So cars are expensive now, huh? (Leasing)

muon said:
I'm sure there are cars that depreciate only £140pm if that is what you are willing to pay.
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I actually just checked leasing.com to see what I could get for £150pm and noticed the prices have dropped from last month. Nothing as cheap as £140pm with a Fiat 500 coming in at £160pm but my corsa is now £171.
 
Joeyuk said:
I actually just checked leasing.com to see what I could get for £150pm and noticed the prices have dropped from last month. Nothing as cheap as £140pm with a Fiat 500 coming in at £160pm but my corsa is now £171.
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I didnt mean a new car. Your current car is how old now?
 
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Joeyuk said:
I leased it last July and due to go back next year.
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Depends on if you have the capital, but buying a 3-5 year old car, then using for 2 years and then selling won't be that expensive. You are taking the risk instead of the lease company.

The reason leases are so expensive right now is that initial (potential) depreciation is higher as they aren't getting large discounts on new cars from manufacturers. Also interest rates are rising.

If lease companies could know with certainty that the market won't fall out underneath them and they wouldn't be stuck with overpriced lease returns in 2-3 years, they would be cheaper.
 
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VincentHanna said:
Anyone else found themselves in this position and what did you end up doing? I only do 10k miles a year so even spending £500 a month on a car seems like a ridiculous luxury.
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Who is your lease finance provider? I extended my lease a further 12 months at a lower cost per month (also had the option to buy even though it is PCH) as I am awaiting the launch of the Ioniq 6 and that isn't due until April/May due to delays.

It's worth asking the provider for a quote and ask if they entertain purchase as well, nothing to lose by asking.
 
Lima said:
Paying £620/ month for a cupra ateca 21 plate. That’s a straight up 5 year bank loan to get the car which was £35k.

It stings but it seemed the most straight forward and cheap way when compared to pcps etc.
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I have the same on lease that's due to go back December 23, currently paying £404. Started looking at replacements the other day and everything was stupid money. Looked at Ateca's just out of interest and the cheapest I could find one was £650.

Worlds gone mad.
 
My A4 goes back in Jan and I cannot extend, it's not surprising when the lease company will probably get nearly 100% return against their purchase price so my monthly (even though it was silly cheap) will have been pure profit.

A similar car is over 80% more expensive so not good value.
I've had 5 really good (a couple of great) lease deals, now resigned to buying again.
At least I can choose what I want rather than chasing the best deal I suppose!
 
Similar situation. Lease ends in march, new car ordered as PCP (was going to lease again but the leasing and purchase only 3k difference even consider the worst case scenario for depreciation, but as current market condition everything holds value this purchase makes more sense). But new car (EV) won’t be available at the earliest June 2023. I do have option to extend the lease. I think I will extend it for 6 months just to cover the fact EVs are so slow at getting delivered and 12month lead in isn’t even new but common. Longer are expected.

Also looked into leasing through salary sacrifice. Literally in the process of pressing the button then lease company came back with a £150 increase on monthly premium. I asked why is that they said the car had increased in price by 10% and I said that still doesn’t account for the 30% increase in monthly payment. They said that’s the numbers. Basically HUGE amount of profiteering going on. It’s the next bubble to go I reckon the whole car leasing and car debt industry.
 
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pc-guy said:
Similar situation. Lease ends in march, new car ordered as PCP (was going to lease again but the leasing and purchase only 3k difference even consider the worst case scenario for depreciation, but as current market condition everything holds value this purchase makes more sense). But new car (EV) won’t be available at the earliest June 2023. I do have option to extend the lease. I think I will extend it for 6 months just to cover the fact EVs are so slow at getting delivered and 12month lead in isn’t even new but common. Longer are expected.

