K of equity. You can then sell the car and clear the loan leaving you with two options:
1. You can either staircase and take out another £20K loan plus your £3-4K equity and get a £23/24K car for the same £400 a month.
2. You could get another £20K car but take out a £16/17K loan and pay less a month.
Worst case scenario you just keep paying the car and own it outright with no payments and decent equity.
Where does depreciation figure in your example?What you’ll find is is you change a car every 24months you’ll probably not touch a pool of money if you are sensible.
So if you bought a car at £20K say £400 a month after ~3 years you should have £3-4K of equity. You can then sell the car and clear the loan leaving you with two options:
1. You can either staircase and take out another £20K loan plus your £3-4K equity and get a £23/24K car for the same £400 a month.
2. You could get another £20K car but take out a £16/17K loan and pay less a month.
Worst case scenario you just keep paying the car and own it outright with no payments and decent equity.
Mandat said:
Where does depreciation figure in your example?
The equity is the difference between what you owe on the car (personal loan) versus it’s market value (trade in price - depreciation). Eg: Buy car for £15K loan it’s worth £10/11K in 2-3 years in trade in due to depreciation. Your personal loan is now worth say £8K. There is your £2-3K equity.
Edited by CG2020UK on Wednesday 11th January 13:25
NSS89 said:
I get bored quickly.
I’ve been looking at X5’s and 5 series touring - higher mileage, one owner types which should fit in with me changing them every 1-2 years.
10k
Daily driver.
It makes the most sense to keep it for three years as you tend to take less of a hit (obviously depending on what model you buy) something with a 40d/40i drivetrain would be the pick.I’ve been looking at X5’s and 5 series touring - higher mileage, one owner types which should fit in with me changing them every 1-2 years.
10k
Daily driver.
Edited by NSS89 on Tuesday 10th January 21:35
LeeM135i said:
I have done something similar with a £20k loan over 5 years, purchased a BMW M135i for £22k in 2015, kept it for 5 years P/Xed it in 2020 for £14k. Took out another £20k loan and put in some cash and got a Mercedes C63S, 2 years in its worth about the same as I paid for it and have £13k loan outstanding on a £45k car so it can be done.
My advice is,
As always, buy the right car to start with at the right price.
Keep it for as long as possible as the P/X / purchase of a new car will cost at least £2k, my BMW went back on the dealer forecourt for £16.5k and sold in a couple of weeks. Assume the same happened to the C63S so that's £5k down the toilet on changeover day.
Just ignore examples like this. Using a 2020-2022 anomaly just isn’t smart. My advice is,
As always, buy the right car to start with at the right price.
Keep it for as long as possible as the P/X / purchase of a new car will cost at least £2k, my BMW went back on the dealer forecourt for £16.5k and sold in a couple of weeks. Assume the same happened to the C63S so that's £5k down the toilet on changeover day.
Use generic depn curves and anything on top of that is a bonus.
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