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 lease. I drive thousands of miles a month for work and leasing means my costs are taken care of in one payment. My lease covers everything apart from fuel for my personal miles so when I add up insurance+maintenance+road tax+breakdown cover+depreciation leasing makes sense for me.

I do mine through the salary sacrifice scheme at work . I pay about £350 a month for a brand new top spec Yaris , and that includes road tax , insurance , servicing , tyres , windscreens , every single cost except fuel and the occasional oil top up . My annual mileage is over 30k , so if I buy a new car outright , it depreciates really really quickly , and the loan repayments are far higher than that just to pay it off in three years , and that’s just for the car , let alone insurance and running costs . And it’s easy . Anything I need , I make a call and they sort it out . I don’t even need to take it anywhere , because they collect it and deliver it back. What’s not to like ?

We lease, could never afford to buy brand new (despite reasonable household income) and found ourselves forking out large sums for maintenance at unpredictable times (usually just prior to Christmas!) So we lease, which means the inclusion of parts warranty and regular services, plus no MOT costs for 3 years. Both modest cars though, nothing suped up or special.

We lease through my husband's company. We needed reliability and a fixed cost going out. We wanted to know that when we're visiting family the car isn't likely to break down. Our old banger had broken down several times and we just couldn't be dealing with it with a son with autism. The thought of breaking down on the motorway with a child in meltdown because we weren't going to arrive when he expected to just made it a sensible decision.

I am just about to sell my car and lease.

The reasons are : I drive a lot for work and I don't want to put 20,000 plus miles a year on my 3 yr old car as the depreciation will be horrendous. I also get a car allowance which will pay for the lease.

I like cars and I really like the idea of having a new one every 2/3 yrs

Repairs are included within the lease

I don't have the faff of selling a car.

A lot of people who lease are probably quite young if insurance is included, upthread, £50 a month for insurance was quoted, I pay £200 a year insurance, DH £250 a year. My tax is £0 anyway so would not save by leasing. I wouldn't expect to buy tyres in the first 3 years anyway.

Why would I want to "own" a car? I do 20k miles per year, often in rural areas where a breakdown would be a nightmare. Reliability and comfort are important. Really can't be arsed buying and selling and all that involves. No thanks.

Leasing is great. I know exactly what my outgoings are, and anything wrong the garage collect the car and bring me a courtesy car. And every three years I get a shiny new one.

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

I've only ever bought - admittedly smaller - cars. Two second hand, three brand new.

Current car was bought when it was 20 months old. Immaculate. You'd have genuinely thought it was brand new. Air con, electric windows, the works. £5k (had been £10k when new). No car tax as lowest emissions. Excluding petrol but taking in insurance, breakdown cover, two services, new wiper blade, two new tyres, in the 2.5 years I've had it, and having just been told what I could sell it for or get as trade in value, my car will have cost me £95 per month.

Previous car I had for 10 years. Bought new at £6k, still got £1.2k for it when I traded it in. Again, owning proved much cheaper than leasing.

Buying and selling isn't hard, take old car to garage, trade it in, buy year old car, drive away, how is that hard, I only do that every 8-10 years.

@ShatnersWig having driven smaller cars on motorways I find it more comfortable and feel safer driving medium size or large cars. However smaller cars are great for driving around in cities and towns though I tend to avoid driving in those situations.

Yes, but what happens to all the cars after 3 years? It looks as if more and more people are leasing and handing cars back after 3 years, so where are all these cars ending up? I guess the prices for 2nd hand cars will drop as the market is being flooded.......

@BlueBug45 Quite possibly, that comes down to personal choice and preference, and things like whether you regularly do distance driving, rarely have adults in the rear seats if you have long legs and push your seat well back. I've always loved my small cars even on motorways; they may not have quite the same 0-60 type pull but never felt uncomfortable and I'm 5 ft 10

A few people have said that their monthly payments are less than the depreciation of the car. I do not understand how this can be correct because in the long term the companies financing these schemes would lose money. Why would companies want to lose money?

I handed back my PCP car last year and we got a £4K car instead. We are now looking at getting a PCP car again and selling ours. when we factor in the costs of maintaining our own car plus the anxiety of going somewhere and the car breaking down then it’s worth the monthly cost. We also live rurally so out car breaking down is a pain in the arse if we lived in a more cosmopolitan area it would t bother me as much.

AFAIK, sometimes the manufacturers will offer very good deals on specific models for different reasons which mean that you can end up paying less than depreciation:
-New model, desire to get it out and "seen" on the road; leasing gets a decent number of them being driven about quickly
-Old model, want to shift stock before bringing out a facelift version
-With new models they'll also sometimes offer very good deals (especially on shorter e.g. 2 year leases) specifically with an eye to them ending up in the second hand dealer network a couple of years later...

You also have to remember that the depreciation number than a consumer sees (what they pay-what it's worth at the end) isn't the same for the manufacturer as their profit is built in there. It's not that they make no profit on one of these deals, it's just lower than for someone buying the car outright at list price.

