The easy way to pay €10k for a new 2017 car instead of €21.5k!

I’ve never bought a new car in my life. Everyone advises against it because of the immediate depreciation in value once you drive it off the dealer’s forecourt. In Ireland, you can expect to lose 20% at least within the few minutes it takes to drive it out of the garage. On a car worth €21.5k that’s €4,300 – completely gone from the value – in five minutes. No one who aspires to financial independence  would even consider it.

There’s the perfect storm in Ireland at the moment (March 2017) around electric cars. Simply put, they are not very popular yet and both the car companies and government want to improve the situation.  2015 saw a meager 222 electric cars sold compared to 13,929 petrol cars and the  massive 47, 559 diesel cars that whizzed out.

Theoretically, Mr Kitty and I  can purchase a Nissan Leaf with a list price of €21,500 for a value of half that.

Here’s how:

€21,500 minus:

  •  €5000 :The government grant scheme in operation will refund you this for a Nissan Leaf. (lots more models too). The grant scheme operates until the end of 2017. It also includes free VRT which I haven’t included in the calculation.
  • €4000: Nissan scrappage scheme discount on existing car.
  • €1300: Represents 2 years free insurance for orders made by March 31st 2017 based on our current insurance cost yearly saving.
  • €240: 2 years free Car Tax from Nissan for orders made by March 31st 2017
  • €600: We pay €720 per year in car tax. This is the saving on what we would have to pay.
  • €250: Approximate cost of two year car services on our current car. Nissan include 2 years free car service for orders made by March 31st 2017.

Total Savings: €11,390

This leaves a car cost of €10,110.  You’re welcome.

Now currently in the Cash in the Kitty household, we estimate we spend from €1500 – €2000 per year on diesel. If we charged the car at one of the many free points around Ireland (there’s 2 at least in my town) it means we would save all that cash.

So in essence, in 5-6 years the car has paid for itself.

After having a good debate about this over dinner, we are still unsure whether to go down this route or not. While savings represent value from yearly cost as well as discount, discount alone means we have to have to hand out approximately €12,000 in cash in one foul swoop. (We don’t do car finance).

It would pain us to hand that out of our savings in one big lump. Currently our car is costing us about €3425 alone in fuel, insurance, tax and NCT costs.

I wonder if the €12,000 would be better off in our investment account earning 8% per year. In that 5-6 years it would be worth almost €18k before taxes.

AH, What to do?!!

Please let me know what you think in the comments below.

 

 

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