Thinking about getting new car on 'lease' - opinions?

chubsta

Previously i have always got a bank loan to pay for my cars, which is nice as when i have paid the loan off i have the car sitting there and it doesnt cost me anything!

Recently, i have noticed a few people at work getting 'lease' vehicles, which to me seems to be the same as renting the vehicle for a period of years and then handing it back and starting again with another one, so you are basically continually paying for a car and never really own one.

OK, so i fancy getting a new car and the prices of 'leasing' one seem pretty good, so i am thinking of giving it a try for a couple of years and seeing how i feel about it...

Does anyone have any experience - good or bad - of this type of thing? One thing that does concern me is that if i buy a car using a loan and some idiot hits it with a supermarket trolley etc then its up to me to get it fixed or not, whereas i would imagine with a leased vehicle that when it comes to handing it back they go over it with a fine tooth comb and charge for every little blemish or flystrike...

Any and all opinions appreciated - I'm not in a huge hurry to get a new car but my old one if now 5 years old and i do fancy a change!! (please - no 'save up and buy one instead' posts as it never works for me, i don't have any non-mortgage debt at all and want all my savings to pay that off!)

rodenal

It's a good way to own a more expensive car than you would normally buy as the monthly payments will be far lower. As long as you go into it with your eyes open and are particularly careful about the condition when handing back (document and photograph everything) you will be fine. Ensure you are realistic with mileage as it'll be cheaper to add an extra 2k miles on a year now than it will be to pay it at the end.

Consider PCP too, similar (or slightly higher than) leasing monthly rates with the bonus that if (and you almost always do) you have more capital in the car at the end of the deal than the agreed buyout figure you'll have something towards your next car.

Cons are as you've already said you'll never own it outright (unless you pay the pcp balloon), you'll have to save in the interim for a deposit for the new car, can be hit with interesting charges for non existant damage if you're not careful and insurance can be a little more expensive (though this tends not to be the case nowadays)

marlot

There is a BVRLA guide for acceptable damage when returning a car. Its the possibility of being hit for spurious damage which is the big unknown.

You should google the lease operator you're thinking of using - there are some shocking stories out there. A few about mercedes on MSE for instance.

neilmcl

With lease hire what you're essentially aiming to do is pay the depreciation (or less) for the vehicle over the period you have it on lease so you need to calculate what this would be. If you end up paying more then you're better of purchasing the car, although that kind of depends on what deals you get via finance.

colino

A lot of people agonise over car finance, but for many, it almost becomes irrelevant. Pick the car, get the payments sorted, run it till the deal runs out and start again. Always in debt and always funding a depreciating, if ever shinier, asset.
More important too if its a business tool. While you use it, if it appreciates, buy it, if it depreciates, rent it.

Hammyman

chubsta wrote: »

Does anyone have any experience - good or bad - of this type of thing? One thing that does concern me is that if i buy a car using a loan and some idiot hits it with a supermarket trolley etc then its up to me to get it fixed or not, whereas i would imagine with a leased vehicle that when it comes to handing it back they go over it with a fine tooth comb and charge for every little blemish or flystrike...

You are right to be concerned for that is what they do. You also find they are limited on mileage, have to be serviced by the book and you cannot modify them at all, even fitting a DAB antenna or changing the stereo, unless you can return it to original condition before returning it.

When I stopped working and stopped doing 300 miles a week commuting, I thought my mileage would go down. I now do 17k a year - quite where I don't know but thats the difference in mileage at MOT time. I also fitted a radio in my car for amateur radio and an antenna for it. All of those would see me being crucified at hand over time.

At least with the one paid for with a loan once the loan is paid then if you can't afford the money, you've still got your car. If you get to the end of the lease and hand the car back and can't afford the £200 a month or whatever, you then have no car.

chubsta

Thanks for the replys...

Im in a reasonable position as i own a 5 year old car that i paid off a few years ago, as well as a sports car that i have as a bit of a plaything. My idea would be to sell the 'normal' car and put that money aside as i would undoubtedly get more for that selling it private than i would trading it in against a car at a dealer.

I think the deal-breaker on this is whether i could stand the stress of driving what is effectively someone else's car - i am not particularly anal when it comes to cars, they are a tool more than a status thing so i don't mind if it gets dirty etc, and although i got annoyed when i saw someone had run a trolley into it it didn't kill me, whereas with a leased car i guess i would be very worried about how the mark would affect the value on handing it back...

Time to have a little think i reckon - in the end i will probably stick with the cars i have, at least they don't cost me anything and it doesn't matter if i have to cut my hedge and just fill the car up with trimmings to get to the dump!

TrickyWicky

Not that I could even afford to but I'd buy a car rather than leasing. The only real advantage I can think of about leasing is that they might be responsible for service bills and parts etc if its anything like TV / washing machine hire etc.

The thought of leasing a car, handing it back and loosing all the cash... not for me. I'd rather buy the thing. At least after it's paid off you've got your own car that you can keep running. I know that thought doesn't do much for those who like to have a new car every 5 years but some of us appreciate not having to walk everywhere even if the car is 10 years old.

property.advert

I have looked at the various options on leasing, even down to this Peugeot "just add fuel" deal and the implied or internal rates of return (essentially their profits) are just too high.

Leases look ok but not when you realise you have to save as well as pay the lease and forgo the up front payment.

Borrow the money and buy a sensible car until finances allow different.