Car leasing questions

jimpix12

Hi all, For the past few months I've been considering getting a car on HP but now that I've seen some of the deals on Leasing I'm reconsidering. I'm looking at leasing a BMW 3 series which is a step up for the car I would buy on HP; however I have some questions (which Ive relayed to a leasing company but wanted to ask for an imprtial viewpoint here too!):

1) Do these companies usually charge any sort of excess for people under 25?
2) Are the prices they quote variable or are they fixed? For example if I get offered a car for £400/m will that change based on my credit status?
3) If I'm applying to lease a car worth £40k over 3 years @ £400 a month, for example, is this in theory the same as applying for a loan at £40k? How do the banks weigh this up? Or is it the monthly income or repayments that are the main factor in their decision?

I'm worried because I'm under 25 and looking to lease a car worth around £40k; I earn around this amount (gross) per year so was wondering if this would be a problem? Thanks.:money:

AdrianHi

The £400 a month sounds like an ex-VAT price and still a surprisingly good deal for a £40K 3 series (330i / 330d?)
The lease payment is covering the depreciation over the 36 month term plus finance charges on borrowing the whole £40K.
You might like to compare this quote with a PCP deal (similar finance structure) on a 6 to 12 month old 3 series kept until warranty expirey. I hear dealers are offering PCP on used cars.

I guess if you are under 25 with no mortgage or family commitments you can afford to do a car like this on those earnings.

Hintza

What will your annual mileage be? If it is over the standard 10k/annum then it might be significantly more expensive.

The other thing to think about is how secure is your job? What will happen if you are made redundant, there is quite an upsurge in posts on here with folk struggling to make payments etc.

Have you thought of saving this money and buying a property instead (assuming you don't own one already)?

If you are happy blowing this money then have fun.

jimpix12

AdrianHi wrote: »

The £400 a month sounds like an ex-VAT price and still a surprisingly good deal for a £40K 3 series (330i / 330d?)
The lease payment is covering the depreciation over the 36 month term plus finance charges on borrowing the whole £40K.
You might like to compare this quote with a PCP deal (similar finance structure) on a 6 to 12 month old 3 series kept until warranty expirey. I hear dealers are offering PCP on used cars.

I guess if you are under 25 with no mortgage or family commitments you can afford to do a car like this on those earnings.

Thanks for your help; I had a look at PCP but it was too dear for the car I wanted to buy. and the cost to buy was too steep. I am happy to just 'rent' a vehicle and hand it back after 2 years.

The only other question I had was, does anyone know if it's possible to put down 12 months lease in advance? Or is it a condition of leasing that you must continue to pay monthly (presumably a lower payment)? Ideally I would like to pay 12 months now and then pay the next 12 months in a year's time. Then I won't have the worry of paying for it monthly.

jimpix12

Hintza wrote: »

What will your annual mileage be? If it is over the standard 10k/annum then it might be significantly more expensive.

The other thing to think about is how secure is your job? What will happen if you are made redundant, there is quite an upsurge in posts on here with folk struggling to make payments etc.

Have you thought of saving this money and buying a property instead (assuming you don't own one already)?

If you are happy blowing this money then have fun.

Hi there, I have definitely given this much consideration, as I think everyone who is in the same situation as me has, but (not one to boast) my earnings have increased in the past 6 months, not fallen. I don't have any commitments or dependants so I am quite lucky in that respect. And, I wouldn't enter the housing market now even if you paid me to do so!

Doozergirl

spunko2010 wrote: »

Thanks for your help; I had a look at PCP but it was too dear for the car I wanted to buy. and the cost to buy was too steep. I am happy to just 'rent' a vehicle and hand it back after 2 years.

The only other question I had was, does anyone know if it's possible to put down 12 months lease in advance? Or is it a condition of leasing that you must continue to pay monthly (presumably a lower payment)? Ideally I would like to pay 12 months now and then pay the next 12 months in a year's time. Then I won't have the worry of paying for it monthly.

You can pay more up front which brings your monthly payments down but you won't be able to pay yearly, I don't think.

I've found the dealers will try to match contract hire prices - especially if they know which financing company the leasing company are using so they can play in the same ball park.

2 year deals are more expensive than 3 year deals for contract hire. If you're going for a BMW then it might be worth going PCP and then trading the car in at 2 years. I've not found the PCP prices on BMW to be disimilar to the cost of contract hire anyway - I've not seen a deal on BMWs in the whole time I've been looking at Personal Contract Hire and I had a car full of BMW finance example leaflets that the kids brought in when I took the MINI in for service.

www.gateway2lease.co.uk were doing the Audi A5 S-line for £349 + VAT the other week. Smaller engine but stunning looking car. Miles better looking than the 3 series coupe and not a chance you'd find the BMW at that price either.

Lemonade_Pockets

spunko2010 wrote: »

Hi all, For the past few months I've been considering getting a car on HP but now that I've seen some of the deals on Leasing I'm reconsidering. I'm looking at leasing a BMW 3 series which is a step up for the car I would buy on HP; however I have some questions (which Ive relayed to a leasing company but wanted to ask for an imprtial viewpoint here too!):

1) Do these companies usually charge any sort of excess for people under 25?
2) Are the prices they quote variable or are they fixed? For example if I get offered a car for £400/m will that change based on my credit status?
3) If I'm applying to lease a car worth £40k over 3 years @ £400 a month, for example, is this in theory the same as applying for a loan at £40k? How do the banks weigh this up? Or is it the monthly income or repayments that are the main factor in their decision?

