I suggest that you buy a 2/3 year old car at auction with as low an interest rate bank loan as possible, then invest your savings in potash (a natural fertilizer) stocks.
Investing in a second-hand car that holds its value or even increases in value over time can be a wise financial decision, especially if you only need it for transportation purposes. Putting the majority of your money towards a deposit for a flat can also be a smart choice, as property in London tends to appreciate in value over time. By paying a mortgage instead of renting, you are also building equity in your home.
⚠️Absolute madness buying cars in any of the demonstrated ways I run an old car. Depreciation zero. In fact it's going up in value. We go on 2 cruises and 2 other holidays per year. My mate has new cars every 3 years and he's vastly in debt. It makes no sense to me at all. We have the last laugh. New cars are so ugly too with those unstreamlined brick wall ghastly front ends.
@@dipladonic Vehicles are put up for auction for one of four reasons 1)finance repossession, 2)dealership dumping 3) the owner suspects a prospective eyewatering fix coming up 4) slight accident damage but still driveable
My dad who is a very successful financial advisor has always given me good advice. Only buy the showroom dealership car or a used car and for the love of everything holy make it Japanese. And only buy them outright, don't borrow money for anything other than buying a home, anything else, you buy in full yourself. Don't buy shit to impress people you don't know or like. Changed my life.
The biggest cost of a newer car is depreciation. Probably the most sensible is to buy a 3-5 year old approved used car outright from an official main dealer, which will have a 12 month warranty from the supplying dealer. If you know about common faults, and buy a car in good condition with a full service history, then you can look at 5-10 year old cars either buying privately or at an independent dealer. The main three things are condition of the car, full service history, and look at the MOT history to see if the car has been looked after properly - a catalogue of MOT warnings and failures is one to avoid.
I'd love to buy a 3 year old car that's depreciated, but I cannot find any! Saw a 3 year old electric Peugeot 208 at a Suzuki dealership, these were £25K when new 3 years ago, the price of this 3 year old car.......£25K
Buy a 5-10 year old car with full service history, check mot History as stated, and maintain the car yourself, i.e., service it yourself and any repairs in accordance with your competence
Here’s another little tip that I learned to do. If you’re on a lot dealing with the salesman, when you finally agree on a price, confirm this price with the salesman a couple times. Say something like “so this is the final price right, this is the amount I will be paying?” He will say yes, of course. Because here’s what’s going to happen; he will turn you over to the finance office where you will sign the contract. And on that contract will be in bold print “documentation fee”. DO NOT PAY IT. It could be several hundred dollars. They will fight you on it, but you call in your salesman and say “remember when I asked you if this was the final price”? Get up and start to leave if you have to. They ALWAYS give in. I’ve done it several times. They are NOT your friend. They’re goal is to get as much of your money as they possibly can. Fuck em! Don’t just hand over money cause you’re in a hurry.
It is for this reason you make an offer on the OUT THE DOOR PRICE (OTD), and let them break it down however they want to on their bill of sale. Calculate your Out the door price based on the Price of the vehicle (after negotiation), tax, tags and title. Now, how the tax is calculated, Tags and title fee are available on the local County's DMV Website in the USA and you should not pay a penny more than that. So, you have to do your research well in advance. You can also call your local DMV and ask them for these details. They will tell you how much would be the tax, tags and title for a certain model of the car. Out the door bill of sale in your mind should only contain - price of the vehicle, tax, tags and title. You then offer this number to the dealership, walk away if the dealership doesn't agree on this OTD number.
Second hand car with lowish milage, funded with a personal bank loan is how I have done it. My last car cost £6000, I drove it for seven years and traded it in for £500 when it would never have passed the next MOT. Cant beat that.
2nd hand car which has had annual oil changes and proper servicing is the answer here. Also - find out if the car has been driven in a stop/start manner OR on highways. The second option means little wear on your engine. Dont be fooled by the LOW MILAGE mantra. Peace.
Yes, you can. Buy with cash. Buy a newish 2nd hand with high mileage. Ex driving school is good. The discount far exceeds the condition- people worry is is worn, but the price includes such. Bought an ex-school car for my wife, the cost of a new clutch was in the price- but it never happened. She drove it ten years, no mechanical repairs needed.
Hi @@Tensquaremetreworkshop which car model and maker options would you recommend currently? My 14 year old car (Alfa Romeo) is giving up after 10 years of use (I bought it 3rd hand) and I don't know what to look for to replace it with. The repairs are too high to keep him running sadly. And I would not buy another Alfa. Thanks in advanced
@@vivayo4588 Alfa's have never had a reputation for build quality. Go for mainstream volume cars, reliable and low cost spares- like Ford Fiesta or Focus, or similar brands. Toyota also have a good reputation. Ask around for someone giving up driving through age- usually low mileage and maintained. Bargains available.
I’ve always, always kept my cars minimum 10 years. For example, my present vehicle is a Honda 2010 CRV and it’s well-maintained. By keeping our cars a long time, we had money for other things. We finished paying our mortgage when I was 45! We invested in real estate, we travelled, we did something else with our money. The amount of cash people spend on ‘look-at-me’ vehicles (when they really cannot afford it) is astounding. If you choose reliable models, the maintenance is not expensive either.
I still drive a 2006 Honda CR-V with 146k miles. Very reliable, and a great utility vehicle. AWD, 4-Cyl. Better than most high tech new cars. Insurance is cheaper as well. Liability Insurance, only.
I got a 2003 CRV had it nearly 6 years, got 118k. I also had a civic both so reliable... BUT the CRV fuel consumption and road tax is quite bad, BUT still better off overall i think
The cheapest way to buy a car is through an unsecured personal loan from your bank. Get a loan from your bank, shop online & Pay cash for the car, and gradually pay back your bank the loan you borrowed. This works really well for high value cars that you want to use for a long term. Car financing in the uk 🇬🇧 is extremely expensive and addictive, don’t get hooked.
This is how I did it. Half the money I had, half a very low interest bank loan independent of the dealership and making overpayments when I felt I could.
I'm an accountant in Canada and I have this question asked of me all the time. Particularly from self-employed individuals who want to know the tax impacts of writing off either a lease or depreciating the vehicle. There are several factors to consider but the most important one I ask my clients is what are your driving habits? If you drive more miles than average its likely best to go the purchase or finance route since leases have mileage restrictions. How long you like to keep your car is another factor. If you like to have a new vehicle every 3 or 4 years then lease option would be preferable. Interest rates also play a factor - generally lease rates in Canada are several points less than finance rates.
Thanks for your input, I have a rental properties for 30 years ask my accountant about leasing a vehicle he disagrees and thinks it’s not worth it because you’re basically renting a vehicle. My rebuttal to him was, I’m always moving fridges and stoves. I want to get a truck, he doesn’t think it’s a good idea and I’m wondering if he’s just being lazy or doesn’t want to flag to CRA or what his reason is after 20 years maybe he is getting softer what do you think?
Bought a Porsche Boxster S, 15 years old, in beautiful condition, for £5K, drove it for 5 years, sold it for £5K. £1K for repairs and servicing over the term. I don't see any problems in saving money by being sensible and enjoying the joys of driving a fantastic car. Now to choose another similar car and do it again. Thank you for one of the most comprehensive and straightforward assessments of new car buying I have seen. People all over the country are pondering their choices and not knowing how to choose correctly, you did all of that thinking and explained it in 10 minutes. Well done. Great video. Now subscribed
That's not a low risk strategy though, you could have easily ended up with £10k of repairs. And only £1k in repairs, servicing, tyres, MOTs, brakes, at Porsche prices over 5 yrs.....sure buddy. Give us the VRM and Years of ownership so we can check the MOT history. Absolute fantasy story.
I realized a long time ago that owing a car brings on additional expeses. Not just maininting the car etc.. , but when you own a car you are more likly to go places and spend money that you otherwise wouldn't..... Thank you for the informative video Nischa :)
This is an interesting one for me. I've always bought my cars outright at roughly 2 years old, and even though its a big outlay, i've always felt more comfortable doing it as i hate monthly outgoings. Meanwhile most other business owners i know swear by leasing and plough that initial saved capital into property investment, or their own homes.
I lease. I'm a real estate investor and I would rather have my money invested and I have a fixed expense. Have the oil changed and no other repairs, tires or brakes for three years.
Worth mentioning lease has bunch of restrictions, also u are not completely immune in those 3 years if it’s not wear n tear like accident or damage you are paying from pocket my friend, but cheap and outright. Sell when needed. Second hand market still has value.
@@adejuwonodugbesi3102 I live in the US and I drive Hondas which are very good quality and hold their value better than anything sold here. Ironically My lease was up last month, and I purchased the car outright, so I own it now without a payment at least for a while. I'll probably sell it and invest the cash and lease another vehicle at the end of the year.
@@shipdog44 I'm curious to know what you do/did to be able to get int real estate investing in the first place. Is investing your full time job or a side hustle?
If you have a decent credit score try going for a 0% credit card. My last one had £5000 limit and 34 months! That meant I could pay for the car and just pay £25 a month for nearly 3 years, then pay off the loan with no interest. In fact I put the £5k in the bank and earned a couple of hundred! I also had protection from my bank if the deal went sour. Win, win! Those cards are getting harder to get and with shorter terms, but still worth looking at.
I just bought a new car and I opted to pay cash. I don't have any stress about monthly payments and high interest rates. Thank you for the info, a few people tried to convince me to lease and I really wasn't interested. Glad to know I made a good decision 😊
You did good... I will do another video showing the real cost of leasing.... be free and spend what you can. Many people is having a hard time with this. Also today we have so many contracts that are really may have bias.
We bought our used car outright. It wasn't a cheap used car at £6k. We had saved the money and just paid it. Car dealership pushed to the hire car but in the end we would have spent about 2k more than the buy now price. Honestly I'm really happy to see that someone is explaining financial terms in simple words but at the same time shocked at the amount of people over-spending money and living paycheck to paycheck. Keep making these videos because more people are going to need your advice.
Well I've also bought my car out right. It's a 2019 Mazda 2 SE but I've also been in a Mercedes AMG. I don't actually blame people for financing those types of cars anymore because they're really, really fun to drive lol.
My used VW was £6k, I would say it's cheap. Spend much less and you're buying too old with too many costly problems. That was 3 years ago and I'm considering selling to buy newer now before any big problems. Checking resale value of my VW, it's held it's value even with the mileage I've put on it.
I don’t have to worry about car dealership ripping me off!! A) I conduct my research on which car manufacturers focuses on quality and reliability B) once I establish that I either buy used or new depending on the incentive at the time.. c) once I purchase that vehicle I keep them for a very long long long time!! Because vehicles are a depreciating asset so I tend to drive them till the wheels fall off!! Fast forward today: my Toyota Tacoma is 11 years old, no mechanical issues! Simple oil and tire changes! Paid off the truck like 8 years ago!! Investing all the savings into real estate and stock!! Paid off two homes and driving my truck with windows down like a boss while watching others complaining about being broke 😂
Thank you Nischa, wonderful video. Not many accountants have the gift of explaining finance in simple straight forward terms. This is a 5-Star presentation.
Being in the car business for over a decade, I appreciate this video. A lot of customers have questions about which is the best way to buy, and it mostly comes down to preference based on their driving habits and plans with the vehicle. In order to best help them, we need to ask questions. Many customers give inaccurate answers which leads us to suggesting an option that may not work out for them in either short term or long term. I understand a customer's reservations about providing information to a dealership. However, with the CFPB and other institutions protecting consumers, it's nice to have a video like this to refer them to. Like anything, there's a lot of misinformation out there, but this video is the best at accurately explaining the pros and cons to each option, what's most important to the buyer, and how to make a decision.
@joeallen8933 Do you really believe that garbage about the "CFPB protecting consumers"? The Banks, Car dealers & car manufacturers all work in conjunction with each other and not for the benefit of the consumer. I don't know where you live but car makers have a powerful block of lobbyists and members of Congress are on the payroll. They make laws that make it easy for snake oil salesman like yourself to con the mind controlled unsuspecting general public.
Buying a 2-3 year old car works for me. I keep them for at least 15 years. Costs including depreciation, tax, insurance, maintenance, repairs is around £1500-2000 per year
Recently found you and enjoying your content. I do work in the trade and regularly have to explain these options to customers. Be careful as lease agreements do have an element of interest buried deep in there. Also, you never touched on the good old fashioned bank loan, often the cheaper method of lending. You can often gets these approved and funds transferred in minutes online. Factor in depreciation on top and the actual cost becomes apparent. How to purchase really depends on the car itself, the individual, their usage, requirements and general temperament. Finally, I’m glad you touched on opportunity costs. This is a fantastic area to delve into. I’ve often shown customers with mortgages what the true cost of paying for the shiny new car outright means. It’s an eye opener!
