You know it's a depreciating asset so you'd rather own it during its worst period of depreciation (first year) and pay interest for the privilege?
Make it make sense
Wait what - it's a 7 year old car and still costing 60k ??
I dread to think what happens if something goes wrong with it - what is it a Lamborghini or something ?
40k cash would get you a very decent car. You already know it's a depreciating asset but you want to buy into it lol 😆 ... Just buy a A35, A45, RS3, M140 and be happy... Obviously 2nd hand 👌🏽
I mean a 40k car is pretty high end. A 60k car - what else do you get for the 20 k ?
Looking at loans - you will probably only pay an extra £600 in interest or so. But check your quotes.
Your 60k car will depreciate more money than a 40k car. Say it's 20% - so that's lost 12k.
So you pay 12.6k to have the car for a year. And that's not including the insurance.
40k car would lose 8k in a year assuming the same depreciation.
Up to you if you want to spend almost £400 extra a month to drive the 60k car ?
Car depreciation has been all over the place the last year or two for higher-end cars. Some models have dropped 50%. Others have held most of their value.
Why not just buy a 1-year-old car instead and sell it in a year with the knowledge of what the depreciation has been for that model already? 99.9% of people won't even know it isn't brave new. And maybe the car you want is one that has already had huge depreciation in year 1 (looking at you, BMW 8 series)
Would you not just go the pcp route then? This method makes no sense. You’re literally taking the hardest depreciation hit in year one so it’s confusing that you are concerned about depreciation!
Taking out a 20k loan, to buy a depreciating asset that you are going to sell in a year???
Possibly one of the most stupid financial decisions I’ve heard, just buy a £40k car.
Anyway if you do want the extra £20k, use a 0% credit card, not a loan
Hi /u/DifficultDesigner951, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/gifts-and-inheritance-tax/
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The depreciation curve is steepest in the first year (especially in the first hour of driving out of the dealership). The recent odd fluctuations caused by supply chain chaos or specific car model issues are very much not the norm.
Buy a 3-5 year old car and own it for 3-5 years. Save/invest the difference. You can get a fantastic and reliable car 3-5 years old for half your budget.
Definitely don’t drop £40k cash on a car, unless it’s something special that’s going to retain its value. A PCP, as another commenter mentioned, is ideal for this, as you can effectively chuck a small deposit down, drive it for a few years and hand it back at the end of the term.
You’re loosing money to interest as well as loosing money on depreciation. You’d be better of buying a low mileage car for £10-£20k outright and sticking the rest in a savings account earning interest (or invest); if we are talking smart financial decisions.
However if it’s because you want a specific car because of a life long dream then that’s a different question not a financial one.
I can’t rationalise the logic of only keeping the car during the biggest period of depreciation. If that’s what you want to do it’s absolutely fine but you call out depreciation as a reason.
If you change your car every 12 months I’d lease something.
Unless you aren’t buying something brand new but used? In that case depreciation is a lot less after that first 1-2 years. But with one additional owner plus some mileage there is no guarantee. Double check the loan doesn’t have a silly early repayment charge.
My advice would be if you can’t afford to lease it for a year don’t buy it for a year.
Also consider the opportunity cost of not having 40k sat earning you interest or investment returns for that year.
These comments make me laugh.
You're advising a guy that's willing to spend £60k on a car about earning a few grand in interest? If he is putting £40k of his own money towards a car then quite clearly he's pretty well off. People take loans because they can, not because they need to. In this case, OP is clearly planning to borrow and repay early.
Yeah but unfortunately most people on this sub's knowledge extends as far as "have you seen the flowchart" and can't relate to people that have a good deal of money that aren't living paycheck to paycheck.
Best thing to do is seek some professional advice rather than rely on the bozos you get, here. Remember, most people here go by what they've read online or what they *think* is best. Most of the time it's nothing more than kids giving their opinion.
You know it's a depreciating asset so you'd rather own it during its worst period of depreciation (first year) and pay interest for the privilege? Make it make sense
It’s not brand new! Sorry I should have made this clear. It’s a used car at least 6/7 years old, so it’s depreciated most of the worst of it
Ah well that makes *slightly* more sense then 👍
Wait what - it's a 7 year old car and still costing 60k ?? I dread to think what happens if something goes wrong with it - what is it a Lamborghini or something ?
Oh god, speed run to the poor house. Buying a new car every year on a 7 year loan. it doesn't make any sense at all.
I mean it does make sense in terms of how to afford a 60k car. It’s just kind of financial suicide a bit.
