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.

It will depreciate, but I'd rather have a depreciating asset than a continual liability.

One of my mother's friends started out buying a new car and then replacing it with another new one as soon as the warranty was about to expire/MOT was due/etc. She says it's been pretty much troublefree driving for her entire adult life as a result and worth every penny, as she's not had to deal with breakdowns, MOT garages or any of the dodgier aspects of the car industry - and the inflated prices charged for approved services has not come near to the cost of motoring that her friends have paid out - as the dealer became so conscious of what a great customer she was for them, they always wanted to keep her happy, too.

As you've got the savings and income, I'd think about saving a little bit more so a brand new car is a possibility - I believe there are some makes that are under ten grand brand new? - or just decide what you want and save the difference between now and when you are ready to go in and say 'I want/No, that's not what I want'.

@KarlKennedysDurianFruit

I think some people are very opinionated about car finance being the best option because it justifies why they do it pay over the odds to drive a car they can't really afford

Completely agree with this. If you want a nicer car than you can afford then finance is the way to get it. That's why you see so many premium brand cars on the road these days. Also the 'change after 3 years' thing was only sensible when car build quality was rubbish, so once you went into MOT territory, you were in danger of getting some expensive bills and having reliability problems. You can run a car for years and years now, if you look after them.

We bought on finance a couple of times when we couldn’t afford to buy outright. Dhs last car we bought nearly new and paid outright. I am refusing to change my 9 yo car because it’s fine for the mileage I do. But the next one will be up to a year old bought for cash.

I buy 3 year old cars with significant mileage and then keep them till there is a clear reason to change. We have a large Volvo estate, and it has suited us very well, so we have kept it for 11 years, still going strong. That way we have a really good car with a lot of space and features, but minimum cost per year.

My car was bought brand new, I was looking for a 1 year old car but they offered a finance deal for a small portion of the cost and it was interest free but reduced the cost of the car down. It meant the cost of a brand new car or a 1 year old car were pretty much the same so we opted for the brand new one. Used the finance for a few grand and paid cash for the rest.

Dh's car was just under a year old. We paid cash for his too but 6 years later, no loans, no PCP, because we saved up for them over the years.

DH has always bought his cars this way, although I provided the lump sum for the first one as I had the savings and he didn't as he had just finished studying. He keeps his cars for 7-10 years and earns a higher than most wage of which he saves a portion for the next car. He drives a top of the range German car that he owns outright so not all flash cars out there are on PCP plan.

My first few cars were Company cars on HP then around 15 years ago when the tax became high we did a deal where we were able to 'purchase' our company car for a small fee and then after a period of time receive a car allowance (no idea if this was legal). Since then I have always saved the car allowance or equivalent amount as I changed jobs to an office based role and then use this to but my car outright. I usually go for a pre-registered or ex-demo and negotiate hard, I always want 3 years free servicing as a minimum. Current car was 5 years old in January and I was thinking about a change prior to Covid, now I work from home mostly and have a car that costs me nothing per month has done hardly any miles this year and is going to be kept for a good while longer now.

I've just bought my long term car outright and I haven't taken my test yet 🙃 its a beautiful 4 yr old pale mint green Fiesta.Im driving it as much as possible with dh next to me as I have a provisional.

That's how I buy cars too OP, outright and then run them into the ground for 10 years. I have only ever had 3 cars! I don't drive for work though and my mileage is around 8-10k a year. I save £250 a month for "car" this is for a replacement plus servicing and repairs etc. My car is 7 years old, we bought it second hand when it was 18 months old and we will probably replace it in 2-3years - I already have £13k saved towards a new one (but I doubt we will spend that much).

My sister has one of those lease arrangements were she pays £300 a month and never owns the car, she swaps it in every 3 years - it is purely for the status of having a new car all the time.

We always buy outright, saves money long term

@madroid if you're concerned about my comfort/safety with those brand cars for the mileage I do, I probably shouldn't tell you what I've been driving! I think the class of car is known as a 'city car' and it's over ten years old...

In your circumstances you're not wrong, OP.

It really varies between people's personal circumstances, sometimes lease/PCP would be a better fit, sometimes a loan and sometimes buying outright. I think in your circumstances the latter is the wisest and your attitude is very sensible. It should work out cheaper for you.

