Car Leasing is it worth it?

PM

Hi Im 24 and want to get a sporty looking car, maybe Audi TT and was thinking of leasing for couple years.

I just wanted to find out in terms of depreceation is it worth while leasing instead of say buying a second hand 3 or so years old and then selling it 2 years down line?

Also if anyone can suggest a car like Audi TT or something with bit more space in back?

Hintza

do a serach on this forum and you will see plenty about leasing. It might work for you but you need to do your sums.

AdrianHi

Leasing an Audi TT and similar "premium" cars is never the bargain some less desirable cars available to leasing firms at big discounts is.

Looking at the real cost of a car (depreciation over the period you have it, interest charges on loan / lost interest on savings, extended warranties, fuel servicing etc.) I worked out some time ago that some cars are actually cheaper bought say 6-12 months old where they have lost the initial big chunk of their value and sold on before the warranty expires unless you are prepared to buy them at 6+ years old and depreciation has slowed to a crawl. It's because they loose about the same amount in depreciation in years 2 and 3 as they do in years 4,5 and possibly 6. Years 4+ then carry higher expenses like extended warranties or the risk of out of warranty repair costs (high on cars like an Audi), MOT's, later more expensive services etc.
Basically people will pay too much for cars like this at 3 years old. The break even point is about 42%-44% of original new price when it's 3 years old. If you have to pay more than that to get the 3 year old get it at 6-12 months old instead and have it for 2 years from there.
You do have the cash flow challenge of the higher purchase price, but it is just that, a cash flow challenge, not the real cost of the car over time.

On rare occasions you can get excellent lease deals from the dealership. When a new version of the Merc. S-Class came out a few years back BMW finance offered the 7 series for £450 a month (you can pay as much as that for a 320d / Ford Mondeo). It basically worked out as letting the car go at cost price, collecting £9000 on top in three years in interest charges via the lease but most importantly of all getting a load of potential S Class buyers into a 7 series instead where they realise it's great to drive despite being ugly compared to the S Class and many of them paid full price for another 7 series a few years later.

PM

Well I did have look around both online and read up on forum. I to have come to conclusion it maybe cheaper for me to loan money from family source and just buy a year or so old and sell before 3 yrs life of car.

Ive been looking around and after 36 months the I will have paid minimum half the car price.

woodsysa

I was told recently - buy something that appreciates and lease something that depreciates.

Cars depreciate.

The UK is too into buying cars - take the US - they lease!! Makes sense.

AdrianHi

Next trick is to pick one with a specification that stands out from the others on the market and is in a desirable colour.
White seems to be in fashion especially on the TT, bit girly for my tastes.

Sporty looking car or an actual sporty car?
Something more sporty would be rear wheel drive like a BMW Z4 or may be Honda S2000. The TT is gorgeous and drives well but it's front wheel drive which doesn't cut it in my book for a sports car driving experience.
Try to test drive all 3 of these and feel the difference for yourself.
If you do go for the TT the DSG automatic gearbox (more like a clutchless manual) is brilliant and in demand.
The Z4 needs to be had with a 6 cylinder engine for the best effect (sound) so it's the 2.2 engine or bigger.
If you can stretch to the £28K-£29K mark go for the newer model Z4 only just out rather than the last of the old model as it's value will hold up better. This is actually the best time to play the buy young sell by 36 months game as it is a brand new model.
Here are a few
http://www.bmw.co.uk/bmwuk/auc/car_details/0,,1260_159980106__,00.html?currentCh=WBALM320X0E155557
(White one:) http://www.bmw.co.uk/bmwuk/auc/car_details/0,,1260_159980106__,00.html?currentCh=WBALM32020E155830
http://www.bmw.co.uk/bmwuk/auc/car_details/0,,1260_159980106__,00.html?currentCh=WBALM32020E155522
Essential extras (same goes for the Audi) Bluetooth, leather interior, sports seats, heated seats.

Be fun to know what you go for

AdrianHi

woodsysa wrote: »

I was told recently - buy something that appreciates and lease something that depreciates.

Cars depreciate.

The UK is too into buying cars - take the US - they lease!! Makes sense.

It is true if you must buy new and for the right car.
Market's always changing. In the US cars depreciate faster and in the UK American cars depreciate faster so often are best as a lease. Vauxhall Corsa was a clear cut lease if you had to have one new last year. Not looked at the figures today.

A BMW Z4 2.5 sport bought 1 year old and sold at 3 years old is £2666 per year in depreciation (2 years owned, excludes road tax and finance charges and is a projection - not 100% accurate and guaranteed). The same car leased will cost £6772 per year for 3 years (inc. VAT, road tax and all finance charges - guaranteed and accurate).

PM

I've been looking around, seen couple Audi TT and its best going for 06 plate for me. Regarding Z3 yes I think its ideal for buying but its going to cost me arm and leg

Went to my local Audi dealer but he messed me about, booked test drive and didn't turn up, when he did said car had been sold! So Im looking around the market now.

anewman

Nah save up and buy

motorguy

anewman wrote: »

Nah save up and buy

Why do that if the O/P has a budget a certain monthly amount to buy it?

iamnotclumsy

I would say don't do it, I fell for that trap once, my circumstances changed and I couldnt get out of the contract - cost me a lot of money!