Leasing is the way to go?

alexlg

For anyone interested in the subject of this thread, Which? magazine did a good article. (You might need a subscription to view it though.)

"We looked at a range of popular new cars to find out whether they are cheaper to buy or lease.

Jaguar XF 3.0D V6 Premium Luxury Auto
The XF is almost £13k more expensive to lease
XF is almost £13k more expensive to lease
The Jaguar XF represents a return to form after the disappointing S-type and X-type.

Its diesel engines are refined and economical, especially this new 3.0d version, making the XF a worthy alternative to German rivals.

A predicted resale value of 55% after three years is good – but the XF is a great example of what not to lease.

An eyewatering lease bill of more than £30k over three years means the XF is almost £13k more expensive to lease than to buy using finance.

The contrast with a Ford Mondeo (below) shows why it’s vital to do your sums.

List price £37,495
Discounted price £34,750 (7%)
Predicted resale value after three years/36,000 miles £20,625
Pay cash
Total cost over three years/36,000 miles £14,125
Pay by finance
Monthly cost £1,051.19
Total cost over three years/36,000 miles £17,218
Lease
Deposit required £2,371.36
Leasing cost per month £796.20
Total cost over three years/36,000 miles £30,238
Verdict: Buy it

Ford Mondeo 2.0 TDCi Zetec
Ford Mondeo is cheaper to lease
Ford Mondeo is cheaper to lease
The Ford Mondeo is a perennial fleet favourite and poor second-hand values mean it’s the only car here that’s cheaper to lease than to buy using finance (though it’s not cheaper than paying in cash).

You’ll need to stump up a deposit of around £920, but after that the monthly payments are almost half those of a bank loan.

List price £20,990
Discounted price £15,615 (26%)
Predicted resale value after three years/36,000 miles £7,350
Pay cash
Total cost over three years/36,000 miles £8,265
Pay by finance
Monthly cost £493.60
Total cost over three years/£36,000 miles £10,420
Lease
Deposit required £919.94
Leasing cost per month £258.69
Total cost over three years/36,000 miles £9,974
Verdict: Lease it

Honda Jazz 1.2 i-VTEC S
The Honda Jazz is a safe bet to buy
The Honda Jazz is a safe bet to buy
The Honda Jazz is one of the most practical superminis you can buy, with a huge 366-litre boot and folding rear seats to expand load space.

Strong demand means it’s difficult to get a discount on a new Jazz, but the silver lining is healthy used values, which make the Honda a good bet to buy with cash or a bank loan.

List price £9,990
Discounted price £9,658 (3%)
Predicted resale value after three years/36,000 miles £5,600
Pay cash
Total cost over three years/36,000 miles £4,058
Pay by finance
Monthly cost £305.30
Total cost over three years/£36,000 miles £5,391
Lease
Deposit required £570.25
Leasing cost per month £223.96
Total cost over three years/36,000 miles £8,409
Verdict: Buy it

Mazda 2 1.3 TS2 5-dr
Mazda2: buy with cash for the best deal
Buy with cash for the best deal
The sporty Mazda 2 shares many parts with the Ford Fiesta. It’s fun to drive and scores five stars from Euro NCAP for adult occupant safety.

The low monthly leasing cost of just over £200 looks tempting, but you’ll pay considerably more in the long-term than if you buy the Mazda 2 on finance and then sell it on after three years.

List price £10,378
Discounted price £9,515 (8%)
Predicted resale value after three years/36,000 miles £5,075
Pay cash
Total cost over three years/36,000 miles £4,440
Pay by finance
Monthly cost: £300.78

Total cost over three years/36,000 miles £5,753
Lease
Deposit required £586.33
Leasing cost per month £201.19
Total cost over three years/36,000 miles £7,628
Verdict: Buy it

Nissan Qashqai 1.5 dCi Acenta 2WD
British-built Qashqai is a Which? Best Buy
British-built Qashqai is a Which? Best Buy
The British-built Nissan Qashqai is a Which? Best Buy. We’d go for a more fuel-efficient two-wheel-drive model unless you really need 4WD.

Though buying on finance is cheaper, leasing a Qashqai may be viable if you want to keep monthly costs down.

List price £16,895
Discounted price £15,769 (7%)
Predicted resale value after 3 yrs/36,000 miles £8,450
Pay cash
Total cost over three years/36,000 miles £7,319
Pay by finance
Monthly cost £498.47
Total cost over three years/36,000 miles £9,495
Lease
Deposit required £810.30
Leasing cost per month £278.15
Total cost over three years/36,000 miles £10,546
Verdict: Close call

VW Golf 2.0 TDI 110 SE 5-dr
VW's Golf is popular with private buyers
VW's Golf is popular with private buyers
An upmarket image means the VW Golf is always a popular with private buyers.

