Some Leasing Questions

Hodders

Hodders

Hodders

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Never leased a car before - always bought outright usually at about 2 years old.

We are looking to get rid of our old and very tired euro5 diesel for an EV.

Looking at a 2 year old Kia EV6, most seem to be in the £30k to £35k range. Lets say we keep it 4 years and then sell for about £12k.

By paying £32k up front, we will lose any investment income (at the moment it is offsetting our mortgage so basically earning us 6% tax free), so total cost of buying:

Initial cost + interest we would have earned on purchase sum - resale value = 32k + 9.6k - 12k = 29.6k​

Leasing (not interest saved is less due to using that balance to pay the lease payments over 4 years):

Initial payment + 47*monthly lease - interest saved by offsetting purchase price = 1650 + 47*525 - 4000 = £23k​

Basically it seems as though leasing a new car for 48 months would be cheaper than buying a 3 year old one and selling after 48 months.

Is there a hole in my thinking?

General lease questions:
1) I'm assuming lower initial payments are better as if the car is written off, insurance will "buy" the car from the lease company. All lease payments will simply disappear.

2) Is leaseloco going to find the best deals or are there other sites worth looking at?

3) Presumably if BoE interest rates come down, lease deals will get cheaper due to lower finance costs for the lease company?

4) The other benefit of leasing an EV is the unknown depreciation - if a new battery tech comes in, suddenly all "old tech" cars will take a hit.

What are your thoughts?
 
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Don't your sums double count a chunk of the expected interest? i.e. you can't add the lost interest to one sum and subtract the saved interest from another.

Or maybe I'm misunderstanding what you are trying to show.
 
lordrobs said:
Don't your sums double count a chunk of the expected interest? i.e. you can't add the lost interest to one sum and subtract the saved interest from another.

Or maybe I'm misunderstanding what you are trying to show.
Click to expand...

The buy option means that the purchase sum can no longer be offset against our mortgage so it's a additional cost

The Lease option means that the purchase sum can continue to save us 6% whilst we slowly use it to pay the monthly lease charges so it's a saving
 
Hodders said:
What are your thoughts?
Click to expand...
Personally I would buy a second hand Skoda, petrol or diesel, a few years old. I would buy it outright if I could, or as much as I could, with a minimal loan. It will cost you a lot less overall than this expensive EV lease deal, and the charging network isn't that good in the UK yet.
 
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If you're set on EV, it may be worth looking into whether you have a salary sacrifice lease scheme available through your employer (and whether it's any good, mine isn't, but some of the deals I see on here suggest some can be good).
 
Hodders said:
The buy option means that the purchase sum can no longer be offset against our mortgage so it's a additional cost

The Lease option means that the purchase sum can continue to save us 6% whilst we slowly use it to pay the monthly lease charges so it's a saving
Click to expand...
So that's a yes then :p

Either way your interest received is reducing so if in the first example you are losing £9.6k and the second option allows you to retain £4k of that then the like for like sum in the second calculation should be 1650 + 47*525 + 5600 = £31,925

It's quite a rudimentary way of looking at the numbers but good enough for a rough comparison of purchase versus lease. Ideally you want to whack the numbers into a spreadsheet and extrapolate it over the 48 months for both scenarios.
 
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