Is it worth leasing a car personally?

woodhouseian

Thanks a lot for all the replies on this.

knighter

AdrianHi wrote: »

or do a PCP to get it,

Can anyone explain this statement?

woodhouseian

I believe this is a reference to Personal Contract Purchase, which is a method of purchase available via leasing companies. I presume it is typically more expensive and less desirable than Personal Contract Hire (PCH), ie the leasing which I originally asked about.

AdrianHi

woodhouseian wrote: »

I believe this is a reference to Personal Contract Purchase, which is a method of purchase available via leasing companies. I presume it is typically more expensive and less desirable than Personal Contract Hire (PCH), ie the leasing which I originally asked about.

PCP is sometimes cheaper as you accept the risk on what the future value of the car will actually be. Depends completely on the car and what deals are around at the time you look.

PCP = Personal Contract Plan the most common way for private individuals to finance a vehicle. You put in a low deposit, typically your current car as trade in, you pay a relatively low monthly payment for 36 months which covers finance charges, depreciation over 36 months, plus a bit more to make sure you do not still owe more than the cars worth at the end, then you either make the "balloon payment" to keep the vehicle or trade it in for another one using any credit you have built up in the car as your next deposit.
Because monthly payments are only for the depreciation plus finance charges and not trying to pay off the entire value of the car over 36 months, the monthly payments are much lower than a straight loan / Hire Purchase... and quite similar to leasing (aka Personal Contract Hire). So if your considering leasing it is worth looking at what PCP deal you can get on the same car too.

This tool is handy to checking out what PCP payments would be like:
http://www.dynamic-webs.co.uk/information/car_loan_calculator.html

Mischa

I have been looking into doing this for myself and it seems to me that it's not a bad thing at all, provided you enter the right finance scheme for you. I was looking at getting a new VW Golf or Polo, and was looking at the balloon finance scheme whereby I would put my current car down as a deposit, (you have tp keep the leased car for 3 years but you treat it like your own for tax, insurance claims etc) and it worked out that I would be covering the depreciation which would work out at £251 per month (for three years). At the beginning of the term they estimate how much the new car will be worth in three years time and if it is worth less than they estimated, you do not suffer the loss and instead they honour what they said it was worth and that becomes your deposit for the next car! I think the issue with leasing is simply that once you start leasing, it's going to be very difficult to get back on the 'buying outright' wagon because you'll need to have some cash saved. Of, course, you can take the option to purchase the leased vehicle at the end of the three year term, but that is where they sting you with the interest which works out (as an average) of approx £4000 on top of the value of the car. I do not see why someone would bother to purchase the vehicle, but I guess if you really love it you would! I think there's a maximum depsoit of £6000 that can be put down on this type of finance scheme, maybe less, because it's all tightly worked out. But if it's a new car you're after and you want an affordable car that is always in warranty so no MOTs etc, then this is the scheme for you! I must admit, I am so tempted...!

AdrianHi

Mischa wrote: »

At the beginning of the term they estimate how much the new car will be worth in three years time and if it is worth less than they estimated, you do not suffer the loss and instead they honour what they said it was worth and that becomes your deposit for the next car!

The deal you are looking at might be different but GFV (Guaranteed Future Value) deals are usually a lot more expensive than the deal where it's your risk as to what the vehicle is really worth in future. You don't have to take the PCP deal offered by the dealer, other companies will do it.

Alan_M_2

Also,

Leasing is often used as a term for Contract Hire, the two are different but Contract Hire is the most common.

You are effectively renting the car for a fixed period, 12, 24 or 36 months and are obliged to keep the vehicle for that time, you can't hand it back. This is ideal for most businesses as it's fixed cost motoring that is tax deductible (why I do it this way).

For non business this is now known as Personal Contract hire (PCH) and the figures generally include vat.

If you want flexibility then Contract Hire might not be for you.

What I generally do is check the manufacturers websites....

Here's Mercedes for an example.

http://www2.mercedes-benz.co.uk/content/unitedkingdom/mpc/mpc_unitedkingdom_website/en/home_mpc/passengercars/home/new_cars/offers.html

Steer clear of the options list though, these bump up the prices.

woodhouseian

Sorry if I've missed this, but how does insurance work for these personal leasing-style arrangements? Is it part of the monthly payment, or do you need to buy insurance separately?

AdrianHi

woodhouseian wrote: »

Sorry if I've missed this, but how does insurance work for these personal leasing-style arrangements? Is it part of the monthly payment, or do you need to buy insurance separately?

Insurance as normal but you but best to tell the insurer it's a lease car, *might* effect premium.