Car leasing: a query for the clever people residing in my computer :)

[fairweathercyclist]

Posting for traffic. I need to replace a 12 year old car and the car I am looking at would be around £13K depending on model and level of newness (ie new new or maybe a few months old).

I was talking to someone yesterday who would like me to lease it instead. When I worked out the numbers it would cost around £9000 for 4 years' use. Whereas if I paid £4000 more, it's mine until eg it's 12 years old and I don't have to worry about mileage or the odd scratch here and there.

Anyway my question is - how does leasing stack up financially and why do so many people do it? I think this came up before a few months ago but I can't find the thread now. I am keen to understand the benefits.

I’ve always bought out right, however next time I’m thinking of leasing as I’m planning on getting an electric car and they are likely depreciate in a serious way.
What I don’t get though is the up front payment.
With a car I own outright I trade it in and use that as the deposit. When your lease ends what do you use to pay for the deposit?

No point if it’s 0% @Viciousrooster**

Yeah, because 0% deals are ten a penny.

They also, if you can find one for a car you actually want, generally require a significant deposit and a far longer repayment term than higher interest deals.

Personally I prefer having money in my account so am happy to pay monthly for things, but a change in circumstances can mean that a car lease is massively disadvantageous. Remortgaging is the obvious one.

Hey! I’m on my second lease car via salary sacrifice through work. The first I had for three years and this current one I’ve had around nine months.

Definitely one of the better decisions I’ve made. Truthfully I couldn’t care less what kind of car I’m driving when I’m a car owner, I’m happy driving £600 bangers. My motivation for a lease was that I was in a financial position where I couldn’t manage to save any money as I could only afford cheap cars and every time I saved up a few hundred (a huge deal for me at that time) something would go wrong with the car and I’d be wiped out back to zero. I had a string of cars that needed so much work to be kept on the road, for example a £1200 rover I had to spend £1000 on in the first six months, only it was incremental so I didn’t know it would keep happening and didn’t have the lump sum up front to buy another car (plus you never truly know whether you’re gonna end up with one that runs for years with minor repairs or one that’s a money pit)

So I looked into it and decided leasing through work was best as I need a reliable car for my job and literally cannot work without one. First car I paid approx £300 per month for a brand new Hyundai, which includes everything but the petrol, comes with insurance for up to five drivers, breakdown, all repairs and servicing. It was brilliant to know that I just had to outlay that one sum each month and I had a reliable car and only had to pay additional for petrol.

It’s more expensive than owning if you have a reliable car already but for me it’s worth the peace of mind that comes with knowing I’m not gonna walk out of the house in the morning to a car that won’t start and the money I have in the bank is mine with no surprise repair bills.

I upgraded after that car to a new orange, white and black Citroen aircross for £420 per month (between the last car and this one I’ve had a few pay rises so figured I would get a car I really liked instead of the most basic and my promotions have paid for the car and then some). It’s nice being able to play around with colours not worrying about resale value.

Loads of people I know are leasing these days if they can afford it as it takes the stress of car owning away. I think now I’m in a more secure position financially when this ends in a couple of years I’ll probably buy a car now I can afford repairs or to spend more buying a car that has a better chance of being reliable. But maybe not, leasing has no downside for me. So worth the expense for the lack of stress.

So that's why people often spend extra on a newer car. It's nothing to do with status, they're just wanting to reduce the risk of something going wrong at an inconvenient time.

Spot on. Work were starting with the raised eyebrows a bit the number of times I had to call in and cancel clients due to my car not working.

Not to mention the time my car literally stopped working permanently while in the right hand lane of the motorway during rush hour, I had to drift without indicating across the lanes onto the hard shoulder during busy traffic. Thank fuck there was a hard shoulder on that stretch. Luckily I stayed calm and got through it but it was a shocking reminder of how dangerous it can be if you’re driving an old banger that suddenly cuts out at the most awkward time.

What happens if something goes wrong? I assume any faults are covered in the warranty as it’s a new car but what if you’re at fault eg you scratch or dent a leased car?

Actually 0% deals are ten a penny. I haven’t paid any interest on either of my lease cars.

Depends what you want. Dh drives an almost 15 year old car, bought in late 2013 for £1995. He has done 72000 miles in it, and apart from routine servicing, tyres, and a couple of faults, it owes us nothing. It gets him to work, back to UK from Belgium and down to Germany to his flying club.

Mine is almost 13 years old...bought for about £3500 in April 14. It has done the Brussels to UK run for university with monotonous regularity. The battery failed this year, but it was the original. My tyres are good for another 4000 miles according to my tyre guy in Cornwall, and it's just been routine servicing. Again, it owes us nothing, and I will run it into the ground. As both are Saabs, we should get just under 300,000 from them before they become uneconomical to repair.

No point having anything new in Belgium, unless it is a company car, as things get dinged here regularly in car parks, or when someone thinks up close to your bumper is the best way to park and will have no qualms in nudging your car to make room for theirs.

What’s wrong with my wrist? I was working out felt an itch on my wrist I looked down my vein was a bulging lump I woke up next morning it had flattened out but now it’s a large bruise. I wasn’t lifting weights I was doing cardio when this happened

Leasing is really bad financially if you're a private user. .

That's very misleading. I leased a car which cost about £17500 new. Payments were around £170/month. If I'd bought new, I would have had to take a loan out or find £17500 somehow. The car would have depreciated hugely on day 1. I paid out around £6100 over the three years, depreciation would have been much more than that if I'd bought the same car, plus there would have been interest payments on the loan.

