Debating getting out of finance deal for an older car
Discussion
After some advice, I am at a stage of life where a first house purchase is imminent and I’m trying to be more sensible financially when it comes to my car decisions. (Track record has not been great on this, couple of Ford Capri’s and a hanging Peugeot 104 later)
I currently have a 17’ BMW 3 Series Touring 2.0 on PCP finance, it’s sitting on 88k miles at the minute. I love the car, in terms of driving experience/handling it’s easily the best I’ve ever owned alongside being a practical family car, which we have been able to use for driving trips to Europe in the last couple of years.
I’m keen to leave car finance behind (for now, at least) and fortunately have enough equity in the car if sold via a site like Motorway to clear the finance and have £3-£4,000 to spend on another car, what I’d ideally like to do is use that to buy an older car outright.
I’m leaning towards the Volvo XC70, particularly the earlier pre-facelift model (pre-2008?), as I need it to have a decent sized boot (equal to if not bigger than the 3-series touring) for hauling family on holiday + my sons wheelchair.
I appreciate it’s always taking more of a gamble with any older car although I will be keeping my eyes out for something with decent service history and MOT history.
However what I’d like to know is have any of you gone this route of chopping in the finance to just drive an older or less desirable car that you were able to buy outright? What has been your experience?
And any views on these Volvo XC70’s particularly if you’ve owned one? Is the stereotype of mostly bulletproof engines on older Volvo’s applicable to the XC70?
Also, any suggestions for other cars in the £3,000 to £5,000 price range that fits the bill for what I’m after? I’ve also been considering the older XC90’s. Cheers.
I currently have a 17’ BMW 3 Series Touring 2.0 on PCP finance, it’s sitting on 88k miles at the minute. I love the car, in terms of driving experience/handling it’s easily the best I’ve ever owned alongside being a practical family car, which we have been able to use for driving trips to Europe in the last couple of years.
I’m keen to leave car finance behind (for now, at least) and fortunately have enough equity in the car if sold via a site like Motorway to clear the finance and have £3-£4,000 to spend on another car, what I’d ideally like to do is use that to buy an older car outright.
I’m leaning towards the Volvo XC70, particularly the earlier pre-facelift model (pre-2008?), as I need it to have a decent sized boot (equal to if not bigger than the 3-series touring) for hauling family on holiday + my sons wheelchair.
I appreciate it’s always taking more of a gamble with any older car although I will be keeping my eyes out for something with decent service history and MOT history.
However what I’d like to know is have any of you gone this route of chopping in the finance to just drive an older or less desirable car that you were able to buy outright? What has been your experience?
And any views on these Volvo XC70’s particularly if you’ve owned one? Is the stereotype of mostly bulletproof engines on older Volvo’s applicable to the XC70?
Also, any suggestions for other cars in the £3,000 to £5,000 price range that fits the bill for what I’m after? I’ve also been considering the older XC90’s. Cheers.
I bought a 107K mile BMW 330i in the middle of your budget in March 2019, a Saloon admittedly, but I still have it as there is nothing I'd rather have that wouldn't cost me thousands more.
As you like how your BMW drives but would like more space maybe an E61 5 Series, X3 or X5 might work.
Or maybe a Mercedes E Class Estate?
As you like how your BMW drives but would like more space maybe an E61 5 Series, X3 or X5 might work.
Or maybe a Mercedes E Class Estate?
Mr Tidy said:
I bought a 107K mile BMW 330i in the middle of your budget in March 2019, a Saloon admittedly, but I still have it as there is nothing I'd rather have that wouldn't cost me thousands more.
As you like how your BMW drives but would like more space maybe an E61 5 Series, X3 or X5 might work.
Or maybe a Mercedes E Class Estate?
Thanks its a good point, I will try browsing some of the older BMW X5’s as well, the driving experience is still important to me as I do a lot of driving for work + the trips the Europe for holidays. As you like how your BMW drives but would like more space maybe an E61 5 Series, X3 or X5 might work.
Or maybe a Mercedes E Class Estate?
I think it’s a hard one.
An old Volvo XC70 or any luxury car at £3-5k has the potential to be a real headache and financial pain.
If you are happy with your 3 series and it fits in budget I’d maybe suggest sticking it out and just enjoying it. This will hopefully be a more stable option.
An old Volvo XC70 or any luxury car at £3-5k has the potential to be a real headache and financial pain.
If you are happy with your 3 series and it fits in budget I’d maybe suggest sticking it out and just enjoying it. This will hopefully be a more stable option.
