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Original poster

Unanticipated car replacement - what's best?

26 replies

heresanotherusername · 09/11/2021 17:25

Not sure if this is the right place but it is technically a money issue so here goes...

Our 8 year old car has been written off following an accident. The insurer will pay the market value as we were not at fault, however we will need to replace it fairly quickly.

We had held the car from new, looked after it well and intended to drive it until it stopped, just hadn't planned for that to be quite so soon, so don't have funds to add to the pot.

So our options seem to be - use the insurance money to buy a similar (old) car and hope we pick well, or to buy new under PCP and use the insurance money to make the payments. This obviously leaves us not owning anything in 4 years' time, but we get to drive a new car in the meantime, mostly under warranty, with no MOT required.

Buying an older car still leaves us with a risk of owning nothing in 4 years' time, along with the risk of something going wrong.

Interest rates on PCP deals seem quite low, and while over 4 years would cost a bit more than the insurance value, we don't have to pay it all at once. So the PCP idea seems very attractive to me but I'm not sure if I'm missing something?

OP posts:
DeliaDinglehopper · 09/11/2021 17:27

HP? Higher payments but it’s yours at the end of the term.

shiningjustforyou · 09/11/2021 18:09

I'd do PCP and put the payout down as a deposit. Technology with cars is moving and electric and hybrid are going to get cheaper and more accessible.
Personally I'm not really bothered about owning a car outright anymore and like the idea that in 3 years I could have a fully electric car.

There's also car subscriptions now but I don't know a lot about them.

shiningjustforyou · 09/11/2021 18:10

Also, our monthly payments are pretty steep but includes breakdown cover and 5 years free servicing so actually saves us money.

Livelovebehappy · 09/11/2021 19:32

Buying a second hand car is false economy tbh. It depreciates, so probably if you own it, in a few years time it might no longer be worth any money to sell on, and things going wrong with it mechanically which would mean spending on it to keep it going. I would always just lease. Reliability of a new car is more important to me than ownership of a second hand potential money pit.

TiddleTaddleTat · 09/11/2021 19:45

I disagree that buying second hand is not as affordable as leasing but it depends what's important to you really.
In your shoes I would hire purchase and think carefully about the car I buy - check it'll be compliant with any new rules that come in re. emissions etc.

Original poster
heresanotherusername · 09/11/2021 20:34

Thanks everyone. The issue with both HP and putting the insurance payout in as PCP deposit is that we'll be paying more over the next 3 or 4 years.
But if we go with £0 deposit the insurance payout will cover most of the repayments so technically costing us little extra but getting a new car. We'll be mindful of emissions but with the option to hand back in 4 years if technology improves we can take advantage of that too.

We've never done this before, it seems almost too good to be true.

OP posts:
BarbaraofSeville · 10/11/2021 07:55

Could you top up the insurance money with a personal loan and buy a newer car, eg around 2-4 years old? Could you also manage with a smaller car or cheaper brand to get a newer car for the same money?

Then hopefully you'll have a car you can continue using after you've finished making the payments, which will then give you spare money to save up for your next one?

Eltonsglasses · 10/11/2021 08:00

I would just find something with the money you have. If it's enough to cover 4 years PCP it's enough to find a reasonable motor second hand.

shiningjustforyou · 10/11/2021 08:02

@BarbaraofSeville

Could you top up the insurance money with a personal loan and buy a newer car, eg around 2-4 years old? Could you also manage with a smaller car or cheaper brand to get a newer car for the same money?

Then hopefully you'll have a car you can continue using after you've finished making the payments, which will then give you spare money to save up for your next one?

But if they can get a 0% interest deal on PCP it seems a bit mad to pay interest on a loan.
BarbaraofSeville · 10/11/2021 08:04

But personal loans are very cheap right now so the interest will be minimal and less than the value lost when buying a new car - a nearly new car will be thousands less than a brand new one.

Lucked · 10/11/2021 08:04

Will you actually be able to get a new car? I had to unexpectedly and quickly replace my car in July. Because of the chip shortage and probably Brexit the lead time for my chosen car new would have been October and friends who ordered a new car around that time have had their delivery delayed into next year. There were a few options so not impossible but you will be limiting your options if you need it quickly.

There weren’t even too many second hand cars that had the spec I wanted either but I got an ex demo in the end

Retirementunderrated · 10/11/2021 08:05

I was advised by someone in PCP trade that the deposit is actually 'lost' money to you, at the end of the deal.
If you can do £0 or even £300, do that.
Reliability is worth it in these uncertain times. Use the insurance payout for monthly deals.

cultkid · 10/11/2021 08:05

We lease our cars don't buy them or do that thing with the balloon

I would transition to lease

Never had a fine from them on returning a car, if you scratch badly just get it repaired before you give it back

Vanarama website click on cars they have some good deals

We have an Audi A6 for 340 a month with no deposit it was a bargain. Petrol. Auto.