I bought my car outright too and I'm delighted not to have this debt and nothing over my head to pay off monthly as we might need to take a loan to do up our new home and at least I'll be free to do that. Don't listen to jerks.

I bought nearly new, part finance and the rest from savings - it was ex-hire so had been run in (about 8k) but was only 9 months old so had the bulk of the 5-year warranty.
I got gap insurance which was fortunate as I wrote it off three years later but that’s an story! I replaced it it with a different make but exactly the same scenario; I needed less finance this time as the gap insurance covered quite a bit.
An old saloon workhorse will probably bean ex-fleet car, so will have been flogged to death - company car drivers tend to be hard on their cars in my experience

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.

This is exactly what my family (and IMO all sensible people) do. Buying in credit is a mugs game. You’re essentially just paying for the depreciation on a car that someone else owns.

No, you won’t be driving the latest number plate or model, but unless you’re a Flash Harry who’s penis size is inversely linked to their car, it doesn’t matter.

Good on you for being sensible!

A new car loses half its value the minute you drive it away from the garage.

A two year old used car is much more sensible.

I buy one outright, I always used to get a loan at a low interest rate, not finance and then when paid off do the same again.

These days I old, have no mortgage and buy mine outright. Never new, always nearly new and I keep for five years.

I personally think pcp is all about the image for some people.

I bought my last 3 cars outright, I like the security of owning my car. Current one is on PCP as I wanted to keep my savings rather than spend them at the moment.

Old fashioned? I’ve always bought my cars this way.
I usually buy one that’s a year or two old and run them for a few years and then trade in and buy another one. My current car (Charlie) I bought in 2009 and it’s the longest I’ve owned one car for but it’s been very reliable, sailing through the test every year so I’m only now thinking about swapping it, just because of its age.
(Honda crv)
I’ve never bought on finance as I’m not keen on saddling myself with debt. Mortgages aside.

PCP is the better way to purchase a car especially if you run your own business. I personally can’t get over my irrational fear of driving a car that’s not mine. And with two primary aged dc chances are that it will be trashed in a short time. I went for a 2year old used car, I had a sizeable down payment, with a 0% HP deal for the balance. I’d rather have the spare cash invested elsewhere, rather than in a depreciating asset.

I used to work in a car showroom (did new and second hand cars) and the sales guys there always said that by far the best value was to buy an ex-demo car. A new car can halve in value as soon as it's driven out of the showroom, so a demo has already taken that loss, with low mileage.

My first car was a 6 year old Ford Fiesta, which cost me £2000 in about 2003. I drove it for 12 years, and in all that time the only "repairs" it needed were a new exhaust, a bit of welding, a couple of bulbs and wiper blades, and a new battery. Total cost for 12 years (not including petrol, MOT and insurance, obviously) was about £4000, so about £330 per year.

One thing to be careful about is if you see a car with very low mileage, perhaps owned by someone who didn't go out in it much. Sitting unused can cause problems, so the low mileage is actually a downside in that case.

I’ve always bought my cars outright.

I’ve just bought a new car PCP, 0% finance & some great deals around. agree though you need to shop around to find deals & paying upfront may well be cheaper in lots of cases.

Buying a car less than three years old is the best idea. We always do this. My parents have just bought a 10-month-old car outright.

Just want to say that I’ve found this thread really useful. I’m coming to the end of a pcp deal and I’ve saved up enough to pay the balloon payment and keep the car (it’s 1k less than the we buy any car valuation)

I know the cars history and trust it but my family think I’m crazy and should upgrade car instead on a new pcp plan. I have just had another child so there is an argument for more space being needed.

I think I’m going to stick with my plan but as suggested above continue to put the £250 pcp money into a savings account each month towards the next car! Thanks all

Sounds sensible to me. I buy my cars outright as well (although I tend towards the slightly older end, as I prefer large and wallowy old jalopies and do some of the spannering myself) and it works out for me.

The one thing I’d say is for 20,000 miles a year I’d prioritise supportive seats over pretty much everything else but I’m sure you’ve got that covered.

I recently bought a car outright. It's difficult to get any kind of return on savings or investments so we thought there is no point getting finance if we have the cash available. The financing and leasing companies aren't doing it for free, they are making a profit out of you so it is better avoid them if possible.

It was a bit painful transfering the money and seeing my account balance go down so much though.

I'm not against finance all together, if I didn't have the cash, I would borrow it but I'd try to get the lowest rate possible.