Forget your PCPs, HPs and leasing. Get digging behind the sofa cushions and pick a banger

Well, here's a surprise: paying up front for a car is increasingly falling out of favour with UK drivers, according to research from Close Brothers Motor Finance.

Apparently, the proportion of drivers saying they will opt for finance, leasing or renting for their next car has increased by 6% (from 37% of total buyers in the car market in 2018 to 43% now). This trend is driven by the young, 60% of whom will borrow, lease or rent to acquire their cars, with the majority saying this was for lifestyle reasons rather than financial ones. 

Although paying for a car up front is the most common way of purchasing a car, the proportion planning to do this for their next car fell from 63% in 2018 to 57% this year. So, yes, paying with cash is going out of fashion and that is very understandable for those who want a simple, uncomplicated and rather more expensive life. 

At our end of things, rather than stumping up an initial deposit and then finding the easy monthly payments, you know what to do. Buy affordably used. And £5000 always seems to me like a sensibly solid budget to play with. 

The first thing I see is a Land Rover Freelander, which is becoming something of an obsession. To me, it is an alt-Defender, at least until we become either happy or sad about the new one. So £5000 for a 2008 2.2 TD4 SE with a panoramic roof, leather and Bluetooth seems very reasonable, even with 106,000 miles. 

Probably the most sensible family hatch of all would be a 2011 Ford Focus 1.6 TDCi Zetec with just 57,000 miles. It has a full-up Ford service history and you will pay just £20 road tax. It may be evil diesel but officially you’ll get 67.3mpg, although anything near 60 is great going. This is a real no-brainer to buy. 

Our Verdict

Ford Focus ST-line X 2019 road test review - hero front

Focus retains its position as the best-in-class to drive – spec dependent – while adding extra space, functionality and connectivity

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Actually, if you need a cheeky little hatch that’s more recent, I’d steer in the direction of a 2015 Fiat 500 1.2 – a Pop Star model with 26,000 miles. Finished in white with air-con and service history, this is a pretty little thing to use on your daily commute. 

If you just want to look dead smart, how about a 2012 Volkswagen Passat 2.0 TDI BlueMotion Tech Sport? That’s another 60mpg motor right there and all that sophistication for £5000, plus it looked as clean as a whistle and don’t worry about the verified 112,000 miles. Why bother going down the PCP route when there are beauties like this? 

Paying for cash may be going out of fashion, but at least our old banger won’t depreciate or get repossessed.

What we almost bought this week

Chrysler Neon 2.0 LX: ‘Over-sold and over here’ was a typical put-down for the Chrysler Neon, but there’s no denying it made an interesting alternative to a Ford Focus or Vauxhall Astra. The second-generation model (2000-2005) was much improved, at least in Chrysler’s terms, and LX trim brought air-con, electric folding mirrors and leather trim. This 2004 example has done 44,000 miles and is up for £990. 

Tales from Ruppert’s garage

Mini Cooper, mileage - 103,590: For the past 40 years, my Mini Cooper has managed without a cigarette lighter. Just as well as I don’t smoke. But a 12V output might be useful in the modern world. I have never used a satnav in it (relied on maps for my last 200-mile-plus journey) and I often forget my mobile phone so don’t feel the need to charge it. 

Anyway, I thought I would install one that I bought for a tenner. It took me a while to sort out because I am no electrician but, hey, we have some power. Not sure what I am going to do with it. The suspension is still broken. 

Reader’s ride

Saab 9-3 convertible: James McKinney is a regular on this page and here is something special. “Our fun car for high days and Sundays is an 11-reg Saab 9-3 convertible,” he says. “It has a 2.0 turbo petrol engine and auto ’box. We bought it in July 2016 with only 7000 miles up by one previous owner and with a full Saab service history. It currently has less than 20,000 miles on the clock. 

“It is a lovely car to drive and has all of Saab’s renowned safety features. It exhibits virtually no scuttle shake and the build quality is very impressive. Not surprising given Saab’s avowed intention was to produce a convertible that was better than its BMW or Mercedes equivalent. In my view, having owned both of the German marques, it definitely is superior.”

