Cars are going to be the next bubble

[WJ99mobile]

I’ve been forced by my firm to sell my car and buy a newer one.

I have been looking at relatively new second hand cars but the depreciation on them is often the same if not more than I can get a brand new lease for.

For example I looked at a 1-2 year old golf that I anticipate the depreciation to be circa £130 a month if bought from a dealer. For the similar price I can lease a brand new good specced Kia for 2 years, wear and tear costs and very minimal service costs.

Cars have never in my opinion been cheaper and when you can buy preregistered cars for circa 40% of the RRP, surely this is undermining the used car market.

I don’t know what the outcome will be, but something surely will give?

[TheMightyBluebirds]

Re: Cars are going to be the next bubble

Yeah I've noticed the same.

My current car (a Kia) was 9 months old when I bought it, and it had already lost something like 35% of its value.

My first car (a Ford Fiesta) was even worse - something like 40% depreciation when I bought it second hand (less than a year old too).

I'm not sure if it'll be a bubble (or at least one that'll burst), mind - plenty of people will only buy new, and usually on "risk free" PCP finance - and then keep trading in their car every 3 years. So whilst there's a good supply of cut-price second hand cars, there's also still plenty of new cars being sold as people stay on the PCP hamster wheel.

[NYCBlue]

Re: Cars are going to be the next bubble

Yeah I've noticed the same.

My current car (a Kia) was 9 months old when I bought it, and it had already lost something like 35% of its value.

My first car (a Ford Fiesta) was even worse - something like 40% depreciation when I bought it second hand (less than a year old too).

I'm not sure if it'll be a bubble (or at least one that'll burst), mind - plenty of people will only buy new, and usually on "risk free" PCP finance - and then keep trading in their car every 3 years. So whilst there's a good supply of cut-price second hand cars, there's also still plenty of new cars being sold as people stay on the PCP hamster wheel.

My Mrs dives a Kia. We lease it. Surprisingly nice car. Smooth ride, great handling and nice pick-up.

[Fine Lines]

Re: Cars are going to be the next bubble

If it increases in value buy it. If it decreases lease it.

If you went to buy a house and was told it would be worth 40% less then u paid for it in 5 years you wouldn’t go near it.

[WJ99mobile]

Re: Cars are going to be the next bubble

If it increases in value buy it. If it decreases lease it.

If you went to buy a house and was told it would be worth 40% less then u paid for it in 5 years you wouldn’t go near it.

That old adage was key to rich dad poor dad books. The problem is it doesn’t take into account the variations in depreciation.

Cars depreciate - but if the lease is triple the depreciation then it doesn’t stack up. At the moment, it does pay to lease but that rule of thumb isn’t right 100% of the time

[Optimistic Nick]

Re: Cars are going to be the next bubble

I'd noticed this too. I never spend big money on cars, but we may need to replace our old X3. We paid £7k for it 3 years ago (when you might assume that depreciation may already have done its damage - it was 9 years old at the time), and it's worth less than £2k now. By the time you've factored in insurance, tax, service etc it will have cost us about £230-£250 a month. And it is no exactly the epitome of driving excellence either - it was an old car that gives a very bumpy ride. The cost would have been far, far higher if we'd spent more at the outset on a newer car.

Anyway - I've been having a look and while £7k would seem to go further now than it did when we bought it, but I can get a new Qashsqai on my work's car scheme for less than £300 a month, and that includes insurance for whomever I want (£25 excess), service, MOT etc. It's a no-brainer really.

[Allez Allez Allez]

Re: Cars are going to be the next bubble

I’ve been forced by my firm to sell my car and buy a newer one.

I have been looking at relatively new second hand cars but the depreciation on them is often the same if not more than I can get a brand new lease for.

For example I looked at a 1-2 year old golf that I anticipate the depreciation to be circa £130 a month if bought from a dealer. For the similar price I can lease a brand new good specced Kia for 2 years, wear and tear costs and very minimal service costs.

