So we’re starting to look for a second car and are wondering how best to actually pay for the damn thing. For example a two or three year old C4 is very roughly ten grand and I don’t see us urgently wanting to replace it in a few years unless it’s costing too much to maintain. Should we:

1) Pay for it outright. We have just enough in the savings account to pay for it. Big hit to the savings account but no other payments ever.
2) Hire Purchase with a 30% deposit, and pay for the car at the end of the term. A lot less up front, more overall with interest.
3) Hire Purchase with a higher deposit (60%?) to strike a balance between how much we spend up front and how much we pay in interest.
4) (2) but with this new PCP thing.
5) (3) but with this new PCP thing.

From a little reading it seems that PCP is best for people who essentially want to lease a car, the system is rigged to prefer giving the car back after three years and getting a new one. Then again I’ve only read a little as I hadn’t really heard of it until last week…

So STW, what would you do?

We bought a second car a couple months ago, we could have got together about 5k. But I HATE buying second hand cars, and for the amount we had to spend we’d have buy another in 4 or 5 years.

So we bought (pcp) a brand new seat Ibiza for £150 a month for four years, where we will then pay another 4k to own it. Which means we don’t have to go second hand car shopping again for a bloody long time*!!

*Hopefully…

We bought a second car a couple months ago, we could have got together about 5k. But I HATE buying second hand cars, and for the amount we had to spend we’d have buy another in 4 or 5 years.

Why would you have to buy another in such a short space of time? What on earth are you doing to them!
My Octavia is a 51 plate, I’ve had it around eleven years, and apart from the a/c going on the fritz several years ago, it just keeps on keeping on. It had 89,000 on the clock when I bought it, it’s got 130,000 now, well below average, and I paid £5000 for it.
Why shouldn’t you get eleven years life out of a similar car?

Why would you not pay the cash, if you have it?

Edit to say I drive a 56 plate Corsa CDTi, two grand five years ago, 170k on the clock (80 of that is mine) and costs pennies to run. Worth nack-all but will run her till she dies and she owes me nothing at all. 🙂

We buy from a main dealer at 3-4 yrs, pay with cash (from an unsecured loan as needed) and run till dead. I’d expect lot a longer than five years before changing. I view cars in the same way as dishwashers. Just another domestic appliance.

RS Twingo 133 bike-ferrying car excepted. That was bought on a whim, without loan and sits on the drive all week. It’s an indulgence from my late mother.

Find out if one payment method gets you a better deal on the price, get the calculator out…
Sometimes you can pay off early and save on the interest paid

I’d buy a slightly older car with cash, max 6k put 3k in an ISA and keep 1k for an emergency.

We buy from a main dealer at 3-4 yrs, pay with cash (from an unsecured loan as needed) and run till dead

I take it you’ve only had two or three cars in your lifetime?

Why would you have to buy another in such a short space of time? What on earth are you doing to them!

Different people have different needs. If, like you, I bought a car at 90,000 miles and kept it for 11 years then it would have 310,000 on the clock.

OP, I’d avoid hp or PCP on second hand cars, the interest rate is usually very high (11%).

If you are concerned about depleting your savings then you can get a loan for about 3% at the moment.

But it’s worth reading money saving experts view on saving v. Debt – his view is that it’s usually better to use the savings rather than take out a loan, because if something bad then happens you could get a loan or credit card and you’d be no worse off. If nothing bad happens then you’re better off.

But it’s worth reading money saving experts view on saving v. Debt – his view is that it’s usually better to use the savings rather than take out a loan, because if something bad then happens you could get a loan or credit card and you’d be no worse off. If nothing bad happens then you’re better off.

We did this recently. I am now paying an amount, monthly, back to the savings account, with a view to getting back to where we were before we bought the car. This makes it an (almost) interest free loan. I am fortunate, though, to receive a car allowance, which helps obviously.

Why would you have to buy another in such a short space of time? What on earth are you doing to them!

The cars that I could find, we were looking at petrol Polo’s and the like, for the cash we had were about 7/8 years old, after we’d had it for another 4/5 years it would start to get a bit tatty. whereas by buying the new car on PCP in 4 years time we’ll still have a car that only we have driven and know exactly what has happened to it.

I’m not a car person, I hate buying them, and really didn’t want to have to buy another in a few years time. If I never have to buy a second hand car again it’ll be too soon. It just a minefield of ripoff.

My current diesel Smax has 120k on the clock and my previous diesel Passat was sold with virtually 200k on it so i’m not a serial car buyer!! But 5 years is a long time to use a car every day.

#myjustificationmaynotsuityou

Perhaps he needs to look at another so soon because he drives them.

Your numbers suggest your old Octavia barely moves….of course it won’t wear out.

When I was a kid in the 1970’s people would marvel at how a Mercedes would do 200,000 miles. Now any decent car will do the same. IMHO the trick is to buy a simple car, the less electronics, turbos etc the better and imo a bigger engine is less stressed than a smaller one. Both our cars are 10 years old and have much much more life left in them.

