AIBU to buy a nearly new car outright?

[Aroaringfire]

I know this might seem silly but I can't tell if I'm being 'old fashioned' or if people are mansplaining to me. It's not meant to be a goady thread about having money, more getting cold feet about big purchases.

Essentially, I have a job where I use my own car for work and it's part of the contract I have one. When I first got into this work a few years back I and DH went halves on a budget car to get me started. Since then I've been putting money aside each month for a new car. I'd anticipated that for a deposit, but budget car has lasted a lot longer than I expected, plus I got a promotion two years ago and I've been using the extra money to add to the pot. I'm lucky that I've now got 9k in my car fund.

My work miles mean high mileage, and it's variable mileage which I can't control. For that reason leasing is out, and PCP doesn't seem a good fit. PCP deals are aimed at people doing less than 12k a year. Mine is usually 15-20k and while I know some will finance, they charge a premium for doing so - definitely not eligible for the tempting advertised deals. Hire purchase seems pointless if I've got the funds as the deals aren't comparable (they're usually just list price plus interest, and interest for HP is usually 12-14%)

So the way I see it I could buy a budget brand car that's less than three years old. I could then keep putting money aside each month and in 5yrs time buy another car the same way. A bit like what I'd be doing with hire purchase but without the interest.

I've mentioned this to some male members of my family and pretty much been told I'm an idiot. That noone buys cars outright these days, they'll see my coming etc. Either I should get the latest popular brand on PCP or I should buy an old saloon workhorse that's already done 70k for a couple of grand.

I totally get that most people buy cars on finance, and if I buy outright im never going to get a big fancy car, but surely for my individual circs this way makes sense? I don't need a big car, nor can I risk a gas guzzling liability. Im not bothered about newish for the sake of it, just something i can be confident will be reliable and last me a good few years, and is efficient/ cheap to run (particularly important when work mileage isn't generous!)

I was brought up not to use credit so I'm aware that that influences my spending compared to some peers, but i think I'm being logical - please tell me if I'm wrong.

We have always bought cars outright. However we have also never spent more than 5k because my dh is very frugal!

Yanbu my family and I always buy our cars outright

Same here. DH's family are the same. His mum has just bought a new car outright.

I think PCP is a truly terrible way to buy a car for most people, not to mention how bad it is for the environment. Buy a car, use it, sell it on when you’re ready. Nearly new cars are usually a really great deal.

Plus again with a new car you pay a massive premium for the fact its new. In a year the cars not new, you get that massive depreciation

A 3 year old car will do exactly the same, yes you dont get the 20 numberplate but its just as reliable, will have most modern features. New cars can sometimes have teething difficulties that a 3 year old car wont have

Buying a brand new car in my eyes is literally throwing away money for fun. Theres no benefit to your car being brandnew over one thats a couple years old other than the status. Which will be gone in a year!

If you can afford to buy a decent car outright why the hell wouldnt you? You might get a flashier car on a pcp deal but it will cost you more longterm, the whole point of these deals is that you pay for the car just spread out and the garage makes money on the interest. Plus you are paying that new car premium.

If you want a brand new car then fair enough, but if thats something that doesnt interest you its a complete waste of money

To me it makes sense to pay outright if you can, so you don't have the debt hanging over you. I have to admit I buy new and pay cash. just because I love new cars, but my DH hates me doing this!

I bought my last (nearly new) car outright. It's so much better than being tied to a monthly payment and having debt.

We do exactly this. Buy new or nearly new and keep for many years. It definitely works out cheaper. PCP/leasing is only "cheaper" for those who want a new car every 3 years for "look at me" attention seeking/street cred!

Don't just look at nearly new, though. Twice, we've bought brand new cars for less than ex-demos, i.e. a discount of 25% from list price, just because the dealer has been desperate to meet their registration targets. Don't be afraid to haggle and walk away from a new car dealership - you never know what they'll offer you. Our last "bargain" was when we were looking at a 1 year old ex-demo (Renault) which we'd have been happy with but for the colour - the dealer offered to price-match a brand new identical one in the colour we wanted - 25% off list, and we negotiated £500 of extras (proper spare tyre, electric windows, front sensors, rear camera etc) for free!

OP. We have bought a number of nearly new cars with excellent existence. Our first was a one year old VW Passat (we had two in car seats at that time). It had less than 6k mileage. Full warranty from dealer

We have had a few Nissan xtrail, also excellent and full warranty

I now have another 4x4 that is 2 years old, all bells and whistles and had 15k mikes. Warranty too.

Buying like this you get a great deal because a lot of depreciation happens in the first year.

“Fleet” cars are now hard to find as mostly employees get a car allowance and fund their own deals.