I wouldn't do it personally. Your 3-series can't be worth more than about £9-10k so you must only be carrying around £5-6k of debt on it? Not a lot in the scheme of things.
I speak from experience as I did a similar thing in light of mortgage rates & general cost of living going up and sold my old car in July 2023. I was paying around £285 per month on PCP but had around £6k equity in the car due to lockdown pricing, so used the equity plus cash to buy an older cheaper car, and have spent most of the time I've owned it looking at getting back into something newer or better.
I've come to realise I'd rather have 10% less money in the bank each month and a car I enjoy, as it's one of my main interests. I can't speak for your interests but it sounds like you enjoy your BMW and would miss it to some extent. You've also touched on the risk of breakdown with an older car which is worth thinking about.
I speak from experience as I did a similar thing in light of mortgage rates & general cost of living going up and sold my old car in July 2023. I was paying around £285 per month on PCP but had around £6k equity in the car due to lockdown pricing, so used the equity plus cash to buy an older cheaper car, and have spent most of the time I've owned it looking at getting back into something newer or better.
I've come to realise I'd rather have 10% less money in the bank each month and a car I enjoy, as it's one of my main interests. I can't speak for your interests but it sounds like you enjoy your BMW and would miss it to some extent. You've also touched on the risk of breakdown with an older car which is worth thinking about.
You might be very lucky buying an older higher end car but as someone else has said, it could throw up some bills.
Having said that you have an extra amount each month to bank as an insurance for such an event.
When I was in your situation with big mortgage etc I drove around in the most basic of cars with the minimum that could go wrong, it wasn't great for a time but needs must.
Having said that you have an extra amount each month to bank as an insurance for such an event.
When I was in your situation with big mortgage etc I drove around in the most basic of cars with the minimum that could go wrong, it wasn't great for a time but needs must.
resolve10 said:
I wouldn't do it personally. Your 3-series can't be worth more than about £9-10k so you must only be carrying around £5-6k of debt on it? Not a lot in the scheme of things.
I speak from experience as I did a similar thing in light of mortgage rates & general cost of living going up and sold my old car in July 2023. I was paying around £285 per month on PCP but had around £6k equity in the car due to lockdown pricing, so used the equity plus cash to buy an older cheaper car, and have spent most of the time I've owned it looking at getting back into something newer or better.
I've come to realise I'd rather have 10% less money in the bank each month and a car I enjoy, as it's one of my main interests. I can't speak for your interests but it sounds like you enjoy your BMW and would miss it to some extent. You've also touched on the risk of breakdown with an older car which is worth thinking about.
Really helpful to hear from someone like yourself who has done exactly what I am considering. There is a good chance I’d miss the driving experience of the 3 series, as well as some of the nice modern features it provides too but weighing up whether missing out on those bits would be outweighed by the extra £240 a month in my bank account is proving difficult. I speak from experience as I did a similar thing in light of mortgage rates & general cost of living going up and sold my old car in July 2023. I was paying around £285 per month on PCP but had around £6k equity in the car due to lockdown pricing, so used the equity plus cash to buy an older cheaper car, and have spent most of the time I've owned it looking at getting back into something newer or better.
I've come to realise I'd rather have 10% less money in the bank each month and a car I enjoy, as it's one of my main interests. I can't speak for your interests but it sounds like you enjoy your BMW and would miss it to some extent. You've also touched on the risk of breakdown with an older car which is worth thinking about.
The novelty of driving an older car without some of the mod cons or handling of the 3 series might wear off pretty quick and then I end up as you have scrolling auto trader for another PCP deal. Out of curiosity what older car did you opt for when you chopped in your financed vehicle? Did you have issues around the reliability?
Ryan104 said:
resolve10 said:
I wouldn't do it personally. Your 3-series can't be worth more than about £9-10k so you must only be carrying around £5-6k of debt on it? Not a lot in the scheme of things.
I speak from experience as I did a similar thing in light of mortgage rates & general cost of living going up and sold my old car in July 2023. I was paying around £285 per month on PCP but had around £6k equity in the car due to lockdown pricing, so used the equity plus cash to buy an older cheaper car, and have spent most of the time I've owned it looking at getting back into something newer or better.
I've come to realise I'd rather have 10% less money in the bank each month and a car I enjoy, as it's one of my main interests. I can't speak for your interests but it sounds like you enjoy your BMW and would miss it to some extent. You've also touched on the risk of breakdown with an older car which is worth thinking about.
