New car time - new/used/PCP/loan?

[TheCyclingProgrammer]

I just posted a bit of an epic post on the MoneySavingExpert forums looking for advice on this and I thought I'd ask here too - I'll spare you the epic and give you the short version.

My first ever car has died. Sad day. Seat Ibiza, suspected timing chain jumped, apparently common on 2003 model after 60k miles - I'm not paying them to strip the engine and find out as its only worth about £600. So its getting scrapped.

Not great timing, with a wedding and buying our first house this year, but hey, that's life. Fortunately we've got some emergency and general savings (a few £k) budgeted separately from our other planned expenses so we have a bit of headroom.

First thought was another 5-6 year old used car but I'm very wary of used cars - I paid £4300 for my Seat Ibiza and must have spent about £3k on it in the last 7 years. I don't want to risk another unreliable car. We could buy a banger from our savings and cut our losses if its unreliable but the OH wants a nice, newer, safer car.

I looked into PCH but TBH, whilst this probably offers the lowest monthly cost, I don't like the idea of never owning the car and there is also the risk of minor damage costing us at the end of the lease (not worried about mileage as ours will be low). Also, I've got to consider that when my fiancee passes her test, the risk of her having a minor prang in her first few years of driving is significantly higher - I had a fair few dents and scratches of my own when I first passed (or maybe it was just me ).

So I'm booked in to test drive a new Ford Fiesta today (one of the 1.0 EcoBoost engines) and I might ask to test drive a Focus too (more on that later). I'm looking at the Zetec model with the Sony DAB/Bluetooth upgrade which works out about £14k after the dealer deposit contribution if we do the PCP financing deal. About £234/month over 2 years (4.2% APR) with a just under £7k balloon payment if we want to keep the car. I like the flexibility but TBH, if we're happy with the car I'd like to buy it and keep it for at least 5 years, so maybe PCP isn't the best choice?

We can't afford a new Focus, but the extra room would be nice so I looked at nearly new cars and had a bit of a revelation. Whilst a 1 year old Fiesta (same model as above) with < 10k miles will save us about £2-3k on the new price, a 1 year old Focus with 15-18k miles saves about £7-8k on a new model - that's a lot more depreciation saved! The upshot is, we could probably get a new Focus 1.0 EcoBoost in a higher spec trim (Titanium instead of Zetec, which comes with the Sony stereo as standard) for around £11k from MotorPoint. We could also look at PCP for this but with a £2k deposit, we could probably finance this with a £9k personal loan. Over 3-4 years, I can get a deal of around 4.5% with monthly payments of around £250/month which is in our affordability range, and we'll own it at the end of the loan. I also think, based on today's used Focus prices, a 6 year old Focus with < 50k mileage will still fetch around £5k if we sell it after 5 years.

So, am I right in saying that I should seriously consider the 1 year old Focus over a new or nearly new Fiesta? Same engine, slightly more room, nicer stuff as standard, much bigger depreciation saving, better finance options. WDYT?

Yes, this was the short version, sorry!

[Paddy]

Always pay cash for a car and pay what you can afford.

[northernladuk]

Why only 1 year old? Why not got for 3 years when it has lost half it's value? New cars last a lot longer than the ones of yesteryear.

If you go for the lease options be careful of the extra charges. They charge 10's of pounds for scratches more than an 10cm long, dings, scuffs and picky crap like that which can mount up if you are not going to give it back in perfect nick.

[RickRow]

So many times I've considered buying new, financing new or leasing, and it's just never anywhere near as cost efficient as buying second hand. And that's leaving room for the cost of repairs and maintenance that wouldn't be covered under any sort of warranty.

I'd always recommend going second hand personally, let the fools with money to burn buy new

[DirtyDog]

Always pay cash for a car and pay what you can afford.

+1

If you have to take a loan, check the early repayment penalties - if you could add the car loan into your mortgage, then is there a saving to be made there when you get the mortgage? Factor in the loan to your mortgage calculations anyway, since the mortgage provider will ask that anyway.

I'd be looking at something a year or older, to get the better deal - but making sure that you still get a decent warranty on the car.

[doodab]

First thought was another 5-6 year old used car but I'm very wary of used cars - I paid £4300 for my Seat Ibiza and must have spent about £3k on it in the last 7 years. I don't want to risk another unreliable car. We could buy a banger from our savings and cut our losses if its unreliable but the OH wants a nice, newer, safer car.

