More people need to watch this video. I have never bought a new car, even though I could. I always buy a 4 - 5 year old car with cash, not credit, and make sure I look after it. Common sense really. I've been putting money into ISA / pension instead and just retired at 55...had I been buying new cars every other year I'd be working another 10 years at least before I could retire!
Yep PCP finance is one of the most insidious scheme ever - a friend of mine who loves cars is now on his 4th or 5th car financed in this way that’s over 10 years of car payments (and he doesn’t buy cheap cars) and he’s never actually owned a car. At the end of the term he gives it back and starts all over again, always being in perpetual debt….i don’t know his personal financial situation but I do know he has absolutely no investments. This is just bonkers to me - my last car was just over 18 months old, had 9,000 miles on thee clock and was in brand new condition, and cost me cash 30% less than it would have cost new. The last time I had a monthly car payment was almost 20 years ago - it’s scary the amount of money people throw away on cars.
Kiran, I'm 30 years old and only just now starting to learn about making smarter choices with my money and investing. I never learned ANY of the things you share from family or friends, heck, we rarely ever talk about finances. So thankyou for sharing all your knowledge through this channel. You are certainly teaching me so much and helping me to have a much brighter and secure future. Happy holidays 🎄❤
Fool: My parents bought a house for £9,500. 52 years later it's worth £450,000. The car they bought 52 years ago is dust. "Funny how the 'system', works"
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You try releasing income to live on as a pension from a rented property.
Kiran you are so right.I gave up spending stupid money on cars.I now have a small Peugeot 107 for driving round town .It costs me nothing in road tax,does 60 to the gallon and is so cheap to insure.I love to park it by the big gas guzzlers in Tesco.Gives me a sense of satisfaction.
Big traditional cars are not gas guzzlers, yes 4x4 are. My Mercedes E Class gets 60mpg, cost £35 tax is not a lot to insure and is worth what I bought it for 2 years ago. But I do agree with you on people going silly with new cars.
I’m an IFA and cars are wealth killers. My car is 9 years old, bought 3 year old. Well maintained and still looks smart. Friends often ask when I’m going to buy a newer car and I just smile whilst I think about the investment portfolio I’ve created and the early retirement I’ll be enjoying instead.
Spot on! Three things to add- A car is never an investment, it is an expenditure. If you buy a new car on finance that £250 per month is not paying for the car- it is just covering the depreciation for that month!! The key is cost per year. Three numbers set this. Cost when buying, how long you own it and resale value. Take resale off of new price and divide by years. A mid-range new car can easily cost £4,000 per year. A decent, quality used car can be under £1,000 per year. Fuel and service costs can be factored in the same way.
I bought a Nissan leaf from a main dealer that was 3 years old for £9500 inc 2 free services. 4 years later after a further 4 years and £700 of brake pads and tyres, sold it to We Buy Any Car for £8900. We also bought in 1995 a 4 year old Merc for £25k, drove it for 28 years and sold it for £10k .Had we not been emigrating we would have kept it much longer as it was appreciating as a classic car. However I would only recommend keeping long term a car from a quality build manufacturer with a good parts availability.
00:03 Car expenses hinder wealth-building 01:11 Owning cars hinders financial freedom and wealth building. 02:13 Buying a brand new car is not a good investment due to rapid depreciation. 03:12 Avoid buying new cars to minimize depreciation costs 04:15 Higher purchase & PCP are expensive due to high interest rates 05:21 Fuel efficiency impacts your monthly expenses significantly. 06:28 Buy a lightweight petrol car to save money on upfront cost. 07:35 Invest your money instead of upgrading your car
you know what they say, it's best to do things when you are young and not when you are old. When you are 20 and got a nice car you will have a good social life and great fun and when you go on holiday everyone wants to come. But when you are 40, saved up and with money, when you buy a nice car no one cares and when you go on holiday no one wants to come with you.
The problem with today society is that we can have anything we want. You see 20-year-olds driving 40k BMW's and AUDI's only to realise they are on PCP, Finance etc. A colleague paying £600 a month for a new Škoda for crying out loud. There are reports in the car finance sector and there is a huge influx of people trying to return their new cars because they cannot afford to run them. The main reasons for the request of return are running costs, tyres and fuel. This is, by definition, ignorance, and total stupidity, thinking they can afford to look good yet unable to afford to run the vehicle.
Buy a reliable car, ensure it gets serviced, garage whenever you are home and keep for a minimum of 15 years. Keeping a car a long time means you get used to the engine's sounds and can detect when something is off-kilter, the only downside for keeping cars a long time is the seats can wear out.
Absolutely right. However, I just bought an EV with the facility to use the battery to run my house (up to 7kW). I can charge the car at night at 7p/kWh and then run the house during the day from that. Look for vehicles that have a V2L (vehicle to load) facility.
Good point, when I was working I got a 60k company car, when I retired , I bought the car from the lease company at 3 years old , I plan to never sell it. I have never taken out a loan apart from a mortgage. I just can’t pay interest, I always live by the maxim, if I can’t pay for it , I don’t buy it.
I brought a 7 year old car 14 years ago. I just sold it as it wouldn't pass the mot it was 19 years old when i sold it , it was brought with cash. I just brought a 9 year old car with cash which will hopefully last me another 14 years. I prefer not to have monthly car payments and paying extra interest just to have the latest car on finance.
🦉🐯 Some ok advice, in general the five year “sweet spot” and cash is sensible, other than that people want what ever they desire, and if you work hard and have the money… be sensible, buy well engineered, and go and enjoy yourself!
From new, PCP, £230pcm, Hybrid so about £25pcm on fuel, £21 on insurance and absolutely no maintenance costs. Tbh, having a car isn't a luxury but a lifestyle tool and NECESSARY (unless you live in London, 'flash' cars are an absolute waste of time and a HUGE moneypit though.
