Dear Reader you may be aware that I'm pondering buying a £10,000 FIAT 500 due to fuel costs rising. You may also remember that I currently run a £300 banger. There seems to be some conflict with regards to valuation of the cars here? How can a new car, with depreciation considerations etc. be comparable to a £300 banger?
Well my banger does less than 30mpg, with petrol at almost £6 a gallon [£1.30 a litre] my fuel bills are hitting £30 per week. That's around £1,440 per year. The new car should do 50mpg average, so around £860 per year for fuel. Add in all the other savings, and even with depreciation considerations, I'd only be around £700 per year worse off. Instead of a banger I'd be in something new. [Note I've ignored the £1,000 deposit - see later.]
But £700 is still £700. That's a week's UK holiday for the family, or two bangers, or a set of forks for a mountain bike, or could be the purchase of a folding bike - this would save me even more money on fuel as I could cycle 3 or 4 miles in quite happily. That's every year as well. £700 is also 117 gallons of fuel, or six month's driving in the Volvo. 6 months!
Financially the new car doesn't quite add up now does it? Especially with the economy the way that it is. My job is insecure, and I'm so bloomin' specialised in what I do that there simply isn't another job to go to. There's less than 1,000 people doing what I do in the UK. You know, it's not like I'm in IT or 'phone sales where I can fire off 300 c.v.'s a month to 300 different jobs. Last time I looked there was one vacancy in my profession nationally, and that was up north somewhere, in November. So I don't want finance.
There's also the point that I actually quite like old cars. No idea why, but I just do. Sure we buy a new car every so often, but my wife drives those. My car is 23 and is a piece of crap, but it still runs absolutely fine. When I check the oil it always looks new. It is cheap to repair. Indeed the FIAT 500 would cost me £130 per month to buy, and that just pays the depreciation. If I put that into the banger, in ten months time it would be solid and fully functional; in two years it would look immaculate. I'd be crazy to do that though.
As a private buy new cars don't make too much sense. OK I've been lucky with my banger [Volvo 360GLT] as it's been pretty reliable over the past three years, and isn't too bad rust wise if I squint, but there are lots of similar cars out there with loads of life left for the same kind of money. The FIAT would also need a deposit of £1,000. For that I could have an immaculate Volvo 340 or 240 series, a newish Proton Wira, or a good classic VW Polo. Lots of really decent cars for little money.
Just look at the maths another way. The Fiat needed a deposit of £1,000 then £129 per month for three years. That's a grand total of £5,644. For that you own precisely nothing. Nada. Zip. Three years down the line, having paid out £6,000 you have a share of absolutely nothing. To actually own the car I'd have to give them a further £4,000. Does not compute. My banger cost £300 three years ago, I own it outright and it is worth £300. Kind of makes sense doesn't it?
Stunningly, in view of my Man Maths, my neighbour stopped for a little chat earlier on. he drives a Range Rover; one of the newer versions. Turns out he hit a pot hole and broke two rims. Now my first reaction was that this is a Range Rover; is it not designed for that type of thing? Ignoring that negative statement, whilst he broke two rims, he couldn't get two new ones to match. So he bought four. And four tyres to go with them. Total cost £1,500. I couldn't help but notice that there was a noisy belt at play as well. "Aha, that went when the radiator went." Possibly another £500 there as well. He's not exactly making a good statement for Range Rover now is he?
This all made me feel so much better about my tri-colour, multiple dented and rusting, unmatching rims, 130,000 mile Volvo after all.
But new cars are so tempting are they not? Bells and whistles, plus peer pressure....
I shall resist!
http://www.bangernomics.com/Bangernomics.html
Well my banger does less than 30mpg, with petrol at almost £6 a gallon [£1.30 a litre] my fuel bills are hitting £30 per week. That's around £1,440 per year. The new car should do 50mpg average, so around £860 per year for fuel. Add in all the other savings, and even with depreciation considerations, I'd only be around £700 per year worse off. Instead of a banger I'd be in something new. [Note I've ignored the £1,000 deposit - see later.]
But £700 is still £700. That's a week's UK holiday for the family, or two bangers, or a set of forks for a mountain bike, or could be the purchase of a folding bike - this would save me even more money on fuel as I could cycle 3 or 4 miles in quite happily. That's every year as well. £700 is also 117 gallons of fuel, or six month's driving in the Volvo. 6 months!
Financially the new car doesn't quite add up now does it? Especially with the economy the way that it is. My job is insecure, and I'm so bloomin' specialised in what I do that there simply isn't another job to go to. There's less than 1,000 people doing what I do in the UK. You know, it's not like I'm in IT or 'phone sales where I can fire off 300 c.v.'s a month to 300 different jobs. Last time I looked there was one vacancy in my profession nationally, and that was up north somewhere, in November. So I don't want finance.
There's also the point that I actually quite like old cars. No idea why, but I just do. Sure we buy a new car every so often, but my wife drives those. My car is 23 and is a piece of crap, but it still runs absolutely fine. When I check the oil it always looks new. It is cheap to repair. Indeed the FIAT 500 would cost me £130 per month to buy, and that just pays the depreciation. If I put that into the banger, in ten months time it would be solid and fully functional; in two years it would look immaculate. I'd be crazy to do that though.
As a private buy new cars don't make too much sense. OK I've been lucky with my banger [Volvo 360GLT] as it's been pretty reliable over the past three years, and isn't too bad rust wise if I squint, but there are lots of similar cars out there with loads of life left for the same kind of money. The FIAT would also need a deposit of £1,000. For that I could have an immaculate Volvo 340 or 240 series, a newish Proton Wira, or a good classic VW Polo. Lots of really decent cars for little money.
Just look at the maths another way. The Fiat needed a deposit of £1,000 then £129 per month for three years. That's a grand total of £5,644. For that you own precisely nothing. Nada. Zip. Three years down the line, having paid out £6,000 you have a share of absolutely nothing. To actually own the car I'd have to give them a further £4,000. Does not compute. My banger cost £300 three years ago, I own it outright and it is worth £300. Kind of makes sense doesn't it?
Stunningly, in view of my Man Maths, my neighbour stopped for a little chat earlier on. he drives a Range Rover; one of the newer versions. Turns out he hit a pot hole and broke two rims. Now my first reaction was that this is a Range Rover; is it not designed for that type of thing? Ignoring that negative statement, whilst he broke two rims, he couldn't get two new ones to match. So he bought four. And four tyres to go with them. Total cost £1,500. I couldn't help but notice that there was a noisy belt at play as well. "Aha, that went when the radiator went." Possibly another £500 there as well. He's not exactly making a good statement for Range Rover now is he?
This all made me feel so much better about my tri-colour, multiple dented and rusting, unmatching rims, 130,000 mile Volvo after all.
But new cars are so tempting are they not? Bells and whistles, plus peer pressure....
I shall resist!
http://www.bangernomics.com/Bangernomics.html
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