Lease cars....

[Stressballs]

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?!

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

True, but common sense suggests putting down a realistic estimate as to how many miles you will need, and as I explained, I usually find paying excess mileage charges is not anymore expensive than paying for the agreement with more miles in the first place. In other words you don’t get stung for going over your agreement, it just works out the same.

I don’t lease my car, but I’m also not one to change my car on a regular basis. The old one had for nearly eight years.

I did look into leasing, but it wasn’t for me at the time. I like the security knowing that it’s mine and to be honest I can’t be arsed changing regular basis - so much effort!

Having said that, there are things my car doesn’t have which I wish it did (one of those fancy boots which open on the key for one) and if I had a lease car I knew I’d be changing it relatively soon. Maybe next time! 🤣

I don't pay anything for my car because I own it. £0 per month.

My car is 6 years old it runs well, I pay about £200 ish quid a year to service it.

I took out a loan and paid it off, that took 3 years. I now save some money every month. Those savings might buy me another car or they might help us is an emergency. I get the interest on those savings and I have peace of mind because I have savings.

My car was second hand, it isn't fancy but it fulfils all my transport requirements.

I will run this car into the ground. I don't care about new shiny cars.

When your car is funded by earnings rather than savings, I see leasing as riskier than buying, because, as with all borrowing, you are spending future earnings that are not guaranteed to actually turn up. For that reason I've paid cash for all my cars, except my very first in the UK. I was out of work half way through the finance period of that one and under the terms of the loan was able to hand it back early without any penalty, so the risk I perceive with finance didn't actually manifest itself in that case.

Personally, I wouldn't choose to lease. DH was convinced it was a great deal when we got our last car, but you end up spending more over a given period if you lease so we bought on a 0% finance deal. Especially when you consider most cars will last well past the payment term so you'll have a long period car payment free.

But I can appreciate how nice it must be to have no hassle, no worries about repair costs etc.

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.

Or option C)
Buy a cheap car that is mechanically sound and last you years?
My last car cost me 1400, and lasted me 5 years. I spent the usual amount on MOT plus full service yearly. New wipers and a new battery.
So, in 5 years that car cost me approx £35 a month. Always started, never let me down. You can be really unlucky with old cars but if you buy something that's decently built and you know what to look out for you can easily get a 10 + year old car for under 2k and drive it happily for years.
I don't give a crap about trim and status though. In fact one of three things I liked about the old one was that it hade a tape deck so I could play my old mix tapes 😂.

Cant see the point in leasing. Im fully intending to keep my car 5 years minimum. Got it new, pre-registered. Never financed before and looking forward to having at least 2 years car loan free. Its cheaper than leasing the same car as i am keeping it for longer. Not quite sure how crap a new car has to be that it needs changing after 3 years, or why you'd think getting a new car every 3 years is anything other than extravagant.

Do people just see nice car affordable price and dont do the price comparison? I do get people choosing to spend money on cars. Its a valid priority given you can spend a lot of time in it.

Dh recently looked at the cost of leasing but it was a company car and after tax made no financial sense. Instead he got a car allowance from work, added his own money and bought the car outright. Its going to cost less over 3 years and his car will still be worth trade in price at the end.

Cars are much better built nowadays so I think long-term buying is cheaper. Each of my cars is 12 years and run fine, annual maintenance is about £300, insurance is cheap as they are old so monthly savings for me funds other things - like kids!

I think somebody mentioned dealer contributions towards finance deals. A year ago I bought my wife a new car as a retirement present and benefited greatly from the dealer contributions. The list price was £33,700 and with discount the price to buy it outright - my normal method of purchase - was £30,500. I thought that was a pretty good discount but the dealer said that if I bought it on a finance deal, the cost would be £28,910 due to the dealer contribution on that particular model. He then said that rather than make the finance payments over 48 months with a substantial payment at the end, which would have meant £34,000-odd overall, I could pay off the finance within 14 days. So on the day of collection I paid £5,000 and a couple of days later phoned the finance company, said I wanted to pay off the finance and then paid them the balance of £23,910.

This approach only works if there is a decent dealer contribution on offer, but I shall bear it in mind when I next change my car. The point is that you don’t forfeit the dealer contribution by early settlement.

I got a bank loan out for my car just due to the reason that if anything happened to me which meant I couldn't work I could just sell the car and pay off the loan .
If I had leased the car I would be in a difficult situation where I couldn't afford the payment and I couldnt sell the asset because I didn't own it.
Bank loan was also cheaper than lease @3.2% Apr

Alessandro not heard of that so thats useful to know.

