Is Buying New Always A Mug's Game

Siliconslave · 31 Jul 2012 at 09:58

I bought my MX-5 new last year, the facelift model had only been out about 6months so there were only 3 second hand examples kicking around in the spec I wanted. The dealership I went with did me 20% off the list price so for about £2k more than the second hand examples I got a brand new car without messing around with ex-demo models.

In fact one of the local Mazda dealers tried to sell me their demo model with about 1.5k on the clock for more than I paid for a new one :confused:

The only reason I even contemplated it though was because I had the cash to spend, personally I'd never buy new with finance, I'll always select based on what I can afford to pay cash.

Haggisman · 31 Jul 2012 at 10:42

Surprised no one has mentioned the mileage yet?

Even if you did manage to get a fantastic deal on finance, from your OP it sounds like you're planning on going for HP/PCP, and many of these have low(ish) mileage limits, which if you go over can have quite nasty financial penalties! (a quick Google shows ~5p/mile, which if you're doing 25k/year on a 10k/year limit is an extra £3k you have to pay when you hand the car back at the end of the 4 year period!)

Basher · 31 Jul 2012 at 10:49

Haggisman said:
Surprised no one has mentioned the mileage yet?

Even if you did manage to get a fantastic deal on finance, from your OP it sounds like you're planning on going for HP/PCP, and many of these have low(ish) mileage limits, which if you go over can have quite nasty financial penalties! (a quick Google shows ~5p/mile, which if you're doing 25k/year on a 10k/year limit is an extra £3k you have to pay when you hand the car back at the end of the 4 year period!)

The mileage limit is only an issue if you hand the car back. If you sell it, it doesn't matter.

Haggisman · 31 Jul 2012 at 10:50

Basher said:
The mileage limit is only an issue if you hand the car back. If you sell it, it doesn't matter.

This is true, but the OP stated "though I'd be looking to move to another new car at that stage" so I assumed he would be looking at handing it back and starting a new lease.

One · 31 Jul 2012 at 11:31

What if everyone bought nearly new though. They'd be no cars left.

Basher · 31 Jul 2012 at 11:43

Haggisman said:
This is true, but the OP stated "though I'd be looking to move to another new car at that stage" so I assumed he would be looking at handing it back and starting a new lease.

He could just as easily be using it as part-ex on the next lease.

Adam · 31 Jul 2012 at 11:48

NathWraith said:
Buying new is bad, buy nearly new.

That's a silly and very general statement.

As has been said it really depends on the offer. Dealers often contribute to the deposit or OTR price to shift more cars close to their quarter end for example.

If you are paying list price then yes, you'll probably suffer big depreciation losses but if you are clever, know your stuff and can forecast what the car will be worth in 3 and 5 years then you can sometimes be on to a winner.

Let's not forget that any car depreciates whether it's a £1k throw away car or a £100k super car. It just depends at what stage in the curve you are at.

NathWraith · 31 Jul 2012 at 11:51

Adam said:
That's a silly and very general statement.

As has been said it really depends on the offer. Dealers often contribute to the deposit or OTR price to shift more cars close to their quarter end for example.

If you are paying list price then yes, you'll probably suffer big depreciation losses but if you are clever, know your stuff and can forecast what the car will be worth in 3 and 5 years then you can sometimes be on to a winner.

Let's not forget that any car depreciates whether it's a £1k throw away car or a £100k super car. It just depends at what stage in the curve you are at.

Not in my experience it isn't.

Had 2 cars from new, massive issues within 6 months coupled with absolutely dire customer service.

Never again.

dave1983 · 31 Jul 2012 at 12:31

As others have stated it really depends on what offers there are, and what type of vehicle you are buying.

Yes i brought from New last month, and got a lot knocked off the listed price and that was with £0 deposit. Im paying about £233 a month compared to the other models isn't to bad on 0% finance option. I will keep the car for about 3 years then part exchange for a newer model. The negative point to this though is the "depreciation" as to whether when you decide to sell and move to another vehicle it settle's the remaining finance or the price of the vehicle is a lot lower than you expected, meaning the remaining finance gets included onto the new vehicle purchase.

[TW]Fox · 31 Jul 2012 at 12:34

dave1983 said:
Yes i brought from New last month, and got a lot knocked off the listed price and that was with £0 deposit.

Nil deposit on a new car?

Why do people do this? I don't get it, insta-negative equity :/ At least put a deposit in the mix!

Then you end up owing more than the car is worth in 3 years time and then take another 'no deposit' deal to finance the cost of the new car AND the outstanding balance on the old one, its just a spiral of 'Well as long as I can afford it monthly.....'

dave1983 · 31 Jul 2012 at 12:37

[TW]Fox;22461282 said:
Nil deposit on a new car?

Why do people do this? I don't get it, insta-negative equity :/ At least put a deposit in the mix!

Then you end up owing more than the car is worth in 3 years time and then take another 'no deposit' deal to finance the cost of the new car AND the outstanding balance on the old one, its just a spiral of 'Well as long as I can afford it monthly.....'

you have a very good point, but it really depends on the market value when the vehicle is ready to sell, but i won't be going for a New Car deal next time, but it depends whats available.