Buy a 3yr old Jap car. Avensis/Civic/Auris. Not as desirable as ze Germans but reliable and can do high miles. Even with a petrol engine.
If you keep it for 10 yes it will probably still be going strong.
PCP has had its day. The manufacturer’s are no longer offering the dealers the discounts, so you end up paying a huge deposit, never owning the car and handing it back. If you want a new car nowadays lease is the cheapest way forward.

Why would you not pay the cash, if you have it?

and this

But it’s worth reading money saving experts view on saving v. Debt – his view is that it’s usually better to use the savings rather than take out a loan, because if something bad then happens you could get a loan or credit card and you’d be no worse off. If nothing bad happens then you’re better off.

As tenfoot says, you could in effect get your savings account to give you an interest free loan which you repay over a term to suit you, with the advantage that it is infinitely variable; overpay, underpay, depending on how much you’ve spent in the month – no bother. Pay it off earlier – no bother, no penalty. Pay it off longer – also fine. Just make sure you have (some) discipline to repay it back into a savings fund as soon as reasonable, and don’t just think the money saved by not having a formal loan is all there for bikes discretionary spending.

The downside – and IANAIFA and IMHO – is that if an emergency happened and you needed the cash that you used to have in your savings account but you now spent, then you may need to get a loan anyway, as noted by MSE, etc. And in a year or two’s time, you might be paying more for that loan than you would now, if as expected interest rates do start to go up. But (and again, IANAIFA) i don’t think they will increase fast and there’s also a sliding scale that by the time they’ve gone up to a point where the difference is appreciable, you’ll also (if you’ve been good!) have rebuilt a decent chunk of your emergency savings anyway.

(have been evaluating this scenario almost exactly, needing £4.5K for a new boiler – could pay with savings, could get a cheap loan, or could go with BG which is £500 dearer but with compensating ‘benefits’ like reduced premiums on my service contract etc., and get 2 years interest free. Decisions…..)

It very much depends on your personal circumstances. However personally, I would never choose HP – because a bank loan has a much cheaper interest rate. Also with a bank loan you own the car, not the finance company (until all the payments have been made) which means that you can sell the car at any moment and clear the debt if you so wish. Owning the car outright also means there is no finance marker which will be revealed in an HPI check.

Because I have a car allowance with work and I drive approx. 40,000 miles a year in a sales job, a 4 year PCP suits me perfectly – the monthly repayments are cheaper than a HP and I will just swap the car out at the end of the agreement.

Hope this helps

for your needs, I’d look at paying cash for a brand new dacia – it looks like @ £10k you can get a well-specced logan mcv (c4 sized but with a bigger boot) with a 7 year warranty/100,000 mile warranty. After 7 years worry-free motoring, rinse and repeat

I’m way behind the curve on the benefits and drawbacks of PCP and the like.
First car was funded through a bank loan, based on needing it to get to my work – so had reasonable expectation it would be repaid. After that have been fortunate in being able to buy with cash, usually (almost always) second hand from garage of some kind or occasionally friends.

Last car hopefully will do us for many years to come, also funded by using savings. Don’t like thought of PCP / HP or even bank loans TBH.

Again, personal circumstances differ but we regularly overpay the mortgage quite considerably and can snatch it back at anytime, so I ‘borrowed’ back the money I needed and increased my over payments by £300p/m, effectively borrowing the money off myself. Was the cheapest loan I was going to get.

after we’d had it for another 4/5 years it would start to get a bit tatty.

Just look after it better then?

My Volvo is 20 years old and looks new inside as its been looked after by its previous owner (first 5 years company owner, then 2 family owners for next 14 years).

I take it you’ve only had two or three cars in your lifetime?

A few more than that, but some have been company cars.

Current CRV is a 2009 and now done 90K. Previous one was a 54 and died at 160K. Was disappointed with that to be honest, as I hoped the timing chain would be more robust. Petrol next time. Before that I had a 97 VW Vento that I drove for 140K miles flawlessly commuting. Between the Vento (which was written off by a lorry) and the first CRV, I had a Mazda 6 and an Eos as company cars because the lease subsidised high mileage (I commuted 30K/year).

I don’t really get excited by cars and don’t view them as status symbols. Next car probably won’t be a CRV as the roof is now lower and the seats don’t fold away as easily, so I can’t wheel a bike in backwards 🙁

Buy it outright privately. Haggle.

OP what’s best for you?

There was a time when you could get a sizeable discount for cash but on the other hand interest rates were high so your cash could’ve been earning while you bought the car an HP. Neither of these apply any more

Personally I’m not fond of owing anybody anything so I set a budget, cast the net far and wide (I like browsing for cars) and buy the one I like best.

My choice would be 1) old out yer and