Hi mate, serious question, what is the best way generally to buy a car?Why don't we come up with a more relevant way of appraising value?
Why can't anyone who advocates using list price explain how list price has anything at all to do with, well, anything?
It's obviously not perfect but:Why don't we come up with a more relevant way of appraising value?
Why can't anyone who advocates using list price explain how list price has anything at all to do with, well, anything?
Up your PPP count bro, it's only on page 1572 pages long and I post one "deal" - and it all kicks off.....
Nobody is making you use it, just ignore if it's not helpful to youBut real depreciation isn't on list so I'm not sure it makes sense to use it.
That's not the discussion point is it? The challenge put forward is if it is actually helpful to anyone in understanding the merits of a lease deal.Nobody is making you use it, just ignore if it's not helpful to you
It's obviously not perfect but:
That makes the 'true cost' of the alternative a real ball ache to calculate for every single model, so you need a 'rule of thumb' to thin out the good deals from the terrible deals.
- List price is a known quantity, best available discounted price is not readily available for all models
- Depreciation rate/future value/GMFV on a PCP differs by car
- PCP interest rates differ by make/model/trim
2 year depreciation on a car is probably around 35% in reality. Everyone knows discounts are available on a car, so nobody would use 35% of list price as a good guide. Something around 20% means that even after discount you are likely to be beating depreciation and therefore cheaper than a PCP deal.
Use the 20% to filter out all the crap deals and you are left with some good ones and (yes) some not so good ones but at least you have a much smaller sample to do detailed cost calculations on.
The other discussion I have with people that blows my mind with leases is when the comparison against depreciation over two years is used by people who previously have always bought at 1 to 2 years old. So... its slightly cheaper than the massive depreciation that you previously avoided by buying used?!
To counter that argument they are getting a brand new car not a 1-2 year old car. They might have previously bought used because they felt the depreciation was too high, but given in your example the lease is cheaper than the depreciation it may have dropped to an acceptable level that they consider worth it for getting the new car rather than a used car. In other words the lease brings down the cost delta from having a new car versus a used car.
Remember even if you bought for £31k then sold for £23k either you had a load of money tied up in the car or you paid another £2-3k in interest payments making your true cost £11k...^^I'm not looking to get into a debate about whether buying a 1-2 year old car is a good thing or not, I'm just explaining why people who previously did that might be tempted by a lease, because it may be cheaper than the depreciation. So they get the best of both worlds - a brand new car, but losing less money on depreciation compared to having bought it outright, which may have been the reason they used to buy 1-2 year old cars. Essentially, the goalposts may have moved, so it is valid for them to approach the scenario differently than they did last time.
^Basically the idea is if is less than 20% of list price then it is probably at least worth looking at because it is very rare to get discounts more than about 30% off list price, meaning that <20% of list has a good chance of still being competitive even against heavily discounted cars.
Example would be, you lease a 40k car for under 8 grand. Whereas if you bought that car via a broker for say 31k then sold it after 2 years and get say 23k back. So you'd lose 8k on depreciation whereas the lease was cheaper.
Of course that is just made up numbers but you get the idea. Some marques like Mercedes seem to have massive discounts on brand new this year which means I would most likely be favouring purchase over lease on them.
How much more was the service package? Tyres should last a lot longer than 2 years at 16k and you may even be lucky and get away without the serviceLeasing for the first time, see other thread.
Mercedes A250 AMG Line (Premium Pack)
- services and maintenance (tyres etc) included
2 years, 8k mileage
£1640 upfront and approx £273 a month.