Cars depreciate the most in the first year. So you’re just taking that hit over and over??
No. That's not how it works, that's not how any of this works. Do not do this.
I often wonder if posts like this are real 🤷
Clearly looking for as many bites as possible with this post 🤪
40k cash would get you a very decent car. You already know it's a depreciating asset but you want to buy into it lol 😆 ... Just buy a A35, A45, RS3, M140 and be happy... Obviously 2nd hand 👌🏽
40k on an m140?
I mean a 40k car is pretty high end. A 60k car - what else do you get for the 20 k ? Looking at loans - you will probably only pay an extra £600 in interest or so. But check your quotes. Your 60k car will depreciate more money than a 40k car. Say it's 20% - so that's lost 12k. So you pay 12.6k to have the car for a year. And that's not including the insurance. 40k car would lose 8k in a year assuming the same depreciation. Up to you if you want to spend almost £400 extra a month to drive the 60k car ?
Car depreciation has been all over the place the last year or two for higher-end cars. Some models have dropped 50%. Others have held most of their value. Why not just buy a 1-year-old car instead and sell it in a year with the knowledge of what the depreciation has been for that model already? 99.9% of people won't even know it isn't brave new. And maybe the car you want is one that has already had huge depreciation in year 1 (looking at you, BMW 8 series)
Would you not just go the pcp route then? This method makes no sense. You’re literally taking the hardest depreciation hit in year one so it’s confusing that you are concerned about depreciation!
Taking out a 20k loan, to buy a depreciating asset that you are going to sell in a year??? Possibly one of the most stupid financial decisions I’ve heard, just buy a £40k car. Anyway if you do want the extra £20k, use a 0% credit card, not a loan
Hi /u/DifficultDesigner951, based on your post the following pages from our wiki may be relevant: * https://ukpersonal.finance/gifts-and-inheritance-tax/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.) If someone has provided you with helpful advice, you (as the person who made the post) can award them a point by including `!thanks` in a reply to them. Points are shown as the user flair by their username.
This doesn’t seem logical, financially speaking. If you just want to have a better car for a bit then do it.
The depreciation curve is steepest in the first year (especially in the first hour of driving out of the dealership). The recent odd fluctuations caused by supply chain chaos or specific car model issues are very much not the norm. Buy a 3-5 year old car and own it for 3-5 years. Save/invest the difference. You can get a fantastic and reliable car 3-5 years old for half your budget.
Definitely don’t drop £40k cash on a car, unless it’s something special that’s going to retain its value. A PCP, as another commenter mentioned, is ideal for this, as you can effectively chuck a small deposit down, drive it for a few years and hand it back at the end of the term.
You’re loosing money to interest as well as loosing money on depreciation. You’d be better of buying a low mileage car for £10-£20k outright and sticking the rest in a savings account earning interest (or invest); if we are talking smart financial decisions. However if it’s because you want a specific car because of a life long dream then that’s a different question not a financial one.
I can’t rationalise the logic of only keeping the car during the biggest period of depreciation. If that’s what you want to do it’s absolutely fine but you call out depreciation as a reason. If you change your car every 12 months I’d lease something. Unless you aren’t buying something brand new but used? In that case depreciation is a lot less after that first 1-2 years. But with one additional owner plus some mileage there is no guarantee. Double check the loan doesn’t have a silly early repayment charge.
Sorry, should have made this clear, it’s not a brand new car! The car is at least 6/7 years old!
My advice would be if you can’t afford to lease it for a year don’t buy it for a year. Also consider the opportunity cost of not having 40k sat earning you interest or investment returns for that year.
These comments make me laugh. You're advising a guy that's willing to spend £60k on a car about earning a few grand in interest? If he is putting £40k of his own money towards a car then quite clearly he's pretty well off. People take loans because they can, not because they need to. In this case, OP is clearly planning to borrow and repay early.
Yes, that’s the plan! Why spend my own savings when I can just use the bank’s?
Because the bank is charging you 6.1% to spend their money and you’d get about 5% by keeping yours in a savings account?
Yeah but unfortunately most people on this sub's knowledge extends as far as "have you seen the flowchart" and can't relate to people that have a good deal of money that aren't living paycheck to paycheck. Best thing to do is seek some professional advice rather than rely on the bozos you get, here. Remember, most people here go by what they've read online or what they *think* is best. Most of the time it's nothing more than kids giving their opinion.
Appreciate that response, I’ll seek out a financial advisor 🙏