Car leasing...a good idea?

Andybtsn

Andybtsn

Andybtsn

Don
Joined
23 Oct 2005
Posts
44,467
Location
North Yorkshire
Hi guys,

My trusty 308 is reaching 170k miles now and with the upcoming MOT I'm fearing the worst, I already know it needs a bit of work doing to it and I'm thinking whether now is the time to change it.

I'm in a predicament of what to do, I do 25k miles a year so maintaining a car is quite high, tyres, brakes, servicing etc. I'm thinking if I bought a car outright with the value being around £10k how much I'd be better off when I came to sell it in 5/6 years time?

I don't actually have a car in mind of yet but a lease would be looking at £1500 deposit and then £200 odd a month I imagine.

I'm after a good spec'd family car with ideally 60+mpg and plenty of room for 2 kids etc.

What's my best bet in this scenario? Get the better car in a lease or own a car with buying outright?

Cheers
 
You will find it very very hard to get a car with a 25k mileage allowance for only 200 quid a month.

Leasing is generally the most expensive way to run a car.
 
I'd had some emailed quotes that were a 1k deposit and £168 for a 2 year lease on a 15k car IIRC. That was 100k mileage! No idea why it was that high.
 
All the "cheap" deals are for 5k and some 8k allowances. Adding extra mileage is what pushes the monthly figure up as the car is worth less at the end of the term.
 
I've never liked the idea of spending money and having nothing I own at the end of it. The only finance deals I got for a true 0% APR (but you rarely get those on cars). As it's 0% on the list price. cash price is £2000 less than the finance. So its not 0% APR. its just hidden in the cost.
All the lease deal's I've seen usually work out a nice little earner for the company thats doing it. the Just Add Fuel is another comedy. Spend £18k on a 22k car over 3 years. Don't own the car at the end and you'll only be allowed to do 6000 miles a year.
 
PooKer said:
I've never liked the idea of spending money and having nothing I own at the end of it. The only finance deals I got for a true 0% APR (but you rarely get those on cars). As it's 0% on the list price. cash price is £2000 less than the finance. So its not 0% APR. its just hidden in the cost.
All the lease deal's I've seen usually work out a nice little earner for the company thats doing it. the Just Add Fuel is another comedy. Spend £18k on a 22k car over 3 years. Don't own the car at the end and you'll only be allowed to do 6000 miles a year.
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That's not always the case and it can sometimes be more expensive to buy for cash than finance due to the dealer contribution.
 
we got the wifes latest car on Lease and its great only way we can afford to be driving a new car about yes it goes back after 2 years but we have decided we are getting another one
buying a new car see's a huge depreciation after 2 years
my thinking is buy a new car for 15 grand 2 years later worth less than 10 grand

leasing pay less than 5 grand for the 2yrs and start again
 
Buttkicker said:
we got the wifes latest car on Lease and its great only way we can afford to be driving a new car about yes it goes back after 2 years but we have decided we are getting another one
buying a new car see's a huge depreciation after 2 years
my thinking is buy a new car for 15 grand 2 years later worth less than 10 grand

leasing pay less than 5 grand for the 2yrs and start again
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This only works if you assume that lease companies are in the business of losing money.

In reality the lease cost is paying for that depreciation and the lease company profit. Except in a few extreme examples of bizarre residual values, leasing will almost always be the most expensive way to buy a car, as Fox pointed out.

It's easy to get caught up with list prices etc. and forget that the 15k new car could probably be bought for 13k using brokers and the like, substantially lowering your exposure to depreciation.

For the most part, if your primary concern is monthly payments and not total cost of ownership, I would have thought PCP was a more cost effective way to get into a new car every two or three years.
 
We got our current 2yr deal nissan juke 12000 miles each year £1000 down £136 month and £199 fee which come out out £4400 which I think is a good deal and they tax it as well it is the only way we can afford two cars and the wife drives a new car which keeps her happy
 
At 25k pa leasing is going to be absolutely exorbitant, you're certainly not going to get a family car for £200 per month unless you're putting in an extremely high first payment.

