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.

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%.

I said "many of their models". Sure, you'll get a big discount on a 7 series, which will skew the overall figures, but see how much discount you will get on the popular models, like the 3 series, or the X1 or X2.

@Kazzyhoward you can't get 25% discount on most cars, and the ones you can get that sort of money off are often still better as leases.

Take a BMW 4-Series gran coupe M-Sport 420d for an example.

Best current deal is 19% off which gets it to £37,700 to buy outright.

Or you can lease it for £13,500 over 4 years.

Even ignoring finding £37k upfront, or the interest on borrowing it, (or opportunity cost if you use savings) there's no way on earth it will lose less than £13.5k in 4 years - more likely £20k or more.

So even at 0% interest you're far, far worse off buying that car, even with the big discount, if you don't intend to keep it for 5+ years.

The other advantage of leasing is that you don't have to delve into the murky world of the second hand car market and have to advertise your car for sale and deal with all the chances and tyre kickers who will come and waste your time in the pretence of being interested in buying your car.

you don't have to delve into the murky world of the second hand car market and have to advertise your car for sale and deal with all the chances and tyre kickers who will come and waste your time in the pretence of being interested in buying your car

That must be worth a few million - why are there so many time wasting Alan Sugar wannabes around?

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

Not a like-for-like comparison though, is it?

Most new cars have at least a 3 year warranty so your issues would be covered whether buying or leasing new.

Selling a car is an absolute pain. I’m delighted never to have to do it again.

Most new cars have at least a 3 year warranty so your issues would be covered whether buying or leasing new But only for 3 years and RR's are known for having issues.

The thing that annoys me about these threads is that people come on and say "leasing is always more expensive" or "buying outright is always more expensive" or "you can always get x% off when you buy for cash" etc etc.

None of it is true. Leasing can be cheaper, or more expensive. Or better or worse. You can get discounts when buying new, on some cars but not others.

It all depends on the car you want, your mileage, how long you want it for, and a load of other factors.

You may as well ask which length of string is the best.

But only for 3 years and RR's are known for having issues.

You're missing the point - most leases are 3 years, and they all start with a new car so a proper like-for-like comparison would be with buying new in which case the warranty cover is the same.

I know all about Land Rover reliability - I've had a Range Rover and currently have a 15 year old Discovery.

@lifecraft you are 100% correct. It's compounded by people using Lease and PCP interchangeably when in fact they totally different and trying to compare a 3 year lease on a new car with buying a 15 year old car etc etc.

Agree @Lifecraft

There are so many variables that it's impossible to know which is the cheaper option for any given car until you look into detail.

What I find even sillier than the claims that one or the other is always cheaper, is the posts saying you can buy a secondhand car outright cheaper than you can lease a new one.

No shit Sherlock.

You can also buy a pack of sausages cheaper than a filet steak but for some reason people don't feel the need to point that out.

It may seem obvious but so many people spout "it's cheaper to lease than to buy a secondhand car " esp die to the odd bit of maintenance. Even on this thread... so it isnt obvious! Many people really think its equivalent!

Lots of people spout leasing is cheapest way to run a car. It isn't. It might be cheapest for running a new car/spec you want. But if you are just looking for cheapest way to run a car, as many people are, it really isn't!

Most people don’t “spout” at all. Just saying.

You can also buy a pack of sausages cheaper than a fillet steak but for some reason people don't feel the need to point that out.

Excellent point. This is it, in a nutshell!

@Ylvamoon

I think that's the big difference. The benefit after the first 3 years, when the depreciation is a lot less, and until you start getting maintenance issues.