New car depreciation

[Steve L]

Having bought the special issue of Auto Express last week, I was very interested to see what we have known for years. You must be mad to buy a new car of any type.

If you wait 3 years and buy a 36k mile car you can save thousands. Alright it doesn't have the sickly new plastic smell and someone else's arse has been plated in the seat, but look at what you get.

Best family car renault Laguna 79.9% off new price.

Best MPV Chevrolet Tacuma 71.9% off new price.

Best 4X4 Isuzu Trooper 3.0td duty 73.1% off new price.

Best executive car Saab 9-5 Linear 73.1% off new price.

That's why I bought my 6year old Laguna estate for a mere £1400. With 75K on the engine which was replaced at 33K miles due to premature cam belt failure at a warantee cost of £2'700, I snapped up a bargain tow tug.

I got my brother-in-law who is a "master technician" to change the timing belt for a "Gates" belt, which will now last 72K miles or they pay for the replacement engine as the engine is not fail safe should the belt break. So £110 of investment sounds good to me.

Over the last two years it has cost me two tyres (£105) a cat (£56) and a back exhaust box(£47) to keep her on the road.

The value today of the car is still over £1400, because I originally bought the car cheap from a "private trader" as a part ex to clear. He'd took it in against a Mercedes Benz (his speciality brand) and could not be bothered to pay for the cam belt and a service. So I pop along (150 mile drive) and snap up a bargain with 12months MOT thrown in after a haggle.

Still I supose some body has to be the looser first and buy it new for us to enjoy the depreciation bargains!!

What a price to pay for that new number plate!!

Steve L.

 

[CliveV]

I agree with all that you say Steve but for those that are self-employed there are compelling tax advantages to buying new. The Cost, Depreciation, Running costs, Servicing are all treated as Trading Costs for tax purposes. Based upon our experience, after about 4 years all costs have been recovered and you still have an asset on the books that is worth something.

Then take into account the huge advantage of having a manufactures 3 year warranty plus any extensions and the package is a good one.

My main vehicle for business was bought new in 2001, we are about to change it but are undecided because everyone likes it!

And before anyone starts yelling "Unfair - I can not do it so you should not be able to - just be aware that like all small business, if we fail, we lose everything!"

And if small/medium/large businesses did not buy the brand new vehicles where would everyone pick up these three and five year old bargains?

If no one bought the things new the whole process would fall over.

 

[JoannaLesley]

I'm pleased to see you praising Lagunas Steve. We live about 15 miles from you in the county town and have just bought a 2 year old 2.2dci sports tourer from a local garage with 36k on the clock. We haven't towed with it yet, but everything I've seen from you gives me hope that the experience will be good! We paid just under

 

[BrianStAlbans]

Buy on a PCP, 24 or 36 months with low deposit,low rate finance.If at the end worth more than final payment buy it or sell it, if worth less give it back.

Only pay for one or two services. No tyres,brakes,exhausts to replace and always in warrenty.

Please do not cross reference this post with the tale of my 104k Maverick , buying and maintaining "trade" changes the figures slightly (",)

 

[giovanni_5060838]

Pretty good logic there to decent motoring and costs.

Just wondering slightly to your believe that if the belt snaps

before 72k, you are covered?

most manufacturers now replace the pulleys and tensioners as

well. as it is quite often due to a tensioner failure that the

belt snaps. if yours are still the original ones, then you are

hoping that they last over 100k? VERY RISKY...

 

[mcghee]

I wouldn't say most manufacturers replace pulleys and tensioners with the belt. In fact the only car I know of which required this was the last generation Mondeo, and that was due to poor manufacture rather than design spec. In my experience I'd expect the rollers should outlast the engine provided they sustain no damage, and a tensioner should last at least 150k miles if its not part of the water pump drive. All I would say is I've never trusted a belt on any engine for more than 36k, but if you're warrantied then why not?

 

[Damian]

Just a word of caution regarding belts, tensioners and rollers.

Vauxhall recommend replacing EVERYTHING, belt, tensioner and roller at 40,000, or 4 years, and this , on the vectra, includes the water pump.

Renault recommend belt, tensioner and roller at 5 years or 60,000.

Just had mine done on the Espace, and all was changed on renaults latest recommendation.

As has been said, it is quite often the fault of a roller seizing, or tensioner failing that causes belts to snap, apart from age.

 

[giovanni_5060838]

Add FIAT and ALFA to the list 5 years or 36k, even though most

dealers seem strangly unaware!

 

[mcghee]

Is it not the case that you replace the Fiat at 36k miles?

 

[LuisaandMartin]

My husband works for a major breakdown company (he's a very, very nice man!) and he says he would be rich if he had a pound for every broken-down vehicle he's towed due to timing belt-related faults. His advice is to not let them go the full manufacturer's recommendation, but to change belts and tensioners before this as it will save you a lot in the long run.

 

[mcghee]

There is a lot of truth in that, anytime I went to a breakdown I used to turn the crank by hand and make sure the cam or rockers did as they should before I attempted to turn the engine over. In the 400 or so I've dealt with I've never seen belt failure due to a faulty roller/sprocket unless its been chipped or damaged in some way. That's not to say it doesnt happen.

 

[Steve L]

I was quoting the guarantee give by the belt manufacturer Giovanni, which stated that if their product failed within 72K miles they would stand the cost of repair.