What we have done is look around at the type of cars we’d like and then search on line. We do usually buy from dealers, even smaller ones. We don’t pay sticker price, they’ll all negotiate.

You're being really sensible. Just because everyone does it doesn't mean it's the best idea. I came home from living aboard & bought a 5 year old car with low mileage outright recently. No issues & I can either drive it into the ground with hundreds of thousands of miles or save up again & trade it in in a few years. My family all disagreed with my approach but they all pay out a couple of hundred a month in payments. I'm having an unexpected arrival & not entitled to maternity pay but that's fine because as a couple we both own our cars and aren't paying out the guts of £500 a month on repayments! So yeah, it'll definitely shelter you a little from anything that doesn't go to plan in life! You can pause saving or use savings if needs be. You'll have to catch up again at some point but you won't have that fear of your car being repossessed or penalties. And if things really go wrong, it's an asset at the end of the day! Not that things will go wrong for you!!

I don’t think most people buy on finance at all. We always buy outright. I’ve just bought a 5 month old car that has 3K miles - and have saved £10,000 off the price of a brand new car. It is still under warranty and still has plastic coverings over several parts. Nearly new cars are sensible purchases and if you can afford to buy outright that’s always the best choice because you pay less.

I bought a 2018 small car with 8K mileage for £7K I love it. Its ideal for what I want. Get your car and stuff the critics

Another option if your credit is good and you are a little bit organised is to buy the car (in whole or in part) on a 0% credit card with 18-24mths interest free - you pay off the minimum (usually 1% each month) and at the end of the term you can either pay off the balance from your stash, or transfer the balance to another 0% card. We have done this for previous car purchases. Interest free debt, you have the funds to pay it off in full if needed, and if your boiler breaks you still have your emergency savings!

My oh wanted to buy his car outright but the financial package was so good he bought it on PCP and will change it in a couple of years

But he does low mileage

In your situation I’d absolutely recommend you buying a car outright

Do what works for you, the only reason people don’t buy cars outright anymore is because without PCP very few cars would be ‘sold’. PCP isn’t designed for you. You know this

Ignore the mansplainers :)

PCP didn't make sense for me either.
So I used £10k cash and then took out a bank loan at 2.9% for the rest so I could afford a nearly new luxury car (that I'd never had before).

So will own the car, monthly payments I can afford and a nicer car than I've ever had.

Your option of straight cash for a cheaper model works too, depends on how important getting a nice car is to you at this time. Never used to bother me, but I reached a point now where I thought, why not ? And I'm very excited!

Nope. I brought a BMW with 2,000 miles outright. Was basically brand new but already halved in value.

Car sales this year are so dire though, the interest free finance option might be better. My oh stuck the money he’d got for his car in an account and that’s what the payments come out of.

I'm only here to find out where this magical 8-12% interest comes from.

I saved 11k off brand new price by buying a 6 month old, 5k on the clock version of my car. If you have the money, there's definitely no need to get caught up in the PCP cycle and I'd ignore anyone who told you that it was wrong to do so!

Buying a sensible used car that has already taken the depreciation "hit" makes sense. The likes of Kia and Hyundai have really good long term warranties that make them very attractive to high mileage owners keeping them for a while.

I agree with most others.

I've never had finance to buy a car. I buy ones that are around 3 years old and my current one had a 2 year parts and warranty, plus roadside breakdown service (like the AA.) through a main dealer.

I haggled and got over £1k knocked off the forecourt price, plus new mats, oil change etc.

I also sold my own older car privately and got a decent price for it.

I do quite a lot of work mileage and always buy cars outright - I usually go for ones that are 2-3 years old. It works out a lot cheaper than finance deals.

That’s exactly how I buy cars, save up what I might have spent on a deal or loan, then spend it when I’m ready to buy.

It gives great peace of mind imo, I have no commitment to make payments if I can’t afford them anymore, I can change the car when it suits me, not when my deal is up etc.

My last car was a 9m old ex demo with 1200 miles on the clock. I’ve had it 5 years now and it’s still good so I’m not changing yet.

Hyundai comes with a 5 year warranty even on secondhand deals. One of the other makes either Skoda or Kia have a 7 year warranty.

Have a look at car hire firms, their business has slowed due to tourism being stuffed and they are selling these fairly cheaply. There should be a scutch if low mileage ex hire cars. If the firm has a forecourt they’re worth a shot.

I wouldn't buy a kia though or another small car if you're doing 15-20k annual mileage. You need a v comfortable and safe car for that kind of mileage imho.

Looking at the cars around us, most people must use PCP but we prefer to have a car longer, and save to buy the next one outright. We are fortunate to be able to do this but also think it makes financial sense for us. It's not old fashioned, just that people seem to prefer to pay monthly for everything. We even buy our phones outright too, costs way less in the long run, but you have to wait.