Lease car questions

Dear_Prudence

Hi there,

I am new to this forum but in need of good advice regarding a potential lease car for our family. I'll give a bit of background behind our decision and then ask the questions. Thanks in advance.

We've always bought decent 2nd hand cars outright using savings, saved up monthly to cover repairs, and got on very well with this. Until recently when the last car we bought has cost us £1600 in the last 2 months alone on repairs, and now packed up with suspected engine wear.

Not only has this left us financially stinging it has also really made us want some peace of mind for our next car! We have 2 young children and potentially planning one more, and we are in a phase of life where we really need a car, and a reliable one (my family lives 5 hours drive away as well).

So we are looking at leasing a car this time. It's a big monthly payment for us to take on but worth it for peace of mind, and we actually worked out all the costs for leasing vs purchasing 2nd hand and although this works out slightly more expensive, it's not that much more and we think it is worth it for a) having a better car; b) being able to plan our monthly outgoings more and spread the cost; and c) the peace of mind!

The maintenance payment is only an extra £24 per month, so we are going for that as well having worked out how much tyres, brakes etc. cost.

We are going for a 36 month contract with payments of £323.99 per month (initial payment of around £780). This includes all servicing and maintenance so if all goes well we will just need to cover our insurance which we have ready to go.

The car is worth £20,975 brand new.

My questions are:

1) Does this sound like a stupid idea?!

2) Do we need GAP insurance?

3) If we scrape the car or cause minor damage in any way, does this come out of our own pocket to fix or does the maintenance payment cover it?

I had one more but can't remember it so will be back...

Thank you!

Pru

Jamie1981

I dont think it is a stupid idea and leasing is a good alternative and you have done the maths. If it does not cost you much more then at least you get a new car that you know will be covered by the maintenance package.

Im sure in the contracts you sign for the lease it will state that you must ensure you keep the car in a good condition. If you scrapped it etc then you would need to get this repaired before the car goes back after the lease period.

GAP insurance is something you may want to take and is fairly popular with lease cars and covers you incase of a write off or if the car is stolen.

NeverEnough

Are you looking at a business lease with a balloon payment at the end or you hand the car back or do you mean an HP agreement where you own thencar at the end of the agreement? Personally, I wouldn't touch a lease as the car never belongs to you unless you pay a huge payment at the end of the lease, and when it comes to handing the car back instead of paying the balloon payment, if you go over the mileage stiulated in the contract you are charged per mile and for all the damage- every little bump and scratch and sign of use, most companies are such a rip off with the "damage" thing when you come to hand the car back.

I would either save a bit longer and buy a newer car, or top up your savings with a personal loan and buy a decent car outright that way, possibly from a main dealer with an approved used car warranty from the dealers.

By the way, as far as peace of mind is concerned- 20K cars break down just like 2K ones do...........

But if you are intent on a lease:
If you do buy GAP insurance, which covers the shortfall between amount owed and market value if the car is written off and is a good idea in lease type arrangements, then look for an independent provider via google- the dealers own GAP insurance can be quite pricey.

Hintza

You need to do your sums. Lease deals are not as good as they were 4-5 years ago. Remember if you are made redundant etc then you will still have the car to pay.

Is the new price you quote the RRP or the price you could by at a discount broker?

I used to have a calculation where I took the monthly payment and divided it in to the price of the car and anything less than 70 was a poor deal. A great deal was around 100 (but I doubt you will get that these days.

Your Calc:- £324 -£24 = (£300 x 35 + £780) / 36 = £313

£20975/£313 = 67

Its not an awful deal but I think you should look at other ways to pay or look at alternative cars and run the numbers.

Choose the deal and not the car ie chose unpopular cars or models about to be replaced.

BugsyBrowne

Just ask about scratches etc including stone chips as these should come under W&T.

Hintza

BugsyBrowne wrote: »

Just ask about scratches etc including stone chips as these should come under W&T.

They won't. When I was leasing it usually cost me +/-£200 to get scratches dealt with and £60 to have it valeted.

The last time I moaned a bit about the price (it was a shed kids, dogs, horses etc) and they guy said "well why aren't you doing it yourself" which was a very fair point.

111KAB

I worked for a while for a Company that collected vehicles which had come to the end of the lease period. The form we had to complete (with a copy given to the customer) went into minute detail regarding scratches/stone chips etc etc etc. Generally customers signed (often they were not at home when their car was collected) anything as there was their brand new replacement vehicle also sat on their drive and they just wanted rid of their 2 or 3 year old car. Some cars then went into auction but before doing so they were valeted and cosmetically touched up with the bill sent to the customer which is when the arguments started! Some cars were sold back to dealerships who expected the odd chip etc. So often it is the case of where your lease company sells the vehicles onto whether you are billed for small scratches/alloy kerbing/stone chips.

neilmcl

OP, can I suggest you have a look at the guides here: http://www.contracthireandleasing.com/guides/

Particularly the "Personal Contract Hire" and "Buy versus Lease - the benefits of car leasing". Is it safe to assume your post is about contract hire rather than PCP?

Tedious

One quick note on GAP insurance ... Before you buy it, check your own car insurance! Our car was (financially) written off at 6 months, due to a lorry incident - we didn't have GAP, but checking the small print in our normal car insurance, it turned out this would automatically replace our car with a brand new one. So GAP insurance - probably/possibly worth it, but better check your own insurance first!!

spiro

Personally I have never leased a car but I have read the horry stories on hear such as "'car has too many stone chips', 'what was I supposed to do about it' , ' drive slower and further away from the car in front'". Add that to have young children - spilled drinks, dropped sweets/chocolate etc. I would avoid like the plaque.

neilmcl

Tedious wrote: »

One quick note on GAP insurance ... Before you buy it, check your own car insurance! Our car was (financially) written off at 6 months, due to a lorry incident - we didn't have GAP, but checking the small print in our normal car insurance, it turned out this would automatically replace our car with a brand new one. So GAP insurance - probably/possibly worth it, but better check your own insurance first!!

That's usually only the case within the first year of ownership but agree they should check their insurance policy.