Leasing new car vs buying used ?

swayzak

Hello

My wife is about to buy a replacement car, but we are a bit confused about this.

Is it better financially to lease a new car or buy a low mileage used car (a couple of years old) outright (with savings) from a car supermarket like AvailableCar.com ?

Thanks

FreddieFrugal

There is already a thread about this on this page.

But the answer to your question depends on:

1 - what sort of car you need/want (city, family car, mpv)
2 - can your current car be soldl/part exchanged for a decent amount
3 - how much cash can you afford to pay as a one off payment
4 - would you prefer/need to make monthly payments I.e. No or small amount money available for cash purchase

I'll tell you what I'd do, but that doesn't mean it's best for you, depends on circumstances.

I'd part exchange my old car and buy an up to three year old car with full service history and in good condition. If you keep it and trade it in in 3/4/5 years time then it should be better value for money than leasing.

But that entirely depends as I said on the above questions, affordable for you could be different to me.

IamNotAllowedToUseMyName

In your situation you need to look at the underlying costs. Leasing can look attractive when comparing with buying outright - typically if the leasing company take their profit from negotiating very high volume discounts from manufacturers. Also manufacturers interested in shifting boxes will sometimes subsidise leasing deals with several thousands of discounts, so the underlying cost of a new car under lease is significantly less than list. For some reason dealers are reluctant to offer the same deals on new cars sold without finance, presumably to do with incentives they receive. With relatively low interest rates, leasing can be competitive with buying outright.

However, if you go 1 year old or so, you are looking at car prices that are towards 40% below list, and often you can find dealer bargains where they have management cars or the like, specially registered to get the volumes up. So you can buy a second hand car at a substantial discount and still have a couple of years warranty as many cars come with at least 3 years warranty these days.

Forget about the thrill of new, it costs thousands and you soon will be on an old registration and realise you've paid a fortune for a few weeks of feeling smug.

WellKnownSid

IanMSpencer wrote: »

For some reason dealers are reluctant to offer the same deals on new cars sold without finance, presumably to do with incentives they receive.

Finance means commission. The last thing the dealer wants is your cold hard cash... This means cashback deals, 'dealer contributions' and free warranty extensions (e.g. 48 month PCP with free five year warranty) - which makes sense because you should only finance something for the useful life of the thing you're trying to finance.

IanMSpencer wrote: »

So you can buy a second hand car at a substantial discount and still have a couple of years warranty as many cars come with at least 3 years warranty these days.

You can extend the manufacturer's warranty of many nearly new cars until their first birthday, or even before the original warranty runs out. Some cars come with longer warranties anyway - 5 or 7 years.

IanMSpencer wrote: »

Forget about the thrill of new, it costs thousands and you soon will be on an old registration and realise you've paid a fortune for a few weeks of feeling smug.

There is no feeling of smugness greater than sitting in an immaculate used car that you've paid for on your debit card. I especially like it that I can keep my used cars immaculate because the majority of my mileage is done much cheaper in a lease car.

To answer the OP, the only problem I have with the car supermarkets is that they generally don't know (and don't care) about the provenance of their stock. I've always bought used cars from local dealers I know and trust - who know their cars and their owners.

andrewf75

I'd say definitely buy secondhand. You'll see lots of debate on this, but in a nutshell leasing makes sense as an alternative to buying new and replacing every few years with another new car. By far the cheaper option is to buy a used car and keep it for longer.

swayzak

Thank you everyone

I have never been interested in new cars - I bought a 2003 Honda Accord Exec Tourer with savings in 2006 for 11k & still have it now (90k on the clock).

I don't think the wife is particularly either.

So if one is happy to purchase a reliable car & drive it until it dies (e.g. preferably for many years) then buying with cheap loan or savings seems to be the best option ?

bazster

Buy a good used car and keep it forever is always my approach. That Honda is barely run-in!

gzoom

swayzak wrote: »

Thank you everyone

I have never been interested in new cars - I bought a 2003 Honda Accord Exec Tourer with savings in 2006 for 11k & still have it now (90k on the clock).

I don't think the wife is particularly either.

So if one is happy to purchase a reliable car & drive it until it dies (e.g. preferably for many years) then buying with cheap loan or savings seems to be the best option ?