You explained everything really well. The one thing that in my opinion you could have explained better was the PCP option. Contributions are indeed extremely high, so they do indeed play a role. So when you were comparing all agreements to a PCP, then taking into consideration that the A3 currently has a £3,000 contribution is a massive figure to simply dismiss out of the equation. You do NOT get that contribution in HP or Lease. In addition, the last Guarantee Value of the car on the PCP is also not exactly how much the car will be worth in three years time when you want/can get into a new car. It’s very likely that you if you did the miles you stated and market was okay, that the value of the car will indeed be higher than the final payment, therefore you have build Equity which can be used as a deposit for the next car. Lastly, customers on PCP, going for another PCP, in Audi get an additional discount as a renewal customer which is actually really strong discount. Put all that into play, and that reduces your total costs for the car dramatically compared to HP and leasing. Cash? Yes definitely a cheap option to buy the car, but as you said, why LOCK £30k in a depreciating asset. Hope this makes sense.
I did lease with my BMW X5m50,drove only for 3.5years,took it back for the new X6M60i,got lots of money back and put it as a deposit for my new house…no deposit,just drove out… got 4 other fully paid off cars, so leasing new one every 4 years is ok for me..
Chris mak… yes she’s far smarter than me mathematically wise… however as you say, the PCP, big discounts and I’ve yet to ever ‘put in ‘ more than £200! My last one , Audi , brand spanking new. Zero deposit!… yes , you have the monthly bill but you’ve never locked away any chunk of money. Probs won’t work for everyone, but if you get a decent deal, want to drive a new car , it’s the way to go. ( imo) …
There is a 5th option (at least in the conuntry where I live) which is to ask for the PCP, and once they give you the car you pay the whole amount. That way, you get huge discounts and you do not need to worry about paying interests. Thanks for sharing this video!
Right video at the right time. Currently considering buying a new/approved used car but the interest rate for an approved used is ridiculous at the moment. The video gave thorough insights and how you can weigh your options. Thanks!
I bought my car outright, but raised the cash via a personal bank loan, which had much lower interest rates than offered by the dealer. The car is mine from day one and I have the flexibility to pay off the loan at any time, (asuming I have the resources to do so).
This was really helpful!! I bought an AUDI TT a few years back - when analysing the figures on the PCP and the charges I would end up paying, I decided to get a personal bank loan. The interest rate was way less Vs pcp. I now also own the car outright and hope to sell it very soon to take advantage of the used car boom, hopefully I’ll get a decent return!
Yup........personal loan or if you already have an open line of credit, which usually has a much lower interest rate, use that and make your monthly payments to yourself.
Well done. Very clear and to the point. I personally think buying a 3/5 year old car outright or on a interest free credit card is the best option. With the card you can spread the payments, will cost you nothing extra.
I thought 'interest free' credit card was an impossibility. Yes if repay within a month, but this is longer term right? I am in NZ and the rules might be different. It would be fab is there was interest free credit. Would you mind elaborating. I just (2024) bought a 2017 Kia Sportage outright but wanted to get a later model.
@@zogzog1063 I'm not sure what the system is like in New Zealand but in the UK you can get a 12 or 24 month interest free credit card for purchases. So you can potentially buy a car and as long as you pay off the credit card within 12/24 months, you'll have paid zero interest.
Always bought a 2 or 3 year old car and kept it till its about 8 years old and done over 100,000 miles, by that age it doesn't matter so much that ive serviced it myself and saved a fortune on garage fees
A big consideration is what mileage a year are you likely put on. If it’s used mainly local, with the occasional longer distance journey. Like an annual holiday, buy your own with low or reasonable mileage.
Here in Canada, in 2016 we bought a new car with 0% financing. I had saved about 1/2 of the $30k needed. With 0% finance it was cheaper to use their money rather than me saving, since their money was free. Here in Canada, back in the 2010s new cars often came with 0% financing, while financing for used cars would be 5-8% - so on a used car you may save on the sticker price but the financing cost gets you. We keep our cars for at least ten years, so depreciation doesn't really matter.
We have 0% financing in the UK but the manufacturer is inflating the purchase price. It’s almost impossible to establish the “Real cost” of a brand new car. It’s usually much, much higher than 120% of the cost of manufacture, which would give the dealer a decent margin. So when you pay 0% you are paying a lot more than the car is worth.
best thing to do is buy a 3 year old car. finance 25% with savings, and cover the other 75% with a low interest loan (dont get finance from car dealership, just get from bank). spread the cost over 3 or 4 years. job done. after 3 to 4 years you can keep car or sell it, which will cover cost of next car
@@whiteweewee5961 Well, a horse needs to rest. A car can keep going for much longer until it’s out of gas and even refilling the tank takes 3-5 minutes assuming there’s no line. And they travel faster on freeways. I know the next town over used to take weeks for horse caravans to travel in the past now only takes less than hour drive on a freeway with a car. Though to be fair, they didn’t have the luxury of a freeway back then and had to go around a lot of obstacles.
Great video. We bought a 3 year old astra back in 2001 for £5k. And it's on its lasts wheels but still working. Looking back through the receipts, the car has only cost an extra £5k to fix any issues, repairs, MOTs and servicing, over the 22 years we've had it. That works out on average less than £500 a year to buy and maintain that car. (were ignoring petrol and road tax because we all have to pay for it). And yet, my friends tell me, 'get a new car and not have to pay to fix it every year'. And I reply; 'yes but, I you are paying £300-£500 a month for that previlege. So how does your method work out financially better off? So...£500 a year for a car, or £500 a month....hmmm not a difficult decision.
The original owner paid 72000$ Canadian for my current 2011 Acura mdx that I bought for less than 20k… calculate that loss per year! They also drove it less then 10,000km per year
Its all good if nothing go's wrong with the old car & its well maintained. You had mostly good luck. If you did it again you'd probably have a different outcome
I've alwayas seen it that way. But I now have a BMW looked after meticulously from new. Its now dead (garages don't know how to fix it)with just 80k miles on the clock. I'm disgusted with BMW and their "premium marque" claims.
You are the type of person who provides invaluable information which can change quite a lot in a person's life, but it is not just about information, it is about an insight and educating others about probably the biggest difference maker, which is mindset. You are amazing.
I do around 40,000 miles a year. Everything other than tyres and insurance is included in my monthly lease payment, most of which is set off against tax as a business expense, so the net cost is extremely low. If I didn’t use my car for business I might buy a second hand car. The best way to buy and finance a car depends very much on what you want it for, and what tax relief might be available.
Thank you - you really answer my thoughts on PCP - I have many friends who have gone down this route convinced it’s the best option!! Personally for the last 20yeRs I have bought high value 2 year old cars and run them for at least 10 years, ensuring that I religiously mot and service them annually not on mileage. My wife has a sports car that is 13years old with 40k on the clock and does 3/4k a year. The car is worth/valued at what I paid for it!. Thanks again.
Don't know if you have realised you can save a lot of money by getting a lower Apr rate from banks or credit union which you can pay off even earlier. Most finance companies are a lot higher than your own bank. And of course you can apply for a loan on line and get a decision within minutes.
Year 2000 Nissan Primera. I paid £350 for it in 2016. It had a genuine 45,000 miles. It's 100% reliable, is good to drive and still shines up pretty well. I do all the servicing and maintenance myself.
Great effort Ian. Cars generally got pretty good in the late 90s onwards (especially if you stick to Japanese and some German stuff). If economic motoring is the main priority when buying a car you'd be mental to buy new. My current car (TT 3.2) cost me 2.1k. Costs me about 500-600 a year to keep it on the road. Drives lovely. Depreciation, zero 🥰
@@dwaynelamberts3696 Yes, I think so. I've owned two. They were praised at the time for their build quality and handling. You have to consider that the newest Primera in the UK is going to be about 17 years old now. I don't see many on the road now, but it's worth looking out for a good one on AutoTrader, Gumtree, Ebay, etc. which you'd probably have to pay more than £350 for. I was lucky!
Good clear explanation. One element you have not taken into account is that as a cash buyer, you can often negotiate a discount on the list price, which would obviously improve the outright purchase option
Wrong. Cash buyers are less valuable to us. It takes us 10 mins to set up your finance usually and the finance company gives a commission our way. I’m more likely to give you a monetary gesture towards your car if you finance it because I can pass some of that commission back your way. If you give me cash, I’m having to take the little margins out of the car for you. Finance and cash, either way we get paid in full.
One thing to consider with leasing is that if your car is stolen or written off, the insurance company will only pay the market value of the product. If this value doesnt match what the leasing company company debt is, then you could find your self with no car and many thousands of pounds of debt. If this is your chosen route, then I would strongly suggest taking out gap insurance, which covers any shortfall. I used to work in the insurance industry, i found multiple cases where a car had been stolen or written off , within the first 3 years and due to depreciation, the insurance payout would be far less than the outstanding debt with the lease company (£9000 was the worst i saw). If leasing then gap insurance is something you should heavily consider.
Great video but you forgot to mention one of the key features of a PCP/Lease deal which are the mileage limits set out at the beginning of the agreement - as this is one of the main factors that determines how much the car is depreciated by. This could materially affect the value of the car at the end of the agreement term (for better or worse) and one key thing you need to consider before taking out the deal. Your car could be worth more or less than the Guaranteed future value and you may end up having to pay more (or indeed have equity returned to you) at the end of the term if you've overshot the original mileage limit.
The depreciation should be factored into the PCP/Lease from the beginning which is why it’s important you are honest about the kind of mileage you do at the start. The difference with lease is the risk of the faster depreciation is more on the finance company than it is on you, whereas with a PCP the risk is wholly on your shoulders.
One thing to remember with lease is remember to not hand it back with damage. The lease company will make the repairs with their preferred repair company and you will get rinsed!
Not always true,yes with some companies but not all. We have leased for around 10 years and we always ask for any damage charges up front before starting a new lease. For example my wife’s previous car had a couple of car park dings and stone chips and a small dent in the rear passenger door where it blew open trying get the baby in the back one day,and some wheel kerb damage. For all this she got charged just over £200 at the end of term for damage which wasn’t consistent with wear and tear. Our lease company sends out vehicle inspectors when it goes back to prove no damage was done while it was taken back. But as you say it’s something you definitely need to be careful of and also potentially have money to one side just in case.
Every scratch, every blemish, every stain on the carpet, every scratch on the windows. Unless you lease again and all those unforgivable things are... forgiven.
The biggest cost most pay on new cars people pay aside from the interest is full coverage insurance, the best game to play to grow wealth is just how low can you make every bill, sooner you learn to just live on liability insurance and drive well, the sooner you can win the game.
Great Vid Nischa. After many years buying new cars outright and selling them on for a loss I decided to try buying older cars with above avg mileage from the now ubiquitous car discount supermarkets. The cars being sold in these supermarkets are normally ex fleet/mobility cars so you will need to be a little careful on how to pick a car that has been well looked after (check the interior, body and boot) and well maintainance records (make sure it has a main dealer service history and no big gaps between services e.g. I bought my dream car for 16.5k that was 3yrs old with 50k miles inc regular services at a main dealer. This car would have cost me 36k new given it had all the options I was looking for. I can still sell the car for 12-13k today after nearly 5yrs ownership... This is not for everyone but I think buying new is too costly in that you pay all upfront and then suffer depreciation over time. Best to get a good used car in my opinion with options that will make it desirable and hold its value.
Excellent analysis Nischa. I did your last option of buying a 3 year old well maintained Honda outright and it has been fantastic. Owning also reduces insurance costs. When you finance in Canada, you are required to have full insurance coverage. Buying outright and being a bit of a risk taker had me paying just the minimum legal insurance. I let the original owner take the depreciation and the shipping costs. Dave
I understand how much a car costs me, regardless of whether I buy it outright (an older car) or I finance it (more recent car) with a loan or get the car on hire purchase or PHP from a dealership. And I know how much it costs my business, work and personal life when I drive an old car or more recent car. It’s all a trade off….there are no free meals in life, every financial decision you make you pay for it positively or negatively
Thank you Nischa for a thorough overview of car purchase options. Although I have purchased many new cars in the past with 20% down and monthly payments, I have not purchased new in the last 10 years. I feel that quality modern cars like Toyota, Lexus and Honda are far more reliable than cars of just 20 years ago so I typically buy a 5 year old that has been well maintained @ 40% of the new car price. Sometimes I will use financing as a negotiating tool as the dealership will get a cut on the loan and I will get a favorable price. Then simply pay off the loan a few months later and own the car outright. Lease purchase may be favorable to business owners as they can write off some or all of their lease payments as a legitimate business expense, lowering their overall taxes. We typically logged far too many miles on the car which would trigger a stiff milage penalty upon turn-in after 3 years. For us the lease option did not make sense. Cheers!
Binge watching having just 'found' you. Solid advice well presented. Please do not stop what you are doing - lifting the veil and countering the drivel others peddle as sage advice.