Really helpful to hear from someone like yourself who has done exactly what I am considering. There is a good chance I’d miss the driving experience of the 3 series, as well as some of the nice modern features it provides too but weighing up whether missing out on those bits would be outweighed by the extra £240 a month in my bank account is proving difficult. I speak from experience as I did a similar thing in light of mortgage rates & general cost of living going up and sold my old car in July 2023. I was paying around £285 per month on PCP but had around £6k equity in the car due to lockdown pricing, so used the equity plus cash to buy an older cheaper car, and have spent most of the time I've owned it looking at getting back into something newer or better.
I've come to realise I'd rather have 10% less money in the bank each month and a car I enjoy, as it's one of my main interests. I can't speak for your interests but it sounds like you enjoy your BMW and would miss it to some extent. You've also touched on the risk of breakdown with an older car which is worth thinking about.
The novelty of driving an older car without some of the mod cons or handling of the 3 series might wear off pretty quick and then I end up as you have scrolling auto trader for another PCP deal. Out of curiosity what older car did you opt for when you chopped in your financed vehicle? Did you have issues around the reliability?
So you could nearly come out better off replacing it every year.
Not a PCP comparison, but I bought a pre-registered 2007 BMW 123d in January 2008 for £22.5K with an interest free loan and monthly car allowance from my employer for opting out of the Company Car scheme. I really liked it and it worked out well with the business use mileage rates at the time.
But I left that job in 2011 and then it started having issues while it was still depreciating so after reading about N47 cam-chain issues I sold it on 81K miles in 2014 and bought an E46 325ti Compact for slightly less than £2K that hadn't quite done 80K miles.
That's when I realised I should have discovered petrol straight 6s sooner - the engine had so much more character. And by then economy wasn't really an issue as I was only doing about 7,000 miles a year which might have been an issue with a diesel that had a dpf.
Ryan104 said:
Really helpful to hear from someone like yourself who has done exactly what I am considering. There is a good chance I’d miss the driving experience of the 3 series, as well as some of the nice modern features it provides too but weighing up whether missing out on those bits would be outweighed by the extra £240 a month in my bank account is proving difficult.
The novelty of driving an older car without some of the mod cons or handling of the 3 series might wear off pretty quick and then I end up as you have scrolling auto trader for another PCP deal. Out of curiosity what older car did you opt for when you chopped in your financed vehicle? Did you have issues around the reliability?
It's a 435d Gran Coupe, will be 10 years old in March. It hasn't given me any bills outside of routine maintenance, but it just feels a bit loose and tired (108k miles) compared to the newer cars I've had previously. I realise I sound spoilt and it's a lovely car to most people. The novelty of driving an older car without some of the mod cons or handling of the 3 series might wear off pretty quick and then I end up as you have scrolling auto trader for another PCP deal. Out of curiosity what older car did you opt for when you chopped in your financed vehicle? Did you have issues around the reliability?
I’d tread carefully. I had an 2012 S60 which has a lot of shared parts with the XC70, mine was a T4 petrol though. I liked the car, had it for 8 years but it liked trips to the garage throughout my time with it. A lot of those trips at the end were for worn suspension parts and sticking brake callipers which is typical for older cars. It gets frustrating when you’re in the garage every few weeks and it breaks just before you’re about to go on a trip. A lot of these problems would come out of the blue and even if you’d had an inspection you wouldn’t know when a suspension mount would let go etc
Forester1965 said:
I don't know what you earn but losing the £240p/m commitment will only improve your chances of getting the mortgage you want.
Exactly this. I jumped off a PCP deal around this time last year so I would better qualify for a mortgage on the property I bought this autumn.Gastons_Revenge said:
Forester1965 said:
I don't know what you earn but losing the £240p/m commitment will only improve your chances of getting the mortgage you want.
Exactly this. I jumped off a PCP deal around this time last year so I would better qualify for a mortgage on the property I bought this autumn.You mention XC70 and XC90...
Personally, I wouldn't want a P2 era car (2000 to 2007) more so in XC guise and more so if it's an auto... they're of an age now where there's plenty crap examples and they have a huge potential to go wrong, big time. The AWD systems are pretty weak, that's assuming they even work by now as most fail and at this price point, very few bother with the expense of fixing. Ditto the Geartronic boxes, known weak points and again many will be wheezing their last gasp and repairs are not cheap.
