Car leasing, worth it?

DiNZi

DiNZi

DiNZi

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Hi all,

I just wanted to get your input on whether you think car leasing is worth it?

My Dad has just recently purchased a Mercedes C200 2010 (60) plate, and I'm hoping to get my license soon, we change cars every 2 years or so, I usually get pretty decent deals when selling.

The car we've just bought was around £10k.

Target Car Leasing and All Car Leasing have a similar Mercedes C200, of course much newer and you can secure it for £11k over 24 months.

Where is the catch? All Car Leasing also provide you with maintenance in the price, which makes sense they'd like to look after their car so when it's back, it's in decent condition.

I'm failing to see where there is a drawback here, hopefully someone can advise. Maybe, when I return the car after 24 months, they will charge me a huge bill for minor damages? What happens if I get into a non-serious accident?
 
The drawback is after 24 months you've paid £11k out and got nothing to show for it.

Your £10k car will still be worth something after 2 years.

They will charge you for any damage too. Scuff the wheels and they'll try and bill you for new ones for example. Usually best to get everything repaired before return.

Unless it's a stonking deal, leasing only usually makes sense if you can get (half) the VAT back.
 
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Will the same car, if bought new with the best discount available lose £11k over two years? If not then it's not a "good" deal.

Maintenance is a complete waste of money for a non business user btw, what maintenance do you think you're going to have to pay out for on a new car? Tyres and one service? Its almost never worth it
 
Car leasing usually only works in specific circumstances:-
1) Where the manufacturer is offering almost ridiculous lease pricing by subsidising
2) Where you can put the car through a business, make sure it has low CO2 and therefore you pay very little company car tax.

If you have decent credit and you're buying personally, then you're probably better offer looking at buying nearly new.
 
Your Dad owns a car. It's his. He can sell it after 2 years and get more than half his money back, reducing the cost to well under £5k. Or he can keep it.

Whereas the leased C Class goes back leaving you with nothing and a total cost of £11k.
 
£11k for a C class seems pricey for a lease, I'm sure I saw a discussion on Pistonheads for a well specced E Class for around £8/9k over 2 years.
 
This was £296 a month at Christmas: http://www.gateway2lease.com/z_merc...tecamglineautomatic-instock_15543_leasing.php
Or C200 for £267: http://www.gateway2lease.com/z_mercedes_c-classsaloon_c200amglinemanual-new_15598_leasing.php


[TW]Fox;27472529 said:
reducing the cost to well under £5k. .
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How much extra does it cost in maintenance? And buying and selling cars is also expensive through the dealer network. How much of the £5k is left after these are taken into account?
 
Trifid said:
This was £296 a month at Christmas: http://www.gateway2lease.com/z_merc...tecamglineautomatic-instock_15543_leasing.php
Or C200 for £267: http://www.gateway2lease.com/z_mercedes_c-classsaloon_c200amglinemanual-new_15598_leasing.php




How much extra does it cost in maintenance? And buying and selling cars is also expensive through the dealer network. How much of the £5k is left after these are taken into account?
Click to expand...


Over the term it's still significantly less than the lease - a £10k car doesn't halve its value in two years. Its not like for like anyway, you'd have to compare the lease and a new or nearly new C - which I suspect still works out much better to purchase using the original fogures (even if you take £25-30 per month+vat off for the maintenance
 
Trifid said:
How much extra does it cost in maintenance? And buying and selling cars is also expensive through the dealer network. How much of the £5k is left after these are taken into account?
Click to expand...

I am being very pessimistic with the values. The reality is that a £10k C Class isn't going to lose huge amounts of money over the space of 2 years.

Lots of people seem to want to think that leasing is some sort of amazing secret anti depreciation trick, probably to justify paying hundreds of pounds a month to rent a brand new car.

Or C200 for £267: http://www.gateway2lease.com/z_merce...98_leasing.php
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They also do things like totally misrepresent costs by quoting headline figures ;)

It's not £267 a month at all, it's £267 a month after deposit. The effective monthly cost of that deal is £323 a month assuming you want a solid painted Mercedes with zero options.

Quoting just the monthly ongoing cost is meaningless, it's like saying you can have a brand new M3 for £1 a month. You can - with a £60k deposit ;)
 
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Maybe not. But there is a value of how much a C class is going to cost you a month including repairs, depreciation and the expense of selling the car (which is quite expensive if buying and selling at main dealers). If (hypothetically) they were the exact same cost then you will go with the lease. What if it was £10 in it? £20? £100? £200? At some point a line has to be drawn where going for a used car is worth it to you.

