Car depreciation calculation is often subjective.
Cars like MX5/Mini etc. might depreciate less at present, but with ever increasing fuel price/tax etc. you never know how they are going to perform after few years.
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The problem is it uses twice the capital outlay over the C1 to achieve it therefore £6000 is in depretation instead of being in investment even at the minis lowdepretiation rate it wont match the C1 if the same amount of capital is available.
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A taxi would be cheaper.
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a bus would be even cheaper, but let's not be silly.... :-)
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a bus would be even cheaper but let's not be silly.... :-)
I really do not see why you think that using a taxi would be silly if it is cheaper. In no sense is a taxi unpleasant, "cheapskate" or otherwise likely to offend your sensibilities.
Your car will cost you each year:
2,500 Deprecation (if you're lucky)
...600 Insurance
...250 Tax
...500 Servicing
...500 Petrol, tyres etc.
...100 breakdown recovery
1,000 Interest cost - I don't know whether you are borrower or saver so have taken 6.6% as an average sort of number.
That's £5,450 to run the car for a year, to do 2,500 miles. That's over £2 per mile.
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Andy is absolutely correct here. Depreciation is normally expressed as a percentage of purchase price but the monetary loss is the difference between purchase price and selling price added to loss of interest from capital tied up in car. It will almost always come out that the less you pay the less you lose.
alfalfa
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£15k on a new car to go 2,500 miles pa is frankly bonkers. You'll pee away £7.5k in the first three years, minimum, and perhaps £8-9k.
I'd be looking at a circa 5 year old 1.4 car from Honda/Toyota with FSH and one owner, as good as the day it was made, but run in. Keep the £10k for the credit crunch.
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It's not bonkers at all.
My work either provide a company car, or provide a cash allowance.
The cash allowance is £4,000 per year after tax. Over 3 years = £16,000. Less insurance & minimal running costs, = circa £15,000. Therefore the car is "free" and at the end of the 3 years it will be all mine.
Although I work from home 90% of the time, If I take the allowance, then I must have use of a car at immediate notice. Hence why a taxi is no good.
The rules state that the car must be <3 years old, and I don't particularly want to keep changing too often (nor fund dealers profit margins on a regular basis) so a new car (or maybe nearly new) is needed.
When I do have to occasionally travel for work, it can be on long journeys. So an Aygo is no good.
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"When I do have to occasionally travel for work, it can be on long journeys. So an Aygo is no good."
Once you get into "comfy for a long journey" you are into larger cars and heavier depreciation.
Your situation may be similar to our family. I need a vehicle, wife has a vehicle for convenience, but she does do long journeys very occasionally. I do 15-20k per year, she does 3-4000.
Audi is main car, wife has the Aygo. When my wife does her occasional long journey she borrows the Audi.
If this isn't possible another Focus would be my choice - pre reg 08 reg 1.6 Zetec at our local dealer was plastered with £8,999 stickers.
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The rules state that the car must be <3 years old
That's unusually harsh. Most companies allow five. The one I work for at the moment doesn't care at all (which is also unusual).
How rigidly is this enforced?
Cheers
DP
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£15k on a new car to go 2,500 miles pa is frankly bonkers
You'll pee away £7.5k in the first three years, minimum, and perhaps £8-9k.
Surely depends on your perspective. If you're on a decent income £3K per annum might seem to be a reasonable price to pay for reliable no trouble motoring with a nice shiny new car at your convenience
If you're on a low wage its obviously not a good idea. Car purchase or indeed any other consumer purchase is seldom just about economics
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It isn't really true though.
Example:
www.cargiant.co.uk/Mini/details.asp?Id=381551
£8k from a dealer.
Cost new, £15.5k (www.parkers.co.uk/cars/equipment/Detail.aspx?deriv...1), which doesn't sound so bad, but in fact Minis are sold without the needed equipment, and if you don't spec up you won't get the resale values.
That one's been upgraded with £880 for leather, £70 for CD, climate (£850). All in all about £18.5k
£7k trade in after 4 years 62% lost. Not great is it? Depreciate the future value for 4 years interet, and you're down to £5.5k. £10,000 over 4 years, ouch.
