Leasing v buying?

Lovetotravel

After yet another massive repair bill, I'm considering leasing a brand new car as opposed to buying another second hand one.

I don't know much about it and obviously the dealerships are going to give me the hard sell.

Has anyone leased before? What are the pros and cons?

Thanks

InsideInsurance

Presumably you are talking about a broader finance a car rather than buy a secondhand one (ie include PCP for example)?

Are you asking the Pros/ Cons of having a brand new car or simply for financing?

The only pro of financing is you can have a vehicle you couldnt otherwise afford (or would lose money by paying cash for a minority of people). The Con is that you have a fair amount of terms to abide by in terms of mileage and damage particularly if you have/ want to return it to the finance company at the end. You are also paying another company a profit margin on top of the dealerships one.

Hintza

Pros

New car every 1/2/3 or 4 years
Fixed costs.
Shouldn't have expensive bills
You don't have to worry about selling it
VED is normally covered
Can be cheapish for models about to be superceded etc
Go for the deal and not the car (eg Don't decide you want an Audi and try and get a deal, look for the deal and then decide if you can live with the car)
Peace of mind.

Cons

It becomes a cycle that can be difficult to escape.
Can be expensive if you don't go for the deal.
Sometimes there aren't any deals.
Check figures closely a PCP or an HP deal might work out cheaper.
If you do a high mileage it will probably be a non starter (8,000-12,000 will be about OK)
Can you afford the payments if you are laid off tomorrow?

Blackbeard_of_Perranporth

How old is the car.

With leasing. You never own the car, and any scratch dent is costed. The mileage is always low. Good if you work local and run a business.

Otherwise, buy like BoP. Three year old and run to the floor. Sell when about knacked. That us about 8 year mark.

If you car is at the 8 year mark, it was probably mine. Well past its best.

thescouselander

I just looked into this and found the costs of leasing vs PCP to be broadly comparable but PCP seemed to offer more flexibility.


Leasing advantages:

1) Tax and maintenance can be part of the package
2) Good certainty over the cost of ownership
3) Small up front payment


PCP advantages

1) Option to buy the car at the end of term (handy if you've done more miles than expected or you like the car and want to keep it)
2) You can hand it back early with minimal penalty (not the case with leasing)
3) Potentially lower monthly payments (at the expense of paying a larger deposit up front)

loskie

http://www.simpsonsskoda.co.uk/new-car-offers/yeti-monte-carlo-pch/

DominicH

For new cars, I don't think it makes much difference overall whether you lease or buy. One way or another, it is you who will be paying for the depreciation. If you don't actually have the money for the car, you either borrow the money (a loan) or borrow the car (a lease). Either way, you pay the borrowing cost and, again, it works out much the same. Some people say that since leasing companies can get bigger discounts and lower interest rates, leasing works out cheaper than buying privately. Maybe, but on the other hand, the lease companies take a cut on the discount, and you can still get a decent discount yourself via haggling or brokers. I think that, overall, it's more or less a wash. Running a new car is expensive any way you slice it.

The real problem with leasing is that you can't lease older cars (actually, I think leasing used cars is a thing, but it's not widely available), and running older cars is manifestly the cheapest way to do it. But you have to buy them yourself, or borrow the money.

WellKnownSid

If you look after your cars, leasing can be a cheap option, because the 10% discount you get buying one car is less than the 50% discount brokers can get for offering to shift several hundred lime green hatchbacks sat waiting at the dockside...

AVOID dealers - brokers will have the best deals. Mileage isn't an issue BUT you need to have a good idea what your mileage is likely to be.

Don't look for particular makes / models - just go for the best deal...

Gap insurance is recommended - but again buy this online for a 1/4 of the price the broker will offer.

Some insurers don't like insuring cars you don't own - make sure they know and approve.

FreddieFrugal

thescouselander wrote: »

Leasing advantages:

1) Tax and maintenance can be part of the package
2) Good certainty over the cost of ownership

Surely that certainty that you're paying more than you should be for a car you don't own is a negative not a positive.

It's not just the monthky payments but the penalties at the end for light body damage that most cars, through owners fault or not, will develop and excess mileage.

Sounds like a terrible deal to me.

0% Finance or payment in full and never on a brand new car, 1-3 year old massive saving, still good life in it, so long as you research before hand, check condition and look after it.

You'd have to be INCREDIBLY unlucky to have repair costs over the life of a 3 year old car that would go anywhere near to bridging the cost gap.

My car (Ford Focus) was 2 1/2 when I bought it, it was nearly 1/3 of its original value, saving me about £12,000 compared the getting a new one. In the three years since that I've owned it (apart from insurance, fuel) it's cost me £600 to maintain independent mechanic servicing, nothing gone wrong on it, just usual brake discs, pads once, the rest just standard servicing.

Also if I come to part exchange it, it's still worth 60% of the price I paid for it after three years.

May I ask what car it is you currently own that's had heavy repair bills and how old it is?

WellKnownSid

IanRi wrote: »

It's not just the monthky payments but the penalties at the end for light body damage that most cars, through owners fault or not, will develop and excess mileage.

If you look after your car no penalty. Normal wear / tear / dings commensurate with mileage is accepted. No different to regular car hire.

I've just handed back a car would have been £17.5k at the showroom new, now has 31,000 miles on it after two years and is worth about £6k on we buy any car. Total lease cost for me was £4,100 plus two services. Didn't even replace the front tyres.

thescouselander

Don't get me started on insurance. In my experience the customer service reps at insurance companies don't have a clue when is comes to ownership and leasing/pcp.

A lot of companies say the car has to be owned and registered by the policy holder and when you call in to query that it will cause massive confusion as the person you speak to won't understand that although your name is on the v5 you won't own it.

Most companies will insure you but it's always a bit uncomfortable getting one thing in writing and being told something else on the phone. Just keep good records and record your calls to the insurance company.