To use investments to buy car?

[Carhelpp]

My car is beginning to cost me quite a bit in repairs (it’s 2018 plate so not ancient in car terms but not new either!) and being petrol I am being hit by the current fuel prices. It’s also a hatchback which is fine for me now but with another DC on the way it’s going to be a squeeze when going on holidays etc when it comes to storage space.

Here’s my dilemma - I have c.£15,000 in a S&S ISA which I’ve never had an exact use for other than assuming it would be long term. My car has a trade in value of £9000 but I suspect it is actually more like £6500/7000.

I fancy a used EV car which is a bit bigger but to get one with a decent warranty etc I’d be spending c.£23,000.

Would it be foolish of me to cash in the investments to use this and the trade in of my current car to buy a new (used) one outright? I don’t like having monthly payments for a car if I can avoid it so not looking down the finance/lease route.

Edit to add I am 35 so time to build the pot up again.

What do you think about PCP?

Hoping to avoid, have done it before and would mean a monthly payment of £200-300 and if I wanted to keep the car at the end a lump sum..

Can you find any 0% finance deals?

Compare what your investment is earning vs the interest you would be charged to finance the car. This may be personal to you and your credit score

For example,
Say I am looking at buying a new car. Finance interest rate is 2.9% ( which I was in fact recently quoted) . My fixed term savings rate is 5% ; my S&S investments considerably more. The finance monthly payment is affordable.

In the above scenarios, financing the car and leaving my investments to grow makes sense. If something changes in the future, you still have investments capital to pay off the car

Bear in mind the car will always depreciate in value. So paying for it from income, rather than capital can make sense

It's a shame to cash in an ISA particularly when they are reducing the amount you can put in in future, but in some ways that's what savings are for, so if you need something you can afford it. Is that the only savings you have? I would be reluctant to use all my savings on a car.

Petrol hasn't gone up as much as diesel, do you have a charger point for an electric car? And bear in mind the batteries don't last that well and are extremely expensive to replace.

Why do you need a new car? There are plenty of great and reliable used cars for all price points.

Key is also finding a reliable decent mechanic and likely avoiding main dealers.

I recently purchased a new car, partly funded by 0% credit card which i opened specifically for this. I get 34 months at 0% enabling me to buy car outright with no balloon payment at the end.

Did you read the OP? She says it is a used car she is buying.

My S&S ISA is currently outperforming the cost of personal loans and inflation so on the face of it, it would be crazy to cash it in. Even if you are planning to refill the pot at a later date, you would have to put in a lot more cash to make up the gains you're giving up.

For example, I have two pension pots that both had a similar amount of contributions one opened in 2004 and the other in 2018. The 2005 is now worth c.£10,000 more than the younger pot.

Also how much is the car really costing you in terms of repairs, fuel etc. Is it really worth getting a new electric or are you using those factors as reasons to get something you want rather than something you need?

No I have other cash savings, emergency fund etc. I would need to get the charger installed.

What return are you making on your stocks and shares ISA?

Mine is up something like 30pc in the past two years (high risk Holdings admittedly) and around 10pc long term.

So you need to compare the cost of financing a car Vs the gains on your portfolio.
If you can finance at 3pc and your return in your ISA are 9pc then it makes more sense to borrow etc

Ok, newish car. You get the point.

What's the point in raiding savings for a depreciating asset that the OP is questioning whether it's the right thing to do?

There are other very decent solutions out there...

I think it doesn't matter what everyone else thinks, if you want to do it then do it. In life it's not an absolute must that every single decision has to be the most sensible choice financially. My DH has an absolutely ridiculous BMW M2 that we definitely don't need and isn't sensible but we love it. I have a very fancy EV as a company car when I could just as easily have a Tesla or a Kia. We have them because we want to.

Of course but this thread seems more about being mindful of costs.

We all buy things because we want them but no point in putting yourself in financial difficulties for something you aren't bothered about.

I have had both cheap cars and expensive cars but often I think you get more "bang for your buck" at the lower end of the scale if you buy wisely.

It seems to me that

A new (to you) car could be a worthwhile investment, and
There are a number of reasons why you need a new car, and
With another DC on the way you may not want to take on further commitments
And at 8 years old that could mean a clutch change on the way

Clearly changing the car and paying 'cash' makes some sense

There are suggestions that the stock market is looking a bit iffy so 'taking your profits' might not be a bad idea