Long term car hire vs leasing vs buying

Pulsedriver · 14 Mar 2013 at 14:19

Good afternoon guys,

Having sold my car a couple of months back, I could not actually decide what car to get next, and so I kept hold of the money.

Now, with my sensible cap on, I don't actually want to use that money anymore for a car! Instead to put it towards a deposit for a flat or house, now, I am not a great saver, so that is a great way of me having a ready made deposit!

So, in the meantime I have been renting a car, which is not the most cost effective thing to do, although there is something nice about getting in a car that isn't yours, you do not need to maintain etc, and just driving it, it's been about £440 every 4 weeks so I am keen to perhaps move away from doing that, although the company I work for pays me a mileage allowance and it would cover that monthly cost just about.

So the question is, what are your views on longer term (6 months+) hire? Or is it a silly thing to do and I should buy a runaround to then sell a few months later? The only problem with the latter being the rubbish that would be for sale at that price market especially after being used to driving new cars in the hiring place!
I suppose the other option is lease a car for a year or so, just making sure the payments are covered by the mileage allowance? At least then my deposit for a place is not used?

rossk26 · 14 Mar 2013 at 14:25

If you are seriously bad at saving and don't want to use the money you already have to buy a car. Then I would suggest a personal loan to purchase the car of your choice. Once this is paid off, you have a car to run on fuel + maintenance only. Or you can sell and have the money in your pocket to start the process again...

Lease and financing tends to be the most costly method.

Jono8 · 14 Mar 2013 at 14:34

if your monthly mileage allowance at work already covers ~£440 then i would just buy something brand new on PCP/Hire purchase for £250 ish a month and then use the rest for fuel/maintenance (not that you will have to do much maintenance for a bit if it is brand new).

rossk26 · 14 Mar 2013 at 14:53

Jono8 said:
if your monthly mileage allowance at work already covers ~£440 then i would just buy something brand new on PCP/Hire purchase for £250 ish a month and then use the rest for fuel/maintenance (not that you will have to do much maintenance for a bit if it is brand new).

Only problem with PCP/HP is you normally get a limited mileage allowance (normally less than 10k). Which is useless if he is using it for business use.

You'd be lucky get a Ford Fiesta on PCP with a decent annual mileage allowance for £250 a month.

J1nxy · 14 Mar 2013 at 15:42

rossk26 said:
Only problem with PCP/HP is you normally get a limited mileage allowance (normally less than 10k). Which is useless if he is using it for business use.

HP you don't get any mileage limits as you are buying the car and PCP you specify your annual mileage when taking on the agreement, typically anywhere from 6,000 PA to 30,000 PA, they just adjust the final payment based on the chosen figure.

rossk26 · 14 Mar 2013 at 16:15

J1nxy said:
HP you don't get any mileage limits

Yes you do...

J1nxy · 14 Mar 2013 at 16:36

rossk26 said:
Yes you do...

No HP is a loan secured against the car for the full value where at the end you own the car outright. The mileage on the car has 0 impact on the amount as there is no balloon or otherwise at the end.

rossk26 · 14 Mar 2013 at 16:39

J1nxy said:
No HP is a loan secured against the car for the full value where at the end you own the car outright. The mileage on the car has 0 impact on the amount as there is no balloon or otherwise at the end.

I think you are confusing Hire Purchase with finance. You will find the HP comes with a mileage cap.

Here is an example of Hire Purchase from Skoda over a 3 year plan...

http://www.skoda.co.uk/gbr/newcars/fabia/finance-offers/pages/hirepurchase.aspx

J1nxy · 14 Mar 2013 at 16:46

I think you might want to re-read what you posted...no where does it state a mileage limit apart from for the 3 years free servicing...

"*3 years or 30,000 miles free servicing (whichever comes sooner)"

I know perfectly well what car finance options are I've bought enough cars to know the differences...

rossk26 · 14 Mar 2013 at 16:51

J1nxy said:
I think you might want to re-read what you posted...no where does it state a mileage limit apart from for the 3 years free servicing...

"*3 years or 30,000 miles free servicing (whichever comes sooner)"

I know perfectly well what car finance options are I've bought enough cars to know the differences...

You clearly have never bought a car on HP.

I'll make is simpler for you, use the VW calculator to see how mileage affects the cost of HP

http://www.volkswagen.co.uk/buying-guide/finance-hire-purchase

Basher · 14 Mar 2013 at 16:58

J1nxy said:
I think you might want to re-read what you posted...no where does it state a mileage limit apart from for the 3 years free servicing...

"*3 years or 30,000 miles free servicing (whichever comes sooner)"

I know perfectly well what car finance options are I've bought enough cars to know the differences...

Based on 3 years 10,000 miles per annum

Apart from that bit?

paradigm · 14 Mar 2013 at 16:58

rossk26 said:
You clearly have never bought a car on HP.

I'll make is simpler for you, use the VW calculator to see how mileage affects the cost of HP

http://www.volkswagen.co.uk/buying-guide/finance-hire-purchase

Erm, have YOU tried it yourself?

With HP selected, mileage makes NO difference.

J1nxy · 14 Mar 2013 at 17:04

rossk26 said:
You clearly have never bought a car on HP.

I'll make is simpler for you, use the VW calculator to see how mileage affects the cost of HP

http://www.volkswagen.co.uk/buying-guide/finance-hire-purchase

Again go and re-read what you have posted...

Firestar_3x · 14 Mar 2013 at 17:07

paradigm said:
Erm, have YOU tried it yourself?

With HP selected, mileage makes NO difference.

Phaeton V6

5k per year - 35 payments of £638.66

25k per year - 35 payments of £737.79

If you buy the car at the end then the total value remains the same (clearly), if you walk away after 35 months you've spent more.

paradigm · 14 Mar 2013 at 17:09

Firestar_3x said:
Phaeton V6

5k per year - 35 payments of £638.66

25k per year - 35 payments of £737.79

If you buy the car at the end then the total value remains the same (clearly), if you walk away you've spent more.

Bad choice, the phaeton doesn't have an HP option! Take the CC for instance, look at the box on the right. Hire Purchase.

Select this and the payments are the same regardless of mileage.

LeMson · 14 Mar 2013 at 17:10

No mileage limits on HP. It's your car at the end of it!

Been adding the numbers up for my brother on HP, leasing etc. It all works out around the same price for him. So its more a choice of does he want to own the car in 5 years or give it back in 2/3 years and then get something else.

Firestar_3x · 14 Mar 2013 at 17:22

paradigm said:
Bad choice, the phaeton doesn't have an HP option! Take the CC for instance, look at the box on the right. Hire Purchase.

Select this and the payments are the same regardless of mileage.

Ah, no balloon payment at the end, i see, so its hire purchase except the purchase isn't optional, so it's just straight up finance then?

J1nxy · 14 Mar 2013 at 17:28

Basher said:
Based on 3 years 10,000 miles per annum

Apart from that bit?

Which is referring to the 3 years or 30,000 miles worth of free servicing.

J1nxy · 14 Mar 2013 at 17:29

Firestar_3x said:
Ah, no balloon payment at the end, i see, so its hire purchase except the purchase isn't optional, so it's just straight up finance then?

Yes no balloon = HP i.e. you have a loan for the car secured against the car so you own it at the end of paying all the monthly payments. The other option is a lease where you typically don't have an option to purchase it at the end.

Everybody clear on that now????

Pulsedriver · 14 Mar 2013 at 17:36

Just to confuse matters it might help if I mention I never keep cars long, usually about 6 months! So a 2,3,4 or 5 year HP wouldn't be a good idea I doubt :/