Car addiction ruining my finances :D

Car addiction ruining my finances :D

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trowelhead

Original Poster:

1,587 posts

68 months

Friday 7th September 2018
quotequote all
My name's TrowelHead and i'm a car addict.

I've worked out that in the last 3 years i've spent/lost in the region of £68k across 9 cars, often keeping them less than 6 months

And no, i'm not a mega wealthy millionaire who can stomach these losses.

Cars have been for those interested - 991.2 GTS, GT4 X 2, RS6, C63, Mini JCW, Defender, RRS x2 (so at least ticked a few boxes)

Time to grow up and stop chucking money at cars.

So earlier this year i had the wonderful idea of trading my range rover sport 2014 for a brand new 2018 model.

Unlike me, i really didn't think into the financials - more a heart vs head thing.

In hindsight, keeping the 2014 model would have made alot more sense as depreciation was nowhere near as savage.

I've worked out that i have already lost a big chunk (£10k +) from March to now if i was to sell private or PX.

I'll also more than likely lose £1k a month in depreciation alone in next 2 years i planned to keep it.

Should i take the hit and PX this now. Or take it on the chin and keep the car 2/3 years?

I was looking at a 2016 435d at £25k which will not be shedding cash. Or another older RRS (i do enjoy them alot)

Advice welcomed, go easy on me though biggrin





NRS

15,058 posts

148 months

Friday 7th September 2018
quotequote all
Put simply, the £10k you have lost in depreciation on the latest car is already sunk costs. So ignore than from any decision you make now. Then it comes down to the question of how much do you want to spend on cars a month. Is the latest car worth spending £1k plus a month for the enjoyment of driving it?

Of course financially it is much better to go for an older car that will not depreciate so much, but if you don't have the restraint and decide to buy yet another new toy it may cost more with the swapping around. No one can say much - you see how much it is costing, so it's up to you to decide if it's worth it.

Simpo Two

70,253 posts

212 months

Friday 7th September 2018
quotequote all
Buy older cars, buy them privately and buy them with cash.

I'm happy with capital tied up but hate depreciation. Who would invest in something that's guaranteed to go down by 50% in 3 years?

Keep the car you have and drive it into the ground smile

Benrad

438 posts

96 months

Friday 7th September 2018
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I used to do similar (to a much lower level) and lost what is to me a huge amount of money over 4 years... Cut my losses, got a personal loan and bought an older car. It's definitely saving me money, plus I actually have a nicer car, it's just a bit older/higher mileage

Google the sunk cost fallacy, might help you decide whether to sell up. Worth considering any early exit fees from your finance desk, but I suspect they pale in comparison to the depreciation

Shnozz

20,843 posts

218 months

Friday 7th September 2018
quotequote all
I would have thought 2 x GT4's would have seen appreciation?!

I have avoided depreciation by buying older cars but, assuming you go with something exotic still, they can then land some large bills so you need a sinking fund really. Mates of mine who finance new sports cars know what their monthly payment is and everything is under warranty, whereas I have had £3k - £5k service bills several times. In fact I cannot remember the last time I had a service of less than about £2k so its swings and roundabouts.

When I was 18 I financed about £18k on a bloody MGF. I sold it 18 months later for about £11k if I remember rightly and it taught be a young lesson. Never financed since then. My first TVR saw me sell at a profit of about a grand, the other TVRs never really lost much at all. My Elises had glacial depreciation also, my Exige saw me make about £3k on resale after a few years. The Evora returned a little more than I paid and I would expect tos ee back at least what I paid for my Aston. Aside from a Boxster S that lost about 1/3 of what I paid I have pretty much broken even I would say which I consider a result.

A Vantage or a £35k Audi R8 is unlikely to see you lose much at all. But you should have a £5k - £10k slush fund just in case (perhaps less so with an R8).

trowelhead

Original Poster:

1,587 posts

68 months

Friday 7th September 2018
quotequote all
NRS said:
Put simply, the £10k you have lost in depreciation on the latest car is already sunk costs. So ignore than from any decision you make now. Then it comes down to the question of how much do you want to spend on cars a month. Is the latest car worth spending £1k plus a month for the enjoyment of driving it?

Of course financially it is much better to go for an older car that will not depreciate so much, but if you don't have the restraint and decide to buy yet another new toy it may cost more with the swapping around. No one can say much - you see how much it is costing, so it's up to you to decide if it's worth it.
Great points, yes sunk cost is a massive factor here, hard to forget about that and just see present value and depreciation only.