First all I am an American living in Philippines. Vehicles are more expensive here due taxes and interest rates of bank. I bought brand new SUV. Buying use here you do not know what you will get. No real way to check history of vehicle here. Locals here for most part do not do maintenance on vehicles. So I used a bank in USA to finance my suv. Bought hire purchase method. Had it for 8 years. Have it now and gonna keep it for 10-15 years. It’s Toyota and very reliable!
Really interesting video! As a young person i wish I’d been tought this sort of thing in school. I had PCP for years and was sick of being ripped off so last year I bought a used audi TT from a private seller got it under retail price and got a loan, putting down 23% deposit best thing I ever did
I don't usually comment on RUclips videos, but your channel is brilliant. As someone who's recently entered the Banking world in middle office. It would be great to see a video on career progression, salaries, when to leave etc. Keep up the good work!
A well maintained and serviced car with low mileage and 2-3 years old is basically still in new condition. Also often checked and serviced by dealer who will add 12months extra warranty. This is a very sensible buy regardless of financing. If you have the cash this is the best option.
I have generally done fairly well in getting a worth while deal when purchasing a car…. Depending on which country I have been in depends if I have bought new & or used. If UK I tend to purchase outright & as I look after them, don’t put huge millage on I can usually get a good deal when coming to sell. I personally like the idea of not having monthly outgoings, however everyone has different requirements/needs. Interesting video, thank you 😊
Hi @nischa, I really enjoyed your video and it covers pretty much everything you have to decide financially when buying a car. Although, you have not covered one aspect which I have used to buy a car. You can take a personal loan from the bank and use that cash to buy the car outright, while repaying loans in EMI. Often interest rates on the personal loans are cheaper than the financing the car. Even 3-4% savings is a huge amount in a long run.
I thought that, and spent a looong time negotiating with the dealer. They ended up throwing in a 3 year servicing deal with free MOT's that balanced out the difference. Not sure if they fooled me in some way, but seemed to make sense at the time.
@@JohnyWallker1 Where are you from that an unsecured personal loan is less interest? Most manufacturers rates are well below personal loan or credit line rates. At least in Canada anyway, and I imagine same in the USA or Europe. And surely not recently at 3.5%.
@@chuck1622 very much depends on your credit score, how much cash you already have in the bank as well as all the special deals you get with your bank. I took the loan from the bank where I keep my main accounts. When I took the loan I already had cash in the bank way in excess to cover the loan straight away a few times over. I've been a customer with the said bank for over 10 years and they knew very well my income and expenses and how much cash I normally keep in the bank at any point in time. I initially wanted to borrow less (half of the sum) at a much higher APR, however, the bank came back to me with a deal to borrow more than I needed at a lower rate. I also took the loan during a time when interest rate (in the country where I live) was close to zero. Finally, now thinking about it I must admit that I paid a one-off fee (when I took the loan) that would otherwise raise the APR from 3.5 to 5%.
Something that you missed and, TBH, most people do. When buying outright you did point out, quite rightly, that you miss out on any investment returns that the money could have made if you hadn't used it to buy the car, but in the run up to buying, you can be actively saving money and therefore investing it. Which means you buy the car with money both saved and returned from the investment. In effect, you buy the car without paying the full price.
Great video. If I had the money, would always buy a 3 year old car outright rather than finance. Covid was a strong lesson in how quickly incomes can change for 90% of the population and a monthly income is not guaranteed
Hi Nischa. I may have done slightly better. Salesman was obviously not interested in discount for cash. I opted for HP as Seat were offering a £1,500 discount. So paid £500 deposit and two days after signing agreement cancelled it, paid it off incurring two days interest and not having to pay the £1,500 back. 😊.
Great presentation., like your others. Your an absolute natural at explaining financial issues and on car finance you've hit the nail on the head. So many people dont understand what they are getting into and get badly ripped off. I've always bought my cars, never new, often using personal loans whilst my money is invested in equity based investments wrapped in an ISA.
I always buy my cars: second hand, in cash and keep them between 8-10 years...I see friends with super cars and leases, and sometimes wonder if I am the one who is wrong... thanks so much for this series, so useful
@@melsagelord3991 Exactly! I love Audi/VW/BMW cabriolets but have been just as happy driving 'runarounds' for years. I'm now looking at buying my third cabriolet, will only pay cash for anything up to 12yrs old, but won't spend more more than 9 grand. I know it's an individuals choice but forget bank loans & HP for new & nearly new models.
@@melsagelord3991 all depends on your own priorities. I love cars, so don't mind spending a fair chunk of change on owning and running a fun one. If a car is just A to B for you it makes sense to buy something second hand, cheap and reliable.
a friend told me how her mom told her to buy a car. This is for if you have cash to buy it out right. Go in and start the buying process of the car you want. but make them think you are going to lease/loan it. play dumb. try to work the price of the car down, but let them get you on the interest and any fees that may come with the lease or the loan. Usually they make you think you are paying a low price, because they know they are going to make money on the loan/lease. then when you have a the price of the car nailed down, get them to say and perhaps write it down with their hand, that price. Then pull out your check book and buy the car. You will save a few thousand my friends mom said. she bought 3 cars doing this. and it worked every time. i have not tried.
Great video. Committed to and highly recommend cash/outright for both the financial & psychological reasons you point out. Interesting insights about the re-up / renewal options that car dealers are pushing to help their bottom line ... super similar to the way phone companies structure their advertising / payment options these days. The only difference is the phones are a little less expensive.
This is huge for me Nischa. I’m 23 and I’m a decent paying job. I’m still able to live at home and am saving for my first place to get on the property ladder early. People my age buy cars and get into debt on finance for the badge, to display wealth they simply don’t have. Nothing has really ever been explained to me when it comes to cars, it seems the norm to fork out a large bank loan and pay a huge chunk of monthly income on a more expensive motor. I own a fiesta outright and I plan on keeping it until I’m in my new place but this sort of video is exactly what I need when it comes to what to do, as different people I talk to have different views on leasing/pcp/ buying outright etc… Thank you
I'm 23 as well working in construction management and I'm buying my home this week. Company pays for my new truck, gas, accommodation and gives allowance. It's tough job, but it's worth the financial freedom!
Amazing job at breaking this all down for us. I've always purchased cash, and it's worked out great for me. If you're mechanically inclined, just purchase a used car just under the end of warranty and you're golden.
Buy certified. It gives you a car that’s had all fluids changed, new tires and extended warranty of some sort. You can add extended warranty as well. Some even offer lifetime car washes.
I took out a bank loan at a pretty decent interest rate and paid both cars off well ahead of the term. For my next car I’m considering a signature loan together with some of my own money, but I am still weighing my options and shopping around since things are a bit more crazy lately. I’m also considering one of the car services where you shop for cars via their online store and the car is delivered to your door. This might be the best because you can not only shop the options and colors, but get more of exactly what you’d like or want with the most minimal effort, IMHO.
There's also the option to buy it outright with a personal loan from the bank. With a standard/good credit rating a typical bank would offer you a 3.0% APR, which would be a total cost of approximately £31,500 at the end of year three, hence the cheapest option . Also, no deposit required 😊
Agree. Unfortunately most people don't understand what APR is or how it can make things a lot more expensive, in the case of HP or a lot less expensive in the case of a personal loan
PCP worked best for me this time, as the increase in the second hand market meant I gained £4200 equity in my car when selling and paying off the balloon payment. I could have never gained that £4200 had I leased.
Thank you so much. I really like how you dove deep into comparing the numbers, as well as comparing the benefits and costs of the different options. Very well done and much appreciated!
Great analysis ! Quite similar here in Melbourne Australia. I own and operate a business and always use the hire purchase option because of the opportunity cost of up fronting the full value of the car. Our hire purchase option does not require a deposit because it is registered to a business with a great credit rating. Also, we never purchase a brand new car - it loses 10-15% of its value as soon as you drive it out of the showroom although, arguably, in these times it may be different. We always purchase a demonstrator or a very low mileage vehicle that is dealership sold and is covered by the statutory warranty. At the end of 5 years, we sell the vehicle and hire purchase a new one for another 5 years. This way, we protect our cash flow as well as receive a “bonus” into the cash flow when the vehicle is sold. Moreover, we claim depreciation annually on our tax returns.
Second owner of a 97 Buick LeSabre which was purchased in December 2004 with just under 43,000 miles. Price was $5,000 on a 3 year loan from my credit union. It has 229,000 miles on it and costs gas and oil changes along with scheduled maintenance. No major repairs and drives as good as the day I purchased it.
Great comparison. I always felt buying outright a few year old car is the best option (and have been doing so for years) but never went through the efforts to calculate it all.. very informative and handy, also very clear. Thanks a bunch !
Really helpful insight. I bought my 6 month old VW Tiguan 18 months ago (at their most expensive) for £32k. £12k deposit and £20k personal loan (at 3% when base rate was low). As you say, timing can be more important than anything!
I got mine on a HP. That said, your finance status in the UK will play a role on which option you choose to follow. With a hire purchase, I can still sell the car and pay off my outstanding loan. As I don't see a car to be an investment, I wouldn't recommend paying cash for any car worth over 15k.
Interesting, I used PCP for my current car mainly because the Apr was 0%. I felt the deal was too good given the car usually is worth more than the final price
Hi Nischa, firstly thank you for your video's, finally somebody from the UK, helping others in straight forward simple language that anybody can understand, love this video, if only you recorded the conversation it would be funny, seeing the sales team scratching their head, as they've been beaten at their own game 🤣 Thank you again God reward you for your efforts ❤️
Not sure why you think the sales team was "beaten at their own game"? It sounds like she has been given good advice and information. All thats happened is someone has gone to work and has had their times wasted by someone who wasnt interested in buying a car. Yeah thats hilarious.
I've always only bought older cars. People afraid of a car over 100,000 miles are just crazy. For instance... I bought a 2013 renault clio a couple years ago. The car cost me £2600. I bought it with 105,000 miles and it still runs like the day it was in the showroom. Its got all the equipment a new car has, satnav, cruise control, heated seats, speed limiter, auto lights and auto wipers. It get 70mpg and is 20 quid to tax. It's cost me an mot which it's been through no advisories each time and 1 tyre in the years I've had it. Today it's worth £2000. It owe me nothing. Cheap motoring shouldn't be seen as a 3-5 yr old car. Lose the ego and go older. You'll save your pocket in the long run. This car has given me the opportunity to invest a lot more into my portfolio and I couldn't thank it enough for doing its job. People are keen to put their pasta sauce jars in the recycling but aren't keen on buying an older car to recycle it before it's day comes to the scrapyard. World gone mad
Buying outright can also give you a better negotiating position, it's often possible to get considerable discounts off the list price depending upon other incentives that the dealer might have. It's possible to offset a fair bit of the depreciation in this way.
On the Onset she told you the price was £ 30K. Ok. [ sure if it was the last Day of the month n year, I could demand a Big dicount] not that I will get it.
not true dealers make money on finance not metal you will always get a better deal if you take finance with the dealer as they make 1 or 2k on the finance itself.
@@stephanemorin7145 That's not my experience - I got a 20% discount from list price as a cash buyer for my last two purchases. It was considerably cheaper than any finance or lease options offered on the same vehicle.
Insurance costs also have to be taken into account. If you lease, the insurance is often included. Also, if you take finance, you might need to insure the potential gap between the market value and the outstanding finance in the event the car is written off.
I became 18 last summer and never learned from my parents how I should save money and what would be a great investment, so this channel to me is like a God send, thank you so much!
Don’t mention God and disrespect your parents who actually gave you life…………… Only thing I see is look in the mirror……… *Dont let that go over your head
I usually go for high performance cars which are older and well looked after. These cars usually have a value which sits within the enthusiast crowd and hold their value. You have to be prepared to look after them mechanically to a certain extent to ensure they maintain their value. It's not for everyone but I buy my cars outright and my running costs are way lower than leasing,pcp, hire purchase etc. Fuel is usually the biggest factor but I do around 3500 miles a year.
@@nischaI ended up buying my new car out right. It was expensive , I ended up paying around 75k cash which included car detailing, car security and insurance, comprehensive and gap .
I bought my E Class Merc at 45.000 miles for £10.000 ten years ago. So far no major bills. It's still like new as I hand wash and dry it every week. I make that £1000 per year. Its now done 130,000 miles. If I get nothing for it I'm still quids in. 😊
Helpful video. As other have mentioned, the leasing option (at least in Canada) comes with higher insurance costs. Another thing to consider is the environmental impact of constantly trading in for a new car every 3 years. If the majority of people did this, older cars would be scrapped much earlier in their lifespan, and more new cars would need to made to meet demand. There is a pretty hefty carbon footprint attached to that. The order matters in the phrase 'Reduce, Reuse, Recycle".