PCP on a new Skoda worked for me, first new car I've ever brought. £134.85 PM over 4 years @ 0% interest (This what made it viable...) £6K balloon payment Around 18K total (got about £5K on a trade in with the old car at sale) Car was worth £12K after 4 years (crazy S/H car market at the time..) New model of same car would of been £200 pm + interest over 4 years. £8K balloon payment. £24K total cost inc interest. Not worth it. They offered me 6K equity back on my car(!!!!!) against a new one. That's pretty much the payments made over the past 4 years bar £500 I just paid the £6K and kept it. I would of had to of paid £13K for the same car at that point. Yeah, there will be some periodic high maintenance costs coming up but over all it felt like the best most sensible thing to do in that situation. I was intending to keep the car, so that's how it worked out anyway looking at the options at the end of the PCP.
Spent 13 years driving a honda accord I bought for 5 grand. Sold it 2 years ago when the second hand car market was booming for 7 grand. Bought a honda jazz for 2 grand which I'm still driving 2 years later 😂 . Do all my servicing and repairs myself. 👌🏻
Yup, you can buy a good model3 for around 20k now. There are cheaper cars available too. I'd argue; if you have a driveway, and you don't travel long distance all the time, EVs are much cheaper overall.
My car was 13 years old and worth £2k on a good day. To get it through mot it required £1600 spend with no guarantee anything else would go wrong. I’d no option of keeping it, I needed a reliable vehicle to get to work. I did buy cash in the sweet spot though.
400k.... But my car cost £100....eight years ago.... Still doing OK and it's worth £270 now.... Just an old mechanic that knows true price of cars. (1.6 diesel 60mpg)
I agree to keep a newish car long term because depreciation eases off and you'll also have few years of no debt on the car which can help save to invest. Those who constantly change cars on finance will forever be in debt due to inflated lifestyle
Average age is 60, and when you usually own a car, you may be 25 to 28 years old. It means, half of life is already over. Now you have half life to enjoy the moments of short life. Better, not to think much about saving money by sacrificing your happiness. So, buy whatever you want Which leads to your happiness before your last breath. If you have money in banks, and didn't use yet, then i swear, its not your money. Your money is only which you have eaten and spent for your happiness. Because if you will die at any moment, that money will not be with you in graveyard. Simple!
I get your point about making the most of the moment and agree. However, not sure which country you live in but 25-28 years is not half way through life in any Western country! Life expectancy is around 80 or more. Also the point of the video is you don’t need a brand new, expensive car to enjoy life to the full. For most people a car is just a means to get from A to B.
@@jacc88888If a car was only to get from A to B for most, there wouldn’t be so many car channels on CZcams 😉. The point here is that if the car is your hobby and makes you happy then that’s where you might want to spend it, enjoy it and no regrets. The point he is making is that you cannot take money to the grave with you, which is a great point - enjoy it ✌️😎
Love this - very true, in the uk half of my parents savings then went on care for my fathers Dementia, after paying tax all their lives, with a little bit of capital left for inheritance. Live life within your means, but enjoy it, gift in life where you can, and don’t take it to the grave with you!
@@markgriffiths409 Yes, good point but that why I put “For most people” ie not everyone. I have a couple of friends who are car enthusiasts and get a lot of pleasure from driving nice cars which is great. I guess there are also a lot of people who buy nice cars just for status and not because they are truly going to enjoy driving them which I don’t get. Ps I also agree with you both about using money to enjoy life to the full. Guess my comment didn’t bring that across enough. For me these days that’s more spending on experiences - holidays, trips etc. rather than accumulating more stuff.
Yep PCP finance is one of the most insidious scheme ever - a friend of mine who loves cars is now on his 4th or 5th car financed in this way that’s over 10 years of car payments (and he doesn’t buy cheap cars) and he’s never actually owned a car. At the end of the term he gives it back and starts all over again, always being in perpetual debt….i don’t know his personal financial situation but I do know he has absolutely no investments. This is just bonkers to me - my last car was just over 18 months old, had 9,000 miles on thee clock and was in brand new condition, and cost me cash 30% less than it would have cost new. The last time I had a monthly car payment was almost 20 years ago - it’s scary the amount of money people throw away on cars.
Unless you have a company car that allows personal mileage and a fuel card, I understand some may not be fortunate in their roles but definitely worth considering as it has saved me alot of money over the years
Great advice. I have never bought a new vehicle and only ever paid for them outright. Its worked well for me, I keep personal vehicles slightly longer and work vehicles for less time based on age and millage for reliability reasons.
You’ve helped me. Now I know buying the car of my dreams is the right thing to do. For me. Oh and buying an electric car now has never been cheaper because the market has collapsed.
I have what I think is a cost effective car buying system. I select an old vehicle with low mileage and full MOT at a low price. I check the MOT history free online through government websites, which often lists previous MOT failures, mileage between MOT’s showing annual use. You tend to be able to see ownership changes to some degree. So I’m looking at how many ownership changes - anything with lots of changes or changes after just 1 year I avoid like the plague. I’m looking for cars owned by few people, run at an average of less than 10k miles per annum. I tend to spend less than £1k but the used car market has inflated. The intention is to run the vehicle for 1 year and if it passes it’s not with minimal repair then I will make a decision to keep it for longer. When the mot runs out or the car has problems I scrap it and make some money back on the scrappage. I go for less than 1.4cc petrol vehicles. low tax better fuel consumption, cheaper insurance and older cars generally avoid ulez charges. It’s worked for me for years, I get to drive lots of different types of cars and no debt. I don’t care if they get scratched or damaged as I’ve not got much skin in the game 🤷♂️
I bought a 2 year old ex-rental Motorhome. I have had it for 3 years and it is now worth more than what I paid for it. I also bought a Land Rover Defender 5 years ago and it has held its value over those 5 years.
