The Escape Artist recommends cycling or walking wherever possible. The main reason is not to save money (although the savings are huge over time). Its the extra life force, happiness and vitality that you get. Oh and great legs as well.
But you may want a car for longer journeys. Just remember that cars are Money Incineration Units…so choose wisely. Generally: the smaller it is, the less money it burns.
Your car choice is a big factor in your spending. And its not just the price of the car. Your car choice has big knock on effects on the fuel costs, the service costs, the cost of parts, insurance. It all adds up via The Aggregation of Marginal Gains.
You are in a poker game against the car industry and if you buy a BMW X7 you’ve shown them your hand. Your choice tells them everything they need to know about what you’re prepared to pay for spares, insurance and related stuff. They know you’re gonna pay £200 (or whatever) for a replacement key. The same key (pretty much) that Skoda will charge you £20 for (not the actual numbers but you get the point).
I’m no petrol-head so I asked a reader that I’ve called The FIREman (yes, he works as an actual fireman) to write about how to choose a car. If you have (constructive) comments, please leave these below.
The Escape Artist
One of the Pillars of Financial Independence is crushing car costs and investing the money saved into a compounding machine.
The problem is that, when buying a car, the options seem endless. The costs are scary and hard to compare. So, to help out, here is my attempt at objective analysis.
I’ll go through some of the issues, identify a shortlist, with links to help you track down your FI-friendly escape and evasion vehicle like a boss.
I’ve also included a spreadsheet with some sensible choices, which you can customise to your own circumstances.
New or used?
Buying a new car is a total sucker move. If you drive it out of the showroom and then sell it, you’ve just dropped 20 – 30% of your money. Buying new cars and selling used is a money massacre.
According to What Car, the slowest depreciating car of 2017 is the Lotus Elise, with a list price of £37,150. After 3 years you have lost a mere £13,350!! Well-maintained modern cars are extremely reliable, so we’ll be buying used. The financial difference is life-changing.
You can buy used cars from a dealer. Or, with 462,000 used cars on Autotrader, you can buy privately. This is where the real gems are found…especially low mileage cars that have been looked after. Look for former owners who are careful / old / non-male / vicars. Take someone along to the viewing who really knows their cars….or The AA and RAC will do inspections on your behalf.
And for the most part you can forget about leasing, hire purchase and the like. Whilst there can be some good deals from time to time, mostly these are for people renting a lifestyle they can’t really afford.
We love efficiency in the FI community, and that includes fuel. Diesels give the best mpg, and the newer ones are ‘clean’, so don’t believe media hype about diesels dying a death.
London’s congestion charge zone now has the T-charge (toxicity charge) of £10/day (on top of the £11/day congestion charge) unless your car meets the Euro 4 emissions standard or better. The Mayor wants this extended out to the North and South Circular roads in 2019/20 and by then you’ll need a Euro 6 car (check ratings here) to avoid the charge.
All the cars listed below are used, achieve 60+ mpg and are in the ‘good’ end of the ‘Driver Power’ reliability surveys, and most are available at a wide range of prices to suit your pocket. Diesels are preferred as they’re much more efficient.
Fuel economy is important. But there are lots of other factors at play here so perhaps the best way to navigate this minefield during your escape is to crunch the numbers. Lucky for you, a handy spreadsheet isn’t far away…
Electric cars avoid both charges and cost pennies to ‘refuel’, but they have some issues that might rule them out for your personal circumstance. To recharge at home, you really need off-street parking, as you can’t safely have the lead trailing down the street. You can plug them into a normal wall socket, but a dedicated (£300-ish) wall charger is better.
Range (how far you can go on one charge) is an issue but is improving all the time. The effective range is reduced if you have the heating or air-conditioning on, and the battery can be degraded over time by frequent fast-charging. The average UK car journey is only 6.8 miles, so range won’t be an issue for most, especially two-car households who can use their ‘normal’ car for occasional longer journeys
Many of the cars below are re-badged versions of more expensive cars. You need to understand the concept of car platforms. In short, car makers put different badges and different prices on cars that (underneath) are essentially the same. This means that you can choose how much you pay for (essentially) the same car.
For example, VW/Audi group (VAG) make the Seat Exeo, which uses the same platform as the much pricier Audi A4. The most efficient versions are Seat Ecomotive, Skoda Greenline, and VW Bluemotion. VAG also make Bentley and Lamborghini cars, so you’ll be in good company.