Curious. So a car that is 3 years old /makes a larger carbon footprint than a /brand new car plus them manufacturing the new car. In 10 years will 1 car/ versus manufacturing 3new ones. 1 car 30,000+10,000 repairs maybe/ versus 110,000 if you buy the same car. All guessing prices. Cost of the vehicle will increase in 3 years time.
What about the economic and health impact of people having jobs to manufacture said vehicles? You're overthinking this too much, and are buying into the crap that is being fed.
Your environmental analysis makes no sense. Automakers will make as many cars as they can and push them out for economies of scale. Also the stats in North America shows large v8 trucks are the biggest sellers.
@@billm3210Automakers pumping out cars (or trucks) has no bearing whatsoever on the validity of the environmental analysis. In fact, if everyone switched to purchasing used vehicles, production of vehicles would, indeed, decrease based on lower demand (ie, there's no point supplying something for which there is no demand). Further, only 10-15% of the world's population lives in North America. So what's the relevance of your point about truck preference there?
If you keep running old vehicles their costs go to the small businesses who repair them rather than the multinationals who build them. Also, the only thing on a vehicle that creates any significant pollution is its engine. If cars were made more with the incentives of being infinitely repairable they could be fitted with less polluting engines when the present one wears out. This is a fairly common practice in third world countries where few people can afford to scrap cars unless they really are scrap. Then they get used for spares to keep others on the road.
Very good video. One additional complication is that, often, maintenance is covered as part of the lease payments. So you’d have to add maintenance costs to the Hire Purchase option, to make it comparable. Also, 11% on a 3-year car loan? Wow. Currently paying 0.9% on mine….
noone gets 0.9% Bank of England rates are 4% you can only get 0% PCP on a new car when you pay the full whack. 11% is the average for a HP or PCP loan most people pay lot more right now.
@1d2a3d4d5i6o 1 second ago if you had gone to a broker depending on the car they offer you a discount and if you go for PCP they give you a discount I have just ordered my next car a Skoda Octavia SEL 1.5. retail £30,000 doing it through a broker and PCP i have saved nearly £7,000 and you can still pay it off in 2 months so it is yours..PCP payments are only the minimum amounts you can pay, you can pay it off. Good luck oh and at the moment Skoda are selling 2 years servicing for £250 if bought on PCP.
I prefer the last option myself, buy a good condition used car, preferably German manufactured. I think the main reason this is the best option is because people are more prudent spending the money they have already had to work for, as opposed to spending somebody else's.
Another thing to consider is those leasing/hire options require you to have full comprehensive insurance for your car, which is probably around 3,000 pounds more than 3rd party insurance. So that'll balloon your costs massively. If you trust your own driving, you can choose the cheaper insurance option when you buy the car for yourself.
Who on earth are you insuring with. That’s teenager priced insurance on a stupidly expensive car. You shouldn’t be paying more than £400 if you buy sensibly
@@pungarehu Not really. im 25 got corsa 2016 last year as first car and been paying 100f a month just because my house is in safe away from city location when I was having 2 houses to choose from( another one from Edinburgh) it got me well over 200f a month
Third party fire and theft isn't always cheaper than comprehensive, I looked at dropping to TPFT with my old Focus given the age of it but that would have been dearer than comprehensive
Kudos to you for a really interesting and super clear video ! Very helpful comparison. Another unexpected cost to factor in for a Lease or a PCP is perhaps a more expensive insurance policy providing better coverage. I leased my last car, and was so stressed about getting any nicks or bumps on it, that I got an insurance policy which was a lot more expensive that what I'd usually get. I later bought a used car outright, and just got liability insurance which helps me save a lot on car insurance. Also, with a leased car, there might be times where you're reluctant to use it for long distances in order to avoid going over the mileage, but then you spend more money on airplane or train tickets, which can get expensive if for a family......
Exactly. Also, they nickel and dime you if there is a scratch or scrape on the car. If a shopping cart hits it, it could mean lots of fees from the person you leased from. When you buy a car, it is just cosmetic damage. I also think people get into this headspace where they need to spend 600 a month to get the latest and greatest in tech when a car from five years ago has all the conveniences one could need depending on the trim you buy. I would also never want to lease because of the uncertainty of the economy. You never know when the next job loss might occur, if you get into a personal accident, or if something else happens. I would much rather feel secure knowing nobody can take my car away if any of those occur. Imagine leasing, losing your job, being unable to pay the lease price, and you end up with no car in a car-centric society such as the United States. It just makes things that much more difficult for you.
If you going to buy a used car , get one just over 5 yrs old. Tires, brakes, water pump, battery etc… usually goes around 4-5 yrs. If you’re buying a new car might as well keep it to the end. I do suggest lease a car if you have a business.
Great and informative video as always Nischa! Having formerly worked in the car business, two other considerations came to mind that are definite advantages of leasing vs. any of the ownership options. One: what if the car is a 'lemon' (has unacceptable reliability issues in the first few years)? Two: what if you are in an accident and then the vehicle has the accident and subsequent repair on it's permanent record (which would seriously affect the value if you were to try to sell it). In both of these cases, leasing offers the huge advantage of just returning it at lease-end and then it becomes the dealer/manufacturer's problem!
+ another thing to take into account, if you lease, than you don’t need to worry about maintenance costs & insurance & any road taxes, as that’s included in your monthly payments. (At least that’s how it works in the Netherlands)
Leasing is fine until you have to return the vehicle... Be careful with leases. Read the fine print. It's rarely a question of just handing back the keys! Tire wear, marks, paint chips, mileage, small scratches, scuffs. They throw the book at you.
Got to be careful with PCP. I got an Audi A4 and was told it would be worth £10k after 3 years. When that time came they offered £6k. It was immaculate, serviced with them and within mileage contract . I felt robbed.
I just bought a house on mortgage and I need a car. As it is now, PCP is the cheapest and less risky option for me at the moment. If I borrow money, I will have another debt. But with PCP, if rainy days or greater opportunities come, I can disengage from the contract much easier.
Nice analysis. Personally I would NEVER buy a car from new. The depreciation is just crazy. Much better to buy a 2 - 3 year old car, preferably from a main dealer with some warranty cover. I also avoid using main dealers for servicing / MOT since they are typically more expensive than an independent garage who services all makes. I also prefer to pay cash so I’m not charged any interest, but I might consider a 0% finance deal (not that there are any these days!). Look after the car, keep it serviced and drive it until it has done 150k miles or 8 - 10 years old. I’m not interested in trying to impress the neighbours with a new car every year!
@@ukaszrozewicz7488 Do you mean new or used car prices? I know both have gone up and I know used car prices are higher than they were, relative to new. I’d still never buy new though.
@@stevegeekok so you know that but still would prefer to buy old. When you can get a new car at the same exact price. Until the market for used cars go down. It makes absolutely no sense to buy used rn. New is better at this moment. And trust it’s going to take YEARS, for the used car market to go down.
Excellent video and confirms that my entire life of buying outright good used cars is still the way to go .. what would make this video even better is if you could have explained depreciation into all the examples and cost of maintenance within the 3 year time period . I still believe buying a good used car will still be the best financial decision you just go through a bit more stress on the journey
You should be able to compare APR between any types of borrowing. HP, PCP, Usecured bank loan. The higher the APR the more expensive the borrowing is to you. If the APR is more than you can earn, after tax, on cash held on deposit then borrowing is costing you real money. That’s basically how banks and other lenders make money at your expense. And depreciation is a real cost of running a car. And it’s almost always a lot.
Great video, I’ve always leased my vehicles as I prefer to change after 2/3 years. The lease market is all about getting the best deals possible. For example, I pay £275 a month for my current car, which has a market value of £40k, and would’ve been around £900 on a PCP agreement. As mentioned in the video, it gives me flexibility to invest my funds elsewhere too!
@@richgl31 Yeah, lease deposits are non-refundable, they count as part of your overall payments for the car, the more you pay as a deposit, the lower your monthly payments
The cheapest car is the one you already own. I invest for my retirement annually. Therefore, I always finance my car and keep it for 5-7 years with extended warranty, which means it's usually an awesome vehicle so that I don't grow tired of it quickly and I have money left over to invest in my retirement fund. I've found that even a car with average reliability will cost less annually for maintenance than monthly car payments. Like I said, given car prices these days, the cheapest car to own is the one you already own.
Great explanation of how to look at financing the purchase of a car. I’m 68 and other than buying a motorbike on hp way back in my youth I’ve always paid cash as you can or could ( not so easy now) negotiate a better price, Retired now and no longer fortunate to have a company car so useful to have this knowledge if I decide to replace my trusty 2012 Audi with something newer! Thanks again.
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I suggest that you buy a 2/3 year old car at auction with as low an interest rate bank loan as possible, then invest your savings in potash (a natural fertilizer) stocks.
Investing in a second-hand car that holds its value or even increases in value over time can be a wise financial decision, especially if you only need it for transportation purposes. Putting the majority of your money towards a deposit for a flat can also be a smart choice, as property in London tends to appreciate in value over time. By paying a mortgage instead of renting, you are also building equity in your home.
⚠️Absolute madness buying cars in any of the demonstrated ways
I run an old car.
Depreciation zero.
In fact it's going up in value.
We go on 2 cruises and 2 other holidays per year.
My mate has new cars every 3 years and he's vastly in debt.
It makes no sense to me at all.
We have the last laugh.
New cars are so ugly too with those unstreamlined brick wall ghastly front ends.
@@dipladonic Vehicles are put up for auction for one of four reasons 1)finance repossession, 2)dealership dumping 3) the owner suspects a prospective eyewatering fix coming up 4) slight accident damage but still driveable
@@dipladonic Where do you buy cars in auction?
My dad who is a very successful financial advisor has always given me good advice. Only buy the showroom dealership car or a used car and for the love of everything holy make it Japanese. And only buy them outright, don't borrow money for anything other than buying a home, anything else, you buy in full yourself. Don't buy shit to impress people you don't know or like. Changed my life.
@@BlueShadow777 save save save save eventually you will
I wonder what the presenter did with her car. Most people who preach this sort of thing don’t live it
@@richtea7868 which presenter? What makes you think that?
What if you have no credit history? Do you just only use a card at that point?
@@normandy2501 save your cash. Save save save. Show up with cash, negotiate. Get the job done. They won't turn down cold hard cash.
The biggest cost of a newer car is depreciation. Probably the most sensible is to buy a 3-5 year old approved used car outright from an official main dealer, which will have a 12 month warranty from the supplying dealer. If you know about common faults, and buy a car in good condition with a full service history, then you can look at 5-10 year old cars either buying privately or at an independent dealer. The main three things are condition of the car, full service history, and look at the MOT history to see if the car has been looked after properly - a catalogue of MOT warnings and failures is one to avoid.
I'd love to buy a 3 year old car that's depreciated, but I cannot find any! Saw a 3 year old electric Peugeot 208 at a Suzuki dealership, these were £25K when new 3 years ago, the price of this 3 year old car.......£25K
@@JohnCarlyle ridiculous
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>3 year old car with a bank loan esp when interest rates were very low is likely the best way to go
Buy a 5-10 year old car with full service history, check mot History as stated, and maintain the car yourself, i.e., service it yourself and any repairs in accordance with your competence
Here’s another little tip that I learned to do. If you’re on a lot dealing with the salesman, when you finally agree on a price, confirm this price with the salesman a couple times. Say something like “so this is the final price right, this is the amount I will be paying?” He will say yes, of course. Because here’s what’s going to happen; he will turn you over to the finance office where you will sign the contract. And on that contract will be in bold print “documentation fee”. DO NOT PAY IT. It could be several hundred dollars. They will fight you on it, but you call in your salesman and say “remember when I asked you if this was the final price”? Get up and start to leave if you have to. They ALWAYS give in. I’ve done it several times. They are NOT your friend. They’re goal is to get as much of your money as they possibly can. Fuck em! Don’t just hand over money cause you’re in a hurry.
And that is why the fee is now posted on the walls of most dealerships.
It is for this reason you make an offer on the OUT THE DOOR PRICE (OTD), and let them break it down however they want to on their bill of sale.
Calculate your Out the door price based on the Price of the vehicle (after negotiation), tax, tags and title.
Now, how the tax is calculated, Tags and title fee are available on the local County's DMV Website in the USA and you should not pay a penny more than that. So, you have to do your research well in advance.
You can also call your local DMV and ask them for these details. They will tell you how much would be the tax, tags and title for a certain model of the car.
Out the door bill of sale in your mind should only contain - price of the vehicle, tax, tags and title. You then offer this number to the dealership, walk away if the dealership doesn't agree on this OTD number.
You should read the comment I wrote . This is just another dedicated young person who can’t see the Forrest for the trees.
Thanks I’d rather buy Tesla than deal with this
No sales person will give you out the door prices in the lot standing next to a used or new car. NO way.
Second hand car with lowish milage, funded with a personal bank loan is how I have done it. My last car cost £6000, I drove it for seven years and traded it in for £500 when it would never have passed the next MOT.
Cant beat that.