G x

shiningjustforyou · 10/11/2021 14:20

@Lucked

Will you actually be able to get a new car? I had to unexpectedly and quickly replace my car in July. Because of the chip shortage and probably Brexit the lead time for my chosen car new would have been October and friends who ordered a new car around that time have had their delivery delayed into next year. There were a few options so not impossible but you will be limiting your options if you need it quickly.

There weren’t even too many second hand cars that had the spec I wanted either but I got an ex demo in the end

We were lucky and managed to get one that was in stock. They said the last one of that model but that was probably pushy sales tactic.
Original poster
heresanotherusername · 10/11/2021 20:25

Yes @Lucked I fear this is the next problem. We need to find something quite quickly.

OP posts:
MyMILisLovely · 10/11/2021 20:31

Buy a used car and pay cash.
That's what I do and my cars last me a long time

negomi90 · 10/11/2021 20:38

I ordered a car on PCP in September because I was worried about my car dying during a 6 month work placement with difficult public transport. The car isn't expected to arrive until February and it's a race to see if it will arrive before I can stop driving to work.

DogDaysNeverEnd · 10/11/2021 20:39

Mileage is the main thing to be aware of. Do you have a good idea of how many miles you sooner year and what the allowance is/penalty on the leased cars? We looked but it wouldn't work for us because we do big journeys.

DeltaAlphaDelta · 10/11/2021 20:39

I was in exactly your situation earlier this year. Put the insurance money on a deposit for a new car on PCP which brought the monthly payments right down. The car was on 0% interest so cheap payments as well. I had to compromise on a few things, but got a model that was in the showroom, so I had it 2 days later rather than the 3 months for the exact model I wanted.

No MOT to worry about, 7 year warranty and we got a service plan too, so dont have that issue. When the four years is up, I will probably chop it in and get a new model, hopefully electric.

WombatChocolate · 11/11/2021 17:00

It depends if you want to drive and get best long term value, or if you want new that you can’t afford upfront.

If you go for the latter via lease or HCP or whatever, it will be affordable on a monthly basis, you won’t have worries about unexpected costs, and you’ll have new or newish cars……but of course you pay for all that and over time it’s more expensive than buying perhaps a 6 year older car and running it for 5 years whilst saving up, so you no longer need to lease or use HCP. Once on leasing, it is hard to break out, as often people never build their savings to buy up front.

The other thing to consider is consequences if choices for other expenditures and finances. Leasing might be affordable in simplistic terms on a mo they basis, but given you are always paying, what impact does it have on your ability to do things like save for a house deposit or upgrade, to put money into pensions, or to have a regular holiday? Big chunks of mo they income going on cars can have knock-on effects that aren’t so easy to see immediately, but which over years can be large, in that some won’t get on housing ladder and some will have to work several more years because of limited pension provision.

To be honest, if I were you, I’d use the lump sum you’ve got and buy second hand. At least you have that lump sum. You don’t HAVE to lease or use finance as you simply have nothing available fir our front buying.

I can see that the leasing is attractive in terms of new car. It consider carefully if this is really affordable to you and how much you will pay for it over perhaps 5 years. Is that the amount you actually want to sound on cars and can afford to spend on cars out if your 5 yearly budget?

I’d also prioritise. Uikdi g a safety beg of savings…..cars do break down, get brittleness off, boilers die etc…..you can always need a chunk of cash anytime. And without it, you’ll always be pulled into the ultimately more expensive options.

CovidCorvid · 11/11/2021 17:02

I always look for 3 year old ex motabilty cars. Low mileage and well serviced.

Eltonsglasses · 11/11/2021 18:57

@CovidCorvid

I always look for 3 year old ex motabilty cars. Low mileage and well serviced.

And often hammered by the driver because it's not their car...

CovidCorvid · 11/11/2021 19:04

Everyone I've bought has had between 9,000 and 17,000 miles on the clock so can't have had much hammering and never had a problem. The Ford I bought with 9k on the clock dh still has it and it's 12 yo with about 90k on the clock now and never had an bill for it apart from tyres and brake pads.

FuckYouCorona · 12/11/2021 00:38

How much is the payout OP? Look at the mileage & service history. You can check all MOT's online now too so find something without any/many advisories. Stick to something Japaneze like a Toyota or a Honda & it will last into well over 100k miles & 20+ years without trouble.

Lavendersquare · 12/11/2021 14:21

Personally I'd take the plunge with a lease car and would also seriously consider an electric one. There are some cracking deals on electric vehicles at the moment, electric mini for just over £200pm as an example. If you have off street parking charging is a doddle and very very cheap. I moved to an electric car 18 months ago and I've gone from putting in around £80 petrol per month to using around £8 a month in off peak electricity. You also don't have any road tax, no congestion charge and a lot of councils give free or reduced parking. Seriously think about electric.