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You’d have better odds at making money in the casino or Bitcoin than trying to “invest” in a car. Buy a car because it makes you happy, not as a financial instrument.
@@MickDrivesCars until you get a used car and write it off and are stuck with the interest on the loan or buy one cash and it starts costing you £1000s in repairs. Or lose your job and have crazy large HP payments. There is no risk free or 'better' way to drive a car. Its all written into the price and everything has trade offs, no matter which method you do.
Depends on what car it is. If you are rich enough to buy a brand new, rare vehicle few in numbers then it can turn out to be an investment in some years, but, most likely you are not going to use it much not to lose value. I had a 911 from 1998 which i used as my daily for just over a year, then sold it and got a profit of around 4k £ It did bring me fun and cool memories that no money can buy as with some of my other cars in the past. I think most of it comes down to you as an individual, what you want and expect from the car.
It’s beyond wonderful to see people talking sense in the car community (especially when it comes to finances). Please keep doing what you’re doing, and mega congrats on getting sponsored!
The only issue with buying a sporty car at the bottom of its depreciation curve is that if it's a sporty car it would have been driven..well.. sporty. So you are one lemon away from having 0 equity at all times. That's the single biggest benefit of buying new IMO.
If you buy new, depreciation will be gigantic. Avoiding that will let you spend big on the maintenance of an older car. And that maintenance cost will only hurt your equity if you want to sell the car quickly. Own the car at least five years and the maintenance cost will hardly show up on your 'total costs' chart.
This is a good lesson for people. I feel like I’ve followed it fairly well with my car purchases over the last 4-5 years. I bought a 3 year old BMW M240 for $34,500 and sold it 3.5 years later for $32k. Rolled that into buying a Z3 M Coupe in cash for $30k that I drove for 6 months and sold for $32.500. Then rolled that as a down payment on an M2C so I’m financing ~$19k and have payments of only $370 a month for 60 months (high, sure but in the US the average used car payment is $520 for 72 months). So I’ve rolled the equity of my M240 that I paid off through 3 different cars now and have barely lost anything to drive 3 cars I find pretty cool. The M2C has depreciated pretty slowly overall so while I definitely expect to lose money on it, I don’t expect it to be that insane with the mileage I put on it.
A couple things I will say: If you are buying a long term car as a daily npc econobox and you intend to use it for as long as possible and just wait till it dies to replace, but you want a “luxury” car (assuming you have the money to do so), it *could* be worth buying brand new, because if you’re keeping that car until it into pieces, the money is gone anyway and it’s worth nothing in terms of money, regardless of how little it depreciates you’re not getting the money back Two: at least where I live in Australia any Toyota is WAY better at holding value Even the most boring cars; let’s use a 2020 es300h sports luxury (a car I was looking at for a daily) for an example, it’s realistically just a high spec Camry; cheapest price I could find in my state was nearly 50k and a brand new 2025 is 90k so those curves are WAY out of reality for me
Definitely a good point, if you keep the car until its last legs you definitely will get your money back. The problem with car guys (i myself is a car guy), is that once i achieve my achievable luxury sports car, i always tell myself before i buy it that it will be my last car, keep it until its dead, one year later with it, i trade for another car. I've been through 5 sports/sedan cars within 6 years lol. It's an endless money pit cycle...
@@himynameisryan lmao yup, sometimes i wish i had a different hobby, like knitting or some shit lol, won't cost thousands and lose on depreciation, oh well...
Ngl, I agree on this a bit. I say buy a car that holds value after 3 years. I live in the UK and the market is quite different when it comes to 2nd hand. Most popular cars depreciate alot. Like I mean alot. Meanwhile the less popular cars hardly depreciate such as the Lexus RC F for example or like Ford Mustangs, etc. Those cars do hold value quite a bit. But I genuinely agree that, if you're looking for a daily that your gonna run until its on its last legs, I say might as well buy it because regardless. You're gonna lose that money anyways.
My god Mick, I’m actually speechless what an informative video thank you 🙏 . I’m on HP with my current car with it coming to end next year. I need this video protected at all costs!
Nice video Mick. I've been considering buying a m240i (while watching your previous video religiously to try and talk myself out of it) so this is great timing!
Haha nice, thanks! 240i is a great only car - check out my video ''how to modify your daily driver'' for an example But if you want something as a pure fun car I would push you in a different direction
@MickDrivesCars I’d love to hear your suggestions! I’m coming from a TT, looking for something rwd. Ideal budget is around 10-15k, was going to stretch it for an m240i
@ thanks for the suggestions. Love the sound of the e92 m3. I've flirted on and off with the idea of a cheap mx5 for the best part of a year now as something just to slide around in with minimal expense to maximum fun ratio. Are you still thinking of getting one?
If you want to make good financial choices, never buy a car and cycle to work. Equity is a hilarious concept unless you're buying rare ferraris. Just buy or lease a car in a way you can afford and enjoy it. Not everything in life needs to be 'smart' you're leaving the planet one day.
Yeah but if you make good financial decisions in your 20s and 30s you can afford much nicer lifestyle later in life. It's all trade offs. The only real stupid people are the ones who just generate wealth their entire lives just to die with it all
So you feel good about your self for throwing non-sequitur truisms, mocking people, just so you can have your emotional decisions validated? Car is a necessity for most people not a luxury. Buying a car is the second most expensive purchase most people make in their life. Bad financial decision here can cripple them financially for years to come. There is nothing hilarious about them using some basic math and common sense in order to save some of their hard earn money, and spend it somewhere they care more...
@@jedananagram6272 lol you've had a meltdown on like 10 different comments. "Bad financial decision here can cripple them financially for years to come" - Literally at no point did i say that, infact i said the complete opposite. Man go deal with your problems at the gym or something.
@@jedananagram6272 You've been rage replying to like 10 different comments. "mocking people, Bad financial decision here can cripple them financially for years to come." - At no point did i say any of this, infact i said the complete opposite. i think you're dealing with your own problems man. I wish you the best in dealing with whatever is bothering you about other peoples wealth.
@@dtex_zero I've replied to exactly 3 comments... And if you bothered to read one, you would know that I have no issue with people buying new cars (or anything else for that matter) if money is not a concern to them. Anyway, since I'm the one propping sound advice that actually is helpful to people IRL, I'm perfectly entitled to be as candid as I'd like when dealing with radnom internet clowns who do the opposite...
Apologies, but I can‘t follow your argumentation. Rule nr 1 is to drive the car you can actually afford to drive. It is an asset but a heavily depreciating one. If you buy an older one that depreciates slower, you will have more costs in maintenance (this especially applies if you get a more premium one that needs more expensive parts to he replaced). Additionally there is inflation, meaning that you might get the same amount a year later, but everything else got more expensive as well. Rule nr 2: Only finance if the condition (effective interest rate) is lower than what you can get out of the capital market (etfs, bank interest). Despite that, each financing option has pros/cons; eg with leasing (your first option) you know exactly what the car incl depreciation costs you each month (downpayment + monthly rates) devided by months of the contract and you have a guaranteed remaining value that you get from the dealership, that can be a safety net eg for electric cars which might depreciate even faster.
The bit about inflation is very important. As far as I know there really aren’t many cars that actually appreciate, they just get adjusted to inflation. And even if the car does indeed appreciate a bit you would have had much higher return if you invested your money in S&P500 or something like that.
If you are not bothered about changing cars frequently I think the smartest thing to do is buy new, ideally outright but on HP if that is not feasible, find a decent independent garage and run it until it can no longer be economically repaired, usually around the 10-15 year mark. At that point you can usually sell it on and get something back, particularly if the car is from a popular mainstream brand like VW or Toyota.