2nd hand car which has had annual oil changes and proper servicing is the answer here. Also - find out if the car has been driven in a stop/start manner OR on highways. The second option means little wear on your engine. Dont be fooled by the LOW MILAGE mantra.
Peace.
Yes, you can. Buy with cash.
Buy a newish 2nd hand with high mileage. Ex driving school is good. The discount far exceeds the condition- people worry is is worn, but the price includes such. Bought an ex-school car for my wife, the cost of a new clutch was in the price- but it never happened. She drove it ten years, no mechanical repairs needed.
Hi @@Tensquaremetreworkshop which car model and maker options would you recommend currently?
My 14 year old car (Alfa Romeo) is giving up after 10 years of use (I bought it 3rd hand) and I don't know what to look for to replace it with.
The repairs are too high to keep him running sadly. And I would not buy another Alfa.
Thanks in advanced
@@vivayo4588 Alfa's have never had a reputation for build quality. Go for mainstream volume cars, reliable and low cost spares- like Ford Fiesta or Focus, or similar brands. Toyota also have a good reputation. Ask around for someone giving up driving through age- usually low mileage and maintained. Bargains available.
@@vivayo4588Toyota, Honda, Hyundai are usually rated as most reliable.
You have no idea how many people needed a detailed video like this about the different ways to purchase a car, myself included so thanks
no lease! trust me!
@@Patriarhul Why not?
@@hasan_z because you don’t own it. It’s like renting. If you have the money and you really want the car, just buy it.
I’ve always, always kept my cars minimum 10 years. For example, my present vehicle is a Honda 2010 CRV and it’s well-maintained. By keeping our cars a long time, we had money for other things. We finished paying our mortgage when I was 45! We invested in real estate, we travelled, we did something else with our money. The amount of cash people spend on ‘look-at-me’ vehicles (when they really cannot afford it) is astounding. If you choose reliable models, the maintenance is not expensive either.
Question when factoring in the cost for maintenance as the car is getting older or kms. Do you end up spending more altogether?
I still drive a 2006 Honda CR-V with 146k miles. Very reliable, and a great utility vehicle. AWD, 4-Cyl. Better than most high tech new cars. Insurance is cheaper as well. Liability Insurance, only.
'Look-at-me' vehicles 😂
Just got rid of a truck that was in good condition that I had for almost 26 years. Miss it already .
I got a 2003 CRV had it nearly 6 years, got 118k. I also had a civic both so reliable... BUT the CRV fuel consumption and road tax is quite bad, BUT still better off overall i think
The cheapest way to buy a car is through an unsecured personal loan from your bank. Get a loan from your bank, shop online & Pay cash for the car, and gradually pay back your bank the loan you borrowed. This works really well for high value cars that you want to use for a long term. Car financing in the uk 🇬🇧 is extremely expensive and addictive, don’t get hooked.
This is how I did it. Half the money I had, half a very low interest bank loan independent of the dealership and making overpayments when I felt I could.
Nice
Same here, especially when interest rate was good.
The cheapest way to buy a car is to save up and buy cash..
@trenners1990 the 1970s called...they want their financial advice back 😂
I'm an accountant in Canada and I have this question asked of me all the time. Particularly from self-employed individuals who want to know the tax impacts of writing off either a lease or depreciating the vehicle. There are several factors to consider but the most important one I ask my clients is what are your driving habits? If you drive more miles than average its likely best to go the purchase or finance route since leases have mileage restrictions. How long you like to keep your car is another factor. If you like to have a new vehicle every 3 or 4 years then lease option would be preferable. Interest rates also play a factor - generally lease rates in Canada are several points less than finance rates.
Thanks for your input, I have a rental properties for 30 years ask my accountant about leasing a vehicle he disagrees and thinks it’s not worth it because you’re basically renting a vehicle.
My rebuttal to him was, I’m always moving fridges and stoves. I want to get a truck, he doesn’t think it’s a good idea and I’m wondering if he’s just being lazy or doesn’t want to flag to CRA or what his reason is after 20 years maybe he is getting softer what do you think?
Bought a Porsche Boxster S, 15 years old, in beautiful condition, for £5K, drove it for 5 years, sold it for £5K. £1K for repairs and servicing over the term. I don't see any problems in saving money by being sensible and enjoying the joys of driving a fantastic car. Now to choose another similar car and do it again. Thank you for one of the most comprehensive and straightforward assessments of new car buying I have seen. People all over the country are pondering their choices and not knowing how to choose correctly, you did all of that thinking and explained it in 10 minutes. Well done. Great video. Now subscribed
Seems to me that you have the best strategy of all if what you’re saying is true.
@@tj9382Well, I think it is true, but it is only my opinion, it may not be reality.
Just the market. I bought a new car for 14k back in college and sold it for 14k 3 years later. Nice try though
That's not a low risk strategy though, you could have easily ended up with £10k of repairs. And only £1k in repairs, servicing, tyres, MOTs, brakes, at Porsche prices over 5 yrs.....sure buddy. Give us the VRM and Years of ownership so we can check the MOT history.
Absolute fantasy story.
@@Stringwar Porsche prices? No chance.
I realized a long time ago that owing a car brings on additional expeses. Not just maininting the car etc.. , but when you own a car you are more likly to go places and spend money that you otherwise wouldn't..... Thank you for the informative video Nischa :)
That's an interesting perspective. Never thought of it that way.
Think that is taking it a bit far, then you are missing out on life experiences and you only live once
@@desb3459 Totally agreed, But if the expereince is worth it. You will go regardless of whether you own a car or not.
not much of a life if you think like that
That is the reason to own a car, to go places. Ever since Daimler invented the thing. Otherwise you’re right.
This is an interesting one for me. I've always bought my cars outright at roughly 2 years old, and even though its a big outlay, i've always felt more comfortable doing it as i hate monthly outgoings. Meanwhile most other business owners i know swear by leasing and plough that initial saved capital into property investment, or their own homes.
It’s true a lot of business owners love leasing in general it gives them more flexibility.
I lease. I'm a real estate investor and I would rather have my money invested and I have a fixed expense. Have the oil changed and no other repairs, tires or brakes for three years.
Worth mentioning lease has bunch of restrictions, also u are not completely immune in those 3 years if it’s not wear n tear like accident or damage you are paying from pocket my friend, but cheap and outright. Sell when needed. Second hand market still has value.
@@adejuwonodugbesi3102 I live in the US and I drive Hondas which are very good quality and hold their value better than anything sold here. Ironically My lease was up last month, and I purchased the car outright, so I own it now without a payment at least for a while. I'll probably sell it and invest the cash and lease another vehicle at the end of the year.
@@shipdog44 I'm curious to know what you do/did to be able to get int real estate investing in the first place. Is investing your full time job or a side hustle?
If you have a decent credit score try going for a 0% credit card. My last one had £5000 limit and 34 months! That meant I could pay for the car and just pay £25 a month for nearly 3 years, then pay off the loan with no interest. In fact I put the £5k in the bank and earned a couple of hundred! I also had protection from my bank if the deal went sour. Win, win! Those cards are getting harder to get and with shorter terms, but still worth looking at.
I just bought a new car and I opted to pay cash. I don't have any stress about monthly payments and high interest rates. Thank you for the info, a few people tried to convince me to lease and I really wasn't interested. Glad to know I made a good decision 😊
It’s good you stay firm on your decision, of course since you have researched all the avenues. Enjoy the car you own, for the years to come 😊
Most millionaires still take out a lease on their super car purchases, that should tell you something.
@@MrDominic152 Because they can usually write the lease off against tax as a business expense
You did good... I will do another video showing the real cost of leasing.... be free and spend what you can. Many people is having a hard time with this. Also today we have so many contracts that are really may have bias.
Yes it says they are super riche.
We bought our used car outright. It wasn't a cheap used car at £6k. We had saved the money and just paid it. Car dealership pushed to the hire car but in the end we would have spent about 2k more than the buy now price.
Honestly I'm really happy to see that someone is explaining financial terms in simple words but at the same time shocked at the amount of people over-spending money and living paycheck to paycheck.
Keep making these videos because more people are going to need your advice.
excellent, someone after my own heart :)
The whole of the UK has a shocking overspending culture, some realise when they go abroad on holidays
Well I've also bought my car out right. It's a 2019 Mazda 2 SE but I've also been in a Mercedes AMG. I don't actually blame people for financing those types of cars anymore because they're really, really fun to drive lol.
But 2nd hand new cars only...Cash if you can if not...on monthly payments. You are still saving more than the brand new car owner.
My used VW was £6k, I would say it's cheap. Spend much less and you're buying too old with too many costly problems. That was 3 years ago and I'm considering selling to buy newer now before any big problems. Checking resale value of my VW, it's held it's value even with the mileage I've put on it.
I don’t have to worry about car dealership ripping me off!!
A) I conduct my research on which car manufacturers focuses on quality and reliability
B) once I establish that I either buy used or new depending on the incentive at the time..
c) once I purchase that vehicle I keep them for a very long long long time!! Because vehicles are a depreciating asset so I tend to drive them till the wheels fall off!!
Fast forward today: my Toyota Tacoma is 11 years old, no mechanical issues! Simple oil and tire changes! Paid off the truck like 8 years ago!! Investing all the savings into real estate and stock!! Paid off two homes and driving my truck with windows down like a boss while watching others complaining about being broke 😂
Thank you Nischa, wonderful video. Not many accountants have the gift of explaining finance in simple straight forward terms. This is a 5-Star presentation.
Are you her husband ?
@@Bugsy0333 Did you look closely at him?
@@Pbadome1 ?? Brits can't marry Indians you think?
Agreed.
Simp
Being in the car business for over a decade, I appreciate this video. A lot of customers have questions about which is the best way to buy, and it mostly comes down to preference based on their driving habits and plans with the vehicle. In order to best help them, we need to ask questions. Many customers give inaccurate answers which leads us to suggesting an option that may not work out for them in either short term or long term. I understand a customer's reservations about providing information to a dealership. However, with the CFPB and other institutions protecting consumers, it's nice to have a video like this to refer them to. Like anything, there's a lot of misinformation out there, but this video is the best at accurately explaining the pros and cons to each option, what's most important to the buyer, and how to make a decision.
@joeallen8933 Do you really believe that garbage about the "CFPB protecting consumers"? The Banks, Car dealers & car manufacturers all work in conjunction with each other and not for the benefit of the consumer. I don't know where you live but car makers have a powerful block of lobbyists and members of Congress are on the payroll. They make laws that make it easy for snake oil salesman like yourself to con the mind controlled unsuspecting general public.
As you will know, the only winner in the motor trade is the Inland Revenue, who have always done rather well!
Buying a 2-3 year old car works for me. I keep them for at least 15 years. Costs including depreciation, tax, insurance, maintenance, repairs is around £1500-2000 per year
Recently found you and enjoying your content.
I do work in the trade and regularly have to explain these options to customers.
Be careful as lease agreements do have an element of interest buried deep in there.
Also, you never touched on the good old fashioned bank loan, often the cheaper method of lending. You can often gets these approved and funds transferred in minutes online.
Factor in depreciation on top and the actual cost becomes apparent.
How to purchase really depends on the car itself, the individual, their usage, requirements and general temperament.
Finally, I’m glad you touched on opportunity costs. This is a fantastic area to delve into. I’ve often shown customers with mortgages what the true cost of paying for the shiny new car outright means. It’s an eye opener!
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You explained everything really well. The one thing that in my opinion you could have explained better was the PCP option. Contributions are indeed extremely high, so they do indeed play a role. So when you were comparing all agreements to a PCP, then taking into consideration that the A3 currently has a £3,000 contribution is a massive figure to simply dismiss out of the equation. You do NOT get that contribution in HP or Lease.
In addition, the last Guarantee Value of the car on the PCP is also not exactly how much the car will be worth in three years time when you want/can get into a new car. It’s very likely that you if you did the miles you stated and market was okay, that the value of the car will indeed be higher than the final payment, therefore you have build Equity which can be used as a deposit for the next car.
Lastly, customers on PCP, going for another PCP, in Audi get an additional discount as a renewal customer which is actually really strong discount. Put all that into play, and that reduces your total costs for the car dramatically compared to HP and leasing.
Cash? Yes definitely a cheap option to buy the car, but as you said, why LOCK £30k in a depreciating asset.
Hope this makes sense.
Because I can....
PCP Tend to offer lower interest rates too comparing to lease or HP. They want to lock you with the brand, so it needs to be attractive somehow.
I did lease with my BMW X5m50,drove only for 3.5years,took it back for the new X6M60i,got lots of money back and put it as a deposit for my new house…no deposit,just drove out… got 4 other fully paid off cars, so leasing new one every 4 years is ok for me..
Chris mak… yes she’s far smarter than me mathematically wise… however as you say, the PCP, big discounts and I’ve yet to ever ‘put in ‘ more than £200!
