Tony Levene is a renowned financial journalist, who has previously been a columnist for Guardian Money. He has written several books, including 'Investing for Dummies' and won the ABI Lifetime Achievement award and the Headline Money award.
A decade or two ago, anyone who was anyone had a sparking new car every three years – often on numberplate letter changing day. Not just factory fresh, it would be an upgrade, showing you were moving up in the world and important enough to qualify for that most sought-after perk, the company car.
Driving an older car was once a necessity because the owner could only afford a jalopy. That does not happen any more. The three year replacement cycle has largely disappeared. The company car has lost its tax-saver status. Whether you choose brand new or banger is now down to lifestyle and priorities as well as affordability.
Cars are now much better made. Your local motor superstore has rows of car seats for children, racks of in-car hi-fi and tons of camping trailers. But you'll find little plastic filler, a one-time best-seller. Cars are no longer rust-buckets, full of holes to fill, sand and repaint by their third birthday. Nor will you see much to help take an engine to bits. Cars are more complex but
Mine is to keep an old car, a near 20 year old Volvo estate, going as long as I can. It still has under 90,000 miles on the clock.
For me, it's a question of why bother replacing it while it still goes. Mechanically it works well and it is comfortable (heated front seats). Yes, a few minor bodywork bits rely more on gaffer tape than they should. And I can't accelerate as fast as a new car.
It's generally easier to find mechanical parts rather than trim or body parts. But there's an increasing market in second hand bits from breakers.
I can exist with this. But because my area has excellent public transport, my mileage is low and I could probably live without it although it's great for the occasional long journey and visiting
I pay very little insurance, and for a car of its size, the road tax is reasonable while many larger cars have costly vehicle excise duty, especially in
the first year.
And I no longer have to think about depreciation. If I sold it, I would get very little but it's the same very little as last year and the year before. Many new cars halve in value over their first three years. It is only after five years that depreciation, the biggest single cost in most newer cars, ceases being painful.
Would I be so sanguine if, like some neighbours, I was car-dependent, driving 20,000 or more miles a year? Perhaps not.
My car guzzles petrol – 25 miles to the gallon. A new car would use less – maybe 35 miles on a gallon. But on my mileage, that would only save me about £250 a year – but a 20,000 miles a year driver would be a far more worthwhile £1,500 happier.
Equally, I know my emissions are below current best practice. But a green calculation would have to include the huge but hidden energy costs of scrapping my vehicle and building a replacement.
Of course, I am more likely to need expensive repairs than with a new or newer car. This would matter if several problems came at once – or if I was dependent on the car.
It's generally easier to find mechanical parts rather than trim or body parts. But there's an increasing market in second hand bits from breakers. Many parts of scrapped cars are re-usable. When my car was involved in a minor crash in the spring, the main dealer quoted £2,250. Using second hand parts and a local repair person, I kept the bill down to £320 (within my insurance excess). The replacement parts were actually better than the old ones!
If all the attributes of a new car – reliability, warranty, comfort, speed, environmental advantages – are important to you, then buy one but
expect to pay for it.
However, if you are happy to take a little less, and you're confident in buying second hand (the AA, RAC and a number of other organisations offer vehicle inspections and checks on outstanding credit payments), then you'll probably have more money to spend on other items. If your decision is not dictated by financial necessity, you now have a real banger vs. brand new choice.
If your policy started or renewed before 01/01/2015
John Lewis Insurance is a trading name of John Lewis plc. Registered in England No. 00233462. Registered office: 171 Victoria Street, London, SW1E 5NN. John Lewis plc is an appointed representative of UKAIS Limited (No. 02613429). Registered in England and Wales at Prospect House, Gordon Banks Drive, Trentham Lakes North, Stoke on Trent ST4 4TW. Authorised and regulated by the Financial Conduct Authority (financial services register 307223).
If your policy started or renewed on or after 01/01/2015
John Lewis Insurance is a trading name of John Lewis plc. Registered in England No. 00233462. Registered office: 171 Victoria Street , London, SW1E 5NN. John Lewis plc is an appointed representative of Ageas Retail Limited. Registered office: Ageas House, Hampshire Corporate Park, Templars Way, Eastleigh, Hampshire, SO53 3YA. Registered in England and Wales 1324965. Ageas Retail Limited is authorised and regulated by the Financial Conduct Authority. FCA registered number: 312468. Ageas Retail Limited is a sister company of Ageas Insurance Limited.