It's a great video but there's a second part of the story which is maintenance cost. Sometimes a car won't lose value but the reason for this is that you need insane amounts of money to keep it running. This is true for cheap Porsches for example. Yes, you can buy them relatively cheap but getting them serviced at Porsche will cost you 3-5k every time you go there. And if you do it yourself or service it somewhere else, it loses value because it doesn't have a full service history at a Porsche dealer. The lesson is: don't try to make money with cars, just enjoy.
37 years old. First flat was £87.5K. Next house was £125K with £13K down. Current house was £257K with £125K down from paying off last house. Laddering up is still possible, but you have to live like a monk for 10 years.
I know financing is bad, but atleast if you finance you can deposit like 40 - 50% of cars price and monthly payments will be low, this way your car won't financially kill you
Great video! Frustratingly I’m 39 and only figured this out recently. I used to buy on finance, get impatient, sell to soon and end up in the negative equity cycle. That was until I bought a house and had to settle down. I picked up a cheap FN2 Type R for 5k. Financed over three years. Sold it for 5k three years later and then put that towards my current car a M140i. In a years time I’ll have around 10k equity in the M140i and can get my dream car. The M2 Competition. This is the way to do it 😎
Honestly I only learned this the hard way too. I think us petrolheads have to make mistakes to move forward sometimes :) Congrats on the M2 comp though, you're going to love it.
I realised it a year ago and atleast i'm only 24 but with the petrol ban coming in I just can't see me having the money in time to get my dream car but enjoy the comp!
Maybe I’m missing a trick here? Isn’t the total amount payable all that matters? most HP deals have interest on them, so you’re paying more for the privilege of splitting the cost up. I can’t understand how getting a car on HP is better than paying for it outright. You’re still suffering the exact same depreciation and paying the exact same amount.
The only thing I can think of is that lots of dealers don't want people buying cash because they make money on the finance (I have had this happen). You may be able to haggle a slightly better price and put the cash elsewhere earning more interest than you get charged.
Using finance allows you to continue to invest your capital elsewhere. If you are in full time employment with decent disposable income then a few hundred £ a month isn’t a big deal to fork out monthly (if the interest being charged is reasonable). It then gives you options with what to do with your 10/20/30/40k which is still in your savings and not in the dealers pocket.
I've got what I think is a car buying hack. Finance is expensive and interest is calculated daily. So what I do is get a good PCP deal and work out what the balloon payment is over the term. Save this balloon payment and at the end you either buy a car which is proven to be a good car or you have yourself a solid deposit to go again. If you can afford to save more and pay the car off early is a big bonus.
Love this video it’s one of the best explained videos l Have ever seen with great detail l agree with everything you say in this video and l have just subscribed so keep the videos rolling 😂👍🏽🤜🏽💯
I love your channel even before you got ur bmw. I was so happy that you progress when you finally bought your dream car. Almost the same time I upgraded my chevy malibu 06 to a used mb glk 350. 2 years into it still drives smooth.just basic maintenance from the dealer. Thank you for your honest review of having a german sports car . And the cost of owning it. I agree car should us make happy not stress out. Cheers brother.
Huge disagree in the last section. Your car is deprecating, and you will realize the loss when you sell it no matter what, you are just changing when you pay for it (upfront vs later). If you are investing the difference elsewhere that returns a higher rate than your loan, or if you simply need the liquidity, those are decent reasons to finance, but make no mistake you are paying for the privilege at the rate of your interest. You will also often pay higher insurance on a financed vehicle, even if you paid down enough to not have gap.
This is a great video. A lot of people will choose cars on finance that are at the limit of their monthly budget. In my experience cars that have plateaued in value have had enthusiasts as owners and have been well cared for. So many amazing cars now available for sub 17k it’s crazy to buy a new basic model for way more money.
The 'trap' is only thinking about what monthly payment you can afford. Always look at the total amount you will replay and how much of that is interest. If you buy a car with the cash you have and save the monthly payments you would have made for a couple of years you are in a massively superior position when you upgrade. Repeat this process, you'll never be tied to a loan and in a couple of cycles you'll have your dream car without nightmare repayments. Apart from avoiding early depreciation, there's no magic formula when it comes to financing a car. Delayed gratification is the only real win.
Good suggestions but it's not always that simple. If a person really needs a car as a basic need to commute or work with it but doesn't afford to buy in full, leasing or personal loan for a small monthly payment is fine. A 3 year old car is fine so one doesn't have to repair it too soon or maybe even a new one. If you are wealthy and want to drive an X5 which you can expense with your company and easily afford it, it's also fine. The interest makes up in a zero worries experience and you always have a new nice car. Otherwise cash is king. I bought my current car 5 years ago as brand new by paying cash and plan to keep for 5 more years. Zero issues so far. And you don't get hit by depreciation until you sell and by the time I sell it, just split the cost of ownership by 10 years and you see it's very very low. And inflation will offset the gains in your favor. Also the current economy where my car is now worth only 25% less.
Congrats on the sponsor mate! As well as HP, PCH (lease) is another good option. If you can get the lease down to the shortest period possible (eg 2 years), yes you eat the depreciation cost and don’t have equity, the monthly’s are lower than PCP (no interest), and you still get a factory new car and warranty. Also no MOT / road tax is payable on leases. And if you run a business, getting a car on business contract hire (BCH), it can be even more cost effective because you’re effectively declaring it as a partial tax write off. Whichever way you spin it, PCP is the devil’s work and avoid it at all costs. It’s effectively a car subscription service, and you as the consumer almost never win. So for those reasons I would say hire purchase / leasing are the most cost effective ways to have nice cars in today’s economy. You’re always going to take a hit financially as that’s the nature of the hobby, but these two make the most sense long term Oh, and one other thing people don’t know about PCP is it can haemorrhage your mortgage applications and amount brokers will lend you.
Really cool topic! The shame though is that during ownership of a car, you spend money on petrol, tires, services etc. which is not included here, but maybe an idea for next video?)
With a car costing 40k changing every 48months as an example...Buying slightly older cars (2 years old) with cash results in a £38,464 saving over 16 years compared to PCP at 5.9%. The cash buyer also owns the cars and benefits from resale value, while the PCP customer pays significantly more without ownership. This approach makes cash purchasing even more cost-effective, especially for those who don’t mind driving cars that aren’t brand new.
But you pay for repairs and a chance its breaks and you have no car and near 0 equity. They also get to ride a brand new car that is likely faster, safer.. etc. There are trade offs no matter the method. If you're a petrol head that likes to tinker, used is probably the way. If you're a software engineer on 6 figure salary financing a merc is probabaly suits you better and doesnt touch your salary in anyway.
@dtex_zero it a fair point. However, in my example, for over 16 years, both methods would have 4 car replacements. In the PCP version, after 16 years, you would have paid almost 40k more and still do not own any car. If buying cash and having just the one car over 16 years, it could save you up to 80k vs PCP changing every 48 months. I accept that there are pros and cons for both.
Hey great video! I watched some of yours recentlyvand discovered great advices here and there! Is it then possible to make a video on how to find cars that are suitable for this staircase approach ? :) maybe with some examples for each step of the stair or something in this kind ? That would be so great!
Hi a little more to this than just the money,older cars will need more servicing and upkeep compared to say a new lease vehicle.Also PCP and HP reflect differently on your financial footprint.I have done all ways-before covid I leased a C1 for my step daughter £99 down £99 per month-simply not worth owning it.Personally I have "staircased" from a £2000 Saab in 2008 to a £127K Taycan now (Bought at 1 year old for half that) but I bet on average it has still cost me upwards of £1000 per month in recent years.....pays your money takes your choice!
In north america, PCP and HP are called leasing, and getting a loan. Loans are much more popular than leasing, although a lot people say to lease luxury cars rather than use a loan to buy them outright because after the warranty, most german cars in north america will eat their owners alive with maintaince and repair costs. But that's assuming you want to keep the car long term.