There's another way you can save money by leasing. I liked the car so much, I extended the lease by a year and a half and the monthly cost went down significantly. Once that finished, I asked about buying the car. Lease companies will then sell you the car at bottom auction price. So I now own my lease car and it has cost me £3500 less in total payments than buying it outright would have done. And I didnt have to shell out £17500 at the outset.

Actually 0% deals are ten a penny. I haven’t paid any interest on either of my lease cars

You never pay interest on a lease - the clue is in the name.

You may or may not pay interest on a PCP of similar type of deal.

I see the nit pickers have arrived.

I’ve always bought out right, however next time I’m thinking of leasing as I’m planning on getting an electric car and they are likely depreciate in a serious way.

If you lease a car with heavy depreciation, it will be expensive. Because when you lease, you are paying for the estimated depreciation between the new cost price to the lease company and the expected value at the end of the lease.

That's why so many people have very nice lease cars. A Merc that costs £40K new and is worth £25K in 3 years will be cheaper to lease than a Vauxhall that costs £25K new and is worth £8K in 3 years. Instead of borrowing money to buy a car, you are borrowing money to fund the depreciation on the car.

What happens if something goes wrong? I assume any faults are covered in the warranty as it’s a new car but what if you’re at fault eg you scratch or dent a leased car?

Lease companies all work within the BVLRA fair wear and tear guidelines. They accept reasonable dinks, bonnet chips and wheel scuffs at the end of the lease, that you'd expect on a car of that age. But bigger dents and scrapes you have to get fixed before the car goes back, or pay the charge imposed by the lease company to fix them.

I see the nit pickers have arrived.

I see the "oh it doesn't matters" have arrived. It may seem like nitpicking but it's important to know what you're signing up for, how it works and what it is. If that's nitpicking in your world then you are making decisions without understanding what you're considering.

Why is anyone who actually knows what they're talking about instantly derided on here?

So that's why people often spend extra on a newer car. It's nothing to do with status, they're just wanting to reduce the risk of something going wrong at an inconvenient time.

Lots of reasons to have a new car. Most people wouldn't buy a second hand sofa, god knows what the previous owners have got up to on it. But are happy to sit in a second hand car for hours on a fabric seat, not knowing if the last owner had incontinence issues or whatever. Who knows what evils lurk below the surface on a second hand car.

I've had loads of second hand cars when I was poor. Now I'm not, I don't. The pleasure in collecting a brand new car is something I never really appreciated until I started doing it.

Why is anyone who actually knows what they're talking about instantly derided on here?

Not just on here, it's a British thing. The British definition of a bore is someone who knows more about the subject that I do!

The pleasure in collecting a brand new car is something I never really appreciated until I started doing it.

Likewise, but I'm happy getting that "pleasure" every 10 years or so, and even happier knowing I'm spending a lot less money as I don't need that "pleasure" every 3 years.

That's very misleading. I leased a car which cost about £17500 new. Payments were around £170/month. If I'd bought new, I would have had to take a loan out or find £17500 somehow.

No, you could have haggled with the garage and paid a lot less than the £17.5k list price. That's what people are missing when comparing buying versus leasing a brand new car. I've never paid anywhere near list price. Last new car I bought 3 years ago was £15k on a list price of £20k - a 25% discount just by playing hardball with the dealer. Yes, I accept that was pretty extreme and I surprised myself to get it so cheap, but I've never yet failed to get 15-20% discount on list price plus some extra freebies such as a proper spare tyre, floor mats, or other add-ons. And no, before anyone suggests it, these aren't for cars the dealer has in their compound costing them money and gathering dust - these are my choice of colour and spec and my choice of factory fitted extras so dealer is buying them in.

No, you could have haggled with the garage and paid a lot less than the £17.5k list price. That's what people are missing when comparing buying versus leasing a brand new car. I've never paid anywhere near list price.

That depends on the car. BMW dealers can't get enough stock of many of their models, so you won't get a penny in discount. Why would you, when there are 5 buyers for every car. The more popular the car, the less chance you have of getting a discount.

I leased a car for a while but I found there was too much "red tape" in the terms and conditions.
So I went back to owning outright. It's soo much better. Ok, I had to take out a small loan ... which I paid for around 18 months, before paying off. And I don't drive the latest model.
But, now that my car is around 4 years old, I don't pay out £150- 200 in loan or lease each month. I have however a service plan with a monthly payment of 30.-. That will pay for services, parts and MOT. If it needs more work, I get 20% off the final bill... I think it's a chapter option than leasing. Ok I paid up front, but my car is affordable and won't cripple my finances.

I just buy cheap 500 cars every few years lol

BMW dealers can't get enough stock of many of their models, so you won't get a penny in discount.

According to "What Car" latest report, average discount on BMWs is 8.8%. That's higher than the average across all brands of 7.9%. Highest discount was VW Passat at 24.6% discount. Obviously, it depends on the exact car and the local area, as discounts are less likely in prosperous areas, and more likely in the poorer regions.

I lease my car and will never buy again. I have a brand new RR and it's had quite a lot of issues. Everything is covered when leasing. Potentially it could have cost me a fortune. DH has a company car so we just split my monthly lease for one really nice car

We've always bought outright but will be leasing next time. Cars are so flashy now with parking sensors/ rear view parking cameras etc,even basic ones have things that can easily have a fault and can potentially cost a fortune to put right.

No, you could have haggled with the garage and paid a lot less than the £17.5k list price. That's what people are missing when comparing buying versus leasing a brand new car.

No chance on this particular car, do you think I didnt look into that? Also you aren't taking into account that the money would all have to be paid up front. So not only was I not paying any interest on a loan, or losing interest by taking money out of savings, I actually was earning interest on my savings all the way through the lease.