At present, the best options for minimising motoring costs are:
1=) Buying a 3-year-old car and running it to 9 years old.
1=) Buying a 8-year-old car and running it until it fails (surprisingly, you are not actually saving any money running a ‘old banger’, due to the significant running cost increases over a newer car.)
3) Leasing a car for 2/3 years.
However, over the last year, I have noticed several trends:
– The list price for new cars has increased significantly.
– With nearly 90% of people buying cars on finance, second-hand prices have been rising. This is due to cars coming off lease and going back in the network to be sold again – indeed some car leases do not even allow you the option to buy the car at the end of the lease.
– With increasing complexity, lighter weight components, and higher replacement costs; the chances of running a modern car to ‘old age’ appear to be reducing.
With these factors, I believe we could reach a point in the future where the only sensible option becomes car leasing. Indeed, several manufacturers have talked about how the market will change in the future and move away from purchasing.
However, there is a significant downside to leasing that many people don’t realise –
When you sign a lease you could be liable for all or most of the future payments until the end of the lease.
However, there is a simple solution… simply save all the lease payments in advance and think of that as ‘buying’ the car rental for the lease term. That way, no matter what happens, you don’t have to worry about making lease payments for the term.
Due to the way leases work, you may want to leave the lump sum in a bank account so that the monthly payments can be taken over the term – rather than pay all of it out upfront.
You would also start saving payments towards your next lease as soon as you take one out, so it is only the first lease that you have to delay while you save the advance payments up.
The few years it takes to save up the initial lease advance would be well worth all the worry it could save you in future.