They can also be much cheaper to supply through a lease - mostly you don't use a main dealer but an online/phone only, low cost company so the costs of selling are lower.

For example though, my husbands last car. List price on it was £33k (give or take a couple of hundred). Over two years we paid £250pcm, plus the deposit was £2k. (this was a bit flash too, my husband is very in to cars!). So total cost of £8k.

A 2 year old, according to Parkers, will fetch somewhere between £18500 (PX) to £20900 (selling to a dealer)

If we'd owned that outright the depreciation would have been somewhere between £12k-£14.5k, plus we'd have had servicing costs on top of that; call it another £500 as the services weren't cheap but I can't remember the exact number. That's also assuming we had the cash to buy it (so not allowing for any interest costs) or not allowing for any loss of interest on savings if that's where the money had come from.

The previous car worked out to be similar.

Yes, of course we could have bought second hand and so on, but this shows the depreciation example

After a life time of driving shit cars into the ground I got my first ever new car on PCP three years ago. It was a total no brainer for me. I pay 0% interest and the joy of driving a new car is worth every penny. I have a hybrid and get 60mpg so lower fuel costs, my insurance went down and I signed up for higher mileage than I'd ever do to make the car worth more when I hand it back.

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

Yes, because it's more than double my current costs. My fuel is £30 every ten days or so. Insurance £400 per year paid in a lump sum at renewal, and my only costs on top of that are service and MOT.

My car is twelve years old and has no mechanical faults whatsoever. It has electric windows, air-con and MP3 connectivity. It also has decent fuel consumption, is small enough to park almost anywhere and barely costs me a penny.

Leasing a car would be financial stupidity for me.

Leasing a car would be financial stupidity for me.

I’m happy for you!

When I bought my year old car last year, I did look a PCP as I do low mileage but it didn't look that cheap so I bought a car instead, also I wasn't bothered about having a new car. A new one wasn't really any different from the one I got apart from the reg was 16 instead of 17, I traded in an 09 reg for it as it was coming up to needing work on it.

I know someone who has 2 big BMW cars and a smaller Mercedes. Only 2 people in the house drive so smaller car generally sits for weeks at a time and only gets the occasional outing. They pay double my mortgage payment for these 3 cars, just so they can say they have these 3 cars. It's batshit. It's all about showing off and nobody actually gives a shit. You would expect by the time people get to a certain age they would be past all that but apparently not

Sometimes I can see it's about financial balance. Sometimes it's showing off. This couple could have leased a couple of small cars, no need for a spare either; but they went with showy twat cars instead.

I lease a qashqai after having several bad experiences with second hand cars that turned out to be either mechanically disastrous or unsafe or both. I can't afford to buy outright for a brand new car. With my qashqai I know when I push the button it's going to start. I love it.

On a New car you’ve the 20% vat you lose as you drive out, that’s before you’ve looked at depreciation.

Do people really believe that lease cars somehow cost less in depreciation?

In a minority of cases it may be possible to come out ahead with a leased car, because of a quirk in the dealer incentive system or because the manufacturer has miscalculated the final value. But if it were generally possible to do this, the lease car industry would not exist.

Renting a house must always be on average more expensive than owning, similarly financing a car must generally be more expensive than owning. Individual exceptions do not disprove this.

Incidentally, the above comment prompted me to google if there was anything to the VAT part, and I came across a blog by someone in the industry who said the full VAT is paid on the new price of a PCP, and on top of that, you pay interest on the part of the loan that pay the VAT bill. The above is not true for PCH, which is a reason why businesses (who are much more canny) never choose PCP over PCH.

There's lots of interest stuff in the blog. Apparently 85% of individuals choose PCP, and the reason they are convinced to do so is because the salesmen have huge incentive to sign people up, so are likely to say anything to get a sale. Including lying about VAT savings. One reason the sellers want you to take PCP is because it almost guarantees another sale in three years time, as almost nobody takes up the option to keep the car.

thebestcarfinanceblog.co.uk/the-truth-behind-personal-contract-purchase/

Renting a house must always be on average more expensive than owning, similarly financing a car must generally be more expensive than owning

Except for one point.

House prices, generally, rise. Cars in the other hand, well their value lessens over time.

What a ridiculous comparison

Cheapest way is to buy a car which is second hand but not many seem to want to do that nowadays. A car a year or two old is not going to be any different to a brand new car apart from being nearly half the price.

House prices, generally, rise. Cars in the other hand, well their value lessens over time.

How does house prices rising make renting cheaper than buying?

Or alternatively, why does car depreciation making leasing cheaper? Are you actually making the claim that PCP results in you paying less for depreciation? If anything the opposite is true, in the sense that it locks people into always paying the depreciation on new cars, whereas owners will keep cars longer and pay less in depreciation, overall.

Sorry if in my quickness to respond I've misunderstood your point.