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leasing versus buying a car?

(17 Posts)
ggirl Wed 06-Feb-13 07:58:28

thanks have a friend who is going to sell me her polo that she has on one of these contracts that you can buy at the end of problem solved
thanks for all yr replies

iliketea Wed 06-Feb-13 07:38:49

I think leasing through work is much more expensive (have recently had quoted for NHS system) as it becomes a taxable benefit, so tax code changes plus you pay for the car, and although the cost apparently includes a mileage allowance for business miles, I found all the quotes hugely expensive (and that was small cars -fabia, polo and fiesta).

If you work it out, you might find that it's cheaper to lease privately, so you get the "worry free motoring" and claim mileage payments through work for your business miles (which may cover a reasonable part of the monthly private lease).

DupontetDupond Wed 06-Feb-13 07:26:01

It's important to understand the different types of finance.

Most of the finance deals bring referred to above are not in fact leasing, but PCP deals.

With a PCP (Personal Contract Purchase) you buy the car. You pay a small deposit and finance the rest. An APR on the financed amount will be charged as you pay interest on the amount financed. You pay a monthly repayment and at the end of the term, typically 3 years, you either pay off the remaining finance (or balloon payment) and keep the car, hand it back and walk away, or use any 'equity' in the car as your deposit for your next PCP deal on a new car. Your balloon payment is the same as the minimum value the dealership set at outset as the amount they think your car will be worth at the end of the term, assuming a certain mileage (say 10,000 a year). They tend to be fairly pessimistic about future values in truth, to protect themselves. If you hand it back and you're over the mileage you'd pay a few pence per mile penalty as obviously the car will be worth a bit less to the dealership if it has more miles on it.

With a lease you don't buy the car. It remains the property of the leasing company. You pay an initial rental payment (a bit like a deposit) followed by a monthly rental payment based on agreed mileage, often 10,000 a year but this can be changed.The initial payment and rentals are subject to VAT. Most deals are over 3 years. At the end of the deal you hand the car back, end of story. Again, small charges apply if you go over the mileage allowance. You then lease another car if you want to, from whomsoever you choose.

I've done both. Which is better? It depends on the car, the mileage etc. But as someone said, it also depends on which manufacturer is keen to shift cars. If you're flexible on car choice, so much the better.

My personal preference is leasing as there is less 'smoke and mirrors' - what you see is what you get. You're effectively just paying for depreciation without the hassle of renegotiating with a car salesman every three years who'll be trying to give you no discount on your next car and a rubbish trade in for your old one. "Sorry, there's very little equity in your car, etc..."

I loved leasing as all the deals are out there on the web. it was done within the comfort of my home with computer and a phone. No garage visits, no salespeople, no haggling.

bigbluebus Tue 05-Feb-13 21:43:21

There is a mileage rate for excess mileage written in to the leasing contract - I think it is 6p per mile for the one DH has. The excess is charged at the end of the term - but if you buy the car to keep at the end of the leasing term, then you don't pay for the excess mileage IIRC.

Jo49 Tue 05-Feb-13 21:42:03

Hello, im currently in my third leased car and love it. A different car every 3 years. You need to put min down usually around £1000 and go for 4 years as it keeps your repayments low, I only keep the car for 3 years and then part chop it in in the usual way. The money offered for part exchange will cover the settlement owed in your car and you can start again. I've gone from a mini to a BM W 1 series and I've just moved to a Mercedes-Benz.

mumscuppa Tue 05-Feb-13 20:14:31

Hi, I was a community nurse and had a lovely lease car. The mileage was limited and there would have been a penalty for any extra miles travelled. When the 3 years were up I could have bought it but I had no money to do so! It was a good scheme but quite expensive, but it was worry free motoring, with everything taken care of apart from petrol of course.I was sorry to see it go at the end of the lease.

hermioneweasley Sun 03-Feb-13 20:16:42

It depends on whether you would use finance to buy a car and whether you want a new car.

If you use finance and want a new car then it often works out cheaper to lease (though most will require some sort of deposit). If you are prepared to buy a second hand car that's a year old and can buy it with cash or have cheap finance it is almost certainly cheaper to buy.

NeverBeenToMe Sun 03-Feb-13 20:16:11

Thanks Fatima smile yes, I've been browsing some today after this thread and found out a bit more about it.

FatimaLovesBread Sun 03-Feb-13 20:13:15

neverbeen you can change the mileage to one more suitable, it just changes the price slightly

Hulababy Sun 03-Feb-13 11:46:38

Dh can do 10,000 miles a year in his leased car. If you go over you have to pay more I believe.

DH says the secret to leasing really is to look at the deals, rather than looking for specific cars really. There are some very good deals to be had for those who take the time to look around and if you are not wanting just a specific car.

Hulababy Sun 03-Feb-13 11:45:08

Dh is currently leasing and it has worked out really well. His car goes back in September and so he is now looking into options for then.

It very much depends on which cars you want and what your normal car buying habits are. DH was always one to swap and change a lot and likes certain types of cars. Leasing worked out better for him - and at least means he has kept this car for 3 years - which for him is a long time!!!

ggirl Sun 03-Feb-13 11:43:23

right thanks

Rockchick1984 Sun 03-Feb-13 11:23:18

Nope, it's just checked at the end of the lease so for example if you had a 3 year lease with 10k per year mileage, you would be charged if you had done more than 30,000 miles when you returned the car.

My car had 12k per year mileage allowance, so think it must just be a case of shopping around until you found the best deal for you.

NeverBeenToMe Sun 03-Feb-13 10:25:25

I've looked at leasing before but always put off by the ridiculously low mileage they expect you to do in a year. I do about 10000 and it was way over the limit.

ggirl Sun 03-Feb-13 10:09:06

thanks that's interesting , how do they work the increase if you go over the mileage , just check the car periodically and hike the monthly payment if you've gone over?

Rockchick1984 Sun 03-Feb-13 00:26:48

I've done both - lease car will have a maximum mileage per year so if you go over it then it's very expensive; however for me it meant I could afford to get a better car by leasing than I could have got by buying.

Mine rather than a traditional lease was one where it was leased for 3 years and at the end I could make a lump sum and keep the car; I could hand it back and walk away; or I could upgrade to a newer model on the same terms. It was fantastic for me, however once I had DS I wanted something where I wasn't committed to making payments forever!

If you would keep upgrading every few years anyway, I'd say get a lease. If you would keep the same car happily for many years, buy it.

ggirl Sat 02-Feb-13 23:48:45

any recommendations
I drive for work a community nurse
could lease a car though work but am on a bank contract despite doing 5days a week , so don't hink I can lease through work.
However need a new car and do about 5000 business miles , 5000 personal a year if that's relevant???

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