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Original poster

Lease cars....

256 replies

Stressballs · 12/07/2018 22:10

Lots of people I know seem to drive around in high end cars which are disproportionate to their earnings and every few years they seem to be upgrading to an even bigger/better car. DP and I are car hunting at the moment and I mentioned to DP that I had always been rather intrigued as to how other people earning far less than us managed to afford these executive cars (when we are driving around in a modest little hatchback!) and DP was saying that barely anyone actually buys cars anywmore and they all lease them instead. Not sure where I’ve been but I had no idea!

Is it really that common now?! I’m struggling to see what the financial benefit is as surely since you never own the car it’s an endless cycle of monthly fees to be left with nothing at the end and having to do it all over again. Or perhaps it’s just for the staus of having a showy car. Am I missing something?! Confused

OP posts:
19lottie82 · 12/07/2018 22:15

Yes, it’s common.

We got a brand new Skoda yeti in March last year. It costs £193 a month and we didn’t have to put down a deposit. The depreciation alone will be more than that.

Sure, we will never own it but for driving a brand new car with all the toys, it’s a total bargain.

It depends what’s important to you in a car. If you want a car that is yours, you’re going to drive into the ground, and you are prepared to budget for maintenance and repairs then yes, but outright.

But if you want a new car every few years, want a fixed cost every month with no surprises for repair costs, and don’t need to worry about MOTs, then a lease / HP is often a good option. It usually works out better financially than buying a new car outright and trading it in every 3 years.

Also, a lot of people will get a car allowance these days instead of a company car, so they often choose a lease.

Semster · 12/07/2018 22:37

For me it's about having predictable costs vs unpredictable costs.

However I'm in the US, and costs here are slightly different ie newer cars costs less, secondhand cars costs more, and repair costs are much more.

huggybear · 12/07/2018 22:42

Yes it's common. We have two modest cars, one 12k, one about 6k but we own them. Some of our colleagues drive around in 40k cars they don't own and brag about it which is a bit galling!

One said the other day the car was more than his rent!

CherryPavlova · 12/07/2018 22:43

I lease an NHS fleet car through work. I’m not convinced it’s cheaper but it’s certainly easier. If I need anything doing, they collect, leave me a courtesy car and drop it back. Tyres sorted just by driving into Kwikfit. Accident management scheme sorted out all the hassle when someone went into the back of me.
Just much simpler.

roseyposeyshmosey · 12/07/2018 22:50

I've just got a car on a pcp (monthly fee for 3/4yrs then trade it in or pay the balloon).

my previous car I owned outright and I'd pretty much run it so far into the ground it was going to cost A LOT of money to repair and get in goof nick again. I didn't have any money to buy outright and to be honest with how quickly a cars value depreciates, I just can't see the benefit of doing that.

I really didn't want to get one on finance but I'm so glad I did now. with my job I need something reliable and cost efficient. which my last car was not!

it's what works for you.

Chembe · 12/07/2018 22:52

I don't lease a fancy car. Just a corsa. It's £130 a month, I didn't pay any deposit, I don't have to pay any servicing or tyres or wipers etc. I'll hand it back after 3 years (in 6 months time) so I'm not responsible for mot and start again although will probably get a bigger car as have a baby arriving soon! I had been to car dealerships and had looked at taking out a loan to buy a car but I didn't want unexpected repairs or to be responsible for the car if that makes sense.. Nowt to do with being showy although I got a brand new car with 6 miles on the clock delivered to my front door the day after it left the factory which was nice!

TweedAddict · 12/07/2018 22:54

For us we would rather have nicer cars then a bigger house. There’s only me and DH most of time, our house suits us just fine, we put a fair bit away in savings each month but we have 2 really nice cars and go away on holiday more then most. For us it’s a mini hobby, car shopping/shows/upgrading trim and engines.

A lot of our family think we are mad, but we don’t smoke or have “proper” hobbies. It makes us happy.

MaryShelley1818 · 12/07/2018 22:54

I lease...I like having a brand new car every 3yrs and use my car for work so need reliability.
I worked out the money I spent over 3yrs on my 10yr old car and repair bills I could have leased a brand new one instead so did.
Doesn’t suit everyone but definitely works for me.

eggsandwich · 12/07/2018 22:57

We’ve leased for years now, both Dh and myself have lease cars that get changed every 2 years.

We decided to lease when we part exchanged a car that we owned and was relatively new that had deprecated considerably that was the turning point and never looked back.

Worieddd · 12/07/2018 22:57

Yes I lease too. Not a fancy car - just a Nissan qashqai. It’s a bargain really, insurance tyres, service etc is all included

Tigresswoods · 12/07/2018 22:57

Totally common. I know it does seem counter intuitive but your other options are:

A) outlay a huge amount of money on a new car which is a depreciating asset.

B) buy a crap cheap car which will go wrong.

So as long as you have an income a modest monthly cost is preferable to many people.

Stefoscope · 12/07/2018 23:00

I think it's pretty common. My friend drives a brand new car for 3 years then trades it in for another brand new car. She is by no means rich but enjoys driving and having a new car without having to worry about paying for MOTs/repairs (as it's all covered under the warranty). I do think the deals on 3+ year old cars sold on lease are the next PPI scandal though. To me the only way to get value is to put cash (or a car you own outright down as a deposit) and then go for something brand new and trade in for another brand new car after 3 years. That way you're getting something new and shiny every 3 years for around the cost of a new car's depreciation in value.