Very good advice, but I have a few things to mention from my own experience: reliability, availability and cost of spare parts, public transport, family and business. Reliability is a big factor IMO, which is why I'm generally only interested in Subaru, and then Toyota as a consolation prize. Subaru are the best automobile in the world, the only downside is you will have some extra fuel costs as they're all-wheel-drive. Toyota do have some rust issues, but overall they're also good, a little cheaper on fuel. Forget anything European, they're all junk and expensive to fix and service. On my journey through life, I grew up in an area with no or very poor public transport. Thus, cars kept me poor, but I still needed to get around. Then, I married and started a business. Two things kicked in, I was going to have children AND needed to make an impact in the market as a successful young man (people don't want to deal with guys who drive old things). I did actually start the business while owning a 1967 S-type Jaguar (3.8 manual), it had a towbar and came in handy. I once heard a bloke talking about me, and to answer the question what's Horlor like, he answered; oh he's all right, bit of a yuppy, drives Jag. I knew then I needed a better car, so I went to see the local Toyota dealer and got an operating lease on a Toyota SUV with all the bells and whistles. This came with all servicing and a complete change of tyres when needed. This gave me instant recognition as a young chap coming up in the world, and I had a new car which wouldn't break down (and if it did, Toyota fixed it), and my family would now be safe as well. Following that, I went through a series of Toyotas until I paid cash for a Subaru new, and that was 19 years ago. This car is so reliable that if it could talk, and you asked it to find a workshop it wouldn't be able to show you as it doesn't know what that is. There is something to be said for regular oil changes, especially in those early years. Any piece of equipment that is an orphan and unloved child in its early years always ends up causing trouble (just my 2 cents..ahem). Anyway, I am now considering a Suzuki Jimny as my retirement car. This jeep is rugged, simple, reliable and it will likely be new so it can take me to my grave. If not, I'll consider a second hand Subaru, better non-turbo, anything with turbo in its name is to be avoided as well.
Hi Kiran, You have correctly identified the costs. However, what about the Congestion Charges or if you take your car to ULEZ in London? What about the fuel efficiency of the new hybrid models vs older models?
I would add also, modern cars are very well built. Buying a car that is 3 years old and has been looked after will last you a long time. I bought a Hyundai Tuscon ex-demonstrator, saving £8,000, and it had less than 2,000 miles on it. I also apply the not upgrading often principle to my home, i.e. I don't redecorate every few years or upgrade the furniture etc.
Interesting thought. I keep debating whether to sell my 911. It was a main car for 2 years, but then I had an electric company car so it becamse a weekend car. I don't drive it much, but I really like it when I do. If I sold it for £25k or so I wonder how much Income I could turn that into with Monthly Dividend paying shares? Probably not much sadly :/
Absolutely - if I see anyone in a brand new car I don''t think 'Wow - they are cool and successful', but I think 'What a plonker!'. It is also very odd that every self-employed Finance Adviser that has come to visit me always pulls up in a brand new, very expensive (non-company) car! I draw two things from this, 1) they don't really have any idea about household finance, and 2) I am probably paying for that car! Thank god for ETFs!
When I buy a car, it dies with me. I buy at reputable auctions and never older than 18 months old. I buy a new car whenever the one I’ve got is about to die, normally at 400,000 miles. I’m wondering what my Discovery will do……..
I know this makes aense especially when talking about the cost of depreciation , but for the record i want to defend my decision to pcp . First off the last 3 2nd hand cars i had before pcp cost me dearly. I had 1 that cost over 2k in repair bills and still wasn't right one that cost 3k in a year . . When we buy our new car on pcp i take it over 4 years but change the car after 3 this gives me shopping time to i can wait out the desired deal the first pcp i got was actually a bargain i got 2k scrappage on my old car, and 0% finance with monthly payments of 170 for 3 years (cost me less than the repair bills from before) . 2nd pcp was a bit more expensive cause i dint get the scrappage and the finance was 1% 240 a month just gone over 3 years now, and i kept it for now as the only 0% deal available at the 3 year point was a car i didnt fancy , but i still have a year and theres usually a 0 or 1 % deal jsut waiting for it to be on a more desirable car . My wife needs the car dor work so a reliable motor is a necessity
Great video very well explained it also makes a lot of sense it is true buying cars can be an addiction especially if you love cars but the money could definitely be spent elsewhere 😂 keep the videos coming 👏🏽👊🏽👍🏽🥂
Great video Bhenji....brilliantly explaining how people become mired in debt at the same time convincing themselves they're "successful" by having the latest model car on the driveway. Far better to buy a used model as you say. Simplisticly put: why would you borrow money against a depreciating asset? You wouldn't buy a house if you knew it would depreciate, even less so if you had to get a mortgage to only end up losing money right? Same principle applies to a car. Humble request: if you haven't done a video on EV leasing (personal vs via Ltd); would you consider making one perhaps? Thanks & keep up the content. You've got +1 subscriber from me
New cars are a major liability. Old cars which are reliable are amazing if it doesn't gas guzzle. I brought a city car £20 tax 60 mpg around town and has everything you will ever need in the luxury cars. Heated seats, air con, bluetooth, electric everything and reversing sensors. Car only cost £1.75k. Servicing is next to nothing. Parts are super cheap and its reliable anyway.
I wish youd have a word about the ULEZ systems which encourage people to get into this debt trap. My Deisel Merc E Class does 60 miles to the gallon. I paid 10.000 for it ten years ago and its like new. These systems want me to scrap it.
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Cars should make people happy. They say that if you don't look back at your car then you have bought the wrong one. My point is that if you die with a portfolio of wealth then you have failed in life.
But for some people investing their money means they have no money to enjoy their life, so no car means no transport which means they don't get around. So though you are right you could say the same for everything you do, ie that take away meal, those designer shoes, those leather gloves that hair do all money wasted or is it? Money is made to be spent you can't take it with you when you die. If you want a car then buy a car, what good is dying with 160 grand while you starve because you are saving money or investing, which I might point out the companies you invest with take the biggest slice of your pie you often just get the crumbs. At least you should enjoy the vehicle you spend your money on, ie you may meet the love of your life, or nice trips to the coast, or enjoy the space with your loved ones. Money is a means by which to obtain things we can't make ourselves, very few people can make cars, so they buy them. As for electric vehicles they are more reliable than other types of fuel, so you could keep them longer and spend less on maintenance therefore the longer you keep them the better the return on your investment in to it. Secondhand petrol and diesel is being outlawed so could at some point be a waste of money as you won't get the use out of it.
