Young people are foolish for leading cars?

[Kitchendrama1]

£2k to get the car and 36 payments of £350 of which you get nothing at the end of 3 years. £14,600 with insurance included, for a car you won’t own for 3 years.

I can understand insurance is high for a young person, but it’s dumb?

Of course that's dumb - but how young is young and do they have plenty of money? If so, it's none of your business.

oh leaSing!

Depends what the car is. The depreciation could be about the same. Or it might not.

Eh? What's dumb? There's normally a final optional buyout payment at the end if you fancy keeping the car, if not you can swap it and get a new one. I personally think it's great! Under 3 years it's covered under warranty and often servicing which lowers unexpected costs.

If you like new cars and know you'll want to swap within a few years, leasing can be cheaper than buying. New cars depreciate really quickly - if you bought it outright, drove it for three years (and had to pay for services etc) then sold it you wouldn't get a great price normally. If you lease it, the monthly payments over the 3 years (along with savings through service plans etc) can actually be less than the depreciation of the vehicle, so when you come to swap it it might be worth 15k less, but you've actually only paid 10k on leasing it for 3 years so you're better off. That's what I worked out when leasing mine - it worked out better to lease than buy.

Can't justify the depreciation of buying new. Buying used invariably means picking up an older car thats just out of warranty and due major services etc Our last car, a rather lovely 5 year old Astra had the gearbox fail. Almost £2,000 in unexpected costs. DH is a high mileage user with work as well.

Leasing is a set payment monthly (our last car £250 with all servicing) for 3 years, then the car goes back and we find something else. No unexpected bills. Works for us.

Not always.

They might need a reliable car if they do a lot of mileage. Their work might give them a car allowance. They might not have sufficient savings to spend on a car (I didn’t in my early twenties despite needing a car for work as I was saving for a house deposit).

My first two cars were pretty old and I spent a fortune on repairs. I also broke down twice away from home and wouldn’t want a car now that wasn’t still under warranty. I can afford to buy outright now but I can see the appeal in leasing if you want/need a new car.

Lots of people of all sorts of ages lease cars, why the hate on young people? I don’t personally have car finance but surely it’s pretty obvious why it’s popular. You get a new car that you wouldn’t otherwise be able to afford and that’s not just about image it’s also about reliability, safety and not having any surprise costs. Depending on what finance plan you choose you can sometimes pay a final payment should you want to keep the car so essentially you’ve paid in instalments which is handy if you didn’t have the money upfront. If the interest rate is very low, some manufacturers even offer 0%, it can even cost you less than if you’d bought the car upfront because of the added perks you might get like free insurance or servicing.

Hands are tied by not having the money upfront. It's another tax on those who don't have thousands in savings 🤷

There are all kinds of perfectly valid reasons to lease.

Also, I think you're getting mixed up with PCH and PCP.

PCH is just a lease hire. No option to buy at the end of the plan.
PCP is the option to buy the car at the end with balloon payments etc or take any equity within the car and put it towards a new PCP.

I thought there was a new craze about kids walking in front of cars or something. Lol.

But ah no, its leaSing.

When I was that age, many many years ago, the best we could afford were bangers. Not latest safety or environmental standards, oil burners, money pits.
Rather have the young in a hopefully safe, reliable, vehicle than something similar to my first cars.

There are a lot of leasing deals cheaper than that.

Your figures aren't correct either unless there are a lot of broker fees included.

With leasing you have to hunt the deal where the cost over the life of the deal matches or is better than the forecasted depreciation.

You are then no worse off than buying the car outright.

Obviously some people think leasing is a waste of money but everyone has autonomy to decide what they want to spend their own money on.

@Kitchendrama1

£2k to get the car and 36 payments of £350 of which you get nothing at the end of 3 years. £14,600 with insurance included, for a car you won’t own for 3 years.

I can understand insurance is high for a young person, but it’s dumb?

That example is very specific and probably a bit silly, yes.

But leasing in general isn't. Both me and DH lease cars (mine - small runaround type, his big 4x4 7 seater monstrosity) and neither cost anywhere near £350 a month and mine didn't need any deposit at all.

We've leased lots of cars over the years and never been charged excess for mileage or damage. Mostly they haven't even needed an MOT and have all been covered under warranty. I don't care about not owning the car because I don't own my house either (mortgage) and I just see it like that.

Leasing is great but you have to do your research.

Oh also, it's a bit of a myth that you can't buy the car at the end. When they take them back off you they are going to see them anyway, so every company we have used has offered to give us a price to buy it outright because it saves them the hassle. I did get a price for my car and it seemed a good deal but Ive kept it on a month to month rolling lease instead because I didn't want to keep it forever.

@mistermagpie

Oh also, it's a bit of a myth that you can't buy the car at the end. When they take them back off you they are going to see them anyway, so every company we have used has offered to give us a price to buy it outright because it saves them the hassle. I did get a price for my car and it seemed a good deal but Ive kept it on a month to month rolling lease instead because I didn't want to keep it forever.

Indeed. But most people who lease don't want to buy the car at the end.

I bought my sons car at the end of his lease. Not all companies do it though.

Friends of mine in their 60s do it. They are dumb too.

People of all ages lease cars. If it's a financially viable way for them to be able to have the car they want, what's the issue?

It’s not just young people taking these deals
Bit agree why spend all that money to have nothing at the end
If people can get approved for finance deals surely they can get a loan to own the car at end

But you could spend that much on a second hand car that is worth very little at the end of several years of ownership. How is that any different?

If I needed a car for a commute, I'd rather rent a decent car that will be safe and serviced than buy an older car that would likely need more repairs, maintenance and higher car tax.

There is no need to pay £350 a month though.

My son has been quoted over 2k for his first years insurance. If we assume it will get slightly cheaper over the subsequent years he will spend 5K on insurance .

Add to this 2k to buy a 'cheap' car, plus say 2k in repairs, he will spend 8k to drive a shit car.

So I guess, a bit more for a brand new shiney car that is likely to be safer, have few repairs or mots sounds ok.

It's not 'dumb'. I mean the figures you've quoted are ridiculous. My last car was about £170 deposit and £170 a month, for a brand new car with a service package. Road tax was paid for the first year too. I then handed it back about 3.5 years later and used the equity in it (I had driven less miles than built in to my package) as a deposit on my next PCP car. It was an affordable way for me to have a nice, new, safe car. It means I'll always have a car payment but that's fine? I just build it into my outgoings.

Maths isn't my strong subject 😳, 9k for a cheap car!

My 65 and 54 year old bosses lease cars, are they not foolish because they're older?