Am I fiddling numbers to get the answer I want?
Discussion
... or do I have legitimate reasoning.
I'm fully aware finance is a dicey game and people can end up getting themselves in to horrendous situations, so I'm trying to make sure everything is calculated correctly.
I planned to get a personal loan £8k (3 year term) in order to purchase a £13k SLK55 2005 car. It will be used pretty much as a daily but I would have access to a more economical and sensible car if I needed. The monthlies would be £230pm.
I shopped around and drove a few and liked the car. Then my friend (who is usually very risk averse) told me that I should consider the model after it as it will be a better, more comfortable daily and also less repair bills due to the age, so just take a loan over a longer period.
It also has the eco-mode which shuts off 4 of the cylinders and can achieve a better mpg on the commutes.
So I could potentially get the newer model (2014) for £20k, £15,000 loan over 5 years and the monthlies come to £275pm.
The more economical car would save me about £25pm in fuel and £5pm less in road tax (but this is negligible) and I'm pretty sure servicing will be the same on both cars. I'd definitely say depreciation will be significantly more, although the older model did hold its value well.
My big question is, what's the pitfalls of a longer period loan in order to afford a more expensive car. Is there something I'm missing?
I work in marketing and there's a phrase which I can't quite remember exactly, but it goes something like "a persons emotions can convince the logical mind of anything" ie if you want something bad enough your emotions will cloud your brain in to thinking something is a good idea, so that's why I'm looking for your opinions!
Thanks
I'm fully aware finance is a dicey game and people can end up getting themselves in to horrendous situations, so I'm trying to make sure everything is calculated correctly.
I planned to get a personal loan £8k (3 year term) in order to purchase a £13k SLK55 2005 car. It will be used pretty much as a daily but I would have access to a more economical and sensible car if I needed. The monthlies would be £230pm.
I shopped around and drove a few and liked the car. Then my friend (who is usually very risk averse) told me that I should consider the model after it as it will be a better, more comfortable daily and also less repair bills due to the age, so just take a loan over a longer period.
It also has the eco-mode which shuts off 4 of the cylinders and can achieve a better mpg on the commutes.
So I could potentially get the newer model (2014) for £20k, £15,000 loan over 5 years and the monthlies come to £275pm.
The more economical car would save me about £25pm in fuel and £5pm less in road tax (but this is negligible) and I'm pretty sure servicing will be the same on both cars. I'd definitely say depreciation will be significantly more, although the older model did hold its value well.
My big question is, what's the pitfalls of a longer period loan in order to afford a more expensive car. Is there something I'm missing?
I work in marketing and there's a phrase which I can't quite remember exactly, but it goes something like "a persons emotions can convince the logical mind of anything" ie if you want something bad enough your emotions will cloud your brain in to thinking something is a good idea, so that's why I'm looking for your opinions!
Thanks
AlexNJ89 said:
Pistonheader101 said:
A 2014 SL55 for 20k is unreasonably cheap - what’s wrong with it?
It's an SLK55. Maybe the one I get will be £22kMy burning question is really about the consequences of a 5 year loan over a 3 year loan.
So you’d be borrowing 18.5K.
Edited by Pistonheader101 on Wednesday 24th July 22:02
AlexNJ89 said:
It's an SLK55. Maybe the one I get will be £22k
My burning question is really about the consequences of a 5 year loan over a 3 year loan.
Well obviously it would make sense for you to keep it longer, but as it's newer ageing shouldn't be an issue. My burning question is really about the consequences of a 5 year loan over a 3 year loan.
But how long do you usually keep your cars? In over 40 years I've only ever had one car longer than 5 years, although I have had a few for 3+ years - but it does mean I wouldn't want to commit to more than 3 years of loan.
Another potential factor is your work situation. I might be wary of even 3 years if I wasn't in a permanent role, or had concerns about my employer's future!
Only you know the answers to those sort of issues, but as you are talking about a loan at the end of the day if circumstances change you can always just sell the car and repay it.
At the end of the day it depends how much you want the newer model.
Mr Tidy said:
Well obviously it would make sense for you to keep it longer, but as it's newer ageing shouldn't be an issue.
But how long do you usually keep your cars? In over 40 years I've only ever had one car longer than 5 years, although I have had a few for 3+ years - but it does mean I wouldn't want to commit to more than 3 years of loan.
Another potential factor is your work situation. I might be wary of even 3 years if I wasn't in a permanent role, or had concerns about my employer's future!
Only you know the answers to those sort of issues, but as you are talking about a loan at the end of the day if circumstances change you can always just sell the car and repay it.
At the end of the day it depends how much you want the newer model.
