Why it pays to buy new (sometimes)
IT has never been easier, or more affordable, to buy a new car. That’s because the market has been stagnant over the last couple of years, leading to manufacturers flooding the market with new models as well as tempting would-be customers with great deals — and the means to finance them.
We live in fast-moving times, with ever-tighter restrictions against diesel and petrol cars. Makers and dealers can’t afford to have new stock hanging around when it will soon be outdated and fail to meet looming emissions targets. To get around this, and to meet sales targets, excess vehicles are often 'pre-registered' — which technically makes them secondhand, but the hefty discount you’ll be offered may well tempt you.
But the main reason folk are buying new cars is the advent of PCPs (Personal Contract Plans) by manufacturers. It is estimated that 90 per cent of buyers of new cars in the UK do so with a PCP. Put simply, you pay a deposit, followed by monthly repayments (usually for 24, 36 or 48 months), then at the end of the contract you get the option to buy the car. Most buyers don’t — instead they go through the whole process all over again with another new car.
If you’ve ever wondered how your neighbour who earns about the same as you can afford a new car every two or three years, now you know. Your neighbour isn’t buying the cars, he is paying for the depreciation.
Of course, no Land Rover is cheap. A basic new Discovery SD4 diesel in SE spec would cost you almost £48,000 if you were to stump up the cash. But if you decide to 'buy' it via a PCP arranged by your local JLR dealer it will cost you a deposit of about £4800, followed by monthly repayments of £700. At the end of 36 months you get the option to buy it for about £21,000 (depending on depreciation and mileage). If you do, you're likely to have paid a total of just under £53,000.
With cars that depreciate rapidly, like the Range Rover, the PCP payments are an eye-opener. For example, an £84,000 SDV8 Vogue SE requires a £15,000 deposit, followed by 48 monthly payments of £900, after which you get the option to buy for about £34,000.
Never mind eye-opener, that sort of depreciation is eye-watering. But we all knew that already, didn’t we? If you want to lose a lot of
