Leasing or Finance

[Super_Ram]

Hi all,

Wonder if anyone could help.

I am in search for a new car and am wondering whether to Lease or get car Finance.

I know the main difference is that you dont own the vehicle at the end of the lease unless you pay off a lump sum I believe whereas with Finance, once paid, then it is all yours.

Initially my problem is although i can easily afford the monthly payments, my Credit rating is not that good. In summary I have had 2 defaults which have been settled for over a year now and since then I have not missed any payments and been good on all credit that I have. I know a few places/people have said length at Job and Home can help or hinder. I mean i am registered on electoral role and have a home phone etc, however only been at current address for 5 months and have been in my job for 18 Months, so not sure how much this will affect me. My credit score last time i checked said it was 500.

Anyway, in terms of car finance we were looking to borrow 8K which is about right for the car we are looking at and would cost around 250 a month for around 3 years which is fine and then car would be ours.

Other option is Leasing which for around the same amount a month, can get a much better car over a three year period, but have the cost of final lump sum at end and also the initial lump desposit of about 3 months.

Now, there are differences but the main thing is I can get the car I want for the budget I want on both, so is really just a question of which would be easier to get credit on with my sort of credit score

Any help much appreciated

[Doozergirl]

I think you're getting a bit confused over your leasing options. The one where you pay a lump at the end, you can pretty much choose how much of an initial deposit you put down. At the end of that term you either pay a lump sum or hand back the car.

Contract Hire, you would pay three months as a deposit, monthly payments and then you hand the car back at the end.

I always thought it was best to own the car outright but actually I now prefer the monthly payments and the fact that I don't have to worry too much about selling the car at the end and what it will actually be worth then. I know that I won't be keeping it beyond the three years so I can hand it back. If I'm lucky, there will be some equity.

I think you should go for the same type of car, regardless of the monthly cost. Don't upgrade just because it costs less per month; it will cost more over the long term.

[Super_Ram]

Cheers doozergirl,

Yeah, I mean I know roughly what car i want, so only difference with the leasing is it might be a newer one that getting from a dealership, but staying to same car to be safe.

Problem i have is I have just been chatting to an adviser at lingscars and they said the finance companies have set rates and criteria and either pass or fail, whereas car finance places can have sub prime rates which are higher but more chance of acceptance. From this, it looks like leasing it not possible maybe

[mk6boi]

Super_Ram,

There are companies out there that offer , whats call none status contract hire, which is in effect contract hire, but they underwrite you based on your bank account, The main things they look at are,

1) affordability , are you overdrawn, do you bounce cheques etc
2) Home ownership / Or rent

The advantage is even if you have CCJ's/Defaults they will accept you providing you have a decent ammount of money going into the bank.

The downside, its more of a risk so its more expensive.

Leave is the way to go at the moment, take a car from a dealer. you buy a fiesta for £8k and you lose £1k as soon as you drive it away, with PCH ( Personal Contract Hire ) the finance company deals with the depreciation so your protected and there is no lump sum at the end to pay.

PM let me know if you need some contact details i know a company that offers the above.

[Super_Ram]

Cheers mk6boi,

That sounds exactly what i might need, my partner who is getting the loan as I currently cannot for finanacial reaosns has applied to a sub prime lender for car finanace and should hear back off them this week, but if they refuse her, then your idea looks ideal as we ahve already factored in that we may be paying a higher rate due to financial circumstances

I would be grateful if you could provide me with more details and contacts on this

Cheers again

[Super_Ram]

sorry mk6boi, pm sent now

[Enfieldian]

I am in a similar situation.

A google search for "non status car leasing" threw up a lot of companies that claim to specialise in this field, however they are likely to want an initial 4 month payment or possibly even more and don't tend to quote a final price for the car until you have supplied loads of information.

In the current climate, I would have thought that you can play a few off against each other and get a reasonable deal though.