@@stanskistan personal contract hire is a lease and personal contract purchase- a finance agreement which has a balloon payment at the end allowing you to buy the car or hand it back at end of contract.
leasing luxury cars can be handy, but you’re essentially still paying interest on top of depreciation. Also the reason why there are so many lemons sitting in lots currently, all been abused without proper care over the years.
I don’t know what it’s like in the UK but PCP can also offer some form of security in you not losing all your money. It’s not a one way street with the big balloon payment at the end - the dealer would also be obliged by contract to take that car off you for that previously determined price. Of course, this is a very financially inefficient way - but you can get at least some of your money back should the environmentalists or government decide, that ICE-cars should be banned or petrol prices made to skyrocket.
Quite a few counter arguments to this advice, mainly that it's only applicable if you're happy driving old bangers that will go pop and cost more to fix than they're worth. When it comes to cars, pick an amount of money you're not bothered to lose and then go buy a car with it.
couldn't agree more. Be prepared to lose the money, but more importantly, don't buy beyond what you can afford. If you can't afford it, or if you finance it and your bank balance isn't going to look any better than it does the day you bought it, don't get it. It's only going to be a potential burden
I would say that the best case is buy a sensible cheap newish daily, on PCP or HP then buy your second fun car on HP and keep upgrading that till you have what you want. You'll keep the miles down on it and when something goes pop you have another car to use so not under pressure to fix straight away.
If you can’t find a good used car for less than 5k that will last you ten years of motoring there’s something wrong with you. The lie people tell themselves about running a used car costing more than their £300 + a month finance payment is hilarious.
Always LEASE and look for the car with the amazing offer - you may end up with something you didn’t necessarily look for BUT RRP vs lease price will be incredible 💯
before watching this video i would say just dont finance because a year old car will have lost some 20-30% of its value. also big congrats on your sponsorship
No mention af APR% .. banks also are aware of depreciation and often account for it in the lending rates. Best bet is actually to get a cat s that the insurance companies have written off , fix it to factory spec and use it for a decade. This way your car is actually an appreciating asset. Only issue is if you plan to sell however the savings will allow for an upgrade after 10 yrs anyway.
In your example of performance car value you forgot inflation, maintenance cost, storage cost, incidentals. It is very rare for cars to out preform other financial instruments.
I wish you would have mentioned repair costs. These can easily hit the 5-digit zone and ruin your "bargain" car purchase after its steep depreciation curve.
Stop financing depreciating assets. Don’t listen to anyone that says you can build equity in the car game lol Save up and Buy a 4-5 year old car in cash. Get payments out of your life. When you have payments the car owns you, you don’t own it. NEVER BUY A BRAND NEW CAR
Also to add, its not just the finance you need to keep in mind, its also the higher premiums, higher maintenance costs, and higher fuel consumption (because let's be honest, youre not going to drive it in Eco) So unless you have around 1000 a month spare that you could use a piece of it to finance a car you don't need to go into debt I'd say steer away from financed cars, especially If you got your license recently.
the way I view it is don't get a car that you can't afford, or finance one where you cannot save a decent amount of money at the end of each month when the payments are made. If you can put a good chunk of money away whilst paying for the car, and start with a good chunk sat there, so that, if something happens, you can afford whatever it is that life has thrown your way. And always have some form of equity in the car on finance, so that, if you lost your job for example, you can get that car gone and get into a cheaper car that you have outright and get rid of those monthly payments overnight without it costing you or leading to you needing to borrow more
The issue I've found, is yes I can afford a £400 HP agreement a month but then you are paying £400 a month for a car its crazy and it felt okay until one month I realised my cars only a weekend thing why am I paying this amount for it. Since then I buy cash only or a very small hp duration loan because very few cars will require 12 months of £400 in repair bills. I can semi understand it if its a special sporty car but I really can't imagine anything worse than buying a normal car for full price HP. Blowing away so much in interest and I don't think people realise.
Interesting topic. A couple of considerations. HP from the car manufacturer may cost much more than a personal loan. Some of the interest rates on used cars can be very high. Warranty is also a consideration. That old BMW for £16k is not so attractive when you get a £5k repair bill. If you can get a car that has some warranty left, there is value in that.
At the end of the day, all that matters is the total cost of ownership, regardless of how you finance it. There are also different types of cash buyers. E.g. Those who are sat on cash and can also afford a monthly car payment (keeping their cash invested). And those who are sat on cash and need to decide between a car or an investment (but not both). The first type needs to consider the opportunity cost of paying cash, while the second does not. Another cash option is a bank loan, which can be a great idea as their interest rates are typically lower than other providers You also benefit from monthly payments, and you build equity. So ultimately it depends on your own situation, but one thing you can be sure of is that anyone who says buying with cash is a bad idea is definitely not in a position to buy with cash themself 😂
Interesting theory. However, there are other factors that you need to consider when buying older cars at the bottom of the depreciation curve. Repairs and maintenance are likely to cost more. You need a pot of money saved up in the event that this happens. A new/nearly new car is less likely to wrong and will have a manufacturer's warranty. You will struggle to get HP on 10 year old car. A bank loan is the only way to go.
No way - you're a real one! Not many people watched that video and even less reference it. I just had a look through and I think I was right on every single model, apart from the WRX STI which is tanking :) Not a huge amount has changed - S2000's are on the up
Ive pcp'd an a35 on mercedes christmas deal, premium plus 501 a month went halves w my dad since we need a family run about thats not gonna clock up too many miles, chose pcp bcuz i know i dont want to own it and the final payment is fairly low, really want a gle63 but cant get insurance, can in 4 years, my first car i bought cash for 36k, was a giant mistake, couldve made so much better use of that money and still had a fun car. This time, I've factored in my future plans to the purchase, and already having it waaaay easier than my first car.
The only car finance trap is buying a car on finance. Buy a car you can afford outright and if you need to stretch it a bit then put the purchase on a 0% credit card (only if you’re 100% able to pay it off within the 0% interest period).
£15k for a E92 M3 is insanely cheap compared to prices here in Germany, here you easily pay more than double. Has to do something with them beeing RHD but still
I think he’s talking about very very high mileage ones. Obs depends on the spec but I’ve been tracking them for a while and sit around £25k for a DCT with 40-55k miles ish
I’ve have always HATED pcp. All you’re doing is kicking a can down the road. You never actually own the car, in essence you are just renting it. Then at the end of your agreement you have to do it all over again or give the car back as most won’t be in a position to pay the balloon payment. Talking of positions that no one EVER considers with pcp is what happens if your circumstances change? You think you getting a new car, your agreement ends however because your circumstances have changed you can’t get approval for the new deal so your left with one option but to give the car back, then you have not one jot to show for all those payments you made. I also think it’s another reason (intertwined with all the others) why car manufacturers have been able to raise car prices so wildly. Manufacturers know people will just have a larger balloon payment keeping monthlies down. For me HP is the only way to go. You can’t really invest in a depreciating asset but at least you will own it at the end of the agreement.
Comparing an automobile to a home is crazy, unless you plan to store it in an armored crate and almost never drive it, such that the probability of it getting wrecked is lowered to match the probability of a catastrophical loss happening to a home. The probability of an event to a home is much lower, which is why home insurance is much cheaper than car insurance.
Beautiful video again mick nice job! Would love to learn to navigate the used/older car cash purchase process. Looking to buy my first “enthusiast” car either an e36/e46 m3 or a 996 911 cash in the next 12-18mo and am wondering what else I should know. Thanks again
Congrats on the Sponsor Mick, been loving your vids since starting driving a year ago. I'm 21, currently driving a Audi A4 Sport 2016 1.4l petrol i paid like £9k but am looking at getting a newer Audi S3 which is a bit more sportier for 2nd/3rd year. What would you recommend? Am thinking about buying a newer 2021+ model but idk probably not the best financial decision.. Any reccomendations?
