Leasing V Buying?

Lifeisbutadream

Having just lost around £6000 on our Focus that we bought two years ago, I am wondering whether it might be more cost effective to lease rather than buy our next car.

Anything I should think about?

Hintza

Read the lease threads on here.

Mileage
Not buying a popular car
Must be near perfect on return
Work out the cost to buy v lease
3 Month deposit the norm (6 months usually a rip off)


Ready Reckoner:-

Divide monthly payments (but add initial deposit into monthly payments) into cheapest you can buy the car (inc any finance) and if the number is greater than 70-75 then leasing might be an option. Over 75 then leasing will almost certainly be the option. Close to 100 then you are getting a steal.

bclark

I was very close to leasing my next Car as it seemed to work out really well for me but in the end I was put off by the costs involved in terminating the lease. If any circumstances change and you want to terminate then it costs an awful lot of money.

Lifeisbutadream

Hintza wrote: »

Read the lease threads on here.

Mileage
Not buying a popular car
Must be near perfect on return
Work out the cost to buy v lease
3 Month deposit the norm (6 months usually a rip off)


Ready Reckoner:-

Divide monthly payments (but add initial deposit into monthly payments) into cheapest you can buy the car (inc any finance) and if the number is greater than 70-75 then leasing might be an option. Over 75 then leasing will almost certainly be the option. Close to 100 then you are getting a steal.

Call me thick, but I dont know what you mean

I have looked at these:

Lease

Buy

What are the sums on them?

Lifeisbutadream

bclark wrote: »

I was very close to leasing my next Car as it seemed to work out really well for me but in the end I was put off by the costs involved in terminating the lease. If any circumstances change and you want to terminate then it costs an awful lot of money.

We probably wont want to terminate as we need a car whatever.

Every time we buy a new car it seems to cost us £2K - £3K a year!

Hintza

Lifeisbutadream wrote: »

Every time we buy a new car it seems to cost us £2K - £3K a year!

As will these deals.

Remember VAT needs to be added to the majority of lease deals.

What don't you understand? My ready reckoner?

OK find out how much the lease car will cost you in total over the period of the lease. Calculate that as a monthly payment. Most leases cover road tax which is a bonus.

Now find the cheapest you can buy the car for. Let us say the cheapest is £25,000 and the lease is £250 per month then you have a steal (in favour of the lease). If the lease is say £350/ month then it will probably be cheaper to buy.

But you still need to do the sums to know for sure.

At first glance your examples would seem to indicate that the lease would be cheaper. But you need to work that out using your own finance deals as well. I would be quite surprised if the lease was cheaper on a BMW (unless they are having problems shifting a 1 series).

The example you have given is also a premium car so it will cost you a bit the cheapest new car will still cost you around £1,000/year and that will be on a £6k car.

Adrian might be along later.

Lifeisbutadream

Hintza wrote: »

As will these deals.

Yes I agree, thats why we think this may be better - no maintenance costs, road tax etc. can probably buy a more expensive car (we only paid £11K for a car which is now worth £6K)

Remember VAT needs to be added to the majority of lease deals.

We can claim half VAT back through our business

What don't you understand? My ready reckoner?

Sorry - I only got a D in maths 20 years ago

OK find out how much the lease car will cost you in total over the period of the lease. Calculate that as a monthly payment. Most leases cover road tax which is a bonus.

Now find the cheapest you can buy the car for. Let us say the cheapest is £25,000 and the lease is £250 per month then you have a steal (in favour of the lease). If the lease is say £350/ month then it will probably be cheaper to buy.

But you still need to do the sums to know for sure.

At first glance your examples would seem to indicate that the lease would be cheaper. But you need to work that out using your own finance deals as well. I would be quite surprised if the lease was cheaper on a BMW (unless they are having problems shifting a 1 series).

The example you have given is also a premium car so it will cost you a bit the cheapest new car will still cost you around £1,000/year and that will be on a £6k car.

Adrian might be along later.

Thank you for all your help. We have until January before we need to change the car (Ford Options deal finishes then) and I wanted to look at every option as I really haven't a clue!

Hintza

Lifeisbutadream wrote: »

Thank you for all your help. We have until January before we need to change the car (Ford Options deal finishes then) and I wanted to look at every option as I really haven't a clue!

Sort your deal in December if you can. Might need to take early delivery though so start looking now and watch prices closely and then you will be better informed when decision time comes along.

Pre-reg or demo might be a cheaper option.

MrLew

Lifeisbutadream wrote: »

We probably wont want to terminate as we need a car whatever.

Every time we buy a new car it seems to cost us £2K - £3K a year!

Why not just keep the car for longer than 2 years and you won't lose as much per year? Keep it for another 2 years and it won't lose another £6k in value but buying a brand new one again will.

Remember by buying brand new the cars value is immediately reduced by at least 25-30% as soon as it's driven out of the showroom. As it's mainly depreciation you are losing each year the longer you keep the car the less the car depreciates per year.

A well maintained car can last years and costs relatively little to run. I run two cars which are both around 10 years old. They cost me around £1,000 per year (total) in maintenenace costs and run as sweet as the day i bought them (bought around 5 years ago). Serviced and maintained regularly is the key.

Lifeisbutadream

MrLew wrote: »

Why not just keep the car for longer than 2 years and you won't lose as much per year? Keep it for another 2 years and it won't lose another £6k in value but buying a brand new one again will.

Remember by buying brand new the cars value is immediately reduced by at least 25-30% as soon as it's driven out of the showroom. As it's mainly depreciation you are losing each year the longer you keep the car the less the car depreciates per year.

A well maintained car can last years and costs relatively little to run. I run two cars which are both around 10 years old. They cost me around £1,000 per year (total) in maintenenace costs and run as sweet as the day i bought them (bought around 5 years ago). Serviced and maintained regularly is the key.

We do like to get a new car every couple of years (although never buy brand new - usually get one around 6 months old) - we have had problems in the past with cars when they get older and have pretty much accepted that we will lose that amount of money, but wonder whether it is worth 'buying' the car to lose the same amount as leasing one.

wnc1981

Leasing is a way to manage depreciation effectively and not worry about the possible hit you might suffer over the years. That's the leasing companies problem. Leasing enables you to apply a monthly cost to something that is only ever going to cost you money.

Equally, leasing is a good way to get unseen discount on the car. Most leasing companies buy at bigger discounts which can reduce the monthly cost compared to a loan. Don't forget you usually get your road tax included too.

I just leased my car from the guys at 123 car leasing, 123carleasing.co.uk, really good experience of it too.