My last one , Audi , brand spanking new. Zero deposit!… yes , you have the monthly bill but you’ve never locked away any chunk of money. Probs won’t work for everyone, but if you get a decent deal, want to drive a new car , it’s the way to go. ( imo) …
There is a 5th option (at least in the conuntry where I live) which is to ask for the PCP, and once they give you the car you pay the whole amount. That way, you get huge discounts and you do not need to worry about paying interests. Thanks for sharing this video!
Did exactly this with a new VW in the UK. The dealer wouldn't give a discount for cash, but there was a "contribution" from VW Finance for PCP.
Agree. Cash is king.
That’s what I did. Saved a lot of money and still have the car 7 years on. Another 3 years and I’ll be back at the dealers again.
Hmmm, there must be another acronym for PCP that I'm unaware of cause this sounds like some kind of illicit drug trade.
@@justwait9822 So right. People just take a bunch of drugs and hallucinate that they got a car for a great deal.
Option #1 is the only way to go. Pay cash. If you can't, save until you can. In the US a lease is called a FLEECE.
By Dave Ramsey.
I agree!
Unless you have high income and want a new shiny car every 2 years, then leasing makes more sense than buying and selling every 2 years.
99% of people can't do that.
Right video at the right time. Currently considering buying a new/approved used car but the interest rate for an approved used is ridiculous at the moment. The video gave thorough insights and how you can weigh your options. Thanks!
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I bought my car outright, but raised the cash via a personal bank loan, which had much lower interest rates than offered by the dealer. The car is mine from day one and I have the flexibility to pay off the loan at any time, (asuming I have the resources to do so).
This was really helpful!! I bought an AUDI TT a few years back - when analysing the figures on the PCP and the charges I would end up paying, I decided to get a personal bank loan. The interest rate was way less Vs pcp. I now also own the car outright and hope to sell it very soon to take advantage of the used car boom, hopefully I’ll get a decent return!
Yup........personal loan or if you already have an open line of credit, which usually has a much lower interest rate, use that and make your monthly payments to yourself.
decided to get a personal bank loan.
So there is no lien on your title?
I’d say be quick as used cars are well on their way back down lol 📉
How much?
Best option mate
Well done. Very clear and to the point. I personally think buying a 3/5 year old car outright or on a interest free credit card is the best option. With the card you can spread the payments, will cost you nothing extra.
very smart
its also the only halal way along with leasing tbf, just need good credit score. I'm young and would definitely try to do this hopefully
I thought 'interest free' credit card was an impossibility. Yes if repay within a month, but this is longer term right? I am in NZ and the rules might be different. It would be fab is there was interest free credit. Would you mind elaborating. I just (2024) bought a 2017 Kia Sportage outright but wanted to get a later model.
@@zogzog1063 I'm not sure what the system is like in New Zealand but in the UK you can get a 12 or 24 month interest free credit card for purchases. So you can potentially buy a car and as long as you pay off the credit card within 12/24 months, you'll have paid zero interest.
Always bought a 2 or 3 year old car and kept it till its about 8 years old and done over 100,000 miles, by that age it doesn't matter so much that ive serviced it myself and saved a fortune on garage fees
A big consideration is what mileage a year are you likely put on. If it’s used mainly local, with the occasional longer distance journey. Like an annual holiday, buy your own with low or reasonable mileage.
We usually rent a vehicle for longer trips like driving for Vacation but even with the car we own that's not a lease we rent for long trips.
Here in Canada, in 2016 we bought a new car with 0% financing. I had saved about 1/2 of the $30k needed. With 0% finance it was cheaper to use their money rather than me saving, since their money was free. Here in Canada, back in the 2010s new cars often came with 0% financing, while financing for used cars would be 5-8% - so on a used car you may save on the sticker price but the financing cost gets you. We keep our cars for at least ten years, so depreciation doesn't really matter.
We have 0% financing in the UK but the manufacturer is inflating the purchase price. It’s almost impossible to establish the “Real cost” of a brand new car. It’s usually much, much higher than 120% of the cost of manufacture, which would give the dealer a decent margin. So when you pay 0% you are paying a lot more than the car is worth.
There is nothing like 0% financing. Lol. They just add the cost of finance to the actual price. Read comment above from Lee
As mentioned, 0% finance just means an increased purchase price lol
best thing to do is buy a 3 year old car. finance 25% with savings, and cover the other 75% with a low interest loan (dont get finance from car dealership, just get from bank). spread the cost over 3 or 4 years. job done. after 3 to 4 years you can keep car or sell it, which will cover cost of next car
best thing to do is to buy a reliable car that just won’t die and you won’t have to buy another one for decades
@@MrOiram46 or just don't buy a car and ride a horse everywhere
@@whiteweewee5961 Well, a horse needs to rest. A car can keep going for much longer until it’s out of gas and even refilling the tank takes 3-5 minutes assuming there’s no line. And they travel faster on freeways.
I know the next town over used to take weeks for horse caravans to travel in the past now only takes less than hour drive on a freeway with a car. Though to be fair, they didn’t have the luxury of a freeway back then and had to go around a lot of obstacles.
Great video. We bought a 3 year old astra back in 2001 for £5k. And it's on its lasts wheels but still working. Looking back through the receipts, the car has only cost an extra £5k to fix any issues, repairs, MOTs and servicing, over the 22 years we've had it. That works out on average less than £500 a year to buy and maintain that car. (were ignoring petrol and road tax because we all have to pay for it). And yet, my friends tell me, 'get a new car and not have to pay to fix it every year'. And I reply; 'yes but, I you are paying £300-£500 a month for that previlege. So how does your method work out financially better off? So...£500 a year for a car, or £500 a month....hmmm not a difficult decision.
The original owner paid 72000$ Canadian for my current 2011 Acura mdx that I bought for less than 20k… calculate that loss per year! They also drove it less then 10,000km per year
When some buy a new car he knows that is not used he is the first time user.
Its all good if nothing go's wrong with the old car & its well maintained. You had mostly good luck. If you did it again you'd probably have a different outcome
I've alwayas seen it that way. But I now have a BMW looked after meticulously from new. Its now dead (garages don't know how to fix it)with just 80k miles on the clock. I'm disgusted with BMW and their "premium marque" claims.
OK if you enjoy driving an astra, fill your boots
You are the type of person who provides invaluable information which can change quite a lot in a person's life, but it is not just about information, it is about an insight and educating others about probably the biggest difference maker, which is mindset. You are amazing.
This is the perfect video to describe car finance! I’ve watched about 10 similar videos but none as simple and concise as this one.
No it isnt, see my reponse regarding interest, ridiculous video submission.
Never buy a new car. Buy a secondhand car, and run it to the end of its life.
You'll spend a lot of money in repairs in the midst of running to its end of life.
I do around 40,000 miles a year. Everything other than tyres and insurance is included in my monthly lease payment, most of which is set off against tax as a business expense, so the net cost is extremely low. If I didn’t use my car for business I might buy a second hand car. The best way to buy and finance a car depends very much on what you want it for, and what tax relief might be available.
Got a love comment that gives no details to support its argument.
I stand by that too. 2nd hand car all the way.
I've got loads and loads of money. I'm buying a new car.
Thank you - you really answer my thoughts on PCP - I have many friends who have gone down this route convinced it’s the best option!! Personally for the last 20yeRs I have bought high value 2 year old cars and run them for at least 10 years, ensuring that I religiously mot and service them annually not on mileage. My wife has a sports car that is 13years old with 40k on the clock and does 3/4k a year. The car is worth/valued at what I paid for it!. Thanks again.
Don't know if you have realised you can save a lot of money by getting a lower Apr rate from banks or credit union which you can pay off even earlier. Most finance companies are a lot higher than your own bank. And of course you can apply for a loan on line and get a decision within minutes.
Year 2000 Nissan Primera. I paid £350 for it in 2016. It had a genuine 45,000 miles. It's 100% reliable, is good to drive and still shines up pretty well. I do all the servicing and maintenance myself.
Are they good cars?
Great effort Ian. Cars generally got pretty good in the late 90s onwards (especially if you stick to Japanese and some German stuff). If economic motoring is the main priority when buying a car you'd be mental to buy new. My current car (TT 3.2) cost me 2.1k. Costs me about 500-600 a year to keep it on the road. Drives lovely. Depreciation, zero 🥰
@@dwaynelamberts3696 Yes, I think so. I've owned two. They were praised at the time for their build quality and handling. You have to consider that the newest Primera in the UK is going to be about 17 years old now. I don't see many on the road now, but it's worth looking out for a good one on AutoTrader, Gumtree, Ebay, etc. which you'd probably have to pay more than £350 for. I was lucky!
Where did u get such a bargain
Good clear explanation. One element you have not taken into account is that as a cash buyer, you can often negotiate a discount on the list price, which would obviously improve the outright purchase option
Wrong. Cash buyers are less valuable to us. It takes us 10 mins to set up your finance usually and the finance company gives a commission our way. I’m more likely to give you a monetary gesture towards your car if you finance it because I can pass some of that commission back your way. If you give me cash, I’m having to take the little margins out of the car for you. Finance and cash, either way we get paid in full.
One thing to consider with leasing is that if your car is stolen or written off, the insurance company will only pay the market value of the product. If this value doesnt match what the leasing company company debt is, then you could find your self with no car and many thousands of pounds of debt. If this is your chosen route, then I would strongly suggest taking out gap insurance, which covers any shortfall. I used to work in the insurance industry, i found multiple cases where a car had been stolen or written off , within the first 3 years and due to depreciation, the insurance payout would be far less than the outstanding debt with the lease company (£9000 was the worst i saw). If leasing then gap insurance is something you should heavily consider.
Many leases include GAP coverage. Many insurance companies offer GAP coverage for a low cost. It is rarely wise to buy GAP coverage from a dealer.
Great video but you forgot to mention one of the key features of a PCP/Lease deal which are the mileage limits set out at the beginning of the agreement - as this is one of the main factors that determines how much the car is depreciated by. This could materially affect the value of the car at the end of the agreement term (for better or worse) and one key thing you need to consider before taking out the deal. Your car could be worth more or less than the Guaranteed future value and you may end up having to pay more (or indeed have equity returned to you) at the end of the term if you've overshot the original mileage limit.
The depreciation should be factored into the PCP/Lease from the beginning which is why it’s important you are honest about the kind of mileage you do at the start. The difference with lease is the risk of the faster depreciation is more on the finance company than it is on you, whereas with a PCP the risk is wholly on your shoulders.
One thing to remember with lease is remember to not hand it back with damage. The lease company will make the repairs with their preferred repair company and you will get rinsed!
Not always true,yes with some companies but not all. We have leased for around 10 years and we always ask for any damage charges up front before starting a new lease. For example my wife’s previous car had a couple of car park dings and stone chips and a small dent in the rear passenger door where it blew open trying get the baby in the back one day,and some wheel kerb damage. For all this she got charged just over £200 at the end of term for damage which wasn’t consistent with wear and tear.
Our lease company sends out vehicle inspectors when it goes back to prove no damage was done while it was taken back. But as you say it’s something you definitely need to be careful of and also potentially have money to one side just in case.
Every scratch, every blemish, every stain on the carpet, every scratch on the windows. Unless you lease again and all those unforgivable things are... forgiven.
The biggest cost most pay on new cars people pay aside from the interest is full coverage insurance, the best game to play to grow wealth is just how low can you make every bill, sooner you learn to just live on liability insurance and drive well, the sooner you can win the game.
Great Vid Nischa. After many years buying new cars outright and selling them on for a loss I decided to try buying older cars with above avg mileage from the now ubiquitous car discount supermarkets. The cars being sold in these supermarkets are normally ex fleet/mobility cars so you will need to be a little careful on how to pick a car that has been well looked after (check the interior, body and boot) and well maintainance records (make sure it has a main dealer service history and no big gaps between services e.g. I bought my dream car for 16.5k that was 3yrs old with 50k miles inc regular services at a main dealer. This car would have cost me 36k new given it had all the options I was looking for. I can still sell the car for 12-13k today after nearly 5yrs ownership... This is not for everyone but I think buying new is too costly in that you pay all upfront and then suffer depreciation over time. Best to get a good used car in my opinion with options that will make it desirable and hold its value.
Excellent analysis Nischa. I did your last option of buying a 3 year old well maintained Honda outright and it has been fantastic. Owning also reduces insurance costs. When you finance in Canada, you are required to have full insurance coverage. Buying outright and being a bit of a risk taker had me paying just the minimum legal insurance. I let the original owner take the depreciation and the shipping costs. Dave
Same. Honda is probably the best name to bet on. 👍
Yes, in North America there is a charge called preparation n shipping on Top of the negotiated price of A New vehicles only!