The car market is in a bit of a strange place at the moment, and there are deals out there. I have just traded-in a low mileage two year old car. The deal I got meant the deprecation over those two years was only £750 per annum.
Hey Kiran, I'm going to level with you. I'm a young Dad trying to get a head start where I can. So I am looking up compound accounts and these are mostly savings accounts? I hope I am onto the right thing here. Also, thankyou. Our schools have failed to teach economics to young people
Excellent video. Subscribed. I know a car is the worse investment and people buy expensive cars to show off. That’s clear because in cities like London you don’t need a fast car. I’ve got a cheap car and bought it second hand and it’s reliable and cheap to run and service. When I look at people driving an expensive car it makes me laugh. Even if they have the cash, it’s still stupid.
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You're wrong. Firstly in this context a car is not an investment.
Steps to drive cheaply- #1 buy a high mileage quality car at 3 years old. (third new price) #2 keep it ten years. At least. #3 service it every 3 years (not one). I have done this for 40 years and never had a mechanical failure. #4 pay cash. I run a Merc for £1500 p.a. plus fuel.
I am not sure if I would trade my current/potential present comfort and convenience over a saving through interest in 25 years. Informative videos and very helpful but it’s my personal thought on this particular point.
Is the £160k figure net of inflation? Also, what would the full picture look like when accounting for comparative maintenance costs? The last factor would be the simple enjoyment factor. Sometimes what we earn should go towards a nicer life, otherwise what's the point, and where's the motivation? Some might find out 12 years into the 25 year investment period that they've got a year to live. Obviously, I'm not saying anyone should be reckless with money; more about being balanced.
There's a idiot at my work whos doing all the overtime he can get, working 7 days a week, no life & looks depressed just to pay extortionate monthly payments on a crappy new car
Some people realise the cost of owning a brand new car but think it’s worth it because they value being seen in a brand new car (the image) and enjoy what other people think of them (or what that person thinks they think of them). I would rather buy the car off of these people once they’ve had their fun 😅
I was poor until i got a car. Without one you pay the ultimate opportunity cost. Less employment options, less shopping options, etc. Get a car right away. Just buy a beater.
I was poor because I owned a car. For ten years, I worked in factories and warehouses for roughly minimum wage. I calculated how much it cost to run my car including depreciation, maintenance etc. The car meant I was in transport poverty (over 15% of income spent on transport). I bought a bike and cycled to work. Later I moved to the city to be closer to job opportunities. Already I was saving thousands annually. A few years later, I used my savings to drop to part time working. I used that time to do a bootcamp. I have no qualifications above GCSE's and am now working as a software engineer in a bank. Now I earn money I didn't think was possible for me. I'm buying a house a 10 minute cycle from my work. I'm buying it with my own salary alone. I have a great pension and investments. When my partner moves in (currently a PhD student), we'll easily clear the top 10% of households by income. With low housing and transport costs and high incomes, we'll have a great quality of life and it was because I chose to move closer to job opportunities and forgo car ownership. I still don't own a car and I never plan to.
Buy the car off the finance company. You know the history of the car and you will be buying a car thats already depreciated so you will be keeping a car that's a known car and not paying a middle man (dealer).
While i agree with the general premise of the video, the assumption and calculation for opportunity cost is clearly incorrect, and therefore reduces the trustworthiness of other things mentioned in the video.
I am astounded that 1 in 2 cars are bought new outright in cash. I always use PCP or Lease because it means I get a brand new car, that will run with no issues for 3-5 years and I do not directly pay for the depreciation. Things that appreciate - buy, things that depreciate - lease.
@@J1M1F Yeah, maybe. But that's a big chunk of my savings on something that will continue to lose value. Versus a couple of hundred a month to something brand new that I'll never own. Either approach is valid
I would just like to point out on your video its more expensive to run a electric car, please do the maths and you will see, stick to petrol and you will be ok
Whether an EV is cheaper than an IC car will depend on a person's circumstances. E.g. for me, it would be massively cheaper to have an EV, therefore I'll be changing to an EV the next time I get a new car
More people need to watch this video. I have never bought a new car, even though I could. I always buy a 4 - 5 year old car with cash, not credit, and make sure I look after it. Common sense really. I've been putting money into ISA / pension instead and just retired at 55...had I been buying new cars every other year I'd be working another 10 years at least before I could retire!
Congrats on your early retirement! Sounds like you made some good financial decisions
@@KiranKaurFinance Thanks…totally recommend early retirement! 😉👍
Yep PCP finance is one of the most insidious scheme ever - a friend of mine who loves cars is now on his 4th or 5th car financed in this way that’s over 10 years of car payments (and he doesn’t buy cheap cars) and he’s never actually owned a car. At the end of the term he gives it back and starts all over again, always being in perpetual debt….i don’t know his personal financial situation but I do know he has absolutely no investments.
This is just bonkers to me - my last car was just over 18 months old, had 9,000 miles on thee clock and was in brand new condition, and cost me cash 30% less than it would have cost new. The last time I had a monthly car payment was almost 20 years ago - it’s scary the amount of money people throw away on cars.
Kiran, I'm 30 years old and only just now starting to learn about making smarter choices with my money and investing. I never learned ANY of the things you share from family or friends, heck, we rarely ever talk about finances. So thankyou for sharing all your knowledge through this channel. You are certainly teaching me so much and helping me to have a much brighter and secure future. Happy holidays 🎄❤
Thank you for your lovely comment! Happy Holidays!
Funny how the 'system', society makes renting always be seen as throwing money away yet never makes cars seen as throwing money away.
That's because they are different propositions you fool.
YES!
Fool: My parents bought a house for £9,500.
52 years later it's worth £450,000. The car they bought 52 years ago is dust. "Funny how the 'system', works"
You try releasing income to live on as a pension from a rented property.
Kiran you are so right.I gave up spending stupid money on cars.I now have a small Peugeot 107 for driving round town .It costs me nothing in road tax,does 60 to the gallon and is so cheap to insure.I love to park it by the big gas guzzlers in Tesco.Gives me a sense of satisfaction.
