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.

@PlanDeRaccordement

YANBU but it’s worth seeing what deals they might offer. I usually buy outright but my latest car they offered 0% interest if you put at least 50% deposit. So I did that and am paying the other 50% of price over 3yrs for 0% interest. There is no mileage limit. Meanwhile I’m coming out ahead because that money is earning 8-12% interest by staying longer in my bank account.

Where on earth are you getting 8-12% interest?

Not read all the replies so apologies if some one has said this.I bought a KA four years ago on 0% finance .I had the money in the bank but thought I was getting a good deal ..however ..although I am not technically paying interest, the repayments were over five years at £128 a month ..there fore once I have paid it off, I will have paid £2000 more than the asking price !!! My advice ? Use your savings! And then save again for your next car if you can! Xx

I always buy my cars outright, and it's worked out very economically over the twenty years I've been doing it. I do high mileage too (or did, pre-COVID).

Personally though, I wouldn't get a budget car for high mileage. I'd get something a decent size from a brand with good reliability, a few years old.

Don't be put off by a few miles on the clock, as long as the servicing had been done accordingly. Easy miles up and down the motorway won't hurt on a car that's built to do them.

I do this apart from once when we didn't have the 'next' payment saved and went with a lease. It's the best way in my opinion although leasing was fine.

I got a 3 year old modern reliable car for 8k with 17k on the clock. I intend to run it into the ground for at least 7 years.

With fluctuating high mileage you are doing the best thing. Also the perk is that your own car is your own and if you scratch it you can fix it or ignore it depending on how bothered you are. You don't have to worry about getting charged in two years time.

We bought my last car outright I didn't get it cheaper for cash and it wasn't cheaper on finance the garage we used the price was the price ( they were prices competitively to start with ) its the first time we haven't had a car on finance as we had a payout for something and decided to use that for a car
I can't see why anyone would recommend finance if you have the cash , even 0 % deals never are really they have had value added on already
My dh car we paid half cash for and a loan for rest as that was cheaper interest but we only took a small loan so payments were cheap

I bought my most recent car out right, it was one year old, came with a warranty, and had extremely low miles on it. It was approx. 10,000. New list price 15/16000 I will do the same again. I consider the silly thing to be the people who use finance. If you can afford to service the debt, then you can afford to save up.

Nobody is getting 8-12% interest on bank deposits. If you could, there would be a healthy profit to be made borrowing from the same bank and sticking the funds in a savings account, as loan rates are way lower.

I haven’t read the whole thread, but we always buy our cars outright and like you save for the next one. Last year I bought brand new because it was a model new to the market and really suited my needs. I hadn’t had a new ( used) car for years and got a good P/ex.
A cautionary tale about PCP - some friends had a new car on PCP. Within a month someone backed into it in a car park. Instead of being able to choose the repair garage and possible pay for it themselves, they had to go to the nominated body shop. It was very expensive, they had to pay the excess and it’s noted on their insurance.
PCP means the car is not yours.

We always buy in cash. Car about a year old (usually 10k plus) miles then run it until it stops working.

I have done this with every car apart from my first which I got with interest free credit. It works for me. I do about 20,000 miles a year and keep cars about 5 or 6 years - plenty of time to save enough to buy the next car.
But then, apart from my mortgage, I have never bought anything on credit. I would rather do without than pay over more than something costs!

Anyone have suggestions about the best place to find ex demo or year old cars?

I found mine on Auto trader, being sold by a local used car dealership.

You're be far better off looking for an unsecured personal loan than taking any finance deal through a dealership.

Always best to buy outright. If you lose your job or become unwell and can't work there's no finance to worry about, the car is yours. Plus you can get better deals! DH just bought himself a cheap runaround rather than getting into debt for a car he'd only use to drive to work and back!

That is absolutely the best thing for you to do. I do it also. When you buy a car on finance the minute you drive off you owe more than the car is worth. Keep being smart

@anniegun

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 think with kia, if you buy second hand from one of their own dealerships, they restart the 7 year warranty too, which is a massive bonus.

It's not silly at all & it is a good time to be buying cars. We recently bought a new one outright & got a good discount. Good luck.

I always buy outright - last one was 3 years old and cost me 10k
I am still very happy with it and no further outlay other than regular servicing and consumable parts eg tyres

YANBU. It's exactly what I did, bought a nearly new car outright with savings. I did pay for some of it on a credit card, simply because you get extra buyer protection that way, but it's a 0% interest credit card that's paid off in full every month.

The car I bought was less than a year old and was a bargain compared to the price brand new.

Go to dealers and consider Skoda as they are very good value cars, excellent quality and practicality for the price.

I have never had so much well- meaning and head- wrecking contrasting advice than when I crashed my car and needed to replace it.

It's like babies but worse because far more people have more to say.

Old versus nearly new versus new.
Petrol versus diesel.
Miles.
Loan versus outright.
Credit union versus bank.
Brand of car, model, make, colours, extras.
Bargaining advice, dealers to avoid, tactics.

All that to say, I think your idea is perfectly sensible and you know what you're doing!

YANBU OP. I had a small inheritance recently and bought a 4 year old car with it. I did also put £2K on finance, but only because it is 0% so costing me less than £100 a month and meant that I could get the car that I wanted.

Anyone I know who buys on monthly payments, changes their car every 3 years because they can't afford the final payment to keep it.

I had my last car for 9 years, so I intend to be driving this one for a while.

This is how I've always bought cars

I own my car outright. No monthly repayment, no interest rates and got a hefty discount on top of my trad in.
It really is one bill less to worry about.

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

Absolute nonsense. Please show me all these nearly new cars at half their list price? Typically you can expect a car lose about half its value over the first 3 years give or take. There are some exceptions, and they’re generally shite like Ssangyong and the new MGs.

@sst1234

debt in itself is not a bad thing, not wanting to have debt is never a good way to think about purchases.

Have you any sort of reasoning behind this statement? I can't quite work it out. It's absolutely fine to think about purchases and never having debt. It's what I do. If I can't afford to buy it i do not buy it. It's worked well for almost 30 years of being an adult.

OP you are not wrong, I have never financed a car.