To buy or not to buy? Would you lease a car?

Your advice seems to be based on the idea that all purchases should be for financial gain. This work well with capital purchases such as a house as you stated. However when purchasing a car you will always loose money wether cash or finance. I recently purchased a car on finance to replace my old runabout from my uni days as it had become unreliable. If I were to save up to replace it it would be a year before I could afford a suitable motor. That would be a year without a job as I could then not get to work. Purchasing a car in finance is far more comparable to purchasing a service such as internet access. For a fixed amount a month I am given the use of a car which will be maintained by the dealer. This makes a lot of sense and as long as I budget carefully the arrangement works very well.

I recently bought a rare used car outright and in 18 months of ownership the value has increased by 43%, so it’s wrong to say that when purchasing a car you will always lose money. Taking all associated motoring costs into account, I could probably sell it today at an overall profit. When spending large amounts on tangible things I don’t like to throw my money away, and if possible I aim for a positive return. If you buy something relatively rare there are fewer example available each year, so supply decreases and prices go up. The flood of PCP deals has the opposite effect – the market is awash with common vehicles at 3 years of age with similar mileage. Used dealers have already observed a drop in prices.
So by paying a PCP you pay the depreciation cost to the dealer and have a less marketable asset at the end. If you choose to pay the final amount, most manufacturer’s warranties end after 3 years so you are then liable for repair costs. Having a new car is becoming less desirable as these cheap deals open the doors to the masses – I’d rather drive something distinctive.

Hello and thank you I agree strongly with your thinking. I’m just needing to accept my beautiful classic merc will not get through the MOT due to failing the emmisions legislation.

I will continue to look for a suitable replacement.

Emission failures can be remedied Rachelle , usually fuel related , ignition problems or vacuum leakage (basically ) unless there is an engine management system installed . Over-rich fuel injection means sooty like deposits in exhaust system and possible black smoke , a worn engine would be blue smoke in exhaust. I would get a second opinion Rachelle .

The other thing is – if it’s borderline and you do low mileage – an oil change shortly before the MOT will give you a near VW advantage (other tricks are available…)

Hi Malcolm,

What is the difference between a lease and a loan ,if you borrow money in any form you have to pay for it one way or the other, in some cases as explained by Ed people need a car to get a job, so its the old adage sometime you have to speculate to accumulate.This also applies to PFI schemes as if you didn’t know.The Accountants in both the Public sector and the private Sector are all aware of the benefits involved why do you think they all encourage these schemes?
In the real world no one gets a free ride, the choice is simple Pay or walk just look at the third world and Communist Countries where cars are still classified as a luxury.

Hello Gerald, I prefer to own an asset that I use regularly, and buy what I can afford. That may mean taking out an affordable loan if the capital is not available. With a lease presumably you need to take a new vehicle, and you don’t own it unless there is a purchase option – when I have briefly looked it seemed a more expensive option. Anyway, I would buy used.
As far as needing a car to get to your job, cars are much more reliable these days so buying a cheap used car should deal with that (our family cars range from 9 to 25 years old and work reliably).
PFI – having been on the sidelines and seen the number of people with fingers in the financial pie shows why they are such an expensive way of keeping debt off the official books. New hospital building is a classic example with huge repayment costs tied in for years. The schemes are encouraged because they have been a way to get assets that would otherwise require public debt – but what a costly way they are of cooking the books. That is my take on PFI.

I would just like to make the distinction between an asset and a liability. An asset makes you money, a liability costs you money. A car is not generally seen as an asset as it costs money to own and run, making it a liability.

In accounting terms, vehicles are a non-current asset. “Examples of noncurrent assets include…..vehicles” https://www.accountingcoach.com/blog/what-is-a-noncurrent-asset
An owned vehicle has a value, one that depreciates like other plant.

I’m with Em on this issue. I regard a car as a necessary transport box and so far have never used hp and always paid cash, never more than £5k. For the last 10 years I’ve relied on very reliable Japanese imports from eBay. The last one (4 years ago) – an automatic diesel – cost me £1500. It has 8 seats with several configurations (great for the grandchildren) and is very comfortable to drive. To some extent the minimal capital outlay is off-set by relatively higher running costs – poor mpg returns (35 mpg on motorways – less than 30 mpg in town) but it has never broken down and costs nothing in maintenance apart from the routine services. For the record my Japanese motorcycle is equally reliable, and twice the fun.

It is difficult to know what to do for the best. Diesel cars have become the favourite target for criticism but that could change as a result of better emission control.

My suggestion would be to hold onto your present car, which will more or less have stopped depreciating by now. At the weekend I was ferried around in a friend’s car that has needed no expensive repairs since he bought it new. I noticed that this little Polo had covered 186k miles and it was not even a diesel one.

If you do change your car it’s worth checking the current VED rates.

Happyfeet, worth looking at Which? car reviews, but you’ll have to be a member to get full information. Or try Honest John https://www.honestjohn.co.uk/carbycar/. Modern diesels are much better at emissions but if you normally do a lot of short journeys then I’d go for petrol. Or if you live in a town and your journeys are short then perhaps electric, or electric with a range extender if you do longer trips regularly.

Anyone who needs an electric car to do longer journeys needs a proper hybrid electric vehicle. As far as I know, a ‘range extender’ just helps charge the battery and does not propel the car.

Diesel cars should be avoided if doing a lot of town driving because the diesel particulate filter can become blocked. Some longer journeys are needed so that it can reach the temperature needed to burn accumulated soot.