'Buying' a new car to save money
Discussion
Hi all,
My step-daughter's boyfriend is considering getting a new car under the pretext of it saving him money.
I'm quite old fashioned in that I try and avoid finance wherever possible in life, and so am probably rather biased when he asked for my thoughts on it. So I thought I'd offer the situation up to the collective here to see what the general consensus is.
He currently drives a 57 plate BMW 116i. Owned outright. Does about 14k miles a year, mix of longer journeys and short trips round town. He reckons he averages about 350 miles to about 60 quid of fuel. He also reckons his car is massively overfueling when cold. He's not very mechanically minded, but appreciates a 'nice' car. He and my step-daughter are currently "saving" for a house deposit, but apparently with little success. He reckons (unsure if he's trying to convince me or him!
) that switching to a more economical car with lower road tax will end up saving him money.
He is thinking of taking out a bank loan for £5-8k (depending on car) at about 3% interest and buying himself something like a 60 plate diesel VW Scirocco. Other cars are being considered, but that type of car definitely seems to be the front runner.
My life experience (biased, as called out above) tells me that the 'cheapest' thing he can do is investigate if his car is running correctly, fix it if required, and run it into the ground. I'd guess it's worth somewhere around £1-1.5k ... but could be well out. I can't wrap my head round the idea that the fuel efficiency, road tax savings & perceived reliability of a newer car will offset the loan repayments and depreciation.
If it turns out that it's actually no cheaper, and that he's just stretching man maths to try and justify a nicer car, I can understand that ... but just trying to see if he's seen something that I've missed. He's unlikely to be massively swayed either way by my thoughts, so this is more for my own curiosity than trying to change his course of action.
If I've missed out any pertinent information, then can try and fill in the blanks - but obviously I don't know every last detail about his life.
My step-daughter's boyfriend is considering getting a new car under the pretext of it saving him money.
I'm quite old fashioned in that I try and avoid finance wherever possible in life, and so am probably rather biased when he asked for my thoughts on it. So I thought I'd offer the situation up to the collective here to see what the general consensus is.
He currently drives a 57 plate BMW 116i. Owned outright. Does about 14k miles a year, mix of longer journeys and short trips round town. He reckons he averages about 350 miles to about 60 quid of fuel. He also reckons his car is massively overfueling when cold. He's not very mechanically minded, but appreciates a 'nice' car. He and my step-daughter are currently "saving" for a house deposit, but apparently with little success. He reckons (unsure if he's trying to convince me or him!
) that switching to a more economical car with lower road tax will end up saving him money.He is thinking of taking out a bank loan for £5-8k (depending on car) at about 3% interest and buying himself something like a 60 plate diesel VW Scirocco. Other cars are being considered, but that type of car definitely seems to be the front runner.
My life experience (biased, as called out above) tells me that the 'cheapest' thing he can do is investigate if his car is running correctly, fix it if required, and run it into the ground. I'd guess it's worth somewhere around £1-1.5k ... but could be well out. I can't wrap my head round the idea that the fuel efficiency, road tax savings & perceived reliability of a newer car will offset the loan repayments and depreciation.
If it turns out that it's actually no cheaper, and that he's just stretching man maths to try and justify a nicer car, I can understand that ... but just trying to see if he's seen something that I've missed. He's unlikely to be massively swayed either way by my thoughts, so this is more for my own curiosity than trying to change his course of action.
If I've missed out any pertinent information, then can try and fill in the blanks - but obviously I don't know every last detail about his life.
That seems quite a straightforward calculation if anyone can be bothered - total cost of ownership of the new car v the exiting over, say, the period of the loan required
New car costs will include
loan plus interest
fuel
depreciation
servicing / MOT / repairs
Road tax
Existing car costs will include the same, except no loan costs and depreciation will presumably be minimal
I can't be bothered to work it out, but I'm guessing that the small fuel and maintenance savings will be massively offset by the loan and depreciation costs for the new car
New car costs will include
loan plus interest
fuel
depreciation
servicing / MOT / repairs
Road tax
Existing car costs will include the same, except no loan costs and depreciation will presumably be minimal
I can't be bothered to work it out, but I'm guessing that the small fuel and maintenance savings will be massively offset by the loan and depreciation costs for the new car
Dave Hedgehog said:
Pica-Pica said:
Said before - the cheapest and cleanest car to run, is the one you already own.
the cost of fuel, warranty, ins and maintenance on my AMG was more than the monthly payment, fuel, ins and maint on my Tesla
In reality, he just fancies a new car. Nothing wrong with that of course.
