To Lease a car or not?

suicidebob

Leasing it an alternative to buying a brand new car every few years, not an alternative to paying £4K for something from 2006.

I think this confuses some!

forgotmyname

Except some people seem to think leasing gives them a brand new car for less than it costs to run a 2006 car.

fred246

I talk a lot to young workers. They seem to really budget everything as £x per month. I don't think they have much savings. So they are happier with some sort of monthly payment arrangement with a fixed fee for servicing and repairs. Over a long period it is more expensive, but they seem to be happier knowing car costs £x per month. I always buy nearly new cars and keep them away from garages till they die. You end up with small bills for wipers, tyres, exhausts, cambelts, brake pads & discs etc. but my experience is that a 12 year old car is as reliable as a 4 year old. Just the odd occasional extra expense for a malfunctioning part.

REdge

I'm looking at leasing as well.

I have 2 options.

1 Buy a £7K, 7 yr old X-trail or similar
2 Lease a 2015 Ford Kuga or similar

According to my figures:

Option 1 will cost £3.867K per annum over 3 years (including loan, fuel, MOT, depreciation @ 15% per annum, servicing, tyres, insurance and car tax). At the end of 3 years, I will be left with an asset worth around £4.3K.

Option 2 will cost £5.052K per annum over 3 years (including fuel, servicing and insurance - tyres are included I think(must check!)). At the end of the 3 years I will be left with an asset worth exactly £0.

Obviously, option 1 doesn't take into account any mechanical problems with an older car.

The 4 year figures are worse with the costs being £4844 / £6538 per annum respectively (asset £3654), so 3 years looks the better option

Reliability is an issue with me as I am self employed and need to visit clients, which I charge at 45p per mile, so with my particular circumstances, I think a lease is the best option.

I'd welcome any comments on my figures, just in case I've missed anything or made a wrong assumption.

Bob

EDIT:

2 year figures are £2868 / £3567 (asset £5K), although I will need to check the monthly lease cost

Wh05apk

REdge wrote: »

I'm looking at leasing as well.

I have 2 options.

1 Buy a £7K, 7 yr old X-trail or similar
2 Lease a 2015 Ford Kuga or similar

According to my figures:

Option 1 will cost £3.867K per annum over 3 years (including loan, fuel, MOT, depreciation @ 15% per annum, servicing, tyres, insurance and car tax). At the end of 3 years, I will be left with an asset worth around £4.3K.

Option 2 will cost £5.052K per annum over 3 years (including fuel, servicing and insurance - tyres are included I think(must check!)). At the end of the 3 years I will be left with an asset worth exactly £0.

Obviously, option 1 doesn't take into account any mechanical problems with an older car.

The 4 year figures are worse with the costs being £4844 / £6538 per annum respectively (asset £3654), so 3 years looks the better option

Reliability is an issue with me as I am self employed and need to visit clients, which I charge at 45p per mile, so with my particular circumstances, I think a lease is the best option.

I'd welcome any comments on my figures, just in case I've missed anything or made a wrong assumption.

Bob

EDIT:

2 year figures are £2868 / £3567 (asset £5K), although I will need to check the monthly lease cost

So on your figures, using option 1, deducting the value of the car left, and deducting it from the annual cost, means the real cost is only about £2,300pa as against £5,000 +? looks like a no-brainer to me?


Like you I am also self employed, using my car for work, so reliability is vital, to me a well maintained older car is far better than a newer less reliable car, mine now has 110k miles and is 8 years old, but has never let me down.


To me leasing a car only works if you want a new car every couple of years, otherwise I buy at 2-3 years old for about 1/2 list price, and so can get top spec cars for supermini money.

REdge

Wh05apk wrote: »

So on your figures, using option 1, deducting the value of the car left, and deducting it from the annual cost, means the real cost is only about £2,300pa as against £5,000 +? looks like a no-brainer to me?

The budget figures I have for Option 1 for buying a £7K car are:

Cost of car: £8239 (including loan)
Servicing: £450
MOT: £150
Tyres: £250
Insurance: £1000
Car tax: £855
Fuel: £4956

Total cost over 3 years is £15900 (£5300 / annum)

3rd year value after depreciation: £4298.88 (£7K less depreciation @ 15% ' annum)

Total cost over 3 years after deducting value of asset = £15900 or £11600 after asset deducted, which is £3867 / annum.

This is £1185 per annum less than leasing a new car (£5052-£3867)

Have I got these figures wrong, because at my hourly rate, it doesn't take many hours to justify a new leased car (at least until my accountant points out the flaws in my argument! :rotfl:)?

Bob

forgotmyname

REdge wrote: »

The budget figures I have for Option 1 for buying a £7K car are:

Cost of car: £8239 (including loan)
Servicing: £450
MOT: £150
Tyres: £250
Insurance: £1000
Car tax: £855
Fuel: £4956

Total cost over 3 years is £15900 (£5300 / annum)

3rd year value after depreciation: £4298.88 (£7K less depreciation @ 15% ' annum)

Total cost over 3 years after deducting value of asset = £15900 or £11600 after asset deducted, which is £3867 / annum.

This is £1185 per annum less than leasing a new car (£5052-£3867)

Have I got these figures wrong, because at my hourly rate, it doesn't take many hours to justify a new leased car (at least until my accountant points out the flaws in my argument! :rotfl:)?

Bob

What you seem to have forgot is when you sell your £4000 asset the yearly running costs will be reduced.
So your looking at over £2000 a year extra, not just £1000

Your saving £1000+ buying a car instead of leasing and after 3 years gaining an asset worth £4000 or so.

Or another way of looking at it buying the car will give you year 4 and 5 for nothing. 2 years free motoring.

Herzlos

Reliability is important, sure, but there's no garuantee that the Kuga will be more reliable, though it'll be covered by warranty.

The £1100/year you save will pay for a lot of repairs and hire cars to get you to work, and you'll be left with £4k at the end to get something else (or you can eat into it for other repairs or hire cars if needed).

You're maybe estimating a bit low on servicing/tyres though, it might depend on mileage but I'd also budget for a new set of tyres (more than £250 I'd have thought) or brake pads at minimum.

Does your leasing figure include servicing and consumables as well?

REdge

Thanks for all the input and apologies for hijacking the thread!

I got a really good deal for leasing the Kuga (£220/month, £30 less than I budgeted for and yes I had budgeted for servicing and consumables), but.....

I've decided to buy a 2nd hand X-Trail instead, pay it off over 12 months using my credit card which is currently 0%

Now I just need to get the asking price down

Anybody want to buy a 2002 RAV4 with a dodgy gearbox?

BTW, my accountant said no

REdge

What would be really interesting is to look back on this in 2 years time and see how well my budget figures work out