I can stomach £1k a month but it's not ideal of course. Worst case would be to change cars a couple more times as thats where the costs rack up from paying the dealer spreads!

trowelhead

Original Poster:

1,587 posts

68 months

Friday 7th September 2018
quotequote all
Simpo Two said:
Buy older cars, buy them privately and buy them with cash.

I'm happy with capital tied up but hate depreciation. Who would invest in something that's guaranteed to go down by 50% in 3 years?

Keep the car you have and drive it into the ground smile
Yes lesson learned i think. I either buy something older in cash and write that off.

Or keep this now and drive it for 10 years + (in which case it would end up being a bargain!)

trowelhead

Original Poster:

1,587 posts

68 months

Friday 7th September 2018
quotequote all
Benrad said:
I used to do similar (to a much lower level) and lost what is to me a huge amount of money over 4 years... Cut my losses, got a personal loan and bought an older car. It's definitely saving me money, plus I actually have a nicer car, it's just a bit older/higher mileage

Google the sunk cost fallacy, might help you decide whether to sell up. Worth considering any early exit fees from your finance desk, but I suspect they pale in comparison to the depreciation
Perhaps it's a life stage / life lesson then, i've been really sensible with cars always buying older ones with cash until 3 years ago, got a C63 (which was wonderful and actually didn't depreciate much) then just went a bit mad!

trowelhead

Original Poster:

1,587 posts

68 months

Friday 7th September 2018
quotequote all
Shnozz said:
I would have thought 2 x GT4's would have seen appreciation?!

I have avoided depreciation by buying older cars but, assuming you go with something exotic still, they can then land some large bills so you need a sinking fund really. Mates of mine who finance new sports cars know what their monthly payment is and everything is under warranty, whereas I have had £3k - £5k service bills several times. In fact I cannot remember the last time I had a service of less than about £2k so its swings and roundabouts.

When I was 18 I financed about £18k on a bloody MGF. I sold it 18 months later for about £11k if I remember rightly and it taught be a young lesson. Never financed since then. My first TVR saw me sell at a profit of about a grand, the other TVRs never really lost much at all. My Elises had glacial depreciation also, my Exige saw me make about £3k on resale after a few years. The Evora returned a little more than I paid and I would expect tos ee back at least what I paid for my Aston. Aside from a Boxster S that lost about 1/3 of what I paid I have pretty much broken even I would say which I consider a result.

A Vantage or a £35k Audi R8 is unlikely to see you lose much at all. But you should have a £5k - £10k slush fund just in case (perhaps less so with an R8).
No, the GT4s were actually quite bad really - Try buying one at £85k then ask porsche what they would give you back for it!

Good point on the bills / servicing - i've actually had no bills for years as it's all been newer stuff.

V10 R8 would be great, not ideal for a daily though?


trowelhead

Original Poster:

1,587 posts

68 months

Friday 7th September 2018
quotequote all
Just revisited the numbers. Value of car as it stands today is about £64k

So ignoring the sunk costs - there is a GFV of £38k in 43 months time - so that means depreciation should be about £600 a month - plus the interest

(doesn't sound as bad when ignoring the retail price / sunk cost and looking as from today)

On a positive note, there is 3 year warranty, tyres, brakes all new, should be pretty much no costs over that period...

Maybe keep it and drive it into the ground is the way forward!

Cheib

17,113 posts

122 months

Friday 7th September 2018
quotequote all
Surprised you haven’t lost more than that buying and selling that lot TBH! I would be selling your current RRS and finding someth8ng older and probably cheaper to maintain. Old RRS are not the most treliable so you could end up with punchy running costs.

trowelhead

Original Poster:

1,587 posts

68 months

Friday 7th September 2018
quotequote all
Cheib said:
Surprised you haven’t lost more than that buying and selling that lot TBH! I would be selling your current RRS and finding someth8ng older and probably cheaper to maintain. Old RRS are not the most treliable so you could end up with punchy running costs.
Problem is - i'm likely to do that then end up getting bored with whatever i do get biggrin

I do actually really like the RRS and feel like i could realistically keep it long term - they seem to have alot better reliability on the newer stuff touchwood

Jon39

6,332 posts

90 months

Friday 7th September 2018
quotequote all

Mr trowelhead, You have taken the first step towards recovery, by actually adding up the £68,000 you have spent on depreciation. Well done, because not many addicts would ever want to know that. Worryingly though, you then go on to talk about changing your car yet again. wink

You will know that most new cars depreciate by 50% during the first 3 years. Canny purchasers therefore buy 2 to 3 year old cars. Try keeping them as long as you can. In my experience, it is surprising just how long cars do last, but probably few people ever find out.