We had a Honda Civic from 2008 -> 2015. 90K, no issue, only ever needed routine servicing. Overall deprecation worked out at something like £80/month, no lease deal can near that for a car the size of a Civic.

We replaced the Civic with a hybrid Lexus, though alot more expensive I don't anticipate any problems with it, and we'll be keeping it longer than the Civic.

The number of Prius taxi's driving around these days tell me hybrid Toyota are probably as reliable as anything gets, and looking at used prices they aren't that dear either. In your situation I would have a good look at one of those, and than just enjoy reliable/cheap motoring.

And there's no need to worry about battery life with these, 200,000 miles seems to be no problem for theses things!!

http://www.consumerreports.org/cro/news/2011/02/the-200-000-mile-question-how-does-the-toyota-prius-hold-up/index.htm

FreddieFrugal

swayzak wrote: »

Thank you everyone

I have never been interested in new cars - I bought a 2003 Honda Accord Exec Tourer with savings in 2006 for 11k & still have it now (90k on the clock).

I don't think the wife is particularly either.

So if one is happy to purchase a reliable car & drive it until it dies (e.g. preferably for many years) then buying with cheap loan or savings seems to be the best option ?

Fantastic. Well in your specific case then, say you p/x your Accord and get a similar size three year old car. Toyota Avensis Tourer can be had for around 11K which is what you spent 9 years ago. Honda Accord higher price, 14K but I only put in max of 30K mileage in the search, if you went higher mileage would be cheaper.

Your car is (guessing trim/engine as you didn't say) worth c£1000?

So you're looking to pay between 10K and 13K on your next car.

Say you have the next three years at least fairly trouble free maintenance wise, so I can round to 12 years of motoring. That in the last 9 years + 3 you will have spent between 21K and 24K on cars.

As a monthly payment that would be between £145 and £165

If you manage to keep the car as long as you did without major expense (you'd need standard servicing on a lease car anyway which you'd pay for normally) 9 years. That's again 21K and 24K over 18 years.

As a monthly payment that would be between £95 and £115

To compare with leasing, I found Honda Accord tourer deal of £303p/month not including any maintenance, max mileage of 10K which should be enough based on your last car.

If you'd paid that over 9+3 years you'd have cost you £43,642 or £65,000 for 18 years compared with 24K so if you're happy with what you're doing, keep doing it. Figures are on your side. If you paid that equivalent on used cars you could of bought yourself a 3 year old Range Rover Evoque, BMW 6 series, Jaguar XF, Audi TT, just from quick glance on auto trader (though they probably wouldn't last 9 years without major expense!)

£95 a month would only get you a Citroen C1, £145 would get you a Nissan Juke or Seat Ibiza. And for that you've been driving a large executive estate car!

If you downsized when you buy your next used car, you'd obviously save even more money over leasing

FreddieFrugal

After all that just realised that YOUR car is a Honda Accord but it's your WIFE that needs a new car.

Does she not have her own currently?

That could have saved me a lot of time if I'd realised earlier.

If you have the cash then buy used car. if you have to use a loan that will be more expensive, but probably still cheaper than leasing, just depends on exact amount and rate of the loan

WellKnownSid

IanRi wrote: »

To compare with leasing, I found Honda Accord tourer deal of £303p/month not including any maintenance, max mileage of 10K which should be enough based on your last car.

Point of order - looking for a random car on a lease site in AUGUST is a poor example. An Octavia estate can be had for under £200 a month, and I've seen plenty of Insignias and equivalent nearer the £150 mark this year. £300 per month is E-class estate territory - few would lease a Honda at that price when you could have your pick of BMs, Audis and Mercs. Picking a high priced example to prove your point is cheating a little, and there are a lot of 'ifs' in your argument about servicing and maintenance.

It proves the point that IF someone was thinking about the lease route, they should not go looking for a particular car but instead a low monthly offer on the right body style (hatchback, estate, etc). That lease offer may not be around this month because (duh!) September is just around the corner, watch what happens in October when a manufacturer misses their target...

I would also add you should pick your lease period and mileage to suit you (e.g. always work it so you hand back before an MoT is due, I've not replaced a tyre or paid out for major service in over four years / 70,000 miles). Motoring when you start with a new car is very predictable if you do your research - service intervals on modern cars are "too long" for a reason, do what any fleet manager would do - let this work in your favour.