So around £1000 a year including repairs. Does that £3k include routine servicing?

So I'm booked in to test drive a new Ford Fiesta today (one of the 1.0 EcoBoost engines) and I might ask to test drive a Focus too (more on that later). I'm looking at the Zetec model with the Sony DAB/Bluetooth upgrade which works out about £14k after the dealer deposit contribution if we do the PCP financing deal. About £234/month over 2 years (4.2% APR) with a just under £7k balloon payment if we want to keep the car. I like the flexibility but TBH, if we're happy with the car I'd like to buy it and keep it for at least 5 years, so maybe PCP isn't the best choice?

So spending nearly £13k on something that will be worth maybe £5k at the end of the period. Does the PCP include maintenance and repairs?

a 1 year old Focus with 15-18k miles saves about £7-8k on a new model - that's a lot more depreciation saved! The upshot is, we could probably get a new Focus 1.0 EcoBoost in a higher spec trim (Titanium instead of Zetec, which comes with the Sony stereo as standard) for around £11k from MotorPoint. We could also look at PCP for this but with a £2k deposit, we could probably finance this with a £9k personal loan. Over 3-4 years, I can get a deal of around 4.5% with monthly payments of around £250/month which is in our affordability range, and we'll own it at the end of the loan. I also think, based on today's used Focus prices, a 6 year old Focus with < 50k mileage will still fetch around £5k if we sell it after 5 years.

So you'll loose £6k in depreciation over 5 years, plus interest on the loan, plus you'll still have to pay for servicing and repairs.

So, am I right in saying that I should seriously consider the 1 year old Focus over a new or nearly new Fiesta? Same engine, slightly more room, nicer stuff as standard, much bigger depreciation saving, better finance options. WDYT?

I think you should but be aware that your cost of motoring is going up.

[alluvial]

I'd avoid the lease option. If anything goes wrong and you end up benched, then you end up saddled with monthly payments and you can't just send it back without a hefty penalty.

[TheCyclingProgrammer]

Why only 1 year old? Why not got for 3 years when it has lost half it's value? New cars last a lot longer than the ones of yesteryear.

Because I like the newer models with the EcoBoost engines and still having 2 years manufacturer warranty is attractive to me. I wouldn't rule out 2-3 years old, it just seems like for the sake of a few grand, I may as well get a new/nearly new car.

If you go for the lease options be careful of the extra charges. They charge 10's of pounds for scratches more than an 10cm long, dings, scuffs and picky crap like that which can mount up if you are not going to give it back in perfect nick.

Yes, one of the things that put me off.

[TheCyclingProgrammer]

If you have to take a loan, check the early repayment penalties - if you could add the car loan into your mortgage, then is there a saving to be made there when you get the mortgage? Factor in the loan to your mortgage calculations anyway, since the mortgage provider will ask that anyway.

I'd be looking at something a year or older, to get the better deal - but making sure that you still get a decent warranty on the car.

Mortgage has been considered and I've spoken to my broker about this. Fortunately the lender he has recommended are willing to lend based on a multiple of last years net profit and are offering to lend far in excess of what we actually need, so no worries on the mortgage affordability front.

I am certainly leaning towards a 1 year old car - if I got the Fiesta is still stands to save a couple of grand and the savings on the Focus, as I mentioned, are much bigger.

[TheCyclingProgrammer]

So around £1000 a year including repairs. Does that £3k include routine servicing?

No.

So spending nearly £13k on something that will be worth maybe £5k at the end of the period. Does the PCP include maintenance and repairs?

I don't think so but I'll discuss this when I'm at Ford today.

So you'll loose £6k in depreciation over 5 years, plus interest on the loan, plus you'll still have to pay for servicing and repairs.

I think you should but be aware that your cost of motoring is going up.

I'm aware of that, but on the other hand I have a much newer, nicer car than what I had before and hopefully one that is more reliable (obviously there's no guarantees here). I obviously need to sit down and work out the proper TCO over 5 years including servicing etc. as best I can. OTOH, VED is £0 on the Fiesta and £20 on the Focus, versus £135 on my old car, and should also be more fuel efficient saving money in petrol.

Servicing depends on whether or not I do get it done at the main dealer but I'll try and get some ballpark costs from the dealer (and I know the main dealer isn't always the cheapest option).