A lot of sense spoken, but.. if you’re savvy with it and know what you’re doing then PCP can work for you. The PCP ‘trap’ with eyes wide open it’s not a bad thing. A new car every few years at X a month (with security of warranty) works for lots of people. Bear in mind that the GFV on a PCP will heavily favour the dealer, so you should be able to sell your car elsewhere the day before it’s due to go back for substantially more than the GFV you were told at the start. This could be 3/4/5k dependant… so works as a deposit for the next one, or a bit of a personal savings account. Personally… I bought my M3 on PCP at 5 months old, it had already lost ~25% of its on the road price and I intend to keep it for the foreseeable. The PCP is through my bank at a reasonable rate so makes it comfortably affordable. At the end of the term I’ll refinance the balloon but if I was to sell it elsewhere I know I’d have the best part of 20k out of it. Not all bad, but do the numbers.
Not sure i follow how paying cash on a new car is worse than finance. If you finance you have the financial hit of depreciation plus paying interest. I guess it would depend on the interest rate at the time. Also there's a mental aspect of owning your toys outright instead of the bank that can't be denied
Had my M140i for 3 years now. I paid £24000 for it in 2022 when it was an approved car from BMW. I've done 15000 miles in it and kept it wanting for nothing. I have been watching the price of these cars since I bought it and they just hover around 20 grand. I'm betting this will be the plateau for well looked after examples as time moves forward.
I also got my M140i in 2022 and have done >20k miles, but I'm not sure of the used value. The issue with the M140i is that the market is saturated with category cars and this pulls the values down and makes it difficult to gauge what should be paid for a car. Actually, I have in mind to keep mind after some of the modifications I've made. Definitely a performance bargain still. About car finance I always prefer to pay cash, but have done some bank loans and 0% credit cards before to reduce the overall cost. I think this can be one of the best methods for getting a slightly better car.
Paying payments to offset the depreciation only works if you already have investments that grow your wealth while you make those payments. If you don't, then you are paying depreciation WITH interest, doing those payments. Not paying cash for a car is ONLY a good option if you have the cash, but invest it instead. Doing payments when you don't have the cash is just plain stupid.
You can buy an older car cash. keep it for a couple of years then sell. you would loose less than the interest you would have paid on finance. Obviously it’s got to be the right car at the right price but 2025 the interest rates are eye watering. Or keep your cash and make it work for you to off set the finance.
Interesting video 🤔 unless you are a car dealer ? Most cars are not an investment! Cars are a depreciating assets and can not be compared with bricks and mortar that are appreciating assets ! 👍
Bought an E30 in 2018 for $3500. Drove it for almost 7 years and now it is worth 2-3X. Used that money in conjunction with some addition funds I have saved during those 8 years to buy a used another sports car that is near the bottom of the depreciation curve. Rinse and repeat. Never had a car payment.
Being smart with money is not so simple. Rather than focus on cash vs. loan vs. leasing the most important thing above all else is the price of the car. Even depreciation rates matter little when the car only costs a little. To determine how expensive a car you can really afford you simply compare the price to your liquid wealth. Never let a car purchase be worth a major percentage of your liquid wealth. Unless you want to always be poor.
@@caffeinefix2751 A good rule of thumb would be 20-25% max for the combined price of owned vehicles. But if you're not an enthusiast and only economics matter, 15% would be smarter.
You haven’t mentioned one of the most important things… how you go about selling your current car. Never ever “trade in”. Always sell private and be patient. Potentially thousands to avoid losing there
Not always, often the dealership can fetch more for your car through warranty packages and reputation. Thus sometimes can offer far closer to what you would get privately than you might initially think. But depends on car.
I agree. Dealers give low valuations all the time. Furthermore they take a huge cut of the sale. For the people with more money than time that is for sure.
What if you were to buy a car in cash when it's at the bottom of its depreciation. That would essentially be better than hp because you don't pay for any of the interest and you've only paid what the car is worth. The other method is to not pay for any car and invest that money to then be able to afford that AMG with cash left over down the line 🤔
One option re cash: Say you have 10k cash to purchase vehicle Take out a 10k bank loan to purchase the vehicle Invest your 10k cash in funds etc If your 10k investment outgrows the interest you paid on your loan, you’ve made money
I'm literally on the search for a new car and this video could not have come at a better time. Was tossing between a used Gold R Mk7.5 DSG vs new Tesla model 3 performance (btw which would u choose?). I reckon I'll go golf for now, and get the M3P once used prices come down so I don't get the depreciation hit. Can afford both cash, of course the tesla being new is about double the price (35k AUD vs 75k). Being a comfortable do-it-all car that both the Mrs and myself will daily, I am torn between the two. I know the tesla will have more tech and generally be more comfortable, but the golf being lighter, petrol and having the hatch space, it's really hard to choose. I probably will get them cash as I hate paying interest on an asset that already is depreciating plus having to pay service and petrol and rego costs and insurance... Would love your insights. cheers!
Bro in my opinion- I would never by a second hand ev. Electric power doesn’t hold up in time as good as an internal combustion engine. The golf will drive better it will have better build quality and it’s a drivers car + it’s light and better to drive and with proper maintenance you can keep it way longer than the model 3
Before buying any used car, it's important to check it's history. Use the link below for a 20% discount or Discount Code : MICKDRIVES
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You’d have better odds at making money in the casino or Bitcoin than trying to “invest” in a car. Buy a car because it makes you happy, not as a financial instrument.
It's not about making money at all
It's about loosing the least, while having transportation. And maybe fun.
One of my dad's work mates has bought a brand new GR Yaris and the car has been sitting in a garage covered by a tarp for a month already.
@@hashteraksgage3281 a car deteriorates so much quicker from not being driven, than when actually used.
@@MickDrivesCars until you get a used car and write it off and are stuck with the interest on the loan or buy one cash and it starts costing you £1000s in repairs. Or lose your job and have crazy large HP payments.
There is no risk free or 'better' way to drive a car. Its all written into the price and everything has trade offs, no matter which method you do.
Depends on what car it is. If you are rich enough to buy a brand new, rare vehicle few in numbers then it can turn out to be an investment in some years, but, most likely you are not going to use it much not to lose value. I had a 911 from 1998 which i used as my daily for just over a year, then sold it and got a profit of around 4k £ It did bring me fun and cool memories that no money can buy as with some of my other cars in the past. I think most of it comes down to you as an individual, what you want and expect from the car.
It’s beyond wonderful to see people talking sense in the car community (especially when it comes to finances). Please keep doing what you’re doing, and mega congrats on getting sponsored!
Paying intrest on something that loses money is never a good idea.
Unless it gives you the possibility to grow your richness, like going to work!
@@Minamoto130 Yeah on a cheaper car the intrest would be low, but you don't need anything expensive to get to work
And paying full money for a depreciating investment is not wise at all
@ Cars are not a investment but getting into debt for a car is not a good idea
The only issue with buying a sporty car at the bottom of its depreciation curve is that if it's a sporty car it would have been driven..well.. sporty. So you are one lemon away from having 0 equity at all times. That's the single biggest benefit of buying new IMO.
To be fair, I've had better luck buying used from people that drive ''sporty'' than from dealerships
Also If someone/you totals the car, then you are at a -20k loss and you still have to pay the finance whilst not having a car 🫣
@@huestom That's what insurance is for.
If you buy new, depreciation will be gigantic. Avoiding that will let you spend big on the maintenance of an older car. And that maintenance cost will only hurt your equity if you want to sell the car quickly. Own the car at least five years and the maintenance cost will hardly show up on your 'total costs' chart.
