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?!

I currently have an old banger. No mechanical problems at all in the year that I have owned it.

Despite that the cost of it too run has been well over £200 per month if I add in routine servicing, tax, mot, tyres, insurance.

If I can get a new car on a just add fuel type deal for similar money post month its a non brainer, even if I don't own it at the end.

I’m def in the minority with my friends and family OP as we buy cars outright every time, DH thinks I’m v weird about it but enjoys the benefit! I start paying into my savings acc again soon as I’ve bought a car then by time I sell it 3/4 years later I can buy a new one.... and the cycle repeats. Do this purely to avoid finance, interest, being trapped in a rigid payment plan, penalised for driving over 8k miles etc. but guess principle is the same as I’m still paying a ‘fee’ to savings (but could alter amount if I needed to). I def don’t have a fancy 40k car though, always buy year old car under £10k - at moment I have a VW polo.

Having said that my sis and BIL both just took out a 4yr finance deal on their cars and seem v happy at the regularity and consistency of payments and got a good %interest deal. My parents hate their deal as they not allowed to trade in early without big fees and want a bigger car (grandchild en route!).

Its really just what works for you in the end!

People saying it's all about image when (some) other posters are clearly explaining that it's not their reason

I had a second hand car that went very wrong (new gear box sort of wrong) and it was only 6 months since I bought it from a nationwide garage chain (linked to Ford) and my DH (who helped me choose it) is a vehicle engineer!! Second hand cars are too risky when you have a long commute every day. I now lease (from the descriptions in this thread I think I do PCP) and get a new car every year without putting any deposit down and without my payments going up (unless I upgrade the spec of my car).

Currently, this is affordable to us but I can see how it may cause financial troubles if someone was used to having new cars on a finance type deal but then couldn't afford one anymore.

I have read that 80% of cars are now ‘bought’ on some form of lease plan. Many people I know do this - new, better car, servicing etc and yes they often get a better car than they could afford otherwise.

In the past most people bought cars on hire purchase, this is just a new way of doing things.

Financial experts are worried about these deals as someone - the banks probably have lent so much money on this - remember the same being said about housing debt a few years ago - Northern Rock.

We wouldn't lease because of the restrictions on milage and also having to give it back looking perfect, DH uses his XTrail as a workhorse so we bought a 3 year old one outright which he will keep until it is no longer worth keeping and then buy another.

I bought my small car outright at a year old and will probably keep it 8-10 years, I don't do much mileage or use it that much

Leasing would not really be a option for DH because of keeping it good and for me I can't be bothered to change a car every 3 years and it is better value to buy outright and keep, works out cheaper in the long run.

SoShinySoChrome I used to do a similar job (worked for a finance company but in a section which tried to help folk in arrears.) This was before leases were a huge thing but they just used credit in a different way - some people are financially irresponsible. I dealt with people who had 15+ finance agreements for buying musical instruments, bought new sofas every year before they'd even started paying off the interest free credit (which was only IF if you cleared it within a set time) on the previous one, folk who insisted they needed a merc to get to work in low paid jobs...

People can get in a mess but it doesn't make the product inherently bad. My car payment is about 5% of take home every month for example so no stretch at all (and not exactly flash either!)

Lending criteria should be tightened though IMO

I always buy my cars- always been brand new but not list price. Tend to keep for 8 years then sell.

Have always been better off this way. I don’t like the idea of leasing something I don’t own.

I thought the trouble was if you damage a lease car it costs a lot? I think it can be a good deal if the payments are low, Im looking at getting a little run around & was suprised they are so reasonable.

For me pcp makes sense only if you go for the deals.

We lease our fleet cars and always go for the deals so you get a much better car for your money. Would never go to a Main Stealer and buy off the forecourt far better deals to be had. Ie last time 40k Audi A6 cheaper than 30k Audi A4 to lease.

at home we but outright as like to borrow the money over the shortest time possible. Current second car is 10 years old bought 8 years ago paid off in two years. Since has only cost me servicing and tyres.

Would always say if leasing or pcp. Make sure you get the mileage right and fix any dents when it goes back - also look at alloy wheel scuffs.

Yup I lease. I only recently learned to drive and don't know the first thing about which cars are more 'impressive', so it's not about that for me.

In my case, the benefits are:

• brand new car so as reliable and safe as possible, important for me as it's usually only myself and my baby in the car so don't want to be broken down if I can help it!
• all maintenance and MOT costs covered, so no financial surprises.
• yes I pay £200 a month, but I just look at it as a charge for the service of using a car. A car depreciates so quickly buying a car is never an investment whichever way you do it. This way after 3 years I can swap it for a brand new car with no extra payment.

Currently own my car but will probably lease next time. I get an allowance from work but there are strings attached so my car has to be less than so many years old, must have 4 doors. My commute is quite long plus some business travel. When the time comes I will look at what deals are available.

When DD1 was on her placement year I was able to get her a Vauxhall Adam 1.4l for £115/month on a 1 year deal. Returned at the end of the year. It was absolutely ideal.

Lease cars are the new big financial time bomb which will soon explode.

The industry has worked to provide a mechanism by which people who may not ordinarily be able to afford a new car,are able to access nice new cars,often high end, within an affordable price band.

This is great at the front end. Car manufacturers get to flog lots of nice new cars and proud owners get to upgrade their perceived status, keep up with the Joneses etc.

But what happens to those cars when they are traded in? Who will buy them? Well since lots of people are being facilitated to buy nice new cars on lease/pcp the pool of used car buyers has shrunk.