My previous car was a 2006 astra . I had that for 5 years, I can do all my own repairs so saved a ton of money there when things went wrong.
Paid £2500 for it in 2011 and sold it for £1000 in 2018. £300 a year depreciation plus about £40 a year service costs. Loved that car 😂

I am eligible for Salary Sacrifice at work (NHS) but what puts me off the lease schemes is the return condition.

My car (2010) which I own is a bloody magnet for other cars/drivers scraping it. Usually when I'm parked perfectly safely and legally (I got a scrape on it this week ) when it was parked .
Many a times I come back to find a scratch or dint from a car.
I'll admit some of the bumps are inflicted by me .

I would be wrapping a new car up in cotton wool I reckon.

I lease an Audi Q2. Insurance, tax, servicing, tyres, breakdown, windscreen etc all included for £232 per month. If I bought a brand new car, I'd lose thousands the very moment it left the forecourt! Plus have the added costs of tax, insurance, servicing etc on top of monthly payment! Hell no.

I have high mileage (well not high but higher than lease often allows) and seem to scratch my car a lot so lease isnt suitable for me. I also don't care much for pretentious cars. Cars are for driving and I don't mind mileage, bashes, scrapes so long as it's reliable.

Nothing worse than someone having a meltdown over a scratched car.

So where do you start with leasing a car? Do you go to a specific dealer for the car you want or are there companies with different makes and models to choose from?

My last car which I still have is a Clio, I've driven it from new for 11yrs I'm passing it on to my son, it's never cost me a thing apart from 2 batteries, plus MOTs and the usual

Dh has just leased me a BMW it was on a special deal as they were over stocked with them, I chose the colour and interior from the list given, and I got it about a month later. With the maintenance package it costs us £411 a month

Because of the rule changes I think the car tax is over a £1000 a yr now
But that's included, as well as road side assistance
The deal for us works and I get a new car, and my ds gets my old one

Lots of people we know are getting cars on PCP, it's worked out for a friend that's had an unexpected job offer abroad and just hands the car back.

We've always had a car on finance and a second (older) car that we've bought outright.

We've never cleared the finance on the car before trading it in, it's never been ours, I would absolutely consider a lease car in the future.

It's only cheaper if you want a new car. I want a lot of other things a lot more than a new car. Savings, peace of mind and holidays are all a lot higher up my list of priorities.

It does depend on the car but especially if you are flexible leasing can be a very sensible choice. Our last two leasers cost us less in lease payments over the term than the cars depreciated by. That's before factoring in that realistically we would have needed a loan to buy outright (incurring interest) plus we'd have had maintenance, road tax etc to pay.

If you prefer to drive new/newish and are semi flexible (so take advantage of deals on specific models) it often works. If you prefer to keep a car for a long time and drive older then the balance is different.

Pcp can work too - my car is pcp as payments were very similar vs leasing and it's a more flexible contract. DH car was about 60% higher payments on pcp so it's leased

So im about top get rid of a car that ive got on hp and go into leasing, this car was brought 3 years ago at 10k my finance has 3,8 left ans there giving me 3,6 for it. So 3 years motoring has effectively cost me 6,3k plus driving round in a 5 year old car which in itself isnt a bad thing but there are things attributed to a 5 year old car, due for a cam belt soon for example we actually guestimated over the next year i will spend £1500 (plus my car payments, 2,2k) and looking at my car a year older be worth maybe 2,5ish my lease for a brand new car will cost 2,4k this year. My logic is i can easily afford my car payment, car goes into mot in sept and need £1000 that'll be harder for me to swollow

It’s all about image, we bought our little c1 when it was a year old for £5k it’s very fuel efficient, £20 per year tax and so basic there’s not a lot can go wrong. Insurance £120 per year fully comp. we have no monthly outgoings on it (just fuel every other month) and it’s a fun drive. I know people who have to have a big expensive gas guzzler just to keep up with an image and are fine about getting into dept, often using safety as a reason for this, however I daily witness Mums texting on their latest model contracted phone whilst drive the children to school.

I have a PCP too. Just hand car back every couple of years and get a new one. No servicing. No MOT. It's brilliant. Only got a fiesta tho

I’ve worked helping people with finances. Many are spending a quarter of their take home pay on car payments. They can’t afford it. It’s a problem and some say it may even be the next sub-prime crisis.