Views on car leasing??

shamac

Trying to weigh up the pros and cons of this. We need a reliable car for work, currently running an old banger which is beginning to cost more than its worth in repairs. We are preparing for applying for a mortgage later this year, we have no debts but think the car might give up the ghost before then. We have done some research and can lease a car on a 2 year contract for about £250 a month. This seems like the better option than having to get a loan for a car and having debts again. However, it also seems like money thrown away. We could have a brand new reliable car which can tide us over until we have got our mortgage, then save up for another car. Good idea or not??

mlp

Cons: you're paying for depreciation plus the lease company's profit, excess mileage charge and the car has to be returned in good condition at the end of the lease

Pros: the monthly payment (compared to a PCP loan) could be cheaper as the finance company will be able to buy the car cheaper than you can, no concern about depreciation, or having to sell car

Essentially it is still an expensive way to buy as you're owning a car for 2 year from new where depreciation is at its highest.

iolanthe07

OP, you might be better posting this on the Motoring board. This subject comes up a lot there.

chubsta

what has put me off is that you would have to be ultra-careful about any damage to the car, or you would end up getting stung for all sorts of charges at the end of the 2 years. Sure, you may look after it and polish it every week etc, but theres no accounting for what other people will do - a nudge or a trolley-bash in a supermarket car park, whilst not being worth fixing because of insurance excess charges, might cost you dear in the end.

i decided i just couldn't live with the worry of what might happen to the car - i prefer to be able to use mine, and if it gets damaged, well thats life...

dshart

Personal Contract Hire on cars can be beneficial especially if you are not after a specific model and are willing to shop around for deals. Quite often you will find cars that are on what they call factory support where they are heavily discounted, if you work these deals you can save a lot.

Regarding the mileage, it is best to know your expected mileage use fairly accurately as if you go over the agreed mileage you may pay quite a bit extra in excess mileage costs. Again shop around for the companies offering lower excess mileage costs if you are unsure of your annual mileage.

The comments about ensuring the car is kept in good condition are correct. I find myself paranoid about the slightest scratch. I always pay for a professional valet on the car before returning it and have a good look over it yourself noting any scratches or dents. I had one company try to charge me for a slight scratch on the passenger door even though it had not been noted on the sign off sheet when the car was collected. Also be very careful to check the car when first delivered to ensure there are no scratches or dents, if there are make sure these are noted on the form you sign.

Servicing may cost you more as you usually have to use an approved servicing station for the model of car and even though you should not expect much to go wrong with the car in the first couple of years there will be the first service due within so many thousand miles depending on make and model of car.

I find contract hire to be good as it takes away a lot of the worry about motoring and although it may seem expensive I find I get reliability and if anything does go wrong it is most likely covered by the warranty. Also at the end of the contract I have no problems with selling on the car, Ijust hand back the keys. This is especially relevant for more expensive cars as you not only have the depreciation (which will be the same if you purchase outright or hire) but you also have the problem of how do you sell a car that may still be worth over £20k? With a private sale do you take cash or cheque, either is open to fraud with even guaranteed cheques being recalled after they have apparently gone through okay. There is a big risk, and it is one that is usually alleviated by trading in the car for a new model with a dealer, but then you usually have to accept a lower price than the car is actually worth.

Overall I have been very happy with PCH and would recommend it. Make sure you explore all the deals and various terms, sometimes a 3 year deal can work out a lot cheaper than a 2 year one as majority of the depreciation is in the first year. Also cars that hold their value usually work out cheaper.

silo24

Bear in mind that the finance company setting up the lease/PCP/PCH will more than likely lodge the full value of the vehicle against your credit file.

I recently got a really good deal on an E-Class mercedes that is costing me just over £400 a month on a 24 month/20,000 miles per annum pcp and was shocked to find the full (£38,000) cost on my credit file.

If I were you I would make do until the mortgage is completed and then apply.

Idiophreak

I'm increasingly starting to view the car as a service rather than an asset.

I find paying a little each month much easier to manage than paying nothing for most of the year then worrying about what I'll be sprung with come the MOT.

Plus, it's quite nice to drive around in quite a modern car all the time.

silo24

Idiophreak wrote: »

I'm increasingly starting to view the car as a service rather than an asset.

I find paying a little each month much easier to manage than paying nothing for most of the year then worrying about what I'll be sprung with come the MOT.

Plus, it's quite nice to drive around in quite a modern car all the time.

I agree completely with this. Much better in my view not to have Capital tied up in the car and accept the fact that I am paying a small premium for the privilege of driving cars less than 2 yrs old. I tend to change my cars after a couple of years anyway and this just suits me. The reason I started down this route was I had £15k tied up in a car and was looking to finance an extension. I sold the car, banked the money and started the PCP at a lower rate than I could borrow £15k for the extension.

The key though for the OP is that they need to remember that a lease is a credit agreement of sort and may impact their ability to get a mortgage so it needs to be done in the right sequence.

Apples2

contractcars wrote: »

Some people thinks that that the car leasing is a bad idea, but for me it is best option for us if we are short of money.

MSE is not an advertising mechanism for your company, :spam: button clicked.

To the OP, I would be very cautious of entering any kind of credit agreement if you are soon to embark on home buying.
I would stick with what you have until the Mortgage is in place, this car will be a massive ball and chain if it results in your mortgage application being rejected.

wensleydaleuk

silo24 wrote: »

Bear in mind that the finance company setting up the lease/PCP/PCH will more than likely lodge the full value of the vehicle against your credit file.

I recently got a really good deal on an E-Class mercedes that is costing me just over £400 a month on a 24 month/20,000 miles per annum pcp and was shocked to find the full (£38,000) cost on my credit file.

If I were you I would make do until the mortgage is completed and then apply.

Crikey, where did you get that from? I assume that isn't maintained?

silo24

wensleydaleuk wrote: »

Crikey, where did you get that from? I assume that isn't maintained?

Friends and family deal with Mercedes, non-maintained.