[Finance] Used Car Prices

[Icy Gull]

I didn't buy either of my kids cars, I'm far too tight for that. I 'helped them' decide how to spend their money from their part time college/uni jobs.

I may have helped a little with the purchase and insurance but I thought that if they had to work for it, they may be a little more careful when they drove it.

:

Exactly

 

[Springal]

And agree completely with the credit thing. If you haven't got the money to pay for it, then you can't afford it

Not sure I agree with that - just simple management of cashflow

 

[WATFORD zero]

Not sure I agree with that - just simple management of cashflow

Well if you get a car on some sort of credit, someone (and, very likely, more than one person) in the chain is making significant money out of you, as credit/lease/hire etc aren't done for altruistic reasons.

If you can't afford the item in the first place, why would you choose to pay more for it

(I assume by cashflow, you mean spending money that you haven't earned yet )

 

[Springal]

Well if you get a car on some sort of credit, someone (and, very likely, more than one person) in the chain is making significant money out of you, as credit/lease/hire etc aren't done for altruistic reasons.

If you can't afford the item in the first place, why would you choose to pay more for it

Depending on the circumstances but not sure that is always the case. For example the car I am in now will depreciate quicker than pro-rata rate I am paying on it. But more generally in life credit can be cheaper than cash if you use it properly.

I'd say anyone spending £10k on a car cash isn't as clever. You can probably get cheap loan or even credit card rates - and then stick £10k in an investment ISA of some kind and easily get 5-7% growth back per year.

 

[WATFORD zero]

Depending on the circumstances but not sure that is always the case. For example the car I am in now will depreciate quicker than pro-rata rate I am paying on it. But more generally in life credit can be cheaper than cash if you use it properly.

I'd say anyone spending £10k on a car cash isn't as clever. You can probably get cheap loan or even credit card rates - and then stick £10k in an investment ISA of some kind and easily get 5-7% growth back per year.

Each to their own, I tend to be very old-fashioned in my personal finance and only spend what I have already earned (mortgages aside). But aren't major credit card rates still around 20% APR ?, although I have no idea what unsecured loans come in at.

If you want to spend money that you haven't yet earned in order to drive a nicer car, then that's your call, but you will pay more for it. (If you can get 5-7% pa on 10K then you should do it professionally )

 

[Kuipers Supporters Club]

I sold my 2005 VW (130,000 miles) on Facebook marketplace within the same day as posting.

As others have said, choose the car first and get insurance ready to go!

 

[Springal]

If you want to spend money that you haven't yet earned in order to drive a nicer car, then that's your call, but you will pay more for it. (If you can get 5-7% pa on 10K then you should do it professionally )

Not really - pretty standard

‘If you had a stocks and shares ISA and had invested in the FTSE 100 index between 2010 and 2019, you’d have made roughly 7.4% a year. Compare that with average interest rates for savings over that time (around 1.5-2%) and you can see why lots of people turn to investing.’

 

[WATFORD zero]

Not really - pretty standard

‘If you had a stocks and shares ISA and had invested in the FTSE 100 index between 2010 and 2019, you’d have made roughly 7.4% a year. Compare that with average interest rates for savings over that time (around 1.5-2%) and you can see why lots of people turn to investing.’

I notice that the investment growth was taken before the Covid 19 crash. I think investing with hindsight is the way ahead

 

[upthealbion1970]

In addition to the advice already given check the cars MOT history online, good service history only gives part of the story.

Also I’d avoid anything that’s currently fallen within the 6 month MOT extension and has gone over 12 months since its last test. There are some cars on the road with 6 months mot on them that are in an absolutely shocking state of repair.

 

[Icy Gull]

In addition to the advice already given check the cars MOT history online, good service history only gives part of the story.

Also I’d avoid anything that’s currently fallen within the 6 month MOT extension and has gone over 12 months since its last test. There are some cars on the road with 6 months mot on them that are in an absolutely shocking state of repair.

Totally agree

You’d have to question why someone would sell a car with an extended MOT rather than get one done. It is easy enough to get an MOT test now and it would seem a no brainer to me unless you were trying to hide something or were just shit at maintaining your car. Has to be worth more with a fresh MOT and you are just asking for trouble if you buy one with not long to run or an extended MOT.

 

[S.T.U cgull]

Depending on the circumstances but not sure that is always the case. For example the car I am in now will depreciate quicker than pro-rata rate I am paying on it. But more generally in life credit can be cheaper than cash if you use it properly.

I'd say anyone spending £10k on a car cash isn't as clever. You can probably get cheap loan or even credit card rates - and then stick £10k in an investment ISA of some kind and easily get 5-7% growth back per year.

Exactly this and exactly what I am doing. £150 on loan payments means more money to put into a Shares ISA.

Low interest rates & credit are here to stay, so why use your money when you can use somebody else’s at a low-cost!

 

[Madafwo]

I've been looking for a car for 2 months and am still no closer to buying one. Just seems like an ideal time for people to get rid of all the lemons they normally wouldn't be able to by using CV as an excuse to not be able to inspect a car properly.