@@Ljubi12882 😂😂😂 ok.
Thats great that you have got a sponsor like car vertical, great news!
This is a good lesson for people. I feel like I’ve followed it fairly well with my car purchases over the last 4-5 years. I bought a 3 year old BMW M240 for $34,500 and sold it 3.5 years later for $32k. Rolled that into buying a Z3 M Coupe in cash for $30k that I drove for 6 months and sold for $32.500. Then rolled that as a down payment on an M2C so I’m financing ~$19k and have payments of only $370 a month for 60 months (high, sure but in the US the average used car payment is $520 for 72 months). So I’ve rolled the equity of my M240 that I paid off through 3 different cars now and have barely lost anything to drive 3 cars I find pretty cool. The M2C has depreciated pretty slowly overall so while I definitely expect to lose money on it, I don’t expect it to be that insane with the mileage I put on it.
For car vertical, be aware that your credit to inspect a car is time limited !!!
How long is it
A couple things I will say:
If you are buying a long term car as a daily npc econobox and you intend to use it for as long as possible and just wait till it dies to replace, but you want a “luxury” car (assuming you have the money to do so), it *could* be worth buying brand new, because if you’re keeping that car until it into pieces, the money is gone anyway and it’s worth nothing in terms of money, regardless of how little it depreciates you’re not getting the money back
Two: at least where I live in Australia any Toyota is WAY better at holding value
Even the most boring cars; let’s use a 2020 es300h sports luxury (a car I was looking at for a daily) for an example, it’s realistically just a high spec Camry; cheapest price I could find in my state was nearly 50k and a brand new 2025 is 90k so those curves are WAY out of reality for me
except the GR yaris, as nice as it is, I lost 8k on mine in depreciation in only 18mths :'(
Definitely a good point, if you keep the car until its last legs you definitely will get your money back. The problem with car guys (i myself is a car guy), is that once i achieve my achievable luxury sports car, i always tell myself before i buy it that it will be my last car, keep it until its dead, one year later with it, i trade for another car. I've been through 5 sports/sedan cars within 6 years lol. It's an endless money pit cycle...
@@Eric-qx7fg ahhh car guys with cars is like me with iphones; i wont buy the new one, see the apple event, buy the new one
@@himynameisryan lmao yup, sometimes i wish i had a different hobby, like knitting or some shit lol, won't cost thousands and lose on depreciation, oh well...
Ngl, I agree on this a bit. I say buy a car that holds value after 3 years. I live in the UK and the market is quite different when it comes to 2nd hand. Most popular cars depreciate alot. Like I mean alot. Meanwhile the less popular cars hardly depreciate such as the Lexus RC F for example or like Ford Mustangs, etc. Those cars do hold value quite a bit. But I genuinely agree that, if you're looking for a daily that your gonna run until its on its last legs, I say might as well buy it because regardless. You're gonna lose that money anyways.
My god Mick, I’m actually speechless what an informative video thank you 🙏 . I’m on HP with my current car with it coming to end next year. I need this video protected at all costs!
Nice video Mick. I've been considering buying a m240i (while watching your previous video religiously to try and talk myself out of it) so this is great timing!
Haha nice, thanks!
240i is a great only car - check out my video ''how to modify your daily driver'' for an example
But if you want something as a pure fun car I would push you in a different direction
@MickDrivesCars I’d love to hear your suggestions! I’m coming from a TT, looking for something rwd. Ideal budget is around 10-15k, was going to stretch it for an m240i
Any MX5, E92 M3, E46 M3, 200sx silvia, lotus elise,
@ thanks for the suggestions. Love the sound of the e92 m3. I've flirted on and off with the idea of a cheap mx5 for the best part of a year now as something just to slide around in with minimal expense to maximum fun ratio. Are you still thinking of getting one?
@@MickDrivesCars 2009 onwards Cayman?
If you want to make good financial choices, never buy a car and cycle to work.
Equity is a hilarious concept unless you're buying rare ferraris. Just buy or lease a car in a way you can afford and enjoy it. Not everything in life needs to be 'smart' you're leaving the planet one day.
Yeah but if you make good financial decisions in your 20s and 30s you can afford much nicer lifestyle later in life. It's all trade offs. The only real stupid people are the ones who just generate wealth their entire lives just to die with it all
So you feel good about your self for throwing non-sequitur truisms, mocking people, just so you can have your emotional decisions validated? Car is a necessity for most people not a luxury. Buying a car is the second most expensive purchase most people make in their life. Bad financial decision here can cripple them financially for years to come. There is nothing hilarious about them using some basic math and common sense in order to save some of their hard earn money, and spend it somewhere they care more...
@@jedananagram6272 lol you've had a meltdown on like 10 different comments.
"Bad financial decision here can cripple them financially for years to come" - Literally at no point did i say that, infact i said the complete opposite.
Man go deal with your problems at the gym or something.
@@jedananagram6272 You've been rage replying to like 10 different comments.
"mocking people, Bad financial decision here can cripple them financially for years to come." - At no point did i say any of this, infact i said the complete opposite. i think you're dealing with your own problems man. I wish you the best in dealing with whatever is bothering you about other peoples wealth.
@@dtex_zero I've replied to exactly 3 comments... And if you bothered to read one, you would know that I have no issue with people buying new cars (or anything else for that matter) if money is not a concern to them. Anyway, since I'm the one propping sound advice that actually is helpful to people IRL, I'm perfectly entitled to be as candid as I'd like when dealing with radnom internet clowns who do the opposite...
Apologies, but I can‘t follow your argumentation.
Rule nr 1 is to drive the car you can actually afford to drive. It is an asset but a heavily depreciating one. If you buy an older one that depreciates slower, you will have more costs in maintenance (this especially applies if you get a more premium one that needs more expensive parts to he replaced). Additionally there is inflation, meaning that you might get the same amount a year later, but everything else got more expensive as well.
Rule nr 2: Only finance if the condition (effective interest rate) is lower than what you can get out of the capital market (etfs, bank interest).
Despite that, each financing option has pros/cons; eg with leasing (your first option) you know exactly what the car incl depreciation costs you each month (downpayment + monthly rates) devided by months of the contract and you have a guaranteed remaining value that you get from the dealership, that can be a safety net eg for electric cars which might depreciate even faster.
The bit about inflation is very important. As far as I know there really aren’t many cars that actually appreciate, they just get adjusted to inflation. And even if the car does indeed appreciate a bit you would have had much higher return if you invested your money in S&P500 or something like that.
Great comment 👍🏽
If you are not bothered about changing cars frequently I think the smartest thing to do is buy new, ideally outright but on HP if that is not feasible, find a decent independent garage and run it until it can no longer be economically repaired, usually around the 10-15 year mark. At that point you can usually sell it on and get something back, particularly if the car is from a popular mainstream brand like VW or Toyota.
It's a great video but there's a second part of the story which is maintenance cost. Sometimes a car won't lose value but the reason for this is that you need insane amounts of money to keep it running. This is true for cheap Porsches for example. Yes, you can buy them relatively cheap but getting them serviced at Porsche will cost you 3-5k every time you go there.
And if you do it yourself or service it somewhere else, it loses value because it doesn't have a full service history at a Porsche dealer.
The lesson is: don't try to make money with cars, just enjoy.
37 years old. First flat was £87.5K. Next house was £125K with £13K down. Current house was £257K with £125K down from paying off last house.
Laddering up is still possible, but you have to live like a monk for 10 years.
I know financing is bad, but atleast if you finance you can deposit like 40 - 50% of cars price and monthly payments will be low, this way your car won't financially kill you
Great video!
Frustratingly I’m 39 and only figured this out recently.