Also looked into leasing through salary sacrifice. Literally in the process of pressing the button then lease company came back with a £150 increase on monthly premium. I asked why is that they said the car had increased in price by 10% and I said that still doesn’t account for the 30% increase in monthly payment. They said that’s the numbers. Basically HUGE amount of profiteering going on. It’s the next bubble to go I reckon the whole car leasing and car debt industry.
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How can a car have gone up 10%? Surely you're paying the depreciation and with the used cabaret artificially high, the payments should be lower?
 
theone8181 said:
How can a car have gone up 10%? Surely you're paying the depreciation and with the used cabaret artificially high, the payments should be lower?
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Their argument was that the initial capital is bigger due to the manufacture increasing price by 10%. As the result their depreciation is going to be bigger etc. anyway the fact is based on the lease the car would be worth next to nothing that’s factor in the interest rates etc.
 
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theone8181 said:
How can a car have gone up 10%? Surely you're paying the depreciation and with the used cabaret artificially high, the payments should be lower?
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Higher list cost, little or no discount and increased borrowing costs from interest rate rises (for the lease companies) easily makes up the increase. There is never any guarantee that used prices will remain artificially high so that has to be factored into depreciation rates as well.
 
gailjon said:
Higher list cost, little or no discount and increased borrowing costs from interest rate rises (for the lease companies) easily makes up the increase. There is never any guarantee that used prices will remain artificially high so that has to be factored into depreciation rates as well.
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Oh I forgot about the discounts. That's probably the biggest reason, as I'd have though lease companies would (normally) negotiate large discounts.
 
To me it seems like the leasing market is simply returning to normal. In theory leasing has always been the most expensive way to drive a new car - as it should be, given all of the risk is with the provider and none of it is with the user.

You're just renting it for a fixed period from its owner. Why would this be cheap? Why should this be cheap?

I think people have had their expectations set by the high profile bargain priced leases we often used to see - Golf R etc - but remember these were largely because manufacturers for whatever reason wanted a load of new cars on the road, either because of over capacity in production or because they wanted them back as used cars or whatever - something which just isn't really the case any more.

If you want a car at the lowest cost, in theory you should buy it yourself. Not get somebody else to buy it for you and then rent it from them. Obviously the complication here is the residual value risk - but who do you think is best at estimating that and making sure they win? You or a leasing company?
 
FT piece on bev leasing costs, some profiteering, albeit govt imposes penalties if they don't sell enough.

The big question is why growing awareness of battery longevity is not translating immediately into lower lease prices for electric vehicles, which remain stubbornly expensive. The chief reason for this is the reluctance of banks, which sit behind these depreciation deals, to lower costs. With the small amount of data to work out future electric car values, or residual values, they have resisted dropping leasing rates.
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However, a factor that could lead to greater depreciation of electric vehicles, Todd added, are constant advances in battery technology, which means older models may prove harder to sell.
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Ultimately, it will take time — Todd reckons three to four years — for enough data to build up to convince financiers to take the jump and increase the residual values of EVs, which in turn will lower leasing rates. “Then, we will have enough insight to be confident of the [residual value] setting,” he said. Many of these “captive finance” companies that are owned by the carmaker, such as VW Financial Service or Ford Credit, are also large profit drivers for their parent companies. VW’s arm made €3bn profit in the first half of this year, while Ford made $1.7bn. This has led some in the industry to argue that the lenders have at least some incentive not to push the electric vehicle shift, which will lead to smaller short term profits, any faster than is necessary.
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[TW]Fox said:
I think people have had their expectations set by the high profile bargain priced leases we often used to see - Golf R etc
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Golf R was a PCP bargain, not a lease bargain. Lease bargains were any only crap that the manufacturer wanted to bin.

Edit: Q5 the current bargain bin car:

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dLockers said:
Golf R was a PCP bargain, not a lease bargain
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Whilst I am sure there were other deals too there were definitely lease deals. The manufacturer wanted the cars back at the end, which they couldn't guarantee with other forms of financing.

There were entire threads on here dedicated to it, it was a big thing around 2017-2018.
 
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[TW]Fox said:
Whilst I am sure there were other deals too there were definitely lease deals. The manufacturer wanted the cars back at the end, which they couldn't guarantee with other forms of financing.

There were entire threads on here dedicated to it, it was a big thing around 2017-2018.
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Can't remember any lease deals on Golf Rs. They were definitely PCP in my memory. Gutted I didn't grab one..M140i Shadow Editions were big, too.
 
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