The closest comparison to leasing is PCP where you have an even higher deposit, similar monthly costs and some vague hope of having enough equity in the car to have a deposit on the next one. This doesn't seem to make much sense to me. At least the lease is clear with the costs. Yes, you need to go with the base spec but then again what options do you really need added on? It even parks it self in the AMG line spec.
 
Trifid said:
The closest comparison to leasing is PCP where you have an even higher deposit
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The deposit on a PCP is totally variable. Some are as low as £1.

similar monthly costs and some vague hope of having enough quity in the car to have a deposit on the next one. This doesn't seem to make much sense to me. At least the lease is clear with the costs. Yes, you need to go with the base spec but then again what options do you really need added on? It even parks it self in the AMG line spec.
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tbh I consider PCP to be just like leasing in the 'convince yourself its an amazing deal so you can drive a brand new car' stakes anyway.

Every so often a deal makes sense and should be grabbed but as a general rule leasing and PCP's are the two most expensive ways to have a car.
 
I have just this evening ordered a brand new AMG SLK55, with Only 1 option (Airscarf). It's a £55,000 car. The lease schedule is 3+23, 10,000 miles per year and the lease cost is £475+VAT per month. The service cost (excluding tyres) is £32+VAT per month.

So the car, will cost me £14,820 over the 2 years I will have it. A 2-year old SLK55 will be £40,000-ish from a dealer so I'm effectively covering the depreciation. And, as someone pointed out, the company can claim half the VAT back. I pay the company the £570/month back so I have no BIK tax to pay.

Mercedes Benz finance is massively subsidising the lease (the order form shows a £13,000 discount on list). I consider that to be a reasonable cost for an expensive new car. When they lease the car to a VAT registered business they don't pay the VAT on it so the amount financed is reduced by 20% and that helps enormously too.

£11,000 to lease a used C-class sounds very expensive. I could lease a new C220CDi for £200+VAT per month on a 6+35 payment schedule so £9840 incl. VAT over 3 years which I think is good for a new car.

And I definitely think £10,000 for a 4-year old C-class sounds very cheap to buy one. So in your example, I would buy. But I've been on the car lease merry-go-round so long now I don't think I'll ever buy another car. You get a new car every other year and it's fixed cost motoring.
 
WJA96 said:
I have just this evening ordered a brand new AMG SLK55, with Only 1 option (Airscarf). It's a £55,000 car. The lease schedule is 3+23, 10,000 miles per year and the lease cost is £475+VAT per month. The service cost (excluding tyres) is £32+VAT per month.

So the car, will cost me £14,820 over the 2 years I will have it. A 2-year old SLK55 will be £40,000-ish from a dealer so I'm effectively covering the depreciation. And, as someone pointed out, the company can claim half the VAT back. I pay the company the £570/month back so I have no BIK tax to pay.

Mercedes Benz finance is massively subsidising the lease (the order form shows a £13,000 discount on list
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You are missing something rather massive here - that £13k discount on list is almost achievable as a retail customer paying cash too.

Broadspeed will source you a brand new SLK55 AMG through a Mercedes main dealer for £44k, a discount of almost £11,000 on list.

So although it's a car with a £55k list price it isn't a car that costs £55k to buy which rather changes the figures somewhat.

Epic choice of car, mind :D
 
In fairness cars like the amg depreciate massively for a good few years so they are one area where it does tend to look attractive to lease (regardless of whether it's still financially better to buy), not to mention the significant initial outlay that's otherwise required
 
rodenal said:
In fairness cars like the amg depreciate massively for a good few years so they are one area where it does tend to look attractive to lease (regardless of whether it's still financially better to buy), not to mention the significant initial outlay that's otherwise required
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But the depreciation is factored into the lease cost - for example in this particular case the trade value of the SLK55 AMG after 2 years is, according to industry experts Glass's, £32k. So thats a £12k loss in 2 years from the discounted cash price. WJA98 tells us his lease is costing £14820. So the cost of buying and trading in is lower than the cost of leasing (thats a very rough figure without a cost of capital included but the point remains).

If the lease was significantly less than the depreciation cost after discounts then the lease would be unprofitable.

Manufacturers sometimes allow unprofitable leases for other reasons but these deals are the exception and not the rule.
 
Of course it is, not to mention the fact that the lease co will likely receive a discount that you just won't get even through a broker making it more profitable for them. I do start to see how its particularly attractive when you're talking about outlaying £40k+ to otherwise own the car though - even if that's a loaned sum
 
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