This leaves lots of ex lease cars on the market which cannot be sold to recoup their book value.

They are therefore sold at a loss. Whos loss is it?

Just like the Freddie Mac and Fannie mae mortgage fiasco in the USA which played its part in the 2008 crash, those lease and pcp finance debts are being repackaged into other products and sold on.

It matters not what the product is, whether its houses or cars,, they all have to pay their way and someone has to pick up the tab.

Approx £40 Billion is financed on car PCP in the UK alone !!!

That is equal or more than the GDP of many whole countries.

Still ,if there is one thing that the 2008 crash taught me is that debt is good and that debtors will always be bailed out to keep the capitalist machine running so go right ahead, fill your boots and treat yourself,, oh and everyone else too,get a big fat loan now because the crooks at the BOE monetary policy committee are due to meet again soon.

Yes it’s very common. So common autotrader have a ‘cost per month’ calculator. It only works if there’s a value in the second hand one, so it wouldn’t work if everyone leased.
America are looking at a bit of a bubble in that respect and there’s rumbling it may pop.
I can see advantages and disadvantages. On a New car you’ve the 20% vat you lose as you drive out, that’s before you’ve looked at depreciation.

I have leased it’s not something I will return to as I’m not bothered about a new car and for me it would be a bad deal. You need to have a crystal ball that at the end of your term you will be in a position to continue to lease. If you’ve used that monthly payment to buy a car, it still has A value. But you have the maintenance risk. So it swings and roundabouts.

Before getting our lease I calculated the cost of a loan, Pcp and leasing. Leasing came out overall cheapest but it always depends on the deals at the time.

If it depreciates, lease it. If it appreciates, buy it.

Cars only go one way.....

Spending £200 a month on a car without even considering fuel costs is mad to me.

Mine cost £1700 when I bought it. Lots of mileage but mechanically it has zero faults. It's gotten me to work through the snow in Cumbria where other, bigger and more expensive cars failed. It's nippy, gets me up the hills, isn't expensive to fill up and hasn't cost me a penny apart from fuel and servicing since I bought it.

Nobody needs a brand new or expensive lease car. In fact I'd rather have a cheap one that doesn't cost me a fortune each month! Spending upwards of £200 for the privilege of driving a car you'll never own seems bonkers to me!

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.

^This

Yep, can't see the point for me either. Brand new car £7k ten years ago. Still going strong now. Never had any repairs, just annual MOT and service. When it dies it will be traded in and another new one bought.

I lease through work!

It’s fab. You can get a car for as little as £200, mine is £300. Brand new car. Three year lease.

Includes insurance for up to five drivers. All tax, MOT, insurance, repairs, servicing.

The money comes out of my pay before I see it and all I pay is petrol.

It’s a great financial decision for me, I can’t afford a decent car outright so when I owned cars I was always forking out unexpectedly for repairs which was a nightmare. With this car I know it’s reliable, no stress, no hassle. Happy to pay £300 per month for that tbh. One of the better financial decisions I’ve made, given I can’t afford a brand new reliable car outright.

I lease too. Nothing to do with image or extravagance

I want a very reliable and comfortable car which is cheap both up front and monthly. For £170 a month I have a great car which has everything covered. To buy, the car would have meant taking out a large loan and using a big chunk of my savings. I worked out the costs of purchasing v leasing and it makes much more sense for me to lease.

I will add, I initially had the ‘but isn’t it more secure to own the car’ question, until I realised all I was doing owning a car was having responsibility for the repair costs. All I want is a reliable car to drive around in, don’t give a toss what it is, but my last three cars all eventually died and were unresellable, having cost hundreds in repair costs throughout their lifetime. I can’t afford a decent car so a lease is the better option by far.

It’s irrelevant whether I own the car or not, what benefit would I get from ownership if it’s only a very cheap (under £1k) Car with no resale value and a lot of repair costs? All I care about is having a reliable car to get up each day and use. I love leasing.

Maybe it’s better for me though as it’s through work and it’s a steady permanent contract that there’s very little chance of me losing for years to come. So no worries about ‘what If I lose my job and can’t pay it’, I lose my job I lose my car.

You can get a car for as little as £200, mine is £300

I just can't get beyond "as little as £200". That's a huge amount of money for lots of people to be forking out each month!

Oh of course it is!

But if you’re someone who travels around, a proportion of your budget is going to be spent on travel anyway. Whether that’s bus or train or taxi fares.

When I owned a car it would usually be £50 per month in insurance. And if I added up the amount spent across the year in servicing, tax, insurance, repairs, MOT, breakdown cover, and divided that by 12 months, it wouldn’t generally be that far off £100-150 monthly anyway.

The extra that makes up the £200 is what I’m happy to pay to be driving a reliable car with peace of mind instead of one that breaks down randomly, needs me to always have hundreds on hand for repairs, interferes with my job (I need a car for work) and so forth. And being able to choose a car I like instead of just whatever is cheapest.

Does that make sense? It’s not that £200 is a tiny amount of money. It’s that any driver is already spending money each month maintaining a car. £300 is more than reasonable in my circumstances for a reliable nice car and everything included, less stress, just pay petrol.

Also do you really think you could lease a decent car for much less than £200 with everything included? £200 isn’t expensive at all for what you get.

Sorry just seen a PP is leasing for £170.

£40ish per week for a reliable car to use? Do you think that’s expensive?

I just can't get beyond "as little as £200". That's a huge amount of money for lots of people to be forking out each month!

And I’m guessing if that’s not doable for someone they won’t sign up for a lease 😂 it’s not mandatory.