£7k should get you a 2012-onwards car with no more than 60,000 miles on the clock. Someone else has paid the bulk of the depreciation, and left you a nearly new car below half-price – Thanks sucker!
£3.5k should get you a 2010-on model which will still be nice inside and have plenty of life left. Consider cars with below average mileage (80,000 or less) with a full service history. These cars are still very reliable, running 150-200,000 miles or more without any expensive problems. Go for cars with a full service history.
These cars are the stars…
Toyota Aygo / Peugeot 108 / Citroen C1 / Peugeot 107
These are all essentially the same car with different badges. Interestingly, the older Citroen (2005-2014) had a diesel version for even better fuel economy.
Cheap to insure for younger FI’ers.
The older version is very basic, with a tiny boot. The 2015-on models are much more swish.
Hyundai i10 / Kia Picanto
This car is cheap to buy, cheap to run (petrol, 68 mpg).
One of the most reliable cars around.
I hired one and found the throttle a little jerky, so try before you buy.
Seat Mii / Skoda Citigo / VW Up
The same car with different badges.
Basically a VW Polo platform with a smaller body.
Very efficient on fuel (petrol, 78 mpg).
Really easy to park.
A perennial source of great value motoring.
One of the most reliable cars around, practical, and cheap to maintain. Has that legendary Toyota build quality / reliability.
Available in diesel, petrol or hybrid form.
The diesel will do 78 mpg.
Seat Ibiza / Skoda Fabia / Skoda Roomster
Same platform as the more expensive VW Polo.
My personal favourite is the Skoda Fabia Greenline estate.
This was What Car? Car of the Year 2015. This can accommodate my dogs in the boot and can manage 94 mpg!
The Roomster has van-like load capacity but looks
ugly as sin unusual.
Peugeot 208 Blue HDi
The Peugeot 208 had a mid-life refresh (65 plates onward)
The highlights are still the small steering wheel and the potential 83.1mpg economy from the 1.6 BlueHDi 100 diesel engine.
Has the latest Euro 6 compliant engines so will not be liable for the Toxicity Charge in London in 2019.
Alternatives: Renault Clio, Peugeot 308.
The Electric Car owned and modelled by Mr Money Mustache. Read his write up here.
Perfect for the London congestion charge zone (its exempt) IF you have off-street parking (for the charger).
Earlier versions had a maximum range of ~80 miles, but could be lower in winter. New models can achieve over 150 miles in good conditions. Check local charging points on zap-map.
The batteries are either leased (from £70/month!) or bought (ie no monthly lease). You should avoid the lease as it will eat up your fuel savings. Like it or not, electric cars are the future, so you may as well get one now. 2013-on ‘Tekna’ model is much better car.
Taxi drivers everywhere love them because they’re cheap to run. Many reports of 250,000 miles plus with nothing more than routine maintenance.
The hybrid technology can take a bit of practice to drive at full efficiency.
Tyres need to be rotated every 5k to even out wear because of the regenerative braking, but the reliability is proven. Claimed fuel economy of up to 94 mpg rarely achieved in practice though.
Skoda Octavia / Seat Leon / Seat Altea
Same platform as the more expensive VW Golf, Audi A3 and Audi TT. The Skoda Octavia is another favourite taxi car around the world. Spacious, comfortable, and reliable.
[ TEA note: I drive a Skoda Octavia. It’s reliable, incredibly well built, luxurious. Oh and it goes like shit off a hot shovel ].
Pro tip: Get the Greenline or Ecomotive version for fantastic economy (80 mpg). Avoid automatic DSG gearboxes due to reports of poor reliability. The Seat Altea XL’s boot is massive [TEA note: so no BS about needing an SUV to carry the cabernet sauvignon back from Waitrose please]
Seat Exeo / Skoda Superb
Based on the Audi A4 / VW Passat platform.
Perfect if you insist on having a large car. The Skoda Superb Greenline is a truly exceptional car.
More rear legroom than a Mercedes S-class, yet achieves up to 74 mpg!
You’ll be laughing all the way to The Ambassador’s Reception.
- Ford Ka
- Ford Fiesta
- Mazda MX5
- Suzuki Swift
- Honda Jazz
- Nissan Micra
This spreadsheet is easy to use and should allow you to calculate the 5-year Total Cost of Ownership (TCO) for different vehicles. It’s pre-loaded with data (guesstimates!) for a selection of cars, which you can edit to reflect your own shortlist. It’s not intended to be super-accurate, but it should allow you to make meaningful comparisons.