Five Reasons Not to Buy a Range Rover Evoque

 

Range Rover Evoque is a thing of beauty!

Let’s just say that this morning, when I saw ours just delivered in our drive, I couldn’t even make a sound – I just gazed at it with the awe reserved for the Hall of Mirrors in the Palace of Versailles or my sleeping baby son (when he was a baby, that is).

And since our trusted Skoda CityGo is being collected in a couple of days, I’m all in stitches about driving it.

‘Have you gone mad to be buying a Ranger Rover Evoque?’ – you are probably thinking. ‘How about this big, fat goal of yours to have £2.5 million, or equivalent, by October 2018?’

I have not gone mad and I have not forgotten, I assure you. We are still working towards achieving our audacious goal.

And we didn’t buy the Range Rover Evoque; we contract-hired it.

Now that I have scandalised many of the old-school personal finance experts let me tell you the top five reasons why we’d rather contract hire our cars than buy them.

Reason 1: Driving a new car makes sense, driving a new Range Rover Evoque will leave you breathless

Most money-conscious people will tell you to drive old cars and to buy them at least three years old (this is about depreciation, you see).

My experience with used cars is not that great. I had a car that spent longer on the back of a delivery lorry than on the road.

Even if you are lucky and get a good car, you’d still need to pay for service and to have it MOTed (for my readers in the US this is an annual technical test all cars older than three years have to pass). Add repairs that come with age.

Now think about the fuel economy…

And you’d come to my point: driving brand-new cars makes sense.

Reason 2: It is about the maths

I have written before about the mathematics of buying a car or contract hiring one here I argued that it makes no sense to buy a Range Rover Evoque.

This is why here I’ll keep this bit nice and simple.

We just got an Evoque eD4 SE Tech that will cost £32,600 to buy.

Assuming that we decided to buy it brand new and paid cash for it we could expect that:

• It will lose up to 50% of its value over the first three years.
• This means that in three years it will be worth approximately £17,000.
• This also means that we would have lost over £15,000.

Naturally, if we didn’t have £32,600 cash to pay and has to borrow for the car the calculation of loss will change for the worse.

As you remember, we contract hired the car. This means that:

• We will pay £2,800 up-front.
• We’ll be paying £319 per month for three years (this includes 20% VAT).
• This means that in three years, driving a brand new Range Rover Evoque will cost us £14,284.

Now a small amount of money by any account. Still less than the loss through depreciation were we to buy the car.

Reason 3: It’ll save you a lot of bother

Contract hiring cars is more convenient than buying them in many ways.

Not least of which is that when the term of the contract hire has expired someone will come and take the car away.

(We did have to sell a car three years ago and let me tell you: if you are not a professional car salesman this is a hard job. And you’d lose.)

Reason 4: You can afford to hire more than you can buy

This is a fact.

But you have to pay attention: make sure that you can easily afford the monthly cost of hiring. If this cost reduces your monthly cash flow to a degree that it threatens your saving rate, think again. May be contract hiring the car you want is not what you should be doing and you’d be better off having the car you can afford.

We contract hired a Range Rover Evoque because it has no effect on our monthly cash flow. In other words, through a combination of decreased other spending and increased income we’ve made sure that the monthly fee has no negative effect on our monthly cash flow.

Reason 5: Your capital is intact

I know this won’t apply to everyone but…

If you are not saving to spend on something but are saving to build capital to invest choosing contract hire makes a big difference.

Okay, what I’m trying to say is that not forking out a large sum of money to buy a car means that I still have cash for investments (will be telling you about this one in a different post).

Having capital in important.

Finally…

I am happy with our choice to contract hire cars rather than buy.

I’m even happier with our new Evoque.

There is only one problem:

The thing looks like a rocket launching pad on the inside and the user manual is 250 pages long.

Don’t believe me?

Have a look at this:

Now I’m off to study the manual. And let’s hope that by tomorrow evening I’d have gathered enough courage to drive it.

Wish me luck!