Been there, done that and so if you want an XC70 I would only consider a P3 car (2007 onwards) and whilst they're not flawless, they're just a huge step forwards compared to the older stuff. Gearboxes are improved, AWD failures are very very scarce and they're just a bit more modern and nicer to live with. Granted they tend to command a premium but £4k will weed out an decent enough example, granted maybe higher miles and less toys (but therefore less to fail)
This isn't a hard and fast rule and there will be very very good pre facelift cars out there and utters dogs of P3 cars... but for the former, you really really need to be aware of what your buying and be prepared for some maintenance, but that applies to all cars really. They're also not bulletproof, things fail... all things fail eventually however they are fairly resilient things if looked after, issue is there's a lot that aren't.
Personally, I wouldn't want a P2 era car (2000 to 2007) more so in XC guise and more so if it's an auto... they're of an age now where there's plenty crap examples and they have a huge potential to go wrong, big time. The AWD systems are pretty weak, that's assuming they even work by now as most fail and at this price point, very few bother with the expense of fixing. Ditto the Geartronic boxes, known weak points and again many will be wheezing their last gasp and repairs are not cheap.
Been there, done that and so if you want an XC70 I would only consider a P3 car (2007 onwards) and whilst they're not flawless, they're just a huge step forwards compared to the older stuff. Gearboxes are improved, AWD failures are very very scarce and they're just a bit more modern and nicer to live with. Granted they tend to command a premium but £4k will weed out an decent enough example, granted maybe higher miles and less toys (but therefore less to fail)
This isn't a hard and fast rule and there will be very very good pre facelift cars out there and utters dogs of P3 cars... but for the former, you really really need to be aware of what your buying and be prepared for some maintenance, but that applies to all cars really. They're also not bulletproof, things fail... all things fail eventually however they are fairly resilient things if looked after, issue is there's a lot that aren't.
CG2020UK said:
Might be slightly controversial but if you need the £240p/m back to get approved for a mortgage you are certainly in risky territory for affordability in eyes regardless of what the bank approves.
I’m certainly not in the realms of “needing” to get rid of my PCP deal, more so it would potentially just be nice to have that extra £240 a month in my account that I can then use as part of my other disposable income. Or alternatively, to put towards higher mortgage payments. After taking hearing people’s thoughts so far I’m leaning towards just sticking with the 3 series for now, I do love the car and driving experience, it is practical and hasn’t (touch wood) caused me any major issues so far.
Meanwhile I could be taking a risky gamble on an older car, even ones I perceived to be known as fairly solid/reliable which the poster above suggests the older XC70 / 90 models do actually have a good level of risk and issues.
I do agree with the principle that it always looks better to a mortgage provider when you have as much disposable income as possible on your application, and getting out of any finance deal no matter how big or small will of course help with that.
It sounds, OP, as if you're heading toward keeping the car and I agree that's sensible.
The only clear benefit is removing the monthly payment, but your cashflow could be quite quickly impacted if you were unlucky in your choice of semi-shed.
With it being a fairly new / known existing car, some equity, modest payments, and presumably not a huge amount owed - I think the financial risk seems quite limited. Your BM should last many more years.
One option might be to use some of your (assumed?) savings intended for a mortgage deposit to pay off the car debt early and buying the car outright, saving interest and freeing cashflow. This would put back your property plans but would also be another route to consider.
The only clear benefit is removing the monthly payment, but your cashflow could be quite quickly impacted if you were unlucky in your choice of semi-shed.
With it being a fairly new / known existing car, some equity, modest payments, and presumably not a huge amount owed - I think the financial risk seems quite limited. Your BM should last many more years.
One option might be to use some of your (assumed?) savings intended for a mortgage deposit to pay off the car debt early and buying the car outright, saving interest and freeing cashflow. This would put back your property plans but would also be another route to consider.
Hmmm...I would usually say just keep the car you've got but if there is any chance, at all, that having the monthly payment is going to impact the likelihood of you being accepted for a mortgage, or of you being able to get the sort of house you want, then your plan of chopping it in for something owned outright is a sound one. And for most people, particularly with dependents, £240 will make a difference. It's not like you'll be getting rid of a super rare car, if you want to you can always get another 3 series after the mortgage is in the bag. Plus is your current car actually under manufacturer warranty? For all the talk of older cars potentially throwing up bills yours isn't exactly in the first flush of youth either.
As to XC70s - I've got one, a P3 version, had it for 5 years and over 80k miles and it's been great. However if I didn't need the AWD or ground clearance I don't think I'd get a £5k one as a main family car that I relied on day in day out, I'd just get a Mondeo or something like that.
As to XC70s - I've got one, a P3 version, had it for 5 years and over 80k miles and it's been great. However if I didn't need the AWD or ground clearance I don't think I'd get a £5k one as a main family car that I relied on day in day out, I'd just get a Mondeo or something like that.
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