Obviously you would not go outside the service period for the car and if like me you tow a lot and put the engine under a lot of strain, then earlier replacement is recommended.

After all what is

 

[MikeP]

It's a case of each to their own, you get what you pay for, and everyone is free to spend their money as they wish.

I buy new or nearly new every 3-5 years, and ditch the car when it reaches about 50-60K. No problems with exhaust, battery, clutch, shocks, etc etc. It's my money and that's how I choose to spend it. None of us should need to justify ourselves.

 

[Lol1]

It does make good sense to buy used cars, especially if you know what you are doing. The reverse of that is, if you don't know what you are doing, it could be an expensive mistake.

If everyone bought second hand, where would the motors be coming from?

 

[LMH]

It does make good sense to buy used cars, especially if you know what you are doing. The reverse of that is, if you don't know what you are doing, it could be an expensive mistake.

If everyone bought second hand, where would the motors be coming from?

And heres me thinking you were the dreaded Kanga...

 

[BrianStAlbans]

I'm sure I can find them for you ;O)

If memory serves me there are lot more "company " cars reg'd each year than private so 2-3 year old cars are easy to find.

 

[Lol1]

And heres me thinking you were the dreaded Kanga...

I do have his stunning good looks and personality

Disorder......

 

[BrianStAlbans]

And heres me thinking you were the dreaded Kanga...

Lmmaaaooo

 

[LMH]

And heres me thinking you were the dreaded Kanga...

Sorry to bring you back down to earth Lol but sadly, as we've never actually seen a photo of K, we only have your word for it.

 

[CliveV]

The beauty of the system is that cars bought for business DO make very very good business sence.

The reason? - because the taxman helps pay.

The only problem the private buyer has is that some business's do not bother with correct servicing.

But as long as you are careful, as Steve says, real bargans are there for the taking.

For once this means that we ALL benefit from getting one over on the taxman!!!

 

[MONKEY1]

Depreciation and how to avoid it is a bit of a pet subject of mine. I spent nearly three years as a fleet manager and one of the worse jobs in the world is lease car underwriting

Essentially what you do is take the price than the lease company buys the car for and add its "service costs and tax and tyres over a period - say three years and then predict it's resale value and divide the difference over the 3 years.

You can make no money or a mint there is very little in between. Despite the tax advantages very few Small businesses can afford to buy new vehicles in fact I admire the canny small businessman who buys second hand because very often he can pick up a bargain. Without doubt Gordon Brown policies have a huge effect on what cars come to market 3 or 4 years latter.

Two really good sources of cars are; car rental fleets and pre registered cars. Currently your can buy a 6 month old Saab 95 for around 40% of its full MRP a fantastic saving; need a little run around then a Nissan Micra or Ford Fiesta etc can all be picked up at 6 to 12 months old with something around 30% off it's mrp.

MH

 

[CliveV]

Monkey PLEASE PLEASE do not take this in the wrong way!

But if you are looking at the situation as a Fleet Manager, you are unlikely to see the advntage (engineering a loss to carry over) in the same way as a FD would of buying new cars. Your role would be to improve the bottom line. Perhaps perversly, it dependes upon your viewpoint, there are good tax reasons why the FD would want to engineer a loss.

But I agree 100% with the ex-fleet rental market cars - they can be good buys. For the user the cost of rental is a total loss on the books - which can be very attractive - but it depends on what is going on elswhere on the balance sheet.

 

[MikeP]

I agree with all that you say Steve but for those that are self-employed there are compelling tax advantages to buying new. The Cost, Depreciation, Running costs, Servicing are all treated as Trading Costs for tax purposes. Based upon our experience, after about 4 years all costs have been recovered and you still have an asset on the books that is worth something.

Then take into account the huge advantage of having a manufactures 3 year warranty plus any extensions and the package is a good one.

My main vehicle for business was bought new in 2001, we are about to change it but are undecided because everyone likes it!

And before anyone starts yelling "Unfair - I can not do it so you should not be able to - just be aware that like all small business, if we fail, we lose everything!"

And if small/medium/large businesses did not buy the brand new vehicles where would everyone pick up these three and five year old bargains?

If no one bought the things new the whole process would fall over.

This is a little misleading. The original cost cannot be claimed against tax, and whilst depreciation is shown in most accounts it is not an allowable deduction from profit. Businesses can claim capital allowances - broadly 25% of original cost per year on a reducing balance basis. An adjustment is made - either a further allowance or a charge - on disposal. The idea is that the cost of an asset is spread out over its life, also reflecting the fact that depreciation is highest in the early years.

Whilst businesses can claim for business use of vehicles, they still have to be paid for in the first place!

 

[Geordie]

Well Steve its pretty obvious from your comments you've got a thing about new cars, and people who wish to purchase same. You must be the first person I've come across that has a problem with the aroma you get from inside a new car. I've had my fill of the black stuff up to the elbows, scars, burns etc all from having the same mentality(habitual outlook) as you.From what you tell us about your car,it seems it has already had major heart surgery and some, so I guess its true when they say, you only get what you pay for.What price peace of mind!

 

[Steve L]

Well Geordie, you could say I have a thing about new cars. Cos I work for a company that makes the Aston martin chassis. I try to ensure the parts to build are to spec etc.

Oh and of coarse through work collegues I've been lucky enough to be able to drive the