Leasing a Golf is vastly more expensive than buying one with a loan – it would cost you £3,500 more over three years.

List price £17,465
Discounted price £15,618
Predicted resale value after three years/36,000 miles £9,950
Pay cash
Total cost over three years/36,000 miles £5,668
Pay by finance
Monthly cost £493.70
Total cost over three years/36,000 miles £7,823
Lease
Deposit required £885.51
Leasing cost per month £300.92
Total cost over three years/36,000 miles £11,418
Verdict: Buy it

Audi A4 Avant 2.0 TDI 143 SE
A4 Avant holds its value well
A4 Avant holds its value well
The stylish Audi A4 Avant holds around 51% of its value after three years.

This makes it nearly £4,500 more costly to lease than to buy on finance, or £6,350 more than paying cash.

List price £25,025
Discounted price £21,450 (14%)
Predicted resale value after three years/36,000 miles £12,775
Pay cash
Total cost over three years/36,000 miles £8,675
Pay by finance
Monthly cost £648.86
Total cost over three years/36,000 miles £10,584
Lease
Deposit required £1,149.94
Leasing cost per month £397
Total cost over three years/36,000 miles £15,045
Verdict: Buy it

Renault Modus 1.5 dCi 86 Dynamique
Look out for Renault's 0% APR deals
Look out for Renault's 0% APR deals
Monthly costs for buying the practical Renault Modus on finance aren’t too much higher than leasing, and the overall cost with buying is much lower.

If you can find one of Renault’s 0% APR deals, finance looks better still.

List price £12,865
Discounted price £10,626 (17%)
Predicted resale value after three years/36,000 miles £4,525
Pay cash
Total cost over three years/36,000 miles £6,101
Pay by finance
Monthly cost £321.44
Total cost over three years/36,000 miles £7,047
Lease
Deposit required £745.72
Leasing cost per month £254.32
Total cost over three years/36,000 miles £9,647
Verdict: Buy it

Citroen C4 Grand Picasso 1.6 HDi SX
It's cheaper to buy this C4 Grand Picasso
It's cheaper to buy this C4 Grand Picasso
The cost difference between leasing the C4 Grand Picasso and buying on finance is much less than for the VW Golf.

But if you can afford the monthly loan payments of £445.89 per month, it works out cheaper.

List price £18,795
Discounted price £14,740 (22%)
Predicted resale value after three years/36,000 miles £7,150
Pay cash
Total cost over three years/36,000 miles £7,590
Pay by finance
Monthly cost £445.89
Total cost over three years/36,000 miles £8,902
Lease
Deposit required £896.83
Leasing cost per month £304.69
Total cost over three years/36,000 miles £11,561
Verdict: Buy it

Honda CR-V 2.2 i-CTDi SE
Lease a CR-V for lower monthly payments
Lease a CR-V for lower monthly payments
The Honda CR-V offers MPV-like space without the staid image.

Leasing a CR-V works out only £530 more costly over three years than buying one with finance, so it might appeal to families with a tight monthly budget.

List price £20,280
Discounted price £17,122 (16%)
Predicted resale value after three years/36,000 miles £8,925
Pay cash
Total cost over three years/36,000 miles £8,197
Pay by finance
Monthly cost £517.94
Total cost over three years/36,000 miles £9,721
Lease
Deposit required £793.44
Leasing cost per month £270.19
Total cost over three years/36,000 miles £10,250
Verdict: Close call

Audi TT 2.0 TDI Quattro
You're better off buying an Audi TT
You're better off buying an Audi TT
The Audi TT has become so familiar that it’s easy to forget what a great car it is.

Low depreciation means you’re better off buying a TT with cash or on finance.

List price £26,525
Discounted price £24,010 (9%)
Predicted resale value after three years/36,000 miles £18,025
Pay cash
Total cost over three years/36,000 miles£5,985
Pay by finance
Monthly cost £726.30
Total cost over three years/36,000 miles £8,122
Lease
Deposit required £1,172.83
Leasing cost per month £396.69
Total cost over three years/36,000 miles £15,057
Verdict: Buy it

VW Scirocco 2.0 TSI GT (DSG)
Lease a Scirocco and you could lose out
Lease a Scirocco and you could lose out
Being one of 2009’s ‘It' cars means that the super-cool VW Scirocco currently boasts great second-hand values.

