Buying a car: finance or not finance

[sasguru]

Don't listen to these losers.
You're a contracator.
Send your butler to buy a posh new car for cash.

[Gibbon]

I can't remember what that's called, but it's not regular HP. In the past I've gone for bank loans, as then it isn't tied to the car and you can always sell and use the money for something else if you desire. But bangernomics does make a lot of sense, and modern cars are pretty reliable even if they're old.

Oh yes it, standard 1974 Consumer Credit Act. Read the Termination rights, it applies to nearly all HP.

[formant]

I prefer to pay cash. I also prefer to buy relatively new cars (ex-demonstrators or anything under 1 or 2 years old). Old bangers can be fun though, but in the long run the upkeep tends to cost a bit more. I'm all for low running costs (hence avoiding finance), so that if benched I don't add car-related expenses to my fixed outgoings.

[wikramasingha]

Reliability is the key. It is likely I will have to relocate to an area without decent transport links.

Whilst in London I have been able to get everywhere on subway or my Segway.

The real issue here is to not use up my liquidity on this purchase so I am still tempted on finance.

As the old saying goes, money in the bank.....

[sasguru]

As the old saying goes, money in the bank.....

...is wasted with current rates.

[SAPABAPLeeds]

Buy an old banger for £2K, and keep the cash. It's what I do..

You don't need a poncy new motor..

Couldn't have said it better! Cash is king whether it is going out or staying in!!

A reliable old banger and job is as good as done....

[OwlHoot]

... modern cars are pretty reliable even if they're old.

The snag is car manufacturers are getting wise to this and discontinuing parts after shorter and shorter times, and it's only so long that garages etc can scavenge replacement parts from write offs.

[BoredBloke]

Not sure I'd go as low as 2k, but definately would never buy a new car. Why take the hit on the depreciation. Let another person do that and pick it up once its 3 years old. Ive got a Mondeo diesel on a 55 plate. I got it when it was about 2.5 years old for £6.5k. Its had no repairs other than normal wear stuff like tyres and the like. I got it on 39k miles and its currently on 104k. Its probably due a big repair now - it pumps out tons of black tulip as it accelerates - If (when) it comes along I'm tempted to pay it since I know my cars history, which is something I can't say for a 2k replacement

[DimPrawn]

The sweet spot for bangeromics seems to be getting a one or two owner, low mileage car with full service history for around the £5K mark and running it for a good number of years.

Obviously being extremely wealthy I know nothing about this though.

HTH BIDI

[psychocandy]

Don;t agree with some of you.

Dont spend whole/majority of warchest/savings on a car. Not much good having a nice car only to find out your contracts terminated and you're savings has just tied up in a car (which you might need to then sell and lose loads on).

Yes, it will cost you to get finance but rates are pretty low at the moment. I'd rather leave my warchest/savings alone, take the hit but keep the flexibility of having my warchest/savings available to me.

Example, £10000 over 3 years at 5.1% will cost you £787 interest (£21.86/month). Alternatively, whip the £10K out of your savings (assuming 2%) and you'll lose approx £480 (£600 gross) (£13.33/month).

So £8 a month for having the flexibility of having money in my account and not having it tied up in a motor with the possibility of having to flog it if you're in trouble. Of course, in a year or twos time if you're looking good you can always pay off the loan early (only costs a months interest normally).

Of course, none of this applies if you've got a huge warchest/savings anyway then fair play take it out. But for me £10K is a bit of chunk at the moment.

As for which car thing. Agree what you say about not wasting on posh cars but us contractors need reliable cars to get us to client. Only permies can blag it/take a days leave cos the motors broken down - not all of us have got clients who'll let you work from home in an emergency. For some, its a case of no-show at office = no billing. Could be expensive.... thus you need a car that you can rely on at least....