Of course, the buyers of 2 to 3 year olds, do need the new car buyers for their system to work.









trowelhead

Original Poster:

1,587 posts

68 months

Friday 7th September 2018
quotequote all
Jon39 said:

Mr trowelhead, You have taken the first step towards recovery, by actually adding up the £68,000 you have spent on depreciation. Well done, because not many addicts would ever want to know that. Worryingly though, you then go on to talk about changing your car yet again. wink

You will know that most new cars depreciate by 50% during the first 3 years. Canny purchasers therefore buy 2 to 3 year old cars. Try keeping them as long as you can. In my experience, it is surprising just how long cars do last, but probably few people ever find out.

Of course, the buyers of 2 to 3 year olds, do need the new car buyers for their system to work.
I actually feel a sense of relief adding it all up - i've seen the real costs of this terrible affliction


The main costs have been in the frequent changes. So this is the takeaway point for me, stop changing!

My family joke that they expect to see me in a new car every time they see me!











brickwall

3,107 posts

157 months

Saturday 8th September 2018
quotequote all
£22.5k per year on cars - solid!

To save money, the main thing you have to do is stop changing. So:
a) If you like the RRS and are comfortable with the payments for the next 4 years, then keep it.
b) If you don't like it or aren't comfortable with the payments, then buy something cheaper where you are (which will likely be a 'downgrade'), and then keep that.

Either way, pick a car then keep it.

Ahbefive

11,657 posts

119 months

Saturday 8th September 2018
quotequote all
I'd get rid. £300 a month will get you something much more fun to drive and save you £300 a month.

AlexC1981

3,439 posts

164 months

Saturday 8th September 2018
quotequote all
Or if you do like changing cars all the time because you get bored with the same drive, just do it with cars that are 10 years old and you won't suffer much, if any depreciation.

Then you've got the fun of finding the exact old car you want in the condition you want and at the right price. No one wants old luxury cars as the tax, insurance and repair bills are too high.

mike9009

4,273 posts

190 months

Saturday 8th September 2018
quotequote all
trowelhead said:
Jon39 said:

Mr trowelhead, You have taken the first step towards recovery, by actually adding up the £68,000 you have spent on depreciation. Well done, because not many addicts would ever want to know that. Worryingly though, you then go on to talk about changing your car yet again. wink

You will know that most new cars depreciate by 50% during the first 3 years. Canny purchasers therefore buy 2 to 3 year old cars. Try keeping them as long as you can. In my experience, it is surprising just how long cars do last, but probably few people ever find out.

Of course, the buyers of 2 to 3 year olds, do need the new car buyers for their system to work.
I actually feel a sense of relief adding it all up - i've seen the real costs of this terrible affliction


The main costs have been in the frequent changes. So this is the takeaway point for me, stop changing!

My family joke that they expect to see me in a new car every time they see me!
As you have identified, stopping changing is the best call. Especially if changing at dealers where you are funding their profits. Changing can be the addictive part, so why not keep the RRS and change cheaper (sub £5k??) cars more frequently. You will have the 'all paid for' and 'reliable' RRS but still feed your changing addiction for interesting 'cheap' stuff to enjoy. If it goes bang - so what?


Mike

Simpo Two

70,253 posts

212 months

Saturday 8th September 2018
quotequote all
brickwall said:
£22.5k per year on cars - solid!
By contrast I lose £1,000 - £1,500pa in depreciation. The main issue I think is that most people pay for their cars in 'easy monthly instalments' and never sit back to do the sums.

Everything these days seems divided up into monthly payments - that individually don't seem much, and are affordable, but... it seems to ensure that people spend whatever they earn. And as someone said, if it keeps the new metal rolling out, that's good for the rest of us smile

RaymondVanDerDon

546 posts

84 months

Saturday 8th September 2018
quotequote all
Simpo Two said:
The main issue I think is that most people pay for their cars in 'easy monthly instalments' and never sit back to do the sums.

Everything these days seems divided up into monthly payments
Given that 99.9% of the working population get paid monthly and budget & pay bills monthly - it makes sense to know what the monthly cost is.

The main issue is that there are a number of restrictions on finance deals e.g. minimum terms and excess mileage - so that new car can fast become a burden if people lose their jobs or experience some other material change of circumstances.