Big traditional cars are not gas guzzlers, yes 4x4 are. My Mercedes E Class gets 60mpg, cost £35 tax is not a lot to insure and is worth what I bought it for 2 years ago. But I do agree with you on people going silly with new cars.
I’m an IFA and cars are wealth killers. My car is 9 years old, bought 3 year old. Well maintained and still looks smart. Friends often ask when I’m going to buy a newer car and I just smile whilst I think about the investment portfolio I’ve created and the early retirement I’ll be enjoying instead.
Spot on!
Three things to add-
A car is never an investment, it is an expenditure.
If you buy a new car on finance that £250 per month is not paying for the car- it is just covering the depreciation for that month!!
The key is cost per year. Three numbers set this. Cost when buying, how long you own it and resale value. Take resale off of new price and divide by years. A mid-range new car can easily cost £4,000 per year. A decent, quality used car can be under £1,000 per year. Fuel and service costs can be factored in the same way.
I bought a Nissan leaf from a main dealer that was 3 years old for £9500 inc 2 free services. 4 years later after a further 4 years and £700 of brake pads and tyres, sold it to We Buy Any Car for £8900.
We also bought in 1995 a 4 year old Merc for £25k, drove it for 28 years and sold it for £10k .Had we not been emigrating we would have kept it much longer as it was appreciating as a classic car. However I would only recommend keeping long term a car from a quality build manufacturer with a good parts availability.
I have a 20-year-old 5 series BMW diesel I've had for the past 3 years. that i paid a grand for. i had finance years ago, never again
00:03 Car expenses hinder wealth-building
01:11 Owning cars hinders financial freedom and wealth building.
02:13 Buying a brand new car is not a good investment due to rapid depreciation.
03:12 Avoid buying new cars to minimize depreciation costs
04:15 Higher purchase & PCP are expensive due to high interest rates
05:21 Fuel efficiency impacts your monthly expenses significantly.
06:28 Buy a lightweight petrol car to save money on upfront cost.
07:35 Invest your money instead of upgrading your car
you know what they say, it's best to do things when you are young and not when you are old. When you are 20 and got a nice car you will have a good social life and great fun and when you go on holiday everyone wants to come. But when you are 40, saved up and with money, when you buy a nice car no one cares and when you go on holiday no one wants to come with you.
The problem with today society is that we can have anything we want. You see 20-year-olds driving 40k BMW's and AUDI's only to realise they are on PCP, Finance etc. A colleague paying £600 a month for a new Škoda for crying out loud. There are reports in the car finance sector and there is a huge influx of people trying to return their new cars because they cannot afford to run them. The main reasons for the request of return are running costs, tyres and fuel.
This is, by definition, ignorance, and total stupidity, thinking they can afford to look good yet unable to afford to run the vehicle.
lol. This is by definition ignorance and total stupidity! Lol😂😂😂
Buy a reliable car, ensure it gets serviced, garage whenever you are home and keep for a minimum of 15 years. Keeping a car a long time means you get used to the engine's sounds and can detect when something is off-kilter, the only downside for keeping cars a long time is the seats can wear out.
Absolutely right. However, I just bought an EV with the facility to use the battery to run my house (up to 7kW). I can charge the car at night at 7p/kWh and then run the house during the day from that. Look for vehicles that have a V2L (vehicle to load) facility.
Good point, when I was working I got a 60k company car, when I retired , I bought the car from the lease company at 3 years old , I plan to never sell it. I have never taken out a loan apart from a mortgage. I just can’t pay interest, I always live by the maxim, if I can’t pay for it , I don’t buy it.
I brought a 7 year old car 14 years ago. I just sold it as it wouldn't pass the mot it was 19 years old when i sold it , it was brought with cash. I just brought a 9 year old car with cash which will hopefully last me another 14 years. I prefer not to have monthly car payments and paying extra interest just to have the latest car on finance.
🦉🐯 Some ok advice, in general the five year “sweet spot” and cash is sensible, other than that people want what ever they desire, and if you work hard and have the money… be sensible, buy well engineered, and go and enjoy yourself!
From new, PCP, £230pcm, Hybrid so about £25pcm on fuel, £21 on insurance and absolutely no maintenance costs. Tbh, having a car isn't a luxury but a lifestyle tool and NECESSARY (unless you live in London, 'flash' cars are an absolute waste of time and a HUGE moneypit though.
what's an alternative!? Is it a low cost car that is a high risk for having faults?
PCP on a new Skoda worked for me, first new car I've ever brought.
£134.85 PM over 4 years @ 0% interest (This what made it viable...)
£6K balloon payment
Around 18K total (got about £5K on a trade in with the old car at sale)
Car was worth £12K after 4 years (crazy S/H car market at the time..)
New model of same car would of been £200 pm + interest over 4 years.
£8K balloon payment.
£24K total cost inc interest.
Not worth it.
They offered me 6K equity back on my car(!!!!!) against a new one. That's pretty much the payments made over the past 4 years bar £500
I just paid the £6K and kept it. I would of had to of paid £13K for the same car at that point.
Yeah, there will be some periodic high maintenance costs coming up but over all it felt like the best most sensible thing to do in that situation.
I was intending to keep the car, so that's how it worked out anyway looking at the options at the end of the PCP.
Its all jargon for waste money asap
Spent 13 years driving a honda accord I bought for 5 grand. Sold it 2 years ago when the second hand car market was booming for 7 grand. Bought a honda jazz for 2 grand which I'm still driving 2 years later 😂 . Do all my servicing and repairs myself. 👌🏻
Not many second hand EVs on the market 😂 are you kidding, the market is full of them the depreciation is massive 😳
Yup, you can buy a good model3 for around 20k now. There are cheaper cars available too. I'd argue; if you have a driveway, and you don't travel long distance all the time, EVs are much cheaper overall.
My car was 13 years old and worth £2k on a good day. To get it through mot it required £1600 spend with no guarantee anything else would go wrong. I’d no option of keeping it, I needed a reliable vehicle to get to work. I did buy cash in the sweet spot though.
400k.... But my car cost £100....eight years ago.... Still doing OK and it's worth £270 now.... Just an old mechanic that knows true price of cars. (1.6 diesel 60mpg)
And compound interest is the key.Bang on!
