Financial dilemma - it’s a car one.

[flowergirl24]

I’m trying to reduce my monthly outgoings due to cost of living etc.

I have a car on PCP which is £325 per month.

I have about £7K savings that I could put towards a car.

The car is half way through the PCP so I could hand it back now without any penalty. It’s in negative equity so not worth selling.

The thing is, I’d really like a safe car and I have young children. A boy has very sadly just died round the corner from us in a car crash, and it’s really made me think.

Ideally, I’d like a safer car such as a Volvo, but my £7K budget won’t stretch.

What’s the best thing to do in my situation for safety and finances?
a) keep my small (but relatively expensive PCP vehicle)
b) get rid of pcp and buy outright a much older car
c) put £7K towards a car with and finance maybe a smaller £5K bank loan to reduce monthly outgoings but have a safer car worth about £12K

Disclaimer: we've never bought a car on PCP or finance so not totally sure how it works. However, if you can return your current car without any penalty, that's great. Personally, I'd be wary of buying a £7k car outright - it could be quite tired and need quite a bit putting right. I bought a 2014 runaround last year and it has since needed new starter motor, new glow plugs, a pair of new discs, new control arms etc. Which adds up to about £3k. A lot of people get rid of cars before the big bills are due.
If you need to be careful about unexpected costs, it seems option c is the safest (if it's correct that the car would have a warranty and some servicing paid for under the finance arrangement). There are some 0% finance deals around at the moment as car makers are struggling to sell - see https://www.honestjohn.co.uk/new-car-deals/0-apr-car-finance-deals/

@CosyFanTucci thank you so much. That’s really helpful.

Yes, I’m concerned about buying a cheaper car and it going wrong.

I've literally never bought a car on PCP - realistically, what is it you're afraid of?

My last car I bought was a 2013 Qashquai for £6500 - bought last year. The wiring in the radio is a bit janky but otherwise no problems.

Not to try and jinx myself, but I've never had an accident worse than a slow backing into a bollard. I really don't know what the relevance of an accident nearby has to do with your driving and any car? Accidents that cause death are very very rare - a quick google tells me far less than 1%.

Don't get me wrong, everyone wants to keep their children safe, but you do that by having a car seat, driving carefully, not taking risks - I don't think bumping up your debt to £12k is realistically going to reduce that risk by a huge amount.

You can look at the safety ratings of cars here.

So you can look at cars that are in your budget and see how safe they are.

It's also worth pricing up a loan so you know how much you would be paying for a more expensive car.

www.euroncap.com/en/ratings-rewards/latest-safety-ratings/#?selectedMake=0&selectedMakeName=Select%20a%20make&selectedModel=0&selectedStar=&includeFullSafetyPackage=true&includeStandardSafetyPackage=true&selectedModelName=All&selectedProtocols=49446&selectedClasses=1202,1199,1201,1196,1205,1203,1198,1179,40250,1197,1204,1180,34736,44997&allClasses=true&allProtocols=false&allDriverAssistanceTechnologies=false&selectedDriverAssistanceTechnologies=&thirdRowFitment=false

Could you try to refinance your current car? We did towards the end of the term and cut the price by two thirds. Some manufacturers do it, some don't but worth asking.

Also 7k will get you a second hand Volvo.

So you can get a safe car if you want to.

I never have cars on finance, to me it’s a waste of money paying so much for a vehicle that does the same as a cheaper (older) version, but everyone is different in that regard.

My current car was £3000, and that is the most expensive one I’ve had. If you do your research (important) and take care of an older car (maintain it to its schedule) then any bills tend to be manageable. Even if you have an unexpected £600 bill, it’s only 2 months payments for a car on finance.

a, keep things as they are.

The car is half way through the PCP so I could hand it back now without any penalty. It’s in negative equity so not worth selling.

This is a common misunderstanding...you can hand it back without penalty once you have paid half the total amount payable, which may or may not fall halfway through your agreement (depends on your deposit)

What car do you have now? Why don't you think it's safe?
I would be very wary of changing at present with second hand values so high.

It may be the same accident as the OP but a little boy and dad died being hit by a drunk driver near me. You can do everything right but can’t control other idiots. I can understand the OP wanting a safer, more solid car.

The car I have at the moment is a Nissan Leaf. It’s not flashy but it’s fairly expensive for what it is (a medium sized EV)

I’ve checked my details and I can leave the contract now. There will be a small excess mileage cost to pay, but it’s not huge.

I would rather a car that I feel more safe in (a Volvo or a Nissan qashqui etc)

I know that the statistics of fatal accidents are low, but this nearby crash has really made me think. I think it’s really naive to say that car safety doesn’t matter. It does to me.

I don't think anyone is saying car safety doesn't matter, people are saying there isn't a correlation between getting into debt and keeping your dc safe.
Obviously everyone wants their dc to be safe (and, indeed, anyone in their car), but you can do that without getting into debt, especially when you say you have £7K in the bank.