Cars have never in my opinion been cheaper and when you can buy preregistered cars for circa 40% of the RRP, surely this is undermining the used car market.

I don’t know what the outcome will be, but something surely will give?

If you lease a car then be prepared to lease cars for the rest of your life.

I buy a car from new, keep it for 12 years and have 9 years of not having to pay any loan fees or anything else. Never understand why people change perfectly good cars just because they are a bit old, or have as many as 40,000 miles on the clock. My Golf, bought in 2006. 14 years old, 178,000 on the clock. I finished paying for it in 2009. Yes, it is starting to rattle, yes it has knocks and dents, but it gets me from a to b. Drove around Europe in it last August.

[MOZZER2]

Re: Cars are going to be the next bubble

just finished paying off my car after 1 of those PCP schemes

thinking of leasing a small car something like a fiesta ,corsa or hyundia until electric cars become the norm

what type of monthly outlay would I be looking at on a lease for a small car ?

[Allez Allez Allez]

Re: Cars are going to be the next bubble

just finished paying off my car after 1 of those PCP schemes

thinking of leasing a small car something like a fiesta ,corsa or hyundia until electric cars become the norm

what type of monthly outlay would I be looking at on a lease for a small car ?

You could lease an electric car. I think that is the only type of car I would bother leasing, until batteries last longer than 7/8 years.

[Allez Allez Allez]

Re: Cars are going to be the next bubble

Hyundai Ioniq can be leased for £320 a month, 10,000 miles, 2 year contract. Initial spend £930, and fees at £230.

[MOZZER2]

Re: Cars are going to be the next bubble

well i would but not practical for me right now because of the mileage i do and waiting until batteries and charging points technology improves . I,m sort of in the know with electric cars so wouldn't lease right now anyway until about 3 years time .

[Allez Allez Allez]

Re: Cars are going to be the next bubble

well i would but not practical for me right now because of the mileage i do and waiting until batteries and charging points technology improves . I,m sort of in the know with electric cars so wouldn't lease right now anyway until about 3 years time .

Yeah, sort of agree there. Hoping my next car is electric but only when batteries improve. My office has a charge point for electric cars, so it would basically be free motoring for me once I go electric.

[WJ99mobile]

Re: Cars are going to be the next bubble

If you lease a car then be prepared to lease cars for the rest of your life.

I buy a car from new, keep it for 12 years and have 9 years of not having to pay any loan fees or anything else. Never understand why people change perfectly good cars just because they are a bit old, or have as many as 40,000 miles on the clock. My Golf, bought in 2006. 14 years old, 178,000 on the clock. I finished paying for it in 2009. Yes, it is starting to rattle, yes it has knocks and dents, but it gets me from a to b. Drove around Europe in it last August.

My work forces me to have a car no older than 5 years old but I really love my VW golf. It’s a solid car.

[NYCBlue]

Re: Cars are going to be the next bubble

That old adage was key to rich dad poor dad books. The problem is it doesn’t take into account the variations in depreciation.

Cars depreciate - but if the lease is triple the depreciation then it doesn’t stack up. At the moment, it does pay to lease but that rule of thumb isn’t right 100% of the time

You might pay over the odds on a lease, but it's doable and the lease ends. You drive a brand new car under full warranty. We even get free oil changes and "light" maintenance.

[chris lee]

Re: Cars are going to be the next bubble

If you do not care about looking fancy, the lower end of the 2nd hand market is where you save big money, Bought a 8 year old corsa a while back for £1,200 drove that for 3 years sold it for £800, bought a Golf 2004 reg 110k on the clock for £600 3 years later I am on 170k and still have not spent a penny on it apart from a basic £80 service every year.

An elderly neighbor has recently stopped driving and has a corsa (2010) which they have offered me for next to nothing, the funny thing is in 9 years he has done 28k miles! full service history. so will pick that up now for about £1k sell my golf for £500 to some teenager and the corsa should last me 5 years easily.