I understand how much a car costs me, regardless of whether I buy it outright (an older car) or I finance it (more recent car) with a loan or get the car on hire purchase or PHP from a dealership. And I know how much it costs my business, work and personal life when I drive an old car or more recent car. It’s all a trade off….there are no free meals in life, every financial decision you make you pay for it positively or negatively
Thank you Nischa for a thorough overview of car purchase options. Although I have purchased many new cars in the past with 20% down and monthly payments, I have not purchased new in the last 10 years. I feel that quality modern cars like Toyota, Lexus and Honda are far more reliable than cars of just 20 years ago so I typically buy a 5 year old that has been well maintained @ 40% of the new car price. Sometimes I will use financing as a negotiating tool as the dealership will get a cut on the loan and I will get a favorable price. Then simply pay off the loan a few months later and own the car outright.
Lease purchase may be favorable to business owners as they can write off some or all of their lease payments as a legitimate business expense, lowering their overall taxes. We typically logged far too many miles on the car which would trigger a stiff milage penalty upon turn-in after 3 years. For us the lease option did not make sense.
Cheers!
Binge watching having just 'found' you.
Solid advice well presented.
Please do not stop what you are doing - lifting the veil and countering the drivel others peddle as sage advice.
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First all I am an American living in Philippines. Vehicles are more expensive here due taxes and interest rates of bank. I bought brand new SUV. Buying use here you do not know what you will get. No real way to check history of vehicle here. Locals here for most part do not do maintenance on vehicles.
So I used a bank in USA to finance my suv. Bought hire purchase method. Had it for 8 years. Have it now and gonna keep it for 10-15 years. It’s Toyota and very reliable!
Really interesting video! As a young person i wish I’d been tought this sort of thing in school. I had PCP for years and was sick of being ripped off so last year I bought a used audi TT from a private seller got it under retail price and got a loan, putting down 23% deposit best thing I ever did
I am thinking for the pcp but witha big deposit and the intention for a final balloon payment
I don't usually comment on RUclips videos, but your channel is brilliant.
As someone who's recently entered the Banking world in middle office. It would be great to see a video on career progression, salaries, when to leave etc.
Keep up the good work!
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She completely forgot to mention 0% APR and keep your money earning interest, use the manufacturers funds.
A well maintained and serviced car with low mileage and 2-3 years old is basically still in new condition. Also often checked and serviced by dealer who will add 12months extra warranty. This is a very sensible buy regardless of financing. If you have the cash this is the best option.
I have generally done fairly well in getting a worth while deal when purchasing a car…. Depending on which country I have been in depends if I have bought new & or used. If UK I tend to purchase outright & as I look after them, don’t put huge millage on I can usually get a good deal when coming to sell.
I personally like the idea of not having monthly outgoings, however everyone has different requirements/needs.
Interesting video, thank you 😊
Hi @nischa, I really enjoyed your video and it covers pretty much everything you have to decide financially when buying a car. Although, you have not covered one aspect which I have used to buy a car. You can take a personal loan from the bank and use that cash to buy the car outright, while repaying loans in EMI. Often interest rates on the personal loans are cheaper than the financing the car. Even 3-4% savings is a huge amount in a long run.
Yep, bought a 2018 BMW; took a 7k personal loan for 2 years at 3.5% APR.
I thought that, and spent a looong time negotiating with the dealer. They ended up throwing in a 3 year servicing deal with free MOT's that balanced out the difference. Not sure if they fooled me in some way, but seemed to make sense at the time.
@@JohnyWallker1 Where are you from that an unsecured personal loan is less interest? Most manufacturers rates are well below personal loan or credit line rates. At least in Canada anyway, and I imagine same in the USA or Europe. And surely not recently at 3.5%.
@@chuck1622 very much depends on your credit score, how much cash you already have in the bank as well as all the special deals you get with your bank. I took the loan from the bank where I keep my main accounts. When I took the loan I already had cash in the bank way in excess to cover the loan straight away a few times over. I've been a customer with the said bank for over 10 years and they knew very well my income and expenses and how much cash I normally keep in the bank at any point in time. I initially wanted to borrow less (half of the sum) at a much higher APR, however, the bank came back to me with a deal to borrow more than I needed at a lower rate. I also took the loan during a time when interest rate (in the country where I live) was close to zero. Finally, now thinking about it I must admit that I paid a one-off fee (when I took the loan) that would otherwise raise the APR from 3.5 to 5%.
@@chuck1622 I want to know where he is buying a 2018 BMW for 7k? I can flip those all day long.
Something that you missed and, TBH, most people do. When buying outright you did point out, quite rightly, that you miss out on any investment returns that the money could have made if you hadn't used it to buy the car, but in the run up to buying, you can be actively saving money and therefore investing it. Which means you buy the car with money both saved and returned from the investment. In effect, you buy the car without paying the full price.
Great video. If I had the money, would always buy a 3 year old car outright rather than finance. Covid was a strong lesson in how quickly incomes can change for 90% of the population and a monthly income is not guaranteed
I'm always stashing cash away for my next car purchase. Thinking I'll be ready to buy in 2-3 years. Hoping the used car market price corrects by then.
Hi Nischa. I may have done slightly better. Salesman was obviously not interested in discount for cash. I opted for HP as Seat were offering a £1,500 discount. So paid £500 deposit and two days after signing agreement cancelled it, paid it off incurring two days interest and not having to pay the £1,500 back. 😊.
Love it!
🤭
So you totally lost out!!!
@@garyt123 How? I bought a car £1,500 cheaper than list price. Perhaps it wasn't clear I kept the car.
I did exactly the same many years ago on a New Ford Kuga
I bought a three year old car outright. I don’t regret it because I got a good deal and I don’t like having monthly payments.
Great presentation., like your others. Your an absolute natural at explaining financial issues and on car finance you've hit the nail on the head. So many people dont understand what they are getting into and get badly ripped off. I've always bought my cars, never new, often using personal loans whilst my money is invested in equity based investments wrapped in an ISA.
Hi, if you using personal loan... Is the interest rate not too high than a car finance?
But a 3 year old Camry is only a few thousand cheaper than new. This market ain't good 😢
I always buy my cars: second hand, in cash and keep them between 8-10 years...I see friends with super cars and leases, and sometimes wonder if I am the one who is wrong... thanks so much for this series, so useful
You’re right. It’s just a car. I’d much rather have money in the bank for other priorities.
@@melsagelord3991 Exactly! I love Audi/VW/BMW cabriolets but have been just as happy driving 'runarounds' for years. I'm now looking at buying my third cabriolet, will only pay cash for anything up to 12yrs old, but won't spend more more than 9 grand. I know it's an individuals choice but forget bank loans & HP for new & nearly new models.
@@melsagelord3991 all depends on your own priorities. I love cars, so don't mind spending a fair chunk of change on owning and running a fun one. If a car is just A to B for you it makes sense to buy something second hand, cheap and reliable.
a friend told me how her mom told her to buy a car. This is for if you have cash to buy it out right. Go in and start the buying process of the car you want. but make them think you are going to lease/loan it. play dumb. try to work the price of the car down, but let them get you on the interest and any fees that may come with the lease or the loan. Usually they make you think you are paying a low price, because they know they are going to make money on the loan/lease. then when you have a the price of the car nailed down, get them to say and perhaps write it down with their hand, that price. Then pull out your check book and buy the car. You will save a few thousand my friends mom said. she bought 3 cars doing this. and it worked every time. i have not tried.
Great video. Committed to and highly recommend cash/outright for both the financial & psychological reasons you point out. Interesting insights about the re-up / renewal options that car dealers are pushing to help their bottom line ... super similar to the way phone companies structure their advertising / payment options these days. The only difference is the phones are a little less expensive.
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The phones are getting to the point where they cost as much as a used car. 😆
This is huge for me Nischa. I’m 23 and I’m a decent paying job. I’m still able to live at home and am saving for my first place to get on the property ladder early. People my age buy cars and get into debt on finance for the badge, to display wealth they simply don’t have. Nothing has really ever been explained to me when it comes to cars, it seems the norm to fork out a large bank loan and pay a huge chunk of monthly income on a more expensive motor. I own a fiesta outright and I plan on keeping it until I’m in my new place but this sort of video is exactly what I need when it comes to what to do, as different people I talk to have different views on leasing/pcp/ buying outright etc…
Thank you
I'm 23 as well working in construction management and I'm buying my home this week. Company pays for my new truck, gas, accommodation and gives allowance. It's tough job, but it's worth the financial freedom!
Amazing job at breaking this all down for us. I've always purchased cash, and it's worked out great for me. If you're mechanically inclined, just purchase a used car just under the end of warranty and you're golden.
Buy certified. It gives you a car that’s had all fluids changed, new tires and extended warranty of some sort. You can add extended warranty as well. Some even offer lifetime car washes.
I took out a bank loan at a pretty decent interest rate and paid both cars off well ahead of the term. For my next car I’m considering a signature loan together with some of my own money, but I am still weighing my options and shopping around since things are a bit more crazy lately. I’m also considering one of the car services where you shop for cars via their online store and the car is delivered to your door. This might be the best because you can not only shop the options and colors, but get more of exactly what you’d like or want with the most minimal effort, IMHO.
What cars were they? if you dont mind me asking
Is this a USA or UK thing ?
There's also the option to buy it outright with a personal loan from the bank.
With a standard/good credit rating a typical bank would offer you a 3.0% APR, which would be a total cost of approximately £31,500 at the end of year three, hence the cheapest option .
Also, no deposit required 😊
On what planet? The rates are easily 7% these days!
Agree. Unfortunately most people don't understand what APR is or how it can make things a lot more expensive, in the case of HP or a lot less expensive in the case of a personal loan
No you won't get 3% anymore Bank of England Rates are 4% so you ll get 6 to 7 minimum.
Yes but opportunity cost and the car will depreciate. Not the best option
Minimum 5% currently for personal loan, although significantly less than any dealers rates for PCP/HP
PCP worked best for me this time, as the increase in the second hand market meant I gained £4200 equity in my car when selling and paying off the balloon payment. I could have never gained that £4200 had I leased.
Thank you so much. I really like how you dove deep into comparing the numbers, as well as comparing the benefits and costs of the different options. Very well done and much appreciated!
Great analysis ! Quite similar here in Melbourne Australia. I own and operate a business and always use the hire purchase option because of the opportunity cost of up fronting the full value of the car. Our hire purchase option does not require a deposit because it is registered to a business with a great credit rating.
Also, we never purchase a brand new car - it loses 10-15% of its value as soon as you drive it out of the showroom although, arguably, in these times it may be different. We always purchase a demonstrator or a very low mileage vehicle that is dealership sold and is covered by the statutory warranty.
At the end of 5 years, we sell the vehicle and hire purchase a new one for another 5 years. This way, we protect our cash flow as well as receive a “bonus” into the cash flow when the vehicle is sold.
Moreover, we claim depreciation annually on our tax returns.
ie, due to commercial reasons. Plus Differnt countries have different Tax implications!
Second owner of a 97 Buick LeSabre which was purchased in December 2004 with just under 43,000 miles. Price was $5,000 on a 3 year loan from my credit union. It has 229,000 miles on it and costs gas and oil changes along with scheduled maintenance. No major repairs and drives as good as the day I purchased it.
Great comparison. I always felt buying outright a few year old car is the best option (and have been doing so for years) but never went through the efforts to calculate it all.. very informative and handy, also very clear. Thanks a bunch !
Really helpful insight. I bought my 6 month old VW Tiguan 18 months ago (at their most expensive) for £32k. £12k deposit and £20k personal loan (at 3% when base rate was low). As you say, timing can be more important than anything!
You Brits are being robbed by ur Government in buying vehicles.( too many taxes n duties)
So many better cars out there at 32k than a Tiguan...
I got mine on a HP. That said, your finance status in the UK will play a role on which option you choose to follow.
With a hire purchase, I can still sell the car and pay off my outstanding loan.
As I don't see a car to be an investment, I wouldn't recommend paying cash for any car worth over 15k.
Interesting, I used PCP for my current car mainly because the Apr was 0%. I felt the deal was too good given the car usually is worth more than the final price
How did you do that im thinking in doing the same
Hi Nischa, firstly thank you for your video's, finally somebody from the UK, helping others in straight forward simple language that anybody can understand, love this video, if only you recorded the conversation it would be funny, seeing the sales team scratching their head, as they've been beaten at their own game 🤣 Thank you again God reward you for your efforts ❤️
😘😘😘😘😘😘🤣🤣
Not sure why you think the sales team was "beaten at their own game"? It sounds like she has been given good advice and information. All thats happened is someone has gone to work and has had their times wasted by someone who wasnt interested in buying a car. Yeah thats hilarious.
