Car lease finance - I can't work out how the monthly payments

deaston

Hello

I've only ever bought cars for cash, but have recently wondered about getting a better car on a lease deal.

I'm looking at a used Range Rover with a price of £64,500.

I'm putting down £10,000 and then the dealer is offering me £859 per month over 3yrs with a "guaranteed final value" of £35,837. But I can't work out if this is a good deal or bad deal.

What exactly am I borrowing? What is the interest rate (he vaguely said "around 5%" but I can't find any specific mention of APR on the paperwork)? Is there a cheaper way??

worried_jim

If you have asked a specific question "what is the Apr?" And the dealer hasn't given you the answer, run away. Zero trust from the start, what else will he/ she be hiding?

BeenThroughItAll

By my reckoning, that makes the total cost of borrowing a Range Rover for three years about 41K, or should you wish to actually keep it, about 76K.

That sounds like a lot to me.

wgl2014

What are you planning on doing at the end of the pcp period?

If you are going to keep the vehicle you will have to stump up the gfv and will have already paid a considerable amount.

If you are going to hand it back you will have paid circa 40k and have nothing to show for it.

Could be worth trying a main dealer for a deal on a brand new vehicle or a broker for a lease depending on your plans.

deaston

BeenThroughItAll wrote: »

By my reckoning, that makes the total cost of borrowing a Range Rover for three years about 41K, or should you wish to actually keep it, about 76K.

That sounds like a lot to me.

I appreciate it's an expensive car and would expect it to cost me, but I can't work out how the figure of £859 per month has been reached.

I asked the dealer the APR and he said "about 5%" but I noticed on a piece of paper with some finance options the figure of 8.9%.

The car in question wasn't ready, so I've put down £500 to secure it and will go back next week to drive it. If I'm not totally happy, the dealer said I could take back my deposit and walk away, so I saw this as a good opportunity to cool-off and do some figures.

At the end of the 3yrs, I would probably hand it back or, if it's worth more than the GFV, buy it and then sell it privately.

Nobbie1967

You are effectively borrowing £54500 for three years and paying £12261 in interest. That's got to be an APR of closer to 10% Doesn't sound like a good deal to me. Sounds like the dealer is lying to you.

Just seen your post, yes 8.9% sounds like the APR, so the dealer saying "about 5%" is telling porkies. Wish I could get 8.9% on my savings, that's a nice little earner!

wgl2014

What spec is it you are getting?

A quick google suggests a lease on a new 'base' spec model is cheaper than you would be paying.

TadleyBaggie

Nobbie1967 wrote: »

Just seen your post, yes 8.9% sounds like the APR, so the dealer saying "about 5%" is telling porkies. Wish I could get 8.9% on my savings, that's a nice little earner!

Maybe not complete "porkies", the much loved (by car dealers) "flat rate" probably is close to 5%.

gzoom

TadleyBaggie wrote: »

Maybe not complete "porkies", the much loved (by car dealers) "flat rate" probably is close to 5%.

Doesn't matter what lies the dealer is spinning, plug the numbers into the website below and basically the OP will be paying 8% interest. Consider the bank of England base rate is now 0.25% you can see why the dealer is lying through their teeth to try and get OP to sign up to PCP.

In short its an awful