I'd be more inclined to look at something a few months to a couple of years old from one of the manufacturers with unlimited mileage warranty (Hyundai?). Something like the i40 is a pleasant car, won't be particularly expensive to purchase and should still feel like an upgrade from the older 308
 
Buttkicker said:
We got our current 2yr deal nissan juke 12000 miles each year £1000 down £136 month and £199 fee which come out out £4400 which I think is a good deal and they tax it as well it is the only way we can afford two cars and the wife drives a new car which keeps her happy
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I'm sure I recall those Juke deals doing the rounds as they were exceptionally cheap, standout deals. I wouldn't necessarily assume all deals will be quite so favourable.

That said, looking on broker sites, brand new 15k list price Jukes are available for 12,800. So for your lease to end up cheaper, a 2 year old juke needs to be worth 8,400 or less, I've no idea if they are really.
 
Buttkicker said:
We got our current 2yr deal nissan juke 12000 miles each year £1000 down £136 month and £199 fee which come out out £4400 which I think is a good deal and they tax it as well it is the only way we can afford two cars and the wife drives a new car which keeps her happy
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The only reason it costs that is because the depreciation between purchase price and resale at the end of the least has been calculated at lower than the £4400 the agreement is costing.

There isn't a wonderful benevolent millionaire behind the signs paying depreciation out of the goodness of his heart so you can keep your wife happy with a second car :p

The driver of a car pays the depreciation however he chooses to drive it - be it a lease, a PCP, HP, outright purchase or even a weekly rental car.

The only way you avoid depreciation is to buy a car that doesn't depreciate.
 
The trick with leasing is to not be looking to buy a particular car and go with the cars that are on 'offer' and giving the best price compared to buying new and selling within 2 years.

My wife has a lease Fiesta ST-2 with metallic and style pack, 6+23, 10k pa, £165 a month. We are happy enough with that but may have got it a little cheaper via other means.
 
InQ said:
The trick with leasing is to not be looking to buy a particular car and go with the cars that are on 'offer' and giving the best price compared to buying new and selling within 2 years.
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Thats what we intend doing my wife likes the Fiat Panda 500 which can be had for £500 down and £88 a month for 5000 mile each year although that deal might be gone by the time the current one expires but this way suits us fine
 
I never really understood why people 'want to own' something that loses half its value in 3 years. I'm not pro-leasing really, just saying there are places you can put your money where it gains value.
 
billysielu said:
I never really understood why people 'want to own' something that loses half its value in 3 years. I'm not pro-leasing really, just saying there are places you can put your money where it gains value.
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This is always the most ridiculous point to be made, I've no idea why people make it so often. The fact a car loses value is irrelevant, you don't buy it for an investment you buy it to provide transport/enjoyment/whatever.

Why do people want to buy a holiday, something that loses all it's value as soon as it's consumed? Why do people buy a TV, when it'll be worth 10% of what you paid after 3 years? etc etc.

There is no magic place to put your money that guarantees it earns such a big return that it offsets the cost of financing a car.

Put simply having the use of a car costs money - whether that's depreciation, finance charges or lease payments. And the biggest factor in the cost of car ownership is depreciation, and depreciation factors into every method of car use - whether it's directly incurred through purchase or indirectly incurred through leasing payments.

Even when you rent a car from Hertz for a week you are paying for the depreciation on that vehicle.
 
Sure bud, if people understand that and want to buy it 'just because' that's fine of course.

I make the point because I think many people don't understand it.
 
billysielu said:
I make the point because I think many people don't understand it.
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I doubt there are many people who dont understand that cars are not free.

Except those who seem to think they are doing voodoo magic by leasing :p

Generally speaking, buying is the cheapest option as your personal cost of capital is likely lower than the cost of capital involved in financing. Finance comes next, leasing comes last. There are obviously exceptions to each of these so the best thing to do is appraise each deal on its merits.
 
billysielu said:
I never really understood why people 'want to own' something that loses half its value in 3 years. I'm not pro-leasing really, just saying there are places you can put your money where it gains value.
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Well you pay for that regardless of whether you buy it, hire it, finance it etc.

At least if you own it, it's yours to do with exactly as you please, no mileage limits, modify to your hearts content and ultimately probably be the cheapest way of doing it anyway.

If it was easy to use the liquid cash to earn more than what you pay to cover lease company profit, the lease companies would probably be doing that instead of leasing cars :p

The only way to avoid a car haemorrhaging money in the first three years is to buy 3 year old cars.
 
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