Skidder · 31 Jul 2012 at 12:40

I have done it once only because I was able to get a good deal. A friend of a family member was a Nissan dealer and told me exactly what his dealership could go to as a favour and still make a couple of hundred quid. His dealership was miles away from us so I went into my local dealer and said I have got this deal, match it and I will give you a deposit now. Much umming and ahing and in the end they did it. It was less than decent examples available used at the time with reasonable mileage and up to about 18 months on them. It was a truck though so I suppose a different market.

Abyss · 31 Jul 2012 at 12:40

dave1983 said:
As others have stated it really depends on what offers there are, and what type of vehicle you are buying.

Yes i brought from New last month, and got a lot knocked off the listed price and that was with £0 deposit. Im paying about £233 a month compared to the other models isn't to bad on 0% finance option. I will keep the car for about 3 years then part exchange for a newer model. The negative point to this though is the "depreciation" as to whether when you decide to sell and move to another vehicle it settle's the remaining finance or the price of the vehicle is a lot lower than you expected, meaning the remaining finance gets included onto the new vehicle purchase.

What did you buy out of interest?

In that sort of situation I would prefer to take out a 5 year loan on the basis that the 2 years outstanding at the end of the 3 years will be less than the value of the car. £230 a month would give a £12k loan with just over £5k outstanding after 3 years.

[TW]Fox · 31 Jul 2012 at 12:41

dave1983 said:
you have a very good point, but it really depends on the market value when the vehicle is ready to sell, but i won't be going for a New Car deal next time, but it depends whats available.

You just bought a brand new car and are paying it off at a rate of just £3k a year. It's almost a certainty that it will be worth less than you owe after 3 years unless the car in question is a £5995 i10 or something.

A decent deopsit protects you from negative equity, gives you an escape route at all times and leaves you with money left after you finish your agreement. It's incredibly short-sighted not to put one in.

Basher · 31 Jul 2012 at 12:45

[TW]Fox;22461360 said:
You just bought a brand new car and are paying it off at a rate of just £3k a year. It's almost a certainty that it will be worth less than you owe after 3 years unless the car in question is a £5995 i10 or something.

A decent deopsit protects you from negative equity, gives you an escape route at all times and leaves you with money left after you finish your agreement. It's incredibly short-sighted not to put one in.

What's better - losing £3k in negative equity when you need an out, or putting a £3k deposit in at the beginning?

[TW]Fox · 31 Jul 2012 at 12:47

Basher said:
What's better - losing £3k in negative equity when you need an out, or putting a £3k deposit in at the beginning?

Putting a £3k deposit in at the beginning. Because:

a) It's £3k less you've borrowed, so it's less interest, therefore lower total cost
b) You have £3k at Day 1 (Well, you should if you feel you can be extravagant and splash out on a brand spanking new car, anyway) whereas there is no guarantee you'll have the £3k at the end of Year 3. Many people do not, which is why they are then trapped into yet another finance agreement with no deposit but this time even bigger because it also refinances the amount they owe, meaning they are even deeper into negative equity.

dave1983 · 31 Jul 2012 at 12:49

Abyss said:
What did you buy out of interest?

In that sort of situation I would prefer to take out a 5 year loan on the basis that the 2 years outstanding at the end of the 3 years will be less than the value of the car. £230 a month would give a £12k loan with just over £5k outstanding after 3 years.

Due to my wife's job and our daughter having one car didn't work. caused a lot of arguements, but i wont go into detail about that.

Having owned the vectra model she would average about 37.9, i needed something that would be a lot more economical and cheaper on the tax side of things. the plus point is i dont have to worry about Mot for the next 3 years, tax is 30 a year, and it being a deisel model Im making a lot of savings on fuel wise. I know i know not the best buying new but im happy with my purchase.

But TW fox has made a good point, at the 3rd year i could be in negative equity, who knows might only keep it for 2, or repay more $$ off the finance near the end of the agreement.

wingman · 31 Jul 2012 at 12:50

Basher said:
What's better - losing £3k in negative equity when you need an out, or putting a £3k deposit in at the beginning?

If you have the willpower to not touch the £3,000.00 for the entire term, then leave it in a seperate bank account, and don't put a deposit down. Otherwise protect yourself straight away and put it down when you purchase the car.

Basher · 31 Jul 2012 at 12:51

wingman said:
If you have the willpower to not touch the £3,000.00 for the entire term, then leave it in a seperate bank account, and don't put a deposit down. Otherwise protect yourself straight away and put it down when you purchase the car.

The lifetime cost would still be more without the £3k deposit though, wouldn't it?

Skidder · 31 Jul 2012 at 12:53

dave1983 said:
Due to my wife's job and our daughter having one car didn't work. caused a lot of arguements, but i wont go into detail about that.

Having owned the vectra model she would average about 37.9, i needed something that would be a lot more economical and cheaper on the tax side of things. the plus point is i dont have to worry about Mot for the next 3 years, tax is 30 a year, and it being a deisel model Im making a lot of savings on fuel wise. I know i know not the best buying new but im happy with my purchase.

But TW fox has made a good point, at the 3rd year i could be in negative equity, who knows might only keep it for 2, or repay more $$ off the finance near the end of the agreement.

brace yourself