Leasing is the way to go?

andrewf75

My instinct tells me its better to buy, but I'm starting to wonder. Would certainly have a look at the deals on offer when I next change car.

AdrianC

marathonic wrote: »

however, the lease appears to work out cheaper.

Don't forget to factor in overage charges on mileage and end-of-life cosmetic repair costs/penalties.

marathonic

AdrianC wrote: »

Don't forget to factor in overage charges on mileage and end-of-life cosmetic repair costs/penalties.

I'll not be doing over 10k in mileage and, should the cosmetic repairs be beyond what they deem acceptable, then the depreciation on the car had I bought would also have been more than the estimated amount in my calculations.

Obviously, it works out cheaper if you keep a car you own outright for a longer term but there doesn't seem to be much in it if you like to replace your car every 2-3 years.

motorguy

AdrianC wrote: »

You're driving around in a car you haven't paid for, that somebody will remove from you if you don't keep paying for it. That's what I was meaning by " a nice easy low-hassle consumerist life of ever-present credit"...

Thats another argument i never really bought into.

A lot of people lease because its cheaper, even though they may well have strong cash reserves.

If you've put £16K - or £5K or whatever into a car, and have otherwise used up your cash reserve, you're going to have to sell the car anyway?

My son paid £9K cash for his car. If he gets it tight next year in his final year at university he knows he will have to cash it in.

So whats the difference really?

pelirocco

motorguy wrote: »

Thats another argument i never really bought into.

A lot of people lease because its cheaper, even though they may well have strong cash reserves.

If you've put £16K - or £5K or whatever into a car, and have otherwise used up your cash reserve, you're going to have to sell the car anyway?

My son paid £9K cash for his car. If he gets it tight next year in his final year at university he knows he will have to cash it in.

So whats the difference really?

He's not going to get £9k back , and the problem if selling something if you need the money quickly is you tend to only get low offers

motorguy

pelirocco wrote: »

He's not going to get £9k back , and the problem if selling something if you need the money quickly is you tend to only get low offers

Yes. Exactly.

So a lot of the time its easier - and better - to have your cash reserve in the bank, and pay a nominal monthly payment which can be continued on.

Horses for courses and all that - but i just never really bought into the "but but your car could be repossessed" as a reason for not using finance or leasing.

rexmedorum

motorguy wrote: »

Yes. Exactly.

So a lot of the time its easier - and better - to have your cash reserve in the bank, and pay a nominal monthly payment which can be continued on.

Horses for courses and all that - but i just never really bought into the "but but your car could be repossessed" as a reason for not using finance or leasing.

The one thing everyone forgets though is that is under the presumption that you MUST have a new car every 2 / 3 years. This is going to be phenomenally expensive whether you buy or lease

AdrianC

rexmedorum wrote: »

The one thing everyone forgets though is that is under the presumption that you MUST have a new car every 2 / 3 years. This is going to be phenomenally expensive whether you buy or lease

...and there ain't to way to get off that merry-go-round without actively spending money, instead of just choosing to step spending it. Which is precisely why the motor industry subsidises the financing with such massive discounts.

rexmedorum

right I double checked some of your numbers:

Leasing 4523.71 for 2 years
Car new: 16,008 (what car target price, list price is 18695)
2 year old:9935 (autotrader)

New car total: 6073

So yes that is more

1 year old example:
10872 (autotrader)
sale at 3 years old: 8200 (autotrader)
total: 2672

Of course these valuations are based on sale prices on autotrader at this moment

Now your ISA:
on average you have 4523.71 / 2 = 2261.855 in the ISA for the full 2 years. at 2.75% interest that is: 124.40
(or at 3% that is 135.71)

motorguy

AdrianC wrote: »

...and there ain't to way to get off that merry-go-round without actively spending money, instead of just choosing to step spending it. Which is precisely why the motor industry subsidises the financing with such massive discounts.

Of course there is - you just chose not lease another car and buy with cash instead. That could be £300, £3,000 or £30,000 depending on your own circumstances.

I've seen times when i've been paying £600 a month on finance on a new X5. Other times i've been happy driving about in a £300 Fiat. No one "forced" me to do either. Both suited my circumstances at the time. Its about flexibility and options.

And dont forget if you've paid for a car with cash, like it or not its depreciating anyway. Buy even a £10K car and you're probably going to be lucky to get £5,000 back after 3 years.

And just to qualify -

is leasing a new car every three years cheaper than buying new and replacing every three years? Probably.

Is leasing a new car every three years cheaper than buy a new car and running it for 15 years then replacing it? Nope.

Is leasing a new car every three years cheaper than buying a car at £1,000 and eking it out as long as you can? No.

BUT, different things suit different people, and different people have differing amounts of disposable income on which they may or may not chose to spend on a monthly payment on a car.