Tell Me About: Leasing

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Soldato
Joined
25 Apr 2007
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My wife is in the process of learning to drive. When she passes she will be getting a 5 door car to drive the 7 mile distance to work and to take our two children out and about for the two weekdays she’s not at work. I’m looking to keep the motoring costs to not much over £200 a month ALL IN, but will go above if necessary.

I have been looking into leasing her a citroen C1 with a few bells and whistles (I hate cars without alloys :P), which can be had for about £400 deposit and then £129 a month over a three year lease. The car goes back at the end and we take out another lease. Insurance for her with me as a named driver averages at £33/month and I estimate fuel at £35/month. Comes to maybe £235 a month for a new car with zero hassle and a couple of services included.

She doesn’t have to have a NEW car - I’m simply looking to control the costs and reliability. Does PCP have any inherent benefits over leasing? The PCP options I’ve looked at generally seem to require a higher startup cost and have a balloon payment at the end, which seems to be of dubious value as I imagine most people will just refinance onto another new car.
 
PCP isn't massively different if you plan to return the car at the end of the term anyway - just depends whether it will leave you with some balance to use as a deposit next time. You also have the option of ending it early and clearing the balance (though given the minimal deposit you may still be in significant negative equity if you do this early on)- whereas with a lease you'll be asked to cover all remaining payments

Have a look at the cost of outright purchase via a broker vs the worth of an example a couple of years old at the moment - these little cars tend to lose very little value over the first few years if you get a decent purchase price - plus finance is cheap just now
 
iaind said:
Ah, I see you're new around here :)
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No it's precisely because I'm NOT new that I don't come here often :D

Rodenal: thanks for the reply, but outright purchase new isn't an option just now. 3-5k second hand would be an option, but I'm unconvinced at the value of buying a small car at this price because they hold their value so well (as you point out).
 
£200 p/m for a car without fuel.

I'd always advise to buy outright. Aim around 3 year old as most of the depreciation will have been done in those years.

Get a loan if need be, will be better and cheaper in the long run than continuously getting a lease car.
 
I don't really get that, what's the difference between loaning up to circa £8k for a new one and leasing one? You'll need reasonable credit for either

A c1 "flair" for example, with £500 metallic is £9k from drivethedeal

A 1.5 year old one is still being touted at £8.5k - typically your px on something like this is not massively lower than dealers asking
 
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You can get a better deal to begin with paying cash, plus it's yours and you don't have to hand it back over.

Loan monthly payments would generally be cheaper over a longer period aswell.
 
rodenal said:
I don't really get that, what's the difference between loaning up to circa £8k for a new one and leasing one? You'll need reasonable credit for either
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Because at the end of the term, you'll own the car. Then you can use said car as capital against the next purchase. Or keep it, and have even cheaper running costs!
 
rodenal said:
I was referring back to the op saying purchasing wasn't an option
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Purchasing at new isn't really an option as I don't want to take the stick for the depreciation. Also, borrowing 8 or 9 grand over 5 years will potentially interfere with our plans to move house as it'll reduce our affordability.

I could stick a 5k car on the credit card and pay it off fairly quickly (this is another option but I didn't want to derail my own thread as I wanted to hear about problems or benefits of leasing)
 
Fair enough if you're already pushing affordability boundaries - just keep in mind the lease will also impact through the monthly payments with the new mortgage system
 
mulpsmebeauty said:
Purchasing at new isn't really an option as I don't want to take the stick for the depreciation. Also, borrowing 8 or 9 grand over 5 years will potentially interfere with our plans to move house as it'll reduce our affordability.

I could stick a 5k car on the credit card and pay it off fairly quickly (this is another option but I didn't want to derail my own thread as I wanted to hear about problems or benefits of leasing)
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A lease will also impact the mortgage

Don't buy new, get a 2/3 year old car which has had most of it's depreciation already done. £5k will get you some really nice cars. I personally don't see the appeal of a Citroen C1 for £139 a month!
 
mulpsmebeauty said:
Purchasing at new isn't really an option as I don't want to take the stick for the depreciation.
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This is exactly what you are doing with a lease.

Somebody else buys the car, works it out its depreciation over the term and charges you a monthly amount that covers the admin costs, the depreciation and some margin for the lease co.

New cars depreciate - somebody has to pay that depreciation and lease firms are not charities*. If a lease looks cheap it will be because the expected depreciation over the term is low.

*Yea ok, except Motability, the UK's largest lease firm :D
 
rossk26 said:
A lease will also impact the mortgage

Don't buy new, get a 2/3 year old car which has had most of it's depreciation already done. £5k will get you some really nice cars. I personally don't see the appeal of a Citroen C1 for £139 a month!
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I don't see the appeal from a driver's perspective either, but they look ok, are cheap to obtain and cheap to run. My wife has zero NCB and insurance costs rocket even on things like Fiestas.

I've seen a few cars at around the 5k mark that may well make sense. Cars this size seem to have quite a bit of value even when they're a few years old so I suppose it'll eventually have a reasonable resale value.
 
Why not buy a 5 year old car instead, the C1/AYGO/107 are so simple and reliable, if money is tight do you really want to tie your self up in a finance agreement?
 
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