I agree to keep a newish car long term because depreciation eases off and you'll also have few years of no debt on the car which can help save to invest. Those who constantly change cars on finance will forever be in debt due to inflated lifestyle
Absolutely, an inflated lifestyle will make investing harder!
Average age is 60, and when you usually own a car, you may be 25 to 28 years old. It means, half of life is already over. Now you have half life to enjoy the moments of short life. Better, not to think much about saving money by sacrificing your happiness. So, buy whatever you want Which leads to your happiness before your last breath. If you have money in banks, and didn't use yet, then i swear, its not your money. Your money is only which you have eaten and spent for your happiness. Because if you will die at any moment, that money will not be with you in graveyard. Simple!
I get your point about making the most of the moment and agree. However, not sure which country you live in but 25-28 years is not half way through life in any Western country! Life expectancy is around 80 or more.
Also the point of the video is you don’t need a brand new, expensive car to enjoy life to the full. For most people a car is just a means to get from A to B.
@@jacc88888If a car was only to get from A to B for most, there wouldn’t be so many car channels on CZcams 😉. The point here is that if the car is your hobby and makes you happy then that’s where you might want to spend it, enjoy it and no regrets.
The point he is making is that you cannot take money to the grave with you, which is a great point - enjoy it ✌️😎
Love this - very true, in the uk half of my parents savings then went on care for my fathers Dementia, after paying tax all their lives, with a little bit of capital left for inheritance. Live life within your means, but enjoy it, gift in life where you can, and don’t take it to the grave with you!
@@markgriffiths409 Yes, good point but that why I put “For most people” ie not everyone. I have a couple of friends who are car enthusiasts and get a lot of pleasure from driving nice cars which is great. I guess there are also a lot of people who buy nice cars just for status and not because they are truly going to enjoy driving them which I don’t get.
Ps I also agree with you both about using money to enjoy life to the full. Guess my comment didn’t bring that across enough. For me these days that’s more spending on experiences - holidays, trips etc. rather than accumulating more stuff.
@@jacc88888 Yep I agree with you on that 💯😎👍
Yep PCP finance is one of the most insidious scheme ever - a friend of mine who loves cars is now on his 4th or 5th car financed in this way that’s over 10 years of car payments (and he doesn’t buy cheap cars) and he’s never actually owned a car. At the end of the term he gives it back and starts all over again, always being in perpetual debt….i don’t know his personal financial situation but I do know he has absolutely no investments.
This is just bonkers to me - my last car was just over 18 months old, had 9,000 miles on thee clock and was in brand new condition, and cost me cash 30% less than it would have cost new. The last time I had a monthly car payment was almost 20 years ago - it’s scary the amount of money people throw away on cars.
Unless you have a company car that allows personal mileage and a fuel card, I understand some may not be fortunate in their roles but definitely worth considering as it has saved me alot of money over the years
Great advice. I have never bought a new vehicle and only ever paid for them outright. Its worked well for me, I keep personal vehicles slightly longer and work vehicles for less time based on age and millage for reliability reasons.
You’ve helped me. Now I know buying the car of my dreams is the right thing to do. For me.
Oh and buying an electric car now has never been cheaper because the market has collapsed.
I have what I think is a cost effective car buying system. I select an old vehicle with low mileage and full MOT at a low price. I check the MOT history free online through government websites, which often lists previous MOT failures, mileage between MOT’s showing annual use. You tend to be able to see ownership changes to some degree. So I’m looking at how many ownership changes - anything with lots of changes or changes after just 1 year I avoid like the plague. I’m looking for cars owned by few people, run at an average of less than 10k miles per annum. I tend to spend less than £1k but the used car market has inflated. The intention is to run the vehicle for 1 year and if it passes it’s not with minimal repair then I will make a decision to keep it for longer. When the mot runs out or the car has problems I scrap it and make some money back on the scrappage. I go for less than 1.4cc petrol vehicles. low tax better fuel consumption, cheaper insurance and older cars generally avoid ulez charges. It’s worked for me for years, I get to drive lots of different types of cars and no debt. I don’t care if they get scratched or damaged as I’ve not got much skin in the game 🤷♂️
I bought a 2 year old ex-rental Motorhome. I have had it for 3 years and it is now worth more than what I paid for it.
I also bought a Land Rover Defender 5 years ago and it has held its value over those 5 years.
Very good advice, but I have a few things to mention from my own experience: reliability, availability and cost of spare parts, public transport, family and business. Reliability is a big factor IMO, which is why I'm generally only interested in Subaru, and then Toyota as a consolation prize. Subaru are the best automobile in the world, the only downside is you will have some extra fuel costs as they're all-wheel-drive. Toyota do have some rust issues, but overall they're also good, a little cheaper on fuel. Forget anything European, they're all junk and expensive to fix and service. On my journey through life, I grew up in an area with no or very poor public transport. Thus, cars kept me poor, but I still needed to get around. Then, I married and started a business. Two things kicked in, I was going to have children AND needed to make an impact in the market as a successful young man (people don't want to deal with guys who drive old things). I did actually start the business while owning a 1967 S-type Jaguar (3.8 manual), it had a towbar and came in handy. I once heard a bloke talking about me, and to answer the question what's Horlor like, he answered; oh he's all right, bit of a yuppy, drives Jag. I knew then I needed a better car, so I went to see the local Toyota dealer and got an operating lease on a Toyota SUV with all the bells and whistles. This came with all servicing and a complete change of tyres when needed. This gave me instant recognition as a young chap coming up in the world, and I had a new car which wouldn't break down (and if it did, Toyota fixed it), and my family would now be safe as well. Following that, I went through a series of Toyotas until I paid cash for a Subaru new, and that was 19 years ago. This car is so reliable that if it could talk, and you asked it to find a workshop it wouldn't be able to show you as it doesn't know what that is. There is something to be said for regular oil changes, especially in those early years. Any piece of equipment that is an orphan and unloved child in its early years always ends up causing trouble (just my 2 cents..ahem). Anyway, I am now considering a Suzuki Jimny as my retirement car. This jeep is rugged, simple, reliable and it will likely be new so it can take me to my grave. If not, I'll consider a second hand Subaru, better non-turbo, anything with turbo in its name is to be avoided as well.
