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]

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]

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.

[xsnaggle]

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

your Mrs or the car?

[NYCBlue]

your Mrs or the car?

My Mrs is a much better ride than the Kia.

[Taunton Blue Genie]

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

The wife or the car?

[Taunton Blue Genie]

The wife or the car?

Oops. I was beaten to it.

[Fine Lines]

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]

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]

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.

[NYCBlue]

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]

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.

[Bobby Dandruff]

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.

Do ANY cars increase in value though, bar very high end classics like the Porsche Carrera GT, McClaren F1, Miura etc ? 🤷*♂️

[Jimmy the Jock]

Do ANY cars increase in value though, bar very high end classics like the Porsche Carrera GT, McClaren F1, Miura etc ? ��*♂️

older classic cars .

My 1990 mini cooper has increased in value from 3k to around 10k . It is a little special though.

[Allez Allez Allez]

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.

[WJ99mobile]

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.

[Jimmy the Jock]

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.

That principle works as long as you maintain the car well and it doesn't have any major mechanical issues .
I rent cars on a long term basis to ordinary people , who like you ,have kept their cars longer than they should have .
The cars have had major mechanical issues , which they have repaired and decided to keep the cars a little longer " to get their money back " this has led to further major issues and they will never get their money back .
Modern cars are so complex electrical issues can run into thousands ( I also run a repair workshops) Believe me you can soon be in the position where the repair bill way exceeds the value of the car .
A nice shiny new car for £2-300 a month with no worries as Nick stated seems like a dream after the pain of massive repair bills for a car that is worthless .

Don't get me wrong it's horses for courses .

Sounds like you have been fairly lucky , you don't do many miles despite your trip round Europe.

I have 2 Audi estates we use for courtesy cars , both drive well and customers often comment on how well they drive with their 285,000 and 330,000 miles respectively . Thing is , if they do go wrong ... I own a garage to fix them ...

[Allez Allez Allez]

who like you ,have kept their cars longer than they should have .

When should I have changed my car then? Just after I finished paying for it? When it got to 100,000 miles? When it passed yet another MOT without even an advisory? What is it about my car that means I have kept it for too long?

People are being duped to stay in perpetual debt to finance companies purely to keep the car industry alive. More fool them.

[Jimmy the Jock]

When should I have changed my car then? Just after I finished paying for it? When it got to 100,000 miles? When it passed yet another MOT without even an advisory? What is it about my car that means I have kept it for too long?

People are being duped to stay in perpetual debt to finance companies purely to keep the car industry alive. More fool them.

Perhaps I could have left the "like you" bit out.

It works for you and thats great, it wont always , unfortunately.

You have kept it too long when it fails and you spend a a fair bit getting it fixed and try to recoup that money and it fails again.
It isnt duping anyone , its a fact it happens .
I would hate everyone to go contract hire . There would be no market for my used contract hire vehicles ....

[valleys caveman]

Perhaps I could have left the "like you" bit out.

It works for you and thats great, it wont always , unfortunately.

You have kept it too long when it fails and you spend a a fair bit getting it fixed and try to recoup that money and it fails again.
It isnt duping anyone , its a fact it happens .
I would hate everyone to go contract hire . There would be no market for my used contract hire vehicles ....

What have you got for sale Jim?

[Allez Allez Allez]

Perhaps I could have left the "like you" bit out.

It works for you and thats great, it wont always , unfortunately.

You have kept it too long when it fails and you spend a a fair bit getting it fixed and try to recoup that money and it fails again.
It isnt duping anyone , its a fact it happens .
I would hate everyone to go contract hire . There would be no market for my used contract hire vehicles ....

Fair enough and the minute the car starts costing me money, regularly, or I jump into it in a morning with fingers crossed that it actually starts - that is when I will change it.

My mileage is going down now, so the chances are my next car will be a used car rather than new.

As for electric, I really want to go electric but it isn't quite there yet. £33,000 for a Kia something is the cheapest I can find. That is too much for a car - but the prices will drop by 2035. Either that, or the Government are going to face an almighty backlash in 2035 when a new £20,000 car is replaced by a £33,000 version that has a battery that will die in 7 years. I'm confident it won't be like that.

[delmbox]

That principle works as long as you maintain the car well and it doesn't have any major mechanical issues .
I rent cars on a long term basis to ordinary people , who like you ,have kept their cars longer than they should have .
The cars have had major mechanical issues , which they have repaired and decided to keep the cars a little longer " to get their money back " this has led to further major issues and they will never get their money back .
Modern cars are so complex electrical issues can run into thousands ( I also run a repair workshops) Believe me you can soon be in the position where the repair bill way exceeds the value of the car .
A nice shiny new car for £2-300 a month with no worries as Nick stated seems like a dream after the pain of massive repair bills for a car that is worthless .

Don't get me wrong it's horses for courses .

Sounds like you have been fairly lucky , you don't do many miles despite your trip round Europe.

I have 2 Audi estates we use for courtesy cars , both drive well and customers often comment on how well they drive with their 285,000 and 330,000 miles respectively . Thing is , if they do go wrong ... I own a garage to fix them ...

I have driven both these Audi's if anybody gives a shit

[Bluebina]

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.

Spot on

[MOZZER2]

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]

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.