TheWK · 12/07/2018 23:01

There are some really good deals about on leases/ PCP, often subsidised by the manufacturer

The key types are

Personal Contract Plan (PCP) - allows you to buy the car at the end of term by paying a ‘balloon payment’ if you want, or to return the car and owe nothing

Personal Contract Hire - works like long term car hire, but there is normally no option to buy the car at the end

You can also buy on Hire Purchase, which gives you ownership at the end of the term. The monthly payment is usually higher, but you own the car at the end of the agreed term and is often better value

Watch out for two two pitfalls on leasing/ PCP

Over-mileage charges - you agree an annual mileage at the start. People often underestimate their mileage, or changes circumstances, and end up having pay something like 50p per mile over the agreed limit

Damage charges - even small scratches can be expensive. Reasonable wear and tear is allowed but some things that you would just let ride on your owned car can cost a lot

Remember to look at the APR for comparison rather than the monthly payment, and look at the total cost for each option

Shitonthebloodything · 12/07/2018 23:02

Yep. We can't afford to buy the cars we need and what we could afford would cost us a fortune in repairs for the mileage we do. PCP makes most sense for us as our needs will have changed in 3 years anyway. We don't have anything flashy just mumwagon type ones a couple of years old (rather than the 15 year old cars we had before them) it's a relatively big expense for us but we couldn't do without decent running cars where we live

GinisLife · 12/07/2018 23:03

I take the view I'll always have a car until the day they remove my licence so one way or another I'll always be paying for a car (unless I come into a lot of money) so why buy one outright/on HP just so I'll own it at the end. I don't care about owning it, I care that it's nice, comfortable, got some poke and nice to drive. I get a nicer car by leasing as the payments reflect the residual value after 3 years whereas HP you're paying more to own it outright after 3 years - but even if I owned it I'd be then chopping it in for another new one at the end of the 3 years so no point

Sommelierrrr · 12/07/2018 23:06

I'm definitely looking for looking to get a lease car. I keep seeing deals like 99 ex. Vat for a Mercedes... But I feel like I'm ripe to get ripped off! Any tips on negotiating these kinds of deals?

TheIsland · 12/07/2018 23:07

It’s very common. For me, it’s having the security that it isn’t going to break down, suddenly have huge costs etc. I couldn’t afford to buy a car this new so would have bought an old one instead, and been more concerned about it

Semster · 12/07/2018 23:08

It's funny how people who don't lease seem to assume that those of us who do lease only do it to get a showy car.

I got a Subaru Outback. Hardly showy or high end. Good in snow though.

19lottie82 · 12/07/2018 23:10

end up having pay something like 50p per mile over the agreed limit

I’ve never ever heard of a mileage charge like this. Mine is 9p a mile if I go over, and it’s no more expensive that pre ordering more miles than when I signed up for the lease.

TheIcon · 12/07/2018 23:13

TheWK, both of those pitfalls only apply if you're handing the car back.

If you're PXing or paying off and keeping, the finance company won't care how many miles you've done or if you've trashed it. They're getting their money. If you hand it back, then yes, make sure you keep to the miles and look after it. They won't expect it back in showroom condition, but in reasonable nick for a 3yo car with 30000 miles on it.

PCP will usually be better because with HP you'll probably have a higher APR and need to pay over a longer term to make the payments remotely affordable. You'll have an asset but the extra payments youll have made will probably have been more than the asset is worth

I've been selling cars for 5 years so this is experience talking. Some garages also offer smart repair insurance which will sort those nicks and dents without going through your motor insurance. (Where I work now does, but the other garages I've been at dont). For less than £200 you can make sure your car is close to immaculate at the end of the contract which will maximise it's PX value.

19lottie82 · 12/07/2018 23:15

I keep seeing deals like 99 ex. Vat for a
Mercedes... But I feel like I'm ripe to get ripped off! Any tips on negotiating these kinds of deals?

The £99 a month for a Mercedes will he after you put down a huge (non refundable) deposit. The bigger the deposit, the cheaper the monthly payments.
There are some good deals with no deposit though.

With PCP deals from a dealership you can sometimes negotiate, as it’s basically finance against the car but you’re guaranteed a buy back figure after X years which means you can either hand it back and walk away, or trade it in for a new car.

But with most actual “lease” deals, where you are just renting the car with no option to trade or buy it at the end, there is usually no room for negotiation as most of the companies offering the deals are just brokers and make very little on each deal.

TheIcon · 12/07/2018 23:15

One other thing - upping the annual mileage isn't expensive. As a rule of thumb an extra 2000 miles per year will put £5 on your monthly payment. 36×£5 is a lot less than 6000x8p. You'll also have more equity in it if you have over estimated.

Firesuit · 12/07/2018 23:16

I've just looked at the PCP terms for a new Golf, admittedly these are the offical VW ones, I haven't shopped around. Over four years the total outlay for a 23K car you then hand back is £335.

My Golf I bought 4.5 years ago for 22.5K has cost me an estimated £250 a month in depreciation and maintenance. I'm planning to keep it until driverless taxis make car ownership obsolete, but I'm not surprised to find it's been cheaper to own.

TheWK · 12/07/2018 23:16

“9end up having pay something like 50p per mile over the agreed limit”

“I’ve never ever heard of a mileage charge like this. Mine is 9p a mile if I go over, and it’s no more expensive that pre ordering more miles than when I signed up for the lease.”

Sorry 9p per mile is more realistic

The 50p per mile I was thinking of was the reimbursement rate for expenses at work

9p per mile can still add up though if you go well over agreed mileage

Firesuit · 12/07/2018 23:16

£335 a month outlay, I meant.