Best way to buy a car?

bauk

Hi everyone,

I need to finally get a car after years of being car-less.

I've looked at a number of makes and models and know I need to get a hatchback size car for daily family duties like shopping and occasional trips etc.

I do not want to pay out a huge sum outright and I would like hassle free driving. We are considering the following:

1. 0% finance deals (50% deposit and monthly payments of 3 years)
2. PCP finance deals (few thousand upfront and monthly payments with a right to buy at the end).
3. Contract Hire (3 payment upfront and monthly payments for 3-5years).

I have read that leasing is a good option because you don't have to deal with the depreciation of the car, you don't pay out lump sums of money, you get a new car every few years....

I just can't get my head around this depreciation comment. Having looked at PCP and contract hire surely they take into account depreciation so we are paying for it. Monthly rental at £250 is about £3000 a year and over 3 years it is £9000. At the end of it if you hand back the car depreciation would have been taken care of in your monthly installments.

If anyone could give me advice, information and hints and tips that would be great... I am just confused as to which way I should go.

Thanks!

bengalknights

Depreciation would only affect those who buy a car outright brand new and intend on selling it after 3 years or companies for the individual who plans on leasing/pcp and returning not really a problem.

In your case if your planning on keeping the car go for either option 1 or 3

If your planning to just keep swapping cars option 2 is best.

bauk

thanks for your help.
Option 3 also requires changing the car after 3-5 years as it is just hiring (leasing) the car.

About the depreciation explanation. Say I bought a car for £12000 and after 3 years it was worth 42% of its original value £5040 which effectively would cost over 3 years £12000 - £5040 = £6960. Under a lease agreement over 3 years at £267 * 38 payments = £10146.

Am I missing something? I thought it was cheaper to lease when change cars every 3 years?

Thanks..

Hammyman

My Mondeo was £21k new. I bought it at 3 years old for £6k. I'd say you'd be lucky if it was worth 42% of its value at 3 years old with mid range and larger cars.

bauk

That is a serious bargain.... however having looked at some used cars I found that a lot were about 50% of the list price if bought from a dealership.

Anyway this is going off topic I really wanted to know about the depreciation component, best option to go for for my circumstances.