 

[dazzer6666]

I would advise not spending more than about £1500 for a first car. Something a few years old, 50-60K mileish with a service history and look to keep for a couple of years. They are likely to put a dent/scratch or two on it in the first couple of years, the insurance will be less, and since it's their first car, they will love it and look back on it with fondness no matter how much of a shitheap it is

Once they have a couple of years experience of driving, a couple of years no claims, and a couple of years experience of the shock of denting things, then get them something better

Pretty much this - did this for both of my offspring (both had Fords - on Ka and one Fiesta, can't remember what the Ka cost but the Fiesta was about £3k I think), after 3-4 years both cars were covered in dents, scratches etc but never had any major mechanical problems with either. Simple annual service was fine plus the usual oil checks etc. Something reasonably well-maintained with 50-60k on the clock will be fine - they are unlikely to be doing many long journeys, anything in that age bracket should still be pretty reliable. Shop around for insurance and make sure you get a policy that includes black box being fitted as it drops the premium quite significantly (and you can get a regular report on their driving)

 

[Greg Bobkin]

Each to their own, I tend to be very old-fashioned in my personal finance and only spend what I have already earned (mortgages aside). But aren't major credit card rates still around 20% APR ?, although I have no idea what unsecured loans come in at.

If you want to spend money that you haven't yet earned in order to drive a nicer car, then that's your call, but you will pay more for it. (If you can get 5-7% pa on 10K then you should do it professionally )

Not sure it's old-fashioned, but you're certainly in the minority (and there's nothing wrong with that). The fact is the lease/finance market has taken over, so the vast majority of cars are 'sold' on finance these days. Partly it's because it's easier (and more affordable) than bank/credit card loans and also because consumers are moving towards a usership model, rather than ownership. In a similar way that people get a subscription to a TV service, mobile phone provider or any other regular service, car buyers are simply getting a 'subscription' to using a car. Even beyond that, the rental and private hire markets has boomed because a lot of drivers have worked out it's more affordable to use those services rather than have a car sat still 90% of the time losing money or, at least, not doing anything.

Having said all that, finance for learners/new drivers isn't always straightforward and often comes with surcharges. So if I were the OP, I'd stick to your old-fashioned approach of looking at the newest and lowest-mileage cars you can afford within your budget and buying one of them outright.

 

[hampshirebrightonboy]

Spoke to a mate of mine who manages a BMW garage. He reckons the second hand car market is going to be busy. There's a lot of demand overall for cars as people want to drive rather than catch public transport. He's also having issues getting cars as the factories are closed. Reckons it's going to take up to a year for some orders.

 

[zefarelly]

borrowing money has never been cheaper. . . each to their own on what for and how much . . . . some peoples mortgages make my eyes water, likewise choice of car and expense of. They probably think I'm nuts spending my money on old cars and guitars!

I've finally found the car I want to replace my ageing banger . . . . I'll find out on Friday if a good offer beats the asking price.

 

[dazzer6666]

I notice that the investment growth was taken before the Covid 19 crash. I think investing with hindsight is the way ahead

Fair amount of the crash has already been recovered - if you're well-diversified it's not looking too bad at all (accepting there are a few dogs in the basket). On average the funds I have are about level with 12-18 months ago - some are still showing decent increases. Over 5-10 years (as always) the comparison with cash is very stark - not really hindsight, more historically proven time after time

 

[Tim Over Whelmed]

Well if you get a car on some sort of credit, someone (and, very likely, more than one person) in the chain is making significant money out of you, as credit/lease/hire etc aren't done for altruistic reasons.

If you can't afford the item in the first place, why would you choose to pay more for it

(I assume by cashflow, you mean spending money that you haven't earned yet )

Our boys are aware of the rules, you work and save for what you want but if you do that the Bank of Mum & Dad top up what you've managed to accumulate, normally about a 25% top up, but they can't go into debt for it. The insurance is a little more problematic because his PT job, whilst studying, will pay for it but if A level progress suffers something will have to give (after all the usual distractions!!)

 

[zefarelly]

On topic people will continue to crucify themselves on credit to have a status symbol car imo. I don’t see prices dropping too much.

This in spades . . . . each to their own, but I find it oddly amusing to see ex council houses with bling of a higher purchase value all over the block paved front garden!

 

[Tim Over Whelmed]

Not sure it's old-fashioned, but you're certainly in the minority (and there's nothing wrong with that). The fact is the lease/finance market has taken over, so the vast majority of cars are 'sold' on finance these days. Partly it's because it's easier (and more affordable) than bank/credit card loans and also because consumers are moving towards a usership model, rather than ownership. In a similar way that people get a subscription to a TV service, mobile phone provider or any other regular service, car buyers are simply getting a 'subscription' to using a car. Even beyond that, the rental and private hire markets has boomed because a lot of drivers have worked out it's more affordable to use those services rather than have a car sat still 90% of the time losing money or, at least, not doing anything.

Having said all that, finance for learners/new drivers isn't always straightforward and often comes with surcharges. So if I were the OP, I'd stick to your old-fashioned approach of looking at the newest and lowest-mileage cars you can afford within your budget and buying one of them outright.

We saw this as

a. He is really focused on passing his test and owning a car, and,

b. The right time to teach him if you want it you've got to work hard and save for it, but you're right a lot of his mates are saying this but the other way around. I'll get it and get a job to pay for it, bad lesson in life IMHO.