People justify getting a new car by saying it's to save money, avoid big bills, better MPG, but it's very rarely the case.
My dad is terrible for it, but it's how he convinces my mum it's a good idea. 4 year old Volvo needs a service and a new set of tyres, so gets traded in for a brand new one.
People justify getting a new car by saying it's to save money, avoid big bills, better MPG, but it's very rarely the case.
My dad is terrible for it, but it's how he convinces my mum it's a good idea. 4 year old Volvo needs a service and a new set of tyres, so gets traded in for a brand new one.
Sten. said:
In reality, he just fancies a new car. Nothing wrong with that of course.
People justify getting a new car by saying it's to save money, avoid big bills, better MPG, but it's very rarely the case.
My dad is terrible for it, but it's how he convinces my mum it's a good idea. 4 year old Volvo needs a service and a new set of tyres, so gets traded in for a brand new one.
My partner's sister traded in her 3-year old Discovery for a brand new one to "save" about £250 a year in road tax... she'd already lost around £7k in depreciation on the first one, and we couldn't convince her that the new one would still lose chunks of cash in comparison.People justify getting a new car by saying it's to save money, avoid big bills, better MPG, but it's very rarely the case.
My dad is terrible for it, but it's how he convinces my mum it's a good idea. 4 year old Volvo needs a service and a new set of tyres, so gets traded in for a brand new one.
boyse7en said:
Sten. said:
In reality, he just fancies a new car. Nothing wrong with that of course.
People justify getting a new car by saying it's to save money, avoid big bills, better MPG, but it's very rarely the case.
My dad is terrible for it, but it's how he convinces my mum it's a good idea. 4 year old Volvo needs a service and a new set of tyres, so gets traded in for a brand new one.
My partner's sister traded in her 3-year old Discovery for a brand new one to "save" about £250 a year in road tax... she'd already lost around £7k in depreciation on the first one, and we couldn't convince her that the new one would still lose chunks of cash in comparison.People justify getting a new car by saying it's to save money, avoid big bills, better MPG, but it's very rarely the case.
My dad is terrible for it, but it's how he convinces my mum it's a good idea. 4 year old Volvo needs a service and a new set of tyres, so gets traded in for a brand new one.
I've brought a couple of cars to save money...worked twice.
I had a BMW 528i and went to a Corsa 1.2. I was spending £450 a month on fuel in the BMW. It was 17 years old. Finance was £140 a month and a lot better fuel costs. Plus it was newer and cheaper if it did go wrong.
Then went to some more sheds. I had a Mondeo that was costing me almost £300 a month in repairs in the short time i had it (nine months or so).
Got a newer car on finance. More reliable than my old one and cheaper to run (50MPG compared to 35MPG), £30 tax compared £230 odd.
At least that's how I'm selling it in my head...
I had a BMW 528i and went to a Corsa 1.2. I was spending £450 a month on fuel in the BMW. It was 17 years old. Finance was £140 a month and a lot better fuel costs. Plus it was newer and cheaper if it did go wrong.
Then went to some more sheds. I had a Mondeo that was costing me almost £300 a month in repairs in the short time i had it (nine months or so).
Got a newer car on finance. More reliable than my old one and cheaper to run (50MPG compared to 35MPG), £30 tax compared £230 odd.
At least that's how I'm selling it in my head...
I am in the process of changing my 15 year old Sante Fe. I am doing it as its 15 yrs old, its done 135k miles I've had it since new, it looks tired, its becoming expensive in maintenance, and due to a job change I think my annual mileage will change from around 8k to around 20k a year.
I thought an added justification would be fuel saving. My Sante Fe does around 28mpg, so 20,000 miles so thats 3,250 litres a year. I hope the replacement will do 40mpg so thats 2,275 litres. So I save 975 litres of fuel so at £1.32 a litre thats an annual saving of £1,287. The total interest for the loan is £1,437 so fuel saving cost over 4 years saves almost enough to pay the interest 4 times.
Only slight problem is depreciation on the old car would probably be around £250 a year, deprecation on the replacement about £2,500 a year!
I thought an added justification would be fuel saving. My Sante Fe does around 28mpg, so 20,000 miles so thats 3,250 litres a year. I hope the replacement will do 40mpg so thats 2,275 litres. So I save 975 litres of fuel so at £1.32 a litre thats an annual saving of £1,287. The total interest for the loan is £1,437 so fuel saving cost over 4 years saves almost enough to pay the interest 4 times.
Only slight problem is depreciation on the old car would probably be around £250 a year, deprecation on the replacement about £2,500 a year!
Gassing Station | Car Buying | Top of Page | What's New | My Stuff