I used to buy on finance, get impatient, sell to soon and end up in the negative equity cycle.
That was until I bought a house and had to settle down. I picked up a cheap FN2 Type R for 5k. Financed over three years. Sold it for 5k three years later and then put that towards my current car a M140i.
In a years time I’ll have around 10k equity in the M140i and can get my dream car. The M2 Competition.
This is the way to do it 😎
Honestly I only learned this the hard way too. I think us petrolheads have to make mistakes to move forward sometimes :)
Congrats on the M2 comp though, you're going to love it.
I realised it a year ago and atleast i'm only 24 but with the petrol ban coming in I just can't see me having the money in time to get my dream car but enjoy the comp!
It’s also worth mentioning that the actual cost of a HP versus a PCP is most people can’t afford.
Just came back from looking at cars, this video comes at the perfect moment
Love to hear it :)
Maybe I’m missing a trick here? Isn’t the total amount payable all that matters? most HP deals have interest on them, so you’re paying more for the privilege of splitting the cost up.
I can’t understand how getting a car on HP is better than paying for it outright. You’re still suffering the exact same depreciation and paying the exact same amount.
The only thing I can think of is that lots of dealers don't want people buying cash because they make money on the finance (I have had this happen). You may be able to haggle a slightly better price and put the cash elsewhere earning more interest than you get charged.
Using finance allows you to continue to invest your capital elsewhere.
If you are in full time employment with decent disposable income then a few hundred £ a month isn’t a big deal to fork out monthly (if the interest being charged is reasonable). It then gives you options with what to do with your 10/20/30/40k which is still in your savings and not in the dealers pocket.
I've got what I think is a car buying hack. Finance is expensive and interest is calculated daily. So what I do is get a good PCP deal and work out what the balloon payment is over the term. Save this balloon payment and at the end you either buy a car which is proven to be a good car or you have yourself a solid deposit to go again. If you can afford to save more and pay the car off early is a big bonus.
Love this video it’s one of the best explained videos l
Have ever seen with great detail l agree with everything you say in this video and l have just subscribed so keep the videos rolling 😂👍🏽🤜🏽💯
Great video. I try to teach people this after years of buying cars and being a young person.
I love your channel even before you got ur bmw. I was so happy that you progress when you finally bought your dream car. Almost the same time I upgraded my chevy malibu 06 to a used mb glk 350. 2 years into it still drives smooth.just basic maintenance from the dealer. Thank you for your honest review of having a german sports car . And the cost of owning it. I agree car should us make happy not stress out. Cheers brother.
Ahh Mick this video came at the right point and you confirmed my suspicions on PCP but also that HP is not a bad financial choice!
Huge disagree in the last section. Your car is deprecating, and you will realize the loss when you sell it no matter what, you are just changing when you pay for it (upfront vs later). If you are investing the difference elsewhere that returns a higher rate than your loan, or if you simply need the liquidity, those are decent reasons to finance, but make no mistake you are paying for the privilege at the rate of your interest. You will also often pay higher insurance on a financed vehicle, even if you paid down enough to not have gap.
I also didn’t get his argument. It’s not like the finance company is loosing money from the depreciation. You are still paying for it. Plus interest
This is a great video. A lot of people will choose cars on finance that are at the limit of their monthly budget. In my experience cars that have plateaued in value have had enthusiasts as owners and have been well cared for. So many amazing cars now available for sub 17k it’s crazy to buy a new basic model for way more money.
The 'trap' is only thinking about what monthly payment you can afford. Always look at the total amount you will replay and how much of that is interest.
If you buy a car with the cash you have and save the monthly payments you would have made for a couple of years you are in a massively superior position when you upgrade.
Repeat this process, you'll never be tied to a loan and in a couple of cycles you'll have your dream car without nightmare repayments.
Apart from avoiding early depreciation, there's no magic formula when it comes to financing a car. Delayed gratification is the only real win.
Good suggestions but it's not always that simple.
If a person really needs a car as a basic need to commute or work with it but doesn't afford to buy in full, leasing or personal loan for a small monthly payment is fine. A 3 year old car is fine so one doesn't have to repair it too soon or maybe even a new one.
If you are wealthy and want to drive an X5 which you can expense with your company and easily afford it, it's also fine. The interest makes up in a zero worries experience and you always have a new nice car.
Otherwise cash is king. I bought my current car 5 years ago as brand new by paying cash and plan to keep for 5 more years. Zero issues so far. And you don't get hit by depreciation until you sell and by the time I sell it, just split the cost of ownership by 10 years and you see it's very very low. And inflation will offset the gains in your favor. Also the current economy where my car is now worth only 25% less.
Very good, informative video! Thank you for your work, Mick.
Congrats on the sponsor mate!
As well as HP, PCH (lease) is another good option. If you can get the lease down to the shortest period possible (eg 2 years), yes you eat the depreciation cost and don’t have equity, the monthly’s are lower than PCP (no interest), and you still get a factory new car and warranty. Also no MOT / road tax is payable on leases.
And if you run a business, getting a car on business contract hire (BCH), it can be even more cost effective because you’re effectively declaring it as a partial tax write off.
Whichever way you spin it, PCP is the devil’s work and avoid it at all costs. It’s effectively a car subscription service, and you as the consumer almost never win.
So for those reasons I would say hire purchase / leasing are the most cost effective ways to have nice cars in today’s economy. You’re always going to take a hit financially as that’s the nature of the hobby, but these two make the most sense long term
Oh, and one other thing people don’t know about PCP is it can haemorrhage your mortgage applications and amount brokers will lend you.
Not even gonna lie, i didnt understand half of what was being said but this is some good advice
if you dont understand half of what was said, how can you say its good advice
Gathering context from other words that were used? Also "half" may have been a small exaggeration
Really cool topic! The shame though is that during ownership of a car, you spend money on petrol, tires, services etc. which is not included here, but maybe an idea for next video?)
With a car costing 40k changing every 48months as an example...Buying slightly older cars (2 years old) with cash results in a £38,464 saving over 16 years compared to PCP at 5.9%.
The cash buyer also owns the cars and benefits from resale value, while the PCP customer pays significantly more without ownership.
This approach makes cash purchasing even more cost-effective, especially for those who don’t mind driving cars that aren’t brand new.
But you pay for repairs and a chance its breaks and you have no car and near 0 equity.
They also get to ride a brand new car that is likely faster, safer.. etc.
There are trade offs no matter the method.
If you're a petrol head that likes to tinker, used is probably the way. If you're a software engineer on 6 figure salary financing a merc is probabaly suits you better and doesnt touch your salary in anyway.
@dtex_zero it a fair point. However, in my example, for over 16 years, both methods would have 4 car replacements. In the PCP version, after 16 years, you would have paid almost 40k more and still do not own any car. If buying cash and having just the one car over 16 years, it could save you up to 80k vs PCP changing every 48 months. I accept that there are pros and cons for both.
Hey great video! I watched some of yours recentlyvand discovered great advices here and there!
Is it then possible to make a video on how to find cars that are suitable for this staircase approach ? :) maybe with some examples for each step of the stair or something in this kind ?
That would be so great!
Hi a little more to this than just the money,older cars will need more servicing and upkeep compared to say a new lease vehicle.Also PCP and HP reflect differently on your financial footprint.I have done all ways-before covid I leased a C1 for my step daughter £99 down £99 per month-simply not worth owning it.Personally I have "staircased" from a £2000 Saab in 2008 to a £127K Taycan now (Bought at 1 year old for half that) but I bet on average it has still cost me upwards of £1000 per month in recent years.....pays your money takes your choice!
I think I’m understanding the HP thing but could you also make a whole video on that topic?