I've always only bought older cars. People afraid of a car over 100,000 miles are just crazy. For instance... I bought a 2013 renault clio a couple years ago. The car cost me £2600. I bought it with 105,000 miles and it still runs like the day it was in the showroom. Its got all the equipment a new car has, satnav, cruise control, heated seats, speed limiter, auto lights and auto wipers. It get 70mpg and is 20 quid to tax. It's cost me an mot which it's been through no advisories each time and 1 tyre in the years I've had it. Today it's worth £2000. It owe me nothing. Cheap motoring shouldn't be seen as a 3-5 yr old car. Lose the ego and go older. You'll save your pocket in the long run. This car has given me the opportunity to invest a lot more into my portfolio and I couldn't thank it enough for doing its job. People are keen to put their pasta sauce jars in the recycling but aren't keen on buying an older car to recycle it before it's day comes to the scrapyard. World gone mad
Buying outright can also give you a better negotiating position, it's often possible to get considerable discounts off the list price depending upon other incentives that the dealer might have. It's possible to offset a fair bit of the depreciation in this way.
On the Onset she told you the price was £ 30K. Ok. [ sure if it was the last Day of the month n year, I could demand a Big dicount] not that I will get it.
not true dealers make money on finance not metal you will always get a better deal if you take finance with the dealer as they make 1 or 2k on the finance itself.
@@stephanemorin7145 That's not my experience - I got a 20% discount from list price as a cash buyer for my last two purchases. It was considerably cheaper than any finance or lease options offered on the same vehicle.
@@markpullan3202 there is always exceptions but nowadays cash is NOT king.
Insurance costs also have to be taken into account. If you lease, the insurance is often included. Also, if you take finance, you might need to insure the potential gap between the market value and the outstanding finance in the event the car is written off.
I buy cars outright. I think it affords me the highest degree of flexibility, as I can do whatever I want whenever I want with the car.
I became 18 last summer and never learned from my parents how I should save money and what would be a great investment, so this channel to me is like a God send, thank you so much!
Don’t mention God and disrespect your parents who actually gave you life……………
Only thing I see is look in the mirror………
*Dont let that go over your head
@@tears2040 What do you mean? I just said that they never taught me as good as her, I never said I hated my parents or anything.
I usually go for high performance cars which are older and well looked after. These cars usually have a value which sits within the enthusiast crowd and hold their value. You have to be prepared to look after them mechanically to a certain extent to ensure they maintain their value. It's not for everyone but I buy my cars outright and my running costs are way lower than leasing,pcp, hire purchase etc. Fuel is usually the biggest factor but I do around 3500 miles a year.
Damn you barely leave the house lol I do 3500 in 2 months
@@thealexleamy I do more mileage on my bicycle
no point owning a car if you drive 3500 mi per year. thats a collectors item not a car , at which point cost analysis has no bearing at all.
@@bendutton exactly 😂
Sooooo what is the best option? Did I miss something
The car shown at 0:07 is definitely not a porsche because they did an outstanding job hiding the emblem on the steering wheel! 🎉
Here comes an another amazing video 😊 ... Thank you Nischa, I wonder how you manage to put quality content every week...
Glad you enjoyed it!
@@nischa 😊
@@nischaI ended up buying my new car out right. It was expensive , I ended up paying around 75k cash which included car detailing, car security and insurance, comprehensive and gap .
I bought my E Class Merc at 45.000 miles for £10.000 ten years ago. So far no major bills. It's still like new as I hand wash and dry it every week. I make that £1000 per year. Its now done 130,000 miles.
If I get nothing for it I'm still quids in. 😊
Helpful video. As other have mentioned, the leasing option (at least in Canada) comes with higher insurance costs. Another thing to consider is the environmental impact of constantly trading in for a new car every 3 years. If the majority of people did this, older cars would be scrapped much earlier in their lifespan, and more new cars would need to made to meet demand. There is a pretty hefty carbon footprint attached to that. The order matters in the phrase 'Reduce, Reuse, Recycle".
Curious. So a car that is 3 years old /makes a larger carbon footprint than a /brand new car plus them manufacturing the new car. In 10 years will 1 car/ versus manufacturing 3new ones. 1 car 30,000+10,000 repairs maybe/ versus 110,000 if you buy the same car. All guessing prices. Cost of the vehicle will increase in 3 years time.
What about the economic and health impact of people having jobs to manufacture said vehicles? You're overthinking this too much, and are buying into the crap that is being fed.
Your environmental analysis makes no sense. Automakers will make as many cars as they can and push them out for economies of scale. Also the stats in North America shows large v8 trucks are the biggest sellers.
@@billm3210Automakers pumping out cars (or trucks) has no bearing whatsoever on the validity of the environmental analysis. In fact, if everyone switched to purchasing used vehicles, production of vehicles would, indeed, decrease based on lower demand (ie, there's no point supplying something for which there is no demand).
Further, only 10-15% of the world's population lives in North America. So what's the relevance of your point about truck preference there?
If you keep running old vehicles their costs go to the small businesses who repair them rather than the multinationals who build them.
Also, the only thing on a vehicle that creates any significant pollution is its engine. If cars were made more with the incentives of being infinitely repairable they could be fitted with less polluting engines when the present one wears out. This is a fairly common practice in third world countries where few people can afford to scrap cars unless they really are scrap. Then they get used for spares to keep others on the road.
Very good video. One additional complication is that, often, maintenance is covered as part of the lease payments. So you’d have to add maintenance costs to the Hire Purchase option, to make it comparable.
Also, 11% on a 3-year car loan? Wow. Currently paying 0.9% on mine….
noone gets 0.9% Bank of England rates are 4% you can only get 0% PCP on a new car when you pay the full whack. 11% is the average for a HP or PCP loan most people pay lot more right now.
Point me in the direction of that deal, I can get the best part of 5% on a fixed rate bond, so borrowing at 0.9 would be great
@1d2a3d4d5i6o
1 second ago
if you had gone to a broker depending on the car they offer you a discount and if you go for PCP they give you a discount I have just ordered my next car a Skoda Octavia SEL 1.5. retail £30,000 doing it through a broker and PCP i have saved nearly £7,000 and you can still pay it off in 2 months so it is yours..PCP payments are only the minimum amounts you can pay, you can pay it off. Good luck oh and at the moment Skoda are selling 2 years servicing for £250 if bought on PCP.
I prefer the last option myself, buy a good condition used car, preferably German manufactured. I think the main reason this is the best option is because people are more prudent spending the money they have already had to work for, as opposed to spending somebody else's.
Another thing to consider is those leasing/hire options require you to have full comprehensive insurance for your car, which is probably around 3,000 pounds more than 3rd party insurance. So that'll balloon your costs massively. If you trust your own driving, you can choose the cheaper insurance option when you buy the car for yourself.
Who on earth are you insuring with. That’s teenager priced insurance on a stupidly expensive car. You shouldn’t be paying more than £400 if you buy sensibly
@@pungarehu Not really. im 25 got corsa 2016 last year as first car and been paying 100f a month just because my house is in safe away from city location when I was having 2 houses to choose from( another one from Edinburgh) it got me well over 200f a month
Third party fire and theft isn't always cheaper than comprehensive, I looked at dropping to TPFT with my old Focus given the age of it but that would have been dearer than comprehensive
@@sameyers2670 that’s just shocking
Kudos to you for a really interesting and super clear video ! Very helpful comparison. Another unexpected cost to factor in for a Lease or a PCP is perhaps a more expensive insurance policy providing better coverage. I leased my last car, and was so stressed about getting any nicks or bumps on it, that I got an insurance policy which was a lot more expensive that what I'd usually get. I later bought a used car outright, and just got liability insurance which helps me save a lot on car insurance. Also, with a leased car, there might be times where you're reluctant to use it for long distances in order to avoid going over the mileage, but then you spend more money on airplane or train tickets, which can get expensive if for a family......
Exactly. Also, they nickel and dime you if there is a scratch or scrape on the car. If a shopping cart hits it, it could mean lots of fees from the person you leased from. When you buy a car, it is just cosmetic damage. I also think people get into this headspace where they need to spend 600 a month to get the latest and greatest in tech when a car from five years ago has all the conveniences one could need depending on the trim you buy. I would also never want to lease because of the uncertainty of the economy. You never know when the next job loss might occur, if you get into a personal accident, or if something else happens. I would much rather feel secure knowing nobody can take my car away if any of those occur. Imagine leasing, losing your job, being unable to pay the lease price, and you end up with no car in a car-centric society such as the United States. It just makes things that much more difficult for you.
very good info
If you going to buy a used car , get one just over 5 yrs old. Tires, brakes, water pump, battery etc… usually goes around 4-5 yrs. If you’re buying a new car might as well keep it to the end. I do suggest lease a car if you have a business.
Great and informative video as always Nischa! Having formerly worked in the car business, two other considerations came to mind that are definite advantages of leasing vs. any of the ownership options. One: what if the car is a 'lemon' (has unacceptable reliability issues in the first few years)? Two: what if you are in an accident and then the vehicle has the accident and subsequent repair on it's permanent record (which would seriously affect the value if you were to try to sell it). In both of these cases, leasing offers the huge advantage of just returning it at lease-end and then it becomes the dealer/manufacturer's problem!
+ another thing to take into account, if you lease, than you don’t need to worry about maintenance costs & insurance & any road taxes, as that’s included in your monthly payments. (At least that’s how it works in the Netherlands)
Leasing is fine until you have to return the vehicle... Be careful with leases. Read the fine print. It's rarely a question of just handing back the keys! Tire wear, marks, paint chips, mileage, small scratches, scuffs. They throw the book at you.
@@gordonduff22 ..and if you were in an accident as the OP suggests that book will be large and heavy.
Got to be careful with PCP. I got an Audi A4 and was told it would be worth £10k after 3 years. When that time came they offered £6k. It was immaculate, serviced with them and within mileage contract . I felt robbed.
I just bought a house on mortgage and I need a car. As it is now, PCP is the cheapest and less risky option for me at the moment. If I borrow money, I will have another debt. But with PCP, if rainy days or greater opportunities come, I can disengage from the contract much easier.
Nice analysis. Personally I would NEVER buy a car from new. The depreciation is just crazy. Much better to buy a 2 - 3 year old car, preferably from a main dealer with some warranty cover. I also avoid using main dealers for servicing / MOT since they are typically more expensive than an independent garage who services all makes. I also prefer to pay cash so I’m not charged any interest, but I might consider a 0% finance deal (not that there are any these days!). Look after the car, keep it serviced and drive it until it has done 150k miles or 8 - 10 years old. I’m not interested in trying to impress the neighbours with a new car every year!
Really? Check how much cars cost 3-4 years ago and how much they cost now.
@@ukaszrozewicz7488 Do you mean new or used car prices? I know both have gone up and I know used car prices are higher than they were, relative to new. I’d still never buy new though.
@@stevegeekok so you know that but still would prefer to buy old. When you can get a new car at the same exact price. Until the market for used cars go down. It makes absolutely no sense to buy used rn. New is better at this moment. And trust it’s going to take YEARS, for the used car market to go down.
Excellent video and confirms that my entire life of buying outright good used cars is still the way to go .. what would make this video even better is if you could have explained depreciation into all the examples and cost of maintenance within the 3 year time period . I still believe buying a good used car will still be the best financial decision you just go through a bit more stress on the journey
It depends. For example I get a flat 20% discount on a new car due to my parents disability. So that changes the equation for me.
You should be able to compare APR between any types of borrowing. HP, PCP, Usecured bank loan. The higher the APR the more expensive the borrowing is to you. If the APR is more than you can earn, after tax, on cash held on deposit then borrowing is costing you real money. That’s basically how banks and other lenders make money at your expense. And depreciation is a real cost of running a car. And it’s almost always a lot.
Great video, I’ve always leased my vehicles as I prefer to change after 2/3 years. The lease market is all about getting the best deals possible. For example, I pay £275 a month for my current car, which has a market value of £40k, and would’ve been around £900 on a PCP agreement. As mentioned in the video, it gives me flexibility to invest my funds elsewhere too!
Non-returnable Deposit?
@@richgl31 Yeah, lease deposits are non-refundable, they count as part of your overall payments for the car, the more you pay as a deposit, the lower your monthly payments
The cheapest car is the one you already own.
I invest for my retirement annually. Therefore, I always finance my car and keep it for 5-7 years with extended warranty, which means it's usually an awesome vehicle so that I don't grow tired of it quickly and I have money left over to invest in my retirement fund.
I've found that even a car with average reliability will cost less annually for maintenance than monthly car payments.
Like I said, given car prices these days, the cheapest car to own is the one you already own.
Not necessarily, my old car was only worth about £1300, but it needed new suspension components which wasn’t economically viable to replace
Great explanation of how to look at financing the purchase of a car. I’m 68 and other than buying a motorbike on hp way back in my youth I’ve always paid cash as you can or could ( not so easy now) negotiate a better price, Retired now and no longer fortunate to have a company car so useful to have this knowledge if I decide to replace my trusty 2012 Audi with something newer! Thanks again.
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He is Eddyjosy VlA TE L E G R AM.
Thanks for the contact info, I will connect with him shortly.