Readers’ questions

Question: I’m tempted by a new-model BMW 320d Touring but would a nearly new, old-shape one be a more sensible purchase? Gary White, Southampton

Answer: We know you just want permission to have the new-shape model. And why not? We tested the saloon and gave it five stars. BMW promises the new Touring will “handle even better” than the old one. Add in its three-year warranty, tempting finance deals… It’s a no-brainer, except that we found an old-shape 2019/68-reg 320d M Sport Shadow Edition auto Touring with 1800 miles for £24,889, compared with £38,955 when new and £39,825 for a new-shape 320d M Sport Touring auto. A saving of £15,000 sounds pretty sensible to us. John Evans

Question: I’ve seen a 2015/15- reg VW Golf 1.6 TDI 110 BlueMotion with 94,000 miles and a 1.6 TDI 105 S of the same year but 72,000 miles, each £7300. Which is the better buy? Sally Armstrong, via email

Answer: If economy is your priority, the BlueMotion’s 88.3mpg triumphs over the standard car’s 74.3mpg. Both cost nothing to tax. Among the BlueMotion’s econo features are a six-speed gearbox compared with the other car’s five-speeder, plus a simple energy recovery system. The downside is that you’re paying for these in terms of your example’s higher mileage. Drive each of them, but we reckon you’ll prefer the BlueMotion’s more refined cruising. John Evans

Read more

Land Rover Freelander 2003-2014 review​

Nearly-new buying guide: BMW 3 Series (F30)​

New BMW 3 Series review

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Comments
11

23 July 2019

Never thought I'd see Autocar use those words in the same sentence. Ahem

23 July 2019

This advice is all well and good... if you have the cash at hand.

I'm a 29 year old home owning professional on a good salary, and I don't have anywhere near £5000 just sitting around to buy a car.

For me, a PCP or PCH makes far more sense. Not interested in ownership in the long-term, will change my car every 2-3 years, so would much rather make very affordable monthly payments.

Got my partner a Fiat 500, brand new, on PCH. Inital rental £800, then £149 per month for 2 years.

£4376 to own a car that shouldn't break down, won't need new tyres, won't need an MOT and will only need two services (maybe £300 total).

Or I could follow Ruppert's advice and spend a mystery £5000 on a pre-owned one that will require MOTs, tyres and potentially more work as it gets older.

If that work costs £680 (£80 for two MOTs if they pass perfectly - unlikely, plus £300 for tyres and £300 for two services) then in two years time sell the car for £2500 with 40k on the clock. In that two years I'd save maybe £1820 by going pre-owned, and I'd rather spend that on having a brand new, lovely car with the latest tech and design.

23 July 2019
thesockpuppet wrote:

Or I could follow Ruppert's advice and spend a mystery £5000 on a pre-owned one that will require MOTs, tyres and potentially more work as it gets older.

If that work costs £680 (£80 for two MOTs if they pass perfectly - unlikely, plus £300 for tyres and £300 for two services) then in two years time sell the car for £2500 with 40k on the clock. In that two years I'd save maybe £1820 by going pre-owned, and I'd rather spend that on having a brand new, lovely car with the latest tech and design.

Totally see your point  BUT...    Buying an older car at £5000 and it depreciates 50% in 2years, would suggest to me the car you bought was vastly overpriced.

Now what if you bought a car for £5000, sold it two years later for £4500 and hardly spent anything on it?  You say the older car will need tyres - well if you buy a car with worn tyres and needing an MOT then more the fool you. Just looking at Autotrader and seeing many 500's which have done less than 15k for under £5000.

Of course you also fail to point out your lease car is on limited miles and any dent's scratches etc will be chargeable at hand back time. You also fail to mention that as you're not the owner, the insurance is likely to be higher.

You should get a 12mth warranty from the garage, top this up with a 3rd party warranty for 1yr and...  After 2yr you've spent £4376 and have nothing left to show for it. After 2yr with a used car, you've spent perhaps about £5500 but you may have £4000 when it comes to sell.

Bottom line - doesn't matter how you pay for it, a new car is always way more expensive due to depreciation. It's even more expensive when you have to borrow someone elses money to do it.  

23 July 2019
thesockpuppet wrote:

If that work costs £680 (£80 for two MOTs if they pass perfectly - unlikely, plus £300 for tyres and £300 for two services) then in two years time sell the car for £2500 with 40k on the clock. In that two years I'd save maybe £1820 by going pre-owned, and I'd rather spend that on having a brand new, lovely car with the latest tech and design.

Wanting a nice shiny new car is fine, but your sums are a short term view. If you saved yourself the (probably worst case) £1800 in two years, that allows you to put that £1800 towards the next car, where you could spend the same again and reduce the loan needed, or increase you budget accordingly.

'buying' on a PCP is a permenant bill, every single month, potentially for ever, until you opt out. However you justify it, it is costing you a lot of money... 