In north america, PCP and HP are called leasing, and getting a loan. Loans are much more popular than leasing, although a lot people say to lease luxury cars rather than use a loan to buy them outright because after the warranty, most german cars in north america will eat their owners alive with maintaince and repair costs. But that's assuming you want to keep the car long term.
Here in UK, leasing as we know it is PCH
@letter1014 What's the difference between pcp and pch?
@@stanskistan personal contract hire is a lease and personal contract purchase- a finance agreement which has a balloon payment at the end allowing you to buy the car or hand it back at end of contract.
@@stanskistan PCH is for new vehicles and PCP is for new and older vehicles
leasing luxury cars can be handy, but you’re essentially still paying interest on top of depreciation.
Also the reason why there are so many lemons sitting in lots currently, all been abused without proper care over the years.
I don’t know what it’s like in the UK but PCP can also offer some form of security in you not losing all your money. It’s not a one way street with the big balloon payment at the end - the dealer would also be obliged by contract to take that car off you for that previously determined price.
Of course, this is a very financially inefficient way - but you can get at least some of your money back should the environmentalists or government decide, that ICE-cars should be banned or petrol prices made to skyrocket.
Quite a few counter arguments to this advice, mainly that it's only applicable if you're happy driving old bangers that will go pop and cost more to fix than they're worth.
When it comes to cars, pick an amount of money you're not bothered to lose and then go buy a car with it.
I agree. I get micks point but some people are ok not owning their car as such. They’re all liabilities at the end of the day.
I agree. Every older car I have owned went POP, and my pockets aren't that deep. :)
couldn't agree more. Be prepared to lose the money, but more importantly, don't buy beyond what you can afford. If you can't afford it, or if you finance it and your bank balance isn't going to look any better than it does the day you bought it, don't get it. It's only going to be a potential burden
I would say that the best case is buy a sensible cheap newish daily, on PCP or HP then buy your second fun car on HP and keep upgrading that till you have what you want. You'll keep the miles down on it and when something goes pop you have another car to use so not under pressure to fix straight away.
If you can’t find a good used car for less than 5k that will last you ten years of motoring there’s something wrong with you. The lie people tell themselves about running a used car costing more than their £300 + a month finance payment is hilarious.
Always LEASE and look for the car with the amazing offer - you may end up with something you didn’t necessarily look for BUT RRP vs lease price will be incredible 💯
before watching this video i would say just dont finance because a year old car will have lost some 20-30% of its value. also big congrats on your sponsorship
No mention af APR% .. banks also are aware of depreciation and often account for it in the lending rates. Best bet is actually to get a cat s that the insurance companies have written off , fix it to factory spec and use it for a decade. This way your car is actually an appreciating asset. Only issue is if you plan to sell however the savings will allow for an upgrade after 10 yrs anyway.
In your example of performance car value you forgot inflation, maintenance cost, storage cost, incidentals. It is very rare for cars to out preform other financial instruments.
I wish you would have mentioned repair costs. These can easily hit the 5-digit zone and ruin your "bargain" car purchase after its steep depreciation curve.
Stop financing depreciating assets.
Don’t listen to anyone that says you can build equity in the car game lol
Save up and Buy a 4-5 year old car in cash.
Get payments out of your life.
When you have payments the car owns you, you don’t own it.
NEVER BUY A BRAND NEW CAR
Totally agree. Only buy what you can truly afford and avoid interest, monthly payments etc
Also to add, its not just the finance you need to keep in mind, its also the higher premiums, higher maintenance costs, and higher fuel consumption (because let's be honest, youre not going to drive it in Eco)
So unless you have around 1000 a month spare that you could use a piece of it to finance a car you don't need to go into debt I'd say steer away from financed cars, especially If you got your license recently.
the way I view it is don't get a car that you can't afford, or finance one where you cannot save a decent amount of money at the end of each month when the payments are made. If you can put a good chunk of money away whilst paying for the car, and start with a good chunk sat there, so that, if something happens, you can afford whatever it is that life has thrown your way. And always have some form of equity in the car on finance, so that, if you lost your job for example, you can get that car gone and get into a cheaper car that you have outright and get rid of those monthly payments overnight without it costing you or leading to you needing to borrow more
Thanks for the video, really informative. Just bought my first car last year cash for 7k and it's a 13 year old car.
Buying cash is also good because you can sometimes secure a healthy discount at the dealership which pays for the depreciation.
8:43 hinge problem
You produce excellent content and you drive really well!
The issue I've found, is yes I can afford a £400 HP agreement a month but then you are paying £400 a month for a car its crazy and it felt okay until one month I realised my cars only a weekend thing why am I paying this amount for it. Since then I buy cash only or a very small hp duration loan because very few cars will require 12 months of £400 in repair bills.
I can semi understand it if its a special sporty car but I really can't imagine anything worse than buying a normal car for full price HP. Blowing away so much in interest and I don't think people realise.
Interesting topic. A couple of considerations. HP from the car manufacturer may cost much more than a personal loan. Some of the interest rates on used cars can be very high.
Warranty is also a consideration. That old BMW for £16k is not so attractive when you get a £5k repair bill. If you can get a car that has some warranty left, there is value in that.
At the end of the day, all that matters is the total cost of ownership, regardless of how you finance it.
There are also different types of cash buyers. E.g. Those who are sat on cash and can also afford a monthly car payment (keeping their cash invested). And those who are sat on cash and need to decide between a car or an investment (but not both).
The first type needs to consider the opportunity cost of paying cash, while the second does not.
Another cash option is a bank loan, which can be a great idea as their interest rates are typically lower than other providers You also benefit from monthly payments, and you build equity.
So ultimately it depends on your own situation, but one thing you can be sure of is that anyone who says buying with cash is a bad idea is definitely not in a position to buy with cash themself 😂
Interesting theory.
However, there are other factors that you need to consider when buying older cars at the bottom of the depreciation curve. Repairs and maintenance are likely to cost more. You need a pot of money saved up in the event that this happens. A new/nearly new car is less likely to wrong and will have a manufacturer's warranty.
You will struggle to get HP on 10 year old car. A bank loan is the only way to go.
Great video! I loved your "enthusiast cars to watch in 2024" video from about a year ago, would love to hear you take on the market for 2025.
No way - you're a real one! Not many people watched that video and even less reference it. I just had a look through and I think I was right on every single model, apart from the WRX STI which is tanking :)
Not a huge amount has changed - S2000's are on the up
Very informative, thank you 👍
Ive pcp'd an a35 on mercedes christmas deal, premium plus 501 a month went halves w my dad since we need a family run about thats not gonna clock up too many miles, chose pcp bcuz i know i dont want to own it and the final payment is fairly low, really want a gle63 but cant get insurance, can in 4 years, my first car i bought cash for 36k, was a giant mistake, couldve made so much better use of that money and still had a fun car. This time, I've factored in my future plans to the purchase, and already having it waaaay easier than my first car.
Live at home and buy it cash. Thats what I did. Its no m140i, but the prices has gone up 10% the last 2 years for the same year and spec.
The only car finance trap is buying a car on finance. Buy a car you can afford outright and if you need to stretch it a bit then put the purchase on a 0% credit card (only if you’re 100% able to pay it off within the 0% interest period).
£15k for a E92 M3 is insanely cheap compared to prices here in Germany, here you easily pay more than double. Has to do something with them beeing RHD but still
I think he’s talking about very very high mileage ones. Obs depends on the spec but I’ve been tracking them for a while and sit around £25k for a DCT with 40-55k miles ish
I’ve have always HATED pcp. All you’re doing is kicking a can down the road. You never actually own the car, in essence you are just renting it. Then at the end of your agreement you have to do it all over again or give the car back as most won’t be in a position to pay the balloon payment. Talking of positions that no one EVER considers with pcp is what happens if your circumstances change? You think you getting a new car, your agreement ends however because your circumstances have changed you can’t get approval for the new deal so your left with one option but to give the car back, then you have not one jot to show for all those payments you made. I also think it’s another reason (intertwined with all the others) why car manufacturers have been able to raise car prices so wildly. Manufacturers know people will just have a larger balloon payment keeping monthlies down. For me HP is the only way to go. You can’t really invest in a depreciating asset but at least you will own it at the end of the agreement.
