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Its time to get your first car!

Meet Harry, he’s 22 years old and fresh out of university. His hard work and academic professionalism have led to him landing a marketing role; if this isn’t reward enough he has decided to treat himself to his first car.

Being 22 – youthful and keen to impress his peers– Harry would like something flashy, impressive, yet subtly economical and, most importantly, a car that’s cheap to buy/run. Given these criteria it’s going to have to be some kind of 5 door hatchback, because what’s the point of having a car if you can’t ferry your friends around?

Having looked around, the Peugeot 308 GT Line seems like the right choice. With its positive review ratings and great looks, it appears to be the best compromise of need/want. It also looks sporty, which is enough to hide the fact that diesels are the only way to go for a mpg-wary young man like Harry.

The budget:

Let’s say Harry earns £18,000 a year after tax, an ideal rate for him would be around 10-15% of his monthly income. The car he wants costs a sizeable £24,520 to buy outright which means he needs a rate of less than 1%.

To buy new:

Peugeot offers a Personal Contract Purchase deal of £389 per month, with an additional payment of £9,000 at the end of the 36 months to buy the car. There isn’t much else to look into here, this is well out of Harry’s budget even for the cheapest model!

To buy second hand:

 It will cost Harry between £13,000 and £16,000 to buy the car second hand. Finance schemes available range between £230 to £280 per month over 48 months, that’s with a £1150 deposit. This is, once again, well out of our prospective buyer’s budget.

The Verdict

 New cars are just too expensive for a young professional who is just starting out. Taking out a loan becomes the only choice for those wanting the luxury of a brand new car, that or wealthy parents. The alternative is to buy an older car which could prove unreliable or have hidden issues that may prove costly in the long term. Assuming there are no issues with the car Harry will have a tool, a means of transportation from A to B, not a symbol of unmitigated freedom that he will itch to get behind the wheel of on the morning commute.

Luckily, there is another option that you will have likely seen coming: vehicle leasing.

Cheap leasing is on the rise, which means a Peugeot 308 GT Line (2.0 Bluemotion) is up for grabs for as little as £187.27 per month on a two year lease. This is 12.4% of Harry’s monthly income which, excluding the initial rental (£1123), comes to £2,247 per year. You get a new car with the manufacturer’s warranty for that period!

So, Harry could buy an old banger and drive it into the ground, traversing unlit back-roads to avoid being seen, or he could choose to lease and enjoy what he has worked hard for.

What would you choose?

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Posted on 16th May 2016 at 3:54 PM

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