Edited by Dynamic Dave on 21/05/2008 at 13:52
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I stand by my orig statement, WhoopWhoop. Your decision and thinking is driven by the allowance rules, which I entirely understand, but it still does not make sense to tie up £15k in a car that will do 2.5k pa.
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The rules state that the car must be <3 years old, and I don't particularly want to keep changing too often (nor fund dealers profit margins on a regular basis) so a new car (or maybe nearly new) is needed.
On that basis, go for a 1 year old "nearly new" car and sell it after 2 years. For example, you can get top of the range Vectras and Mondeos for around £10-12K which have lost 50% in the first year. After another 2 years, you can sell for around £6k, thereby getting your depreciation down to £2k a year.
Before you write off 1 year old Mondeos and Vectras as too dull or too common, do go and test drive them. Alternatively, go for a 1 year old Avensis, or a Saab or a BMW 318D.
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If it has to be under 3 years old, you're rather moving the goalposts...
I still think that if those miles are going to cost you £2 per mile you should see if you can't do something somewhat more economical than a 15k car.
No way are the running costs for a car 'nominal' - particularly once you've considered interest.
Edited by Mapmaker on 21/05/2008 at 18:54
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This never ceases to amaze me, the guy wants advice about a decent brand new car (stated in the opening paragraph) that will have less steep depreciation than others and he ends up getting suggestions ranging from old second hand motors to taxis! I can only hope that most of these posts have been made TIC :-)
For what it's worth, I'd not worry too much about the depreciation given that the car is effectively free, just get something that puts a smile on your face when you drive it. I'd get a Focus ST personally, silly fast and surprisingly, doesn't seem to depreciate as quickly as you'd expect.
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Blue wroteFor what it's worth I'd not worry too much about the depreciation given that the car is effectively free
I presume *that* was TIC, or else you don't understand that money is fungible.
OP is paid, let us say, 50,000 per annum. He receives either a car, or an allowance of say 15% of his salary. So he either takes a car, or he is paid 57,500.
So it's now HIS money. And he has to provide a car. Just because the money is described by his employer as "car allowance" doesn't mean that he has to spend it on a car. To the extent that he doesn't, it becomes his money to spend on holidays etc. The reason it's called car allowance is because it is unpensioned and does not constitute salary so it is cheaper for the employer. I get a substantial "car allowance" and still resent every penny I spend on my banger.
This is a cheap grotty car that is going to cost him a *fortune* on a per-mile basis. IMHO - and in that of others - he should think outside the box. If he wants to spend 100k on a new Merc that will cost him £10 per mile, fair enough, but this is a thread about cheap motoring, not throwing money away!
>>something that puts a smile on your face when you drive it. I'd get a Focus ST personally,
A Focus puts a smile on your face? You should get out more.
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Blue wrote >> For what it's worth I'd not worry too much about the depreciation given that the >> car is effectively free I presume *that* was TIC or else you don't understand that money is fungible. A Focus puts a smile on your face? You should get out more.
I think we obviously take a different view on cars, if I could get by *comfortably* on my basic salary and was offered a car allowance on top then so help me every last penny and then some would get spent on getting the best car that I could buy. That's why I consider the car to be free, it's a car allowance, therefore I could probably justify spending it on a car. I'm not bothered about loads of holidays, I'd rather have a really decent Merc or an Aston Martin on the drive so long as I get the odd few days away now and again.
There aren't many new (or very nearly new) cars on the market that could put a bigger smile on my face **for £15K** than a Focus ST. If you've read any of my posts over the last few years you would know that a standard Focus would not put a smile on my face. Of course I'm a total snob and if I had the money available I wouldn't even get in a Focus ST on my way to Stratstone to pick up my DB9. (now there's a TIC comment ;)
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If it has to be under 3 years old you're rather moving the goalposts...
No it's not. My original post stated new car and asked for opinions on that basis. You're the one that started talking about older cars!
But thanks anyway
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