New subscriber here ,great content.
Thanks and welcome!
i live in cy and here car prices are a steal compared to uk i wish i was there
Yeah we've got it quite good compared to a lot of places.
Used cars are dirt cheap in the UK but that also means new cars really hurt the economy of their buyers there.
they might be a steal, but they very quickly hurt us with depreciation
Even company leased cars have ridiculous taxes and deductions to your salary... make sure you do your due diligence
Comparing an automobile to a home is crazy, unless you plan to store it in an armored crate and almost never drive it, such that the probability of it getting wrecked is lowered to match the probability of a catastrophical loss happening to a home. The probability of an event to a home is much lower, which is why home insurance is much cheaper than car insurance.
Great vid keep it up
Beautiful video again mick nice job! Would love to learn to navigate the used/older car cash purchase process. Looking to buy my first “enthusiast” car either an e36/e46 m3 or a 996 911 cash in the next 12-18mo and am wondering what else I should know. Thanks again
Much appreciated advice! Nice.
Thank you for this advice
I loved this. Maybe I didn't fuck up as bad as I thought after all...
Congrats on the Sponsor Mick, been loving your vids since starting driving a year ago. I'm 21, currently driving a Audi A4 Sport 2016 1.4l petrol i paid like £9k but am looking at getting a newer Audi S3 which is a bit more sportier for 2nd/3rd year. What would you recommend? Am thinking about buying a newer 2021+ model but idk probably not the best financial decision.. Any reccomendations?
A lot of sense spoken, but.. if you’re savvy with it and know what you’re doing then PCP can work for you.
The PCP ‘trap’ with eyes wide open it’s not a bad thing. A new car every few years at X a month (with security of warranty) works for lots of people. Bear in mind that the GFV on a PCP will heavily favour the dealer, so you should be able to sell your car elsewhere the day before it’s due to go back for substantially more than the GFV you were told at the start. This could be 3/4/5k dependant… so works as a deposit for the next one, or a bit of a personal savings account.
Personally… I bought my M3 on PCP at 5 months old, it had already lost ~25% of its on the road price and I intend to keep it for the foreseeable. The PCP is through my bank at a reasonable rate so makes it comfortably affordable. At the end of the term I’ll refinance the balloon but if I was to sell it elsewhere I know I’d have the best part of 20k out of it.
Not all bad, but do the numbers.
Not sure i follow how paying cash on a new car is worse than finance. If you finance you have the financial hit of depreciation plus paying interest. I guess it would depend on the interest rate at the time. Also there's a mental aspect of owning your toys outright instead of the bank that can't be denied
Nice video.. you should add car maintenance to this model as well.
Had my M140i for 3 years now. I paid £24000 for it in 2022 when it was an approved car from BMW. I've done 15000 miles in it and kept it wanting for nothing. I have been watching the price of these cars since I bought it and they just hover around 20 grand. I'm betting this will be the plateau for well looked after examples as time moves forward.
I also got my M140i in 2022 and have done >20k miles, but I'm not sure of the used value. The issue with the M140i is that the market is saturated with category cars and this pulls the values down and makes it difficult to gauge what should be paid for a car. Actually, I have in mind to keep mind after some of the modifications I've made. Definitely a performance bargain still.
About car finance I always prefer to pay cash, but have done some bank loans and 0% credit cards before to reduce the overall cost. I think this can be one of the best methods for getting a slightly better car.
Paying payments to offset the depreciation only works if you already have investments that grow your wealth while you make those payments. If you don't, then you are paying depreciation WITH interest, doing those payments. Not paying cash for a car is ONLY a good option if you have the cash, but invest it instead. Doing payments when you don't have the cash is just plain stupid.
There are exceptions such as PCP with 0% APR
Just buy cash... I'd never finance a car, it's only going down in value unless it's a fezza F40
You can buy an older car cash. keep it for a couple of years then sell. you would loose less than the interest you would have paid on finance. Obviously it’s got to be the right car at the right price but 2025 the interest rates are eye watering. Or keep your cash and make it work for you to off set the finance.
Don't finance?
Interesting video 🤔 unless you are a car dealer ? Most cars are not an investment! Cars are a depreciating assets and can not be compared with bricks and mortar that are appreciating assets ! 👍
Congrats on the sponsor Mick
Thanks dude, I'm buzzing!
Bought an E30 in 2018 for $3500. Drove it for almost 7 years and now it is worth 2-3X. Used that money in conjunction with some addition funds I have saved during those 8 years to buy a used another sports car that is near the bottom of the depreciation curve. Rinse and repeat.
Never had a car payment.
great one bro
Being smart with money is not so simple. Rather than focus on cash vs. loan vs. leasing the most important thing above all else is the price of the car. Even depreciation rates matter little when the car only costs a little. To determine how expensive a car you can really afford you simply compare the price to your liquid wealth. Never let a car purchase be worth a major percentage of your liquid wealth. Unless you want to always be poor.
what's a major percentage? 10 percent? 30? 50?
@@caffeinefix2751 A good rule of thumb would be 20-25% max for the combined price of owned vehicles. But if you're not an enthusiast and only economics matter, 15% would be smarter.
You haven’t mentioned one of the most important things… how you go about selling your current car.
Never ever “trade in”. Always sell private and be patient. Potentially thousands to avoid losing there
Not always, often the dealership can fetch more for your car through warranty packages and reputation. Thus sometimes can offer far closer to what you would get privately than you might initially think. But depends on car.
I agree. Dealers give low valuations all the time. Furthermore they take a huge cut of the sale. For the people with more money than time that is for sure.
Great vid Mick
congratulations on the sponsor!
What if you were to buy a car in cash when it's at the bottom of its depreciation. That would essentially be better than hp because you don't pay for any of the interest and you've only paid what the car is worth.
The other method is to not pay for any car and invest that money to then be able to afford that AMG with cash left over down the line 🤔
Amazing!
Can you make a video on one size fits all ownership v having a separate daily and sports car
What about leasing mick. ?
good vid 💎
Will this work for a 2019 BMW 4 series, I’m guessing it’s at end point of it’s depreciation?
Mick teach us how to drift will you
One option re cash:
Say you have 10k cash to purchase vehicle
Take out a 10k bank loan to purchase the vehicle
Invest your 10k cash in funds etc
If your 10k investment outgrows the interest you paid on your loan, you’ve made money
I'm literally on the search for a new car and this video could not have come at a better time. Was tossing between a used Gold R Mk7.5 DSG vs new Tesla model 3 performance (btw which would u choose?). I reckon I'll go golf for now, and get the M3P once used prices come down so I don't get the depreciation hit. Can afford both cash, of course the tesla being new is about double the price (35k AUD vs 75k). Being a comfortable do-it-all car that both the Mrs and myself will daily, I am torn between the two. I know the tesla will have more tech and generally be more comfortable, but the golf being lighter, petrol and having the hatch space, it's really hard to choose. I probably will get them cash as I hate paying interest on an asset that already is depreciating plus having to pay service and petrol and rego costs and insurance... Would love your insights. cheers!
Bro in my opinion- I would never by a second hand ev. Electric power doesn’t hold up in time as good as an internal combustion engine. The golf will drive better it will have better build quality and it’s a drivers car + it’s light and better to drive and with proper maintenance you can keep it way longer than the model 3
Only buy what you can afford 👍