I'm worried because I'm under 25 and looking to lease a car worth around £40k; I earn around this amount (gross) per year so was wondering if this would be a problem? Thanks.:money:

1) No, doesn't make any difference how old you are.

2) Not usually, allthough if anyone tries this angle i'd suggest walking away there are enough lease car companies out there.

3) No. The loan is secured against the car so in theory and generally speaking you wouldn't ever be liable for the full £40k so it is not the same as applying for a £40k loan. As long as you don't have adverse credit history or huge outgoings you should be ok on this front.

With regards to paying yearly. It is not common for companies to bill this way. I'd suggest setting up a bank account purely for the lease payments. This way you can deposit the money in the account at the beginning of each year and then just leave it.

N.b Most prices quoted will be plus VAT. It is worth finding out if they will adjust this for the new vat rate (whatever it is) on the 1/1/2010!
Also some companies will only lease to companies not private indviduals but this is normally pretty clear.

Hintza

Lemonade_Pockets wrote: »

With regards to paying yearly. It is not common for companies to bill this way. I'd suggest setting up a bank account purely for the lease payments. This way you can deposit the money in the account at the beginning of each year and then just leave it.

Well I'm sure you could but you would still have mothly payments to make.

So lets say it is £400 (@3 + 23) which would be £10,400 over the two years if you offered to pay 12 + 23 then without a discount you would pay £4,800 up front and then £243 per month to still total £10,400. But there would be a fairly heafty reduction on the monthly bill to take into account the reduced finance charges propbably about £20/month.


So you could always ask, and see what they say.

AdrianHi

spunko2010 wrote: »

And, I wouldn't enter the housing market now even if you paid me to do so!

Sometime over the next 12 or so month the bottom of the market will be found and things will be on the way up again. A golden "once in a decade" opportunity for first time buyers able to get into the market.

I would agree that the question of "renting" or owning a car is largely irrelevant, no car lasts for ever and you incurr expenses while you use it. It makes no difference if those expenses are lease payments or depreciation and finance charge costs so long as the total amount paid out is right.

I mention the nearly new option on BMW's because they tend to shed half of the first 3 years of depreciation inside the first 6 months, making 6 to 36 months good value months to be using the car. If you can get a BMW finance PCP deal for the 6 to 36 months period where you do have the flexibility to put down a bigger deposit and make monthly payments easier to swallow, it's worth checking into.

Gateway2Lease

Doozergirl wrote: »

Gateway2Lease were doing the Audi A5 S-line for £349 + VAT the other week. Smaller engine but stunning looking car. Miles better looking than the 3 series coupe and not a chance you'd find the BMW at that price either.

Our Audi A5 Coupe 2.0T Fsi S-Line has come down to £339 + VAT now on a 3+35 basis, and Doozergirl is right, in that you can make a larger advance payment which will not only reduce your monthly payments, but save you interest, but doing so. The overall balance works out slightly cheaper to do it this way.

The issue with BMW at the moment, as much as we rate the range, they are just not offering the same sorts of discount that Audi and Mercedes are.

You would be paying more for a low spec BMW Coupe then you would a top spec Audi A5, like the S-Line model above. Comparative models in Contract Hire is worth looking at

I.e BMW Coupe vs Audi A5 vs Mercedes CLK

Our of these 3 the CLK would be the cheapest at £274 per month, the A5 Coupe next at £319 per month ( lower spec ) and the BMW would be probably late £400s, with 3 payments in advance.

Hope this isn't classed as advertising as know I'm going to get slapped wrists. Just some passing advice

Kind Regards

Kelly

jimpix12

Gateway2Lease wrote: »

Our Audi A5 Coupe 2.0T Fsi S-Line has come down to £339 + VAT now on a 3+35 basis, and Doozergirl is right, in that you can make a larger advance payment which will not only reduce your monthly payments, but save you interest, but doing so. The overall balance works out slightly cheaper to do it this way.

The issue with BMW at the moment, as much as we rate the range, they are just not offering the same sorts of discount that Audi and Mercedes are.

You would be paying more for a low spec BMW Coupe then you would a top spec Audi A5, like the S-Line model above. Comparative models in Contract Hire is worth looking at

I.e BMW Coupe vs Audi A5 vs Mercedes CLK

Our of these 3 the CLK would be the cheapest at £274 per month, the A5 Coupe next at £319 per month ( lower spec ) and the BMW would be probably late £400s, with 3 payments in advance.

Hope this isn't classed as advertising as know I'm going to get slapped wrists. Just some passing advice

Kind Regards

Kelly

Hi Kelly

I've been considering the A5 actually, 2.0 version as it's <£300/m in some places.

Out of interest why is the M3 so cheap? You can lease an M3 (£50k car) for much less than you can a Porsche Boxtser (£35k car). Really quite strange; is it all down to residual values and discounts that the manufacturers offer?