A sketch of my wonderful 2010 Nissan Micra…
I’m not going to mince words: If you’re under 30 and rolling around in a brand-new car on a PCP (Personal Contract Purchase) deal, you’re actively choosing to be poorer than you need to be.
Don’t get me wrong. I love the smell of a new car. The heated steering wheel. The satellite navigation that actually works. It’s lush. But that feeling? It’s the most expensive fleeting emotion you can buy, and I refuse to pay for it.
I drive what the internet affectionately calls a “sh!tbox.” It’s a decade-old, slightly dented hatchback. The paint is faded, the radio cuts out over speed bumps, and it definitely does not connect to Apple CarPlay. But you know what? It gets me from A to B.
And that, my friends, is the most crucial financial concept most people completely ignore.
The Cold, Hard Math That Will P**s You Off
Let’s look at the average cost of driving a new car in the UK versus keeping an older, paid-off one.
| Factor | New Car (e.g., £25k PCP) | Sh!tbox (Paid off, £3k value) | The Financial Difference |
| Monthly Payment | £300 – £450 | £0 | HUGE. That’s your ISA contribution. |
| Depreciation (Loss of Value) | £2,500 – £4,000 per year | Minimal (Maybe £200 – £500) | The biggest hidden killer of wealth. |
| Insurance | Often higher (due to higher value) | Typically lower (I paid £662/year) | More cash in your pocket. |
| Servicing/Parts | Pricey dealership parts | Cheap, third-party parts/DIY | Freedom from the main dealer network. |
The Controversial Takeaway: The ‘£15k Status Fee’
Most people replace their perfectly fine older car because they want a better one. If your new car costs, say, £15,000 more over four years (payments + depreciation) than running your old one, you’re paying an extra £3,750 a year just for bragging rights and comfort.
Imagine investing that £3,750 every year into a Stocks & Shares ISA instead. At a modest 7% return, after 10 years, you’d have close to £52,000.
That’s the difference between a nice car now, and a deposit on your first flat later. I’ll take the flat. Every. Single. Time.
The Freedom of Financial Indifference
The absolute best part about driving a vehicle that’s worth less than your watch is the freedom it buys you.
- You Stop Caring About Scratches: A trolley dings the door? Don’t care. You don’t get the pit in your stomach you would if you were protecting a £300 monthly payment. This reduced stress is priceless.
- You’re Not Trapped by Finance: That shiny new car locks you into a contract and a monthly payment. My sh!tbox is paid for. If I lose my job tomorrow, my car payment remains exactly £0. That is the ultimate financial safety net.
- You Don’t Over-Insure: I know many people around my age that are spending well over £1,000 on just their insurance. It’s just another marked up fee that doesn’t give you much tangible value.
Actionable Takeaway: If you have a car loan right now, check the settlement figure. Work out how fast you can aggressively pay it down to £0. Then, start treating that former car payment like a mandatory monthly ISA contribution.
The “Why Not” Section: Why Leasing is The Ultimate Trap
I know what you’re thinking: “Leasing is cheaper than buying, it’s just a monthly fee!”
Wrong. Leasing (or PCP/PCH) is just a long-term rental agreement. You pay thousands, you deal with all the hassle (mileage limits, wear and tear charges), and at the end of the term, you own nothing. You walk away empty-handed, only to restart the cycle of debt and payments to stay mobile.
It’s the ultimate consumerist trap designed to keep you paying for the depreciation that the finance company happily benefits from.
I’m not saying drive something dangerous. Safety comes first. But once you hit the sweet spot, an older, reliable model that has been paid off and runs well, you’ll have one less thing to worry about. Your vehicle is now a tool, not a status symbol.
I drive a sh!tbox because I’m focused on buying freedom and future wealth, not on impressing strangers in the Tesco car park. You should be, too.