Thanks!But how long do you usually keep your cars? In over 40 years I've only ever had one car longer than 5 years, although I have had a few for 3+ years - but it does mean I wouldn't want to commit to more than 3 years of loan.
Another potential factor is your work situation. I might be wary of even 3 years if I wasn't in a permanent role, or had concerns about my employer's future!
Only you know the answers to those sort of issues, but as you are talking about a loan at the end of the day if circumstances change you can always just sell the car and repay it.
At the end of the day it depends how much you want the newer model.
I tend to get bored of cars after about 3 years. I'm new to financing cars, as it's a personal loan would I not be able to sell the car and pay off the most of the remaining balance?
As for job security, you're right about that too. We're going in to the unknown with Brexit, we're due an economic downturn and marketing people can often get hit worst.
snake_oil said:
I hate to be that guy but if you're worrying about 30 or 40 quid here or there I don't think an SL55 is for you. They can sting you big time, an 80k car has 80k car running costs even at the bottom of it's depreciation curve.
It's an SLK55 which isn't as ridiculous to run. I agree with what you're saying in principle though.Integroo said:
Big question is how much buffer is in your savings/disposable income.
If you're stretching the budget, you won't be happy when you get hit with a big repair bill, which I am sure any high performance sports car will throw at you at least a few times across five years.
I do have savings if something went catastrophically wrong. I'm wondering if the probability of a big repair bill is lower on the later models than the older r171?If you're stretching the budget, you won't be happy when you get hit with a big repair bill, which I am sure any high performance sports car will throw at you at least a few times across five years.
I remember you were in the market for an SLK55 yourself, did you find one yet?
AlexNJ89 said:
snake_oil said:
I hate to be that guy but if you're worrying about 30 or 40 quid here or there I don't think an SL55 is for you. They can sting you big time, an 80k car has 80k car running costs even at the bottom of it's depreciation curve.
It's an SLK55 which isn't as ridiculous to run. I agree with what you're saying in principle though.AlexNJ89 said:
Thanks!
I tend to get bored of cars after about 3 years. I'm new to financing cars, as it's a personal loan would I not be able to sell the car and pay off the most of the remaining balance?
As for job security, you're right about that too. We're going in to the unknown with Brexit, we're due an economic downturn and marketing people can often get hit worst.
Maybe I'm a bit paranoid due to seeing a big change in our business since the Brexit ref but I would be slightly concerned about selling the car as the back up plan. If the economy does take a significant turn (which I obviously hope it doesn't) then I think the luxury car market will (as usual) be badly affected. Not saying you should go out and buy an easy to sell econobox but bear in mind that a 5+ yo V8 2 seater may not be as high up the priority list in a downward market and you may take a big hit if you need to sell it. Again this is all dependent on your earnings/savings etc. and not to put you off buying but I think they're relevant factors to consider if the car is stretching you financially in any way.I tend to get bored of cars after about 3 years. I'm new to financing cars, as it's a personal loan would I not be able to sell the car and pay off the most of the remaining balance?
As for job security, you're right about that too. We're going in to the unknown with Brexit, we're due an economic downturn and marketing people can often get hit worst.
Just talking about the car itself, and whilst you're correct that an older car will of course need a bit more maintence spending compared to the newer model, I do think the R171 is holding strong in terms of depreciation - I would even say you'll lose little, to nothing, on the purchase price, even using it every day. Whereas the newer model will drop a lot more and for some reason not as universally liked compared to the original 55.
Bumblebee7 said:
Maybe I'm a bit paranoid due to seeing a big change in our business since the Brexit ref but I would be slightly concerned about selling the car as the back up plan. If the economy does take a significant turn (which I obviously hope it doesn't) then I think the luxury car market will (as usual) be badly affected. Not saying you should go out and buy an easy to sell econobox but bear in mind that a 5+ yo V8 2 seater may not be as high up the priority list in a downward market and you may take a big hit if you need to sell it. Again this is all dependent on your earnings/savings etc. and not to put you off buying but I think they're relevant factors to consider if the car is stretching you financially in any way.
I think this is a good point, and I do think we're due a downturn so maybe I should stick to my beliefs and prepare accordingly.2002 said:
Just talking about the car itself, and whilst you're correct that an older car will of course need a bit more maintence spending compared to the newer model, I do think the R171 is holding strong in terms of depreciation - I would even say you'll lose little, to nothing, on the purchase price, even using it every day. Whereas the newer model will drop a lot more and for some reason not as universally liked compared to the original 55.
I think this is a significant point, and it was what drew me to the r171 in the first place.I unfortunately may pay a bit of a premium given the amazing weather we're having right now.
I'm hoping to spend about £12k - £13k for one with 50k miles on, or £8k on one with 120k miles on.
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