However, leasing this swift and sleek turbocharged Scirocco with DSG automatic gearbox will cost you £4,222 more over three years than buying one with a bank loan. Don’t do it!

List price £22,640
Discounted price £20,650 (9%)
Predicted resale value after three years/36,000 miles £14,275
Pay cash
Total cost over three years/36,000 miles £6,375
Pay by finance
Monthly cost £624.66
Total cost over three years/36,000 miles £8,213
Lease
Deposit required £965.83
Leasing cost per month £327.69
Total cost over three years/36,000 miles £12,435
Verdict: Buy it

marathonic

alexlg wrote: »

An eyewatering lease bill of more than £30k over three years means the XF is almost £13k more expensive to lease than to buy using finance.

I can lease a Jaguar XF, albeit the 2.2d Luxury model, here for £15,263 for four years. That's almost half the cost for a year extra.

You can buy this car from the discount brokers for about £29,060. Given Which's predicted resale value of 55% after three years, we could assume that it'd be worth at most 45% after 4 years.

This means that buying costs £15,983 whilst leasing costs £15,263.

Therefore, leasing works out cheaper and that's ignoring the opportunity cost of the money that you have to put up upfront when buying. Taking this into consideration, leasing this model is significantly cheaper.

Even looking here at the model they talk about, the cost over three years is £19,078 - for 12,500 miles per year compared to their 12,000.

I'm losing faith on Which's journalism skills. Where on earth did they get these quotes?

paul2468

If you lease a car would the dealer give you the chance to buy it say at the end of 3 years, and if so how would they set the price ?

Frogletina

marathonic wrote: »

If I build £11,000 up in my Newcastle Regular Saver ISA at 3%, I could buy a 1-year old version at £11,000 or leave the majority of my £11,000 in the ISA - only withdrawing for the lease payments.

According to a spreadsheet I set up, withdrawing the initial payment and then each subsequent payment, allowing for the 3% interest I earn, would result in £6970.75 remaining in the ISA after 2 years. I estimate that this is about the same amount that the 1 year old car, after keeping for 2 years, would be worth.

With this in mind, am I better going for the lease or is there something that I am missing?

Looking at the details for the regular saver, the 3% rate is only given if you deposit each month and don't make any withdrawals. Each month you make a withdrawal you will only get 2% interest.

jaydeeuk1

paul2468 wrote: »

If you lease a car would the dealer give you the chance to buy it say at the end of 3 years, and if so how would they set the price ?

No. Do you know what a lease is? That jag xf deal from hotukdeals is pretty good, howver in the 4th year its an out of warranty low mileage diesel limited to under 10k a year. I wouldnt risk it.

ACG

My dad does car leasing, this is something i had never considered until speaking to him about it. It can make sense in certain circumstances, but like anything its all about doing your figures and making sure they stack up for whichever option you choose.

thewinelake

...of being a former "never buy a new car" person who discovered that there are some great deals on new cars (although I suppose buying secondhand privately should be more VAT efficient).

Firstly - that Which? report is typically rubbish. Whenever Which? cover a subject I know something about, I can see that they don't have a clue, so I presume they never have a clue. One can easily debunk their example with 5 minutes on the Internet....

Secondly - there do appear to be some stunning bargains around. Like someone said earlier on, if you're prepared to compromise on exactly what car you want. One example that brought it home to me was a Merc A200 sport 5 dr Diesel - fully maintained - for £170+VAT. That was a special offer (and a real one - not like supermarket wine - verified by looking at other leasing companies offering the same car at much, much more).

Slightly ignoring my own advice, I've been looking at Ford Focuses. eg. Ford Focus 1.6 TDCi 115 Zetec 5dr for £1300 + £144 x 24 (prices inc VAT). So that's about £4750 for 2 years of that car (which one could get new for £13330). Seems like a great deal to me...

If I were a little richer, then the Merc E-Class Blue-tec estate for £2000 + £360/month would be quite attractive (£10800 for 2 years of a car worth about £36000).

What I'd really like is a decent plug-in hybrid, but it's not available yet (hoping the Golf might open the floodgates) so the idea of having something for a couple of years as a stop-gap does appeal.

Catches might include an unreasonable view of wear and tear - how do they assess minor scuffs and wear to upholstery, etc?

Also, if you get parking tickets/speeding fines, etc, it can make it a lot more hassle.