23 July 2019
thesockpuppet wrote:

This advice is all well and good... if you have the cash at hand.

I'm a 29 year old home owning professional on a good salary, and I don't have anywhere near £5000 just sitting around to buy a car.

For me, a PCP or PCH makes far more sense. Not interested in ownership in the long-term, will change my car every 2-3 years, so would much rather make very affordable monthly payments.

Got my partner a Fiat 500, brand new, on PCH. Inital rental £800, then £149 per month for 2 years.

£4376 to own a car that shouldn't break down, won't need new tyres, won't need an MOT and will only need two services (maybe £300 total).

Or I could follow Ruppert's advice and spend a mystery £5000 on a pre-owned one that will require MOTs, tyres and potentially more work as it gets older.

If that work costs £680 (£80 for two MOTs if they pass perfectly - unlikely, plus £300 for tyres and £300 for two services) then in two years time sell the car for £2500 with 40k on the clock. In that two years I'd save maybe £1820 by going pre-owned, and I'd rather spend that on having a brand new, lovely car with the latest tech and design.

 

You have been roundly taken apart for posting nonsense, so far be it for me to support you.

 

If you can't afford it, you only have the person in your mirror to blame when the repayments force you to go cap in hand to your parents, wait until you can.

 

To say you are a home owning professional is telling us you own your own home, that you are mortgage free, are you?. If yes and you don't have £5K, then you have less than the recommended savings buffer should you need it and yet still you moan about not being able to afford a car and running costs, boo hoo.

 

Not going to spend the time mocking your rationalised figure work. All you would be doing in taking out one of these types of finance, is to pay off just the depreciation on the bright shiny new car, that you will NEVER own, for someone else to get the benefit from.

 

Still, you and others like you provide a good living for many people, so do carry on, both moaning and PCP-ing. Hilarious.

23 July 2019

Maybe that's why you've no money, you're spending nearly £2,500 a year on a Fiat 500.

£5,000 could buy a better Mazda 2 with 30k on the clock. MOT £50 a year, set of tyres about once every 2 years so budget another £100 per year for those.  Should go on for another 100k miles/ 5 years without a problem, thus saving a possible £1,300 a year minimum.   

If you're doing 20k miles a year on your current pcp then you did well to get for £170 a month by the way.

23 July 2019

It's all horses for courses, a new warranted car every three years on affordable monthly payments is appealing, if you took that £5k out as a loan as I am sure many do, then you are still paying monthly and have other bills that are often not an issue for the new car buyer, even better if you can get servicing included. However we didn't renew our PCP/get a new car as I didn't want to pay £140 rfl for a car the same as the one we have, Mii, which is currently £10, so we paid off the finance, effectively doing what this article says, buying a used car but with the advantage of knowing it from new.

23 July 2019

For me nearly new is the best compromise. Buy a year old car and the worst depreciation is taken by the first owner but you've still got a modern reliable car covered by a warranty with all the latest technology. As for leasing, pcps etc, I'm not a fan. I own my car outright and put away a few hundred pounds each month to replace it. So rather than pay interest on finance, I'm earning interest on my savings and have the freedom of owning my car and the choice over when to change it.

23 July 2019

"Probably the most sensible family hatch of all would be a 2011 Ford Focus 1.6 TDCi Zetec with just 57,000 miles"

Absolute rubbish.

Anyone who knows used diesels knows that under 12k miles a year means a clogged DPF, it simply hasn't done motorway miles on a weekly basis - as is required for a healthy DPF regen cycle.

Add to that, this is Peugeot's 1.6 turbo diesel engine - which is known to have turbo issues when you get soot in oil caused by a clogged DPF, and it's not a good or respectable bargain buy at all!!

 

 

23 July 2019

While I utterly dislike Ruppert's choices of second hand cars in this article, I completely agree that paying cash for an older car can be a better option for many of us. I have always taken the view that the only debt I want to incur is a mortgage on a home. For everything else, if I can't afford it, I won't buy it. My early cars were around the modern equivalent of £4000, and this allowed me to make huge savings on depreciation. Yes, it would have been nice to have driven around in a shiny new car in my 20s, but the money I have saved has been deployed to things like a bigger house which I can continue to enjoy many years after the car has been scrapped.

Just remember that, if you own the car, you can always sell it if times get hard, but debt will follow you around regardless of circumstance.

Sorry if this is rather old-fashioned, but it has worked well for me.

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