I sold my car and bought a bike. It was good for my health and wealth. Hopefully better health will save me money in later years.
Love this!
Hi Kiran, You have correctly identified the costs. However, what about the Congestion Charges or if you take your car to ULEZ in London? What about the fuel efficiency of the new hybrid models vs older models?
Thank you! Very good points
I would add also, modern cars are very well built. Buying a car that is 3 years old and has been looked after will last you a long time. I bought a Hyundai Tuscon ex-demonstrator, saving £8,000, and it had less than 2,000 miles on it.
I also apply the not upgrading often principle to my home, i.e. I don't redecorate every few years or upgrade the furniture etc.
Hi Kiran. My car makes me money as a surveyor, it’s a cheap Toyota hybrid that I’m driving to the death. Great video
Interesting thought. I keep debating whether to sell my 911. It was a main car for 2 years, but then I had an electric company car so it becamse a weekend car. I don't drive it much, but I really like it when I do. If I sold it for £25k or so I wonder how much Income I could turn that into with Monthly Dividend paying shares? Probably not much sadly :/
Absolutely - if I see anyone in a brand new car I don''t think 'Wow - they are cool and successful', but I think 'What a plonker!'. It is also very odd that every self-employed Finance Adviser that has come to visit me always pulls up in a brand new, very expensive (non-company) car! I draw two things from this, 1) they don't really have any idea about household finance, and 2) I am probably paying for that car! Thank god for ETFs!
When I buy a car, it dies with me. I buy at reputable auctions and never older than 18 months old. I buy a new car whenever the one I’ve got is about to die, normally at 400,000 miles. I’m wondering what my Discovery will do……..
Depreciation is the main point. Thanks for sharing. I need some training from you. ®
I know this makes aense especially when talking about the cost of depreciation , but for the record i want to defend my decision to pcp . First off the last 3 2nd hand cars i had before pcp cost me dearly. I had 1 that cost over 2k in repair bills and still wasn't right one that cost 3k in a year . . When we buy our new car on pcp i take it over 4 years but change the car after 3 this gives me shopping time to i can wait out the desired deal the first pcp i got was actually a bargain i got 2k scrappage on my old car, and 0% finance with monthly payments of 170 for 3 years (cost me less than the repair bills from before) . 2nd pcp was a bit more expensive cause i dint get the scrappage and the finance was 1% 240 a month just gone over 3 years now, and i kept it for now as the only 0% deal available at the 3 year point was a car i didnt fancy , but i still have a year and theres usually a 0 or 1 % deal jsut waiting for it to be on a more desirable car . My wife needs the car dor work so a reliable motor is a necessity
Great video very well explained it also makes a lot of sense it is true buying cars can be an addiction especially if you love cars but the money could definitely be spent elsewhere 😂 keep the videos coming 👏🏽👊🏽👍🏽🥂
Great video Bhenji....brilliantly explaining how people become mired in debt at the same time convincing themselves they're "successful" by having the latest model car on the driveway. Far better to buy a used model as you say. Simplisticly put: why would you borrow money against a depreciating asset? You wouldn't buy a house if you knew it would depreciate, even less so if you had to get a mortgage to only end up losing money right? Same principle applies to a car.
Humble request: if you haven't done a video on EV leasing (personal vs via Ltd); would you consider making one perhaps? Thanks & keep up the content. You've got +1 subscriber from me
New cars are a major liability. Old cars which are reliable are amazing if it doesn't gas guzzle. I brought a city car £20 tax 60 mpg around town and has everything you will ever need in the luxury cars. Heated seats, air con, bluetooth, electric everything and reversing sensors. Car only cost £1.75k. Servicing is next to nothing. Parts are super cheap and its reliable anyway.
440k on cars. Somebody lives in an elite bubble.
I wish youd have a word about the ULEZ systems which encourage people to get into this debt trap.
My Deisel Merc E Class does 60 miles to the gallon.
I paid 10.000 for it ten years ago and its like new. These systems want me to scrap it.
Cars should make people happy. They say that if you don't look back at your car then you have bought the wrong one. My point is that if you die with a portfolio of wealth then you have failed in life.
Spot on I worked this out years ago after a chat with an old guy
But for some people investing their money means they have no money to enjoy their life, so no car means no transport which means they don't get around.
So though you are right you could say the same for everything you do, ie that take away meal, those designer shoes, those leather gloves that hair do all money wasted or is it? Money is made to be spent you can't take it with you when you die.
If you want a car then buy a car, what good is dying with 160 grand while you starve because you are saving money or investing, which I might point out the companies you invest with take the biggest slice of your pie you often just get the crumbs.
At least you should enjoy the vehicle you spend your money on, ie you may meet the love of your life, or nice trips to the coast, or enjoy the space with your loved ones.
Money is a means by which to obtain things we can't make ourselves, very few people can make cars, so they buy them.
As for electric vehicles they are more reliable than other types of fuel, so you could keep them longer and spend less on maintenance therefore the longer you keep them the better the return on your investment in to it.
Secondhand petrol and diesel is being outlawed so could at some point be a waste of money as you won't get the use out of it.
The car market is in a bit of a strange place at the moment, and there are deals out there. I have just traded-in a low mileage two year old car. The deal I got meant the deprecation over those two years was only £750 per annum.
Hey Kiran, I'm going to level with you. I'm a young Dad trying to get a head start where I can.
So I am looking up compound accounts and these are mostly savings accounts?
I hope I am onto the right thing here.
Also, thankyou. Our schools have failed to teach economics to young people
Excellent video. Subscribed.
I know a car is the worse investment and people buy expensive cars to show off. That’s clear because in cities like London you don’t need a fast car. I’ve got a cheap car and bought it second hand and it’s reliable and cheap to run and service.
When I look at people driving an expensive car it makes me laugh. Even if they have the cash, it’s still stupid.
You're wrong. Firstly in this context a car is not an investment.
Thanks for sharing and subscribing!
I live in London and have never owned or rented a car. I mostly walk or use public transport.
What fund gives 10% interest? Very interesting on this
thanks kiran, really informative info.
Thanks, Kiran. .really fantastic advice. I am 60 now, and I am not sure I will be here in 25 years time and fit to drive. 🤣🤣🤣🤣🤣
Steps to drive cheaply-
#1 buy a high mileage quality car at 3 years old. (third new price)
#2 keep it ten years. At least.
#3 service it every 3 years (not one). I have done this for 40 years and never had a mechanical failure.
#4 pay cash.
I run a Merc for £1500 p.a. plus fuel.
Amazing, thanks for sharing!
It's a status symbol and also people are lazier than in the past. I have never owned or rented a car or had any interest in either.
I am not sure if I would trade my current/potential present comfort and convenience over a saving through interest in 25 years. Informative videos and very helpful but it’s my personal thought on this particular point.
Is the £160k figure net of inflation? Also, what would the full picture look like when accounting for comparative maintenance costs?
The last factor would be the simple enjoyment factor. Sometimes what we earn should go towards a nicer life, otherwise what's the point, and where's the motivation? Some might find out 12 years into the 25 year investment period that they've got a year to live. Obviously, I'm not saying anyone should be reckless with money; more about being balanced.
Will using uber be wise? Can I save more? Kindly share your thoughts
There's a idiot at my work whos doing all the overtime he can get, working 7 days a week, no life & looks depressed just to pay extortionate monthly payments on a crappy new car
Where can i invest to get 10% that compounds?
Ever seen a 'Greenie' that didn't buy a flash, shiny new electric vehicle?
It's about saving the planet man! Cough.
Some people realise the cost of owning a brand new car but think it’s worth it because they value being seen in a brand new car (the image) and enjoy what other people think of them (or what that person thinks they think of them).
I would rather buy the car off of these people once they’ve had their fun 😅
Great advice 👍 thanks
Where can you drive to in a Bentley that you can’t drive to in a corsa?
Just found your channel, good stuff!
Thank you!
Beautiful, smart, intelligent, classy. I subscribed, you talk extremely well
Thank you!
@@KiranKaurFinance You're welcome
Why do you feel you have to comment on there appearance ?
Hi thank you for this information and have a nice Christmas 🎄
Happy holidays!
Women judge a man on the car he drives.
I guess those women wouldn't even talk to me then, because I don't own a car or rent one and never have. I either walk or use public transport.
Fully agree 🙂💯
which fund gives 10% interest?
I was poor until i got a car. Without one you pay the ultimate opportunity cost. Less employment options, less shopping options, etc. Get a car right away. Just buy a beater.
I was poor because I owned a car.
For ten years, I worked in factories and warehouses for roughly minimum wage. I calculated how much it cost to run my car including depreciation, maintenance etc. The car meant I was in transport poverty (over 15% of income spent on transport).
I bought a bike and cycled to work. Later I moved to the city to be closer to job opportunities. Already I was saving thousands annually.
A few years later, I used my savings to drop to part time working. I used that time to do a bootcamp. I have no qualifications above GCSE's and am now working as a software engineer in a bank.
Now I earn money I didn't think was possible for me. I'm buying a house a 10 minute cycle from my work. I'm buying it with my own salary alone. I have a great pension and investments. When my partner moves in (currently a PhD student), we'll easily clear the top 10% of households by income.
With low housing and transport costs and high incomes, we'll have a great quality of life and it was because I chose to move closer to job opportunities and forgo car ownership.
I still don't own a car and I never plan to.
EVs lose so much value as no one wants a broken battery.
So I am already in the middle of a PCP, what would you suggest when the initial term is up and they want the car back?
Buy the car off the finance company. You know the history of the car and you will be buying a car thats already depreciated so you will be keeping a car that's a known car and not paying a middle man (dealer).
Have a merry christmas & a happy New Year.
Happy holidays!
Cars are a status symbol
The banks and government keep me poor not a car
While i agree with the general premise of the video, the assumption and calculation for opportunity cost is clearly incorrect, and therefore reduces the trustworthiness of other things mentioned in the video.
There are many EVs on the market and very affordable.
to answer your question as to why are we spending money on cars : because cars are fun c:
Get a EV, they are cheap to charge especially if you charge at home, almost zero maintenance, no emission charge etc etc
£1000... Invested in Nvidia in 2016 would now be worth £100,000. How's my car doing?....
I'm an accountant and never ever buy new cars. It's a showman ship. I invest in property
Great decision!
Wao Amazing!
I am astounded that 1 in 2 cars are bought new outright in cash. I always use PCP or Lease because it means I get a brand new car, that will run with no issues for 3-5 years and I do not directly pay for the depreciation. Things that appreciate - buy, things that depreciate - lease.
Or buy a cheaper used car outright?
@@J1M1F Yeah, maybe. But that's a big chunk of my savings on something that will continue to lose value. Versus a couple of hundred a month to something brand new that I'll never own. Either approach is valid
Where I’m from, if u don’t have a car u can’t get a job. The whole society is designed or revolves around the car industry.
I'd definitely be unemployed forever there then, because I've never owned or rented a car in my life.
Very interesting
No credit cards
Shame you forgot about inflation when you calculated investment gains
Brand new cars? you don't own it, instead you are a slave to it
I would just like to point out on your video its more expensive to run a electric car, please do the maths and you will see, stick to petrol and you will be ok
Whether an EV is cheaper than an IC car will depend on a person's circumstances. E.g. for me, it would be massively cheaper to have an EV, therefore I'll be changing to an EV the next time I get a new car
Not me I ride a recumbent bicycle.
😔time to dust off the old pedal bike then... or maybe an ebike? Hmmm 🤔
25 years? 😢 for 100k jezzz
Your investment returns are unrealistic 10% a year, and what car can you buy for £225 a month, more like £400 a month
💯💯💯💯
who on earth holds a car for 20 years?
Cigarettes keep you poor in the UK. 15 pounds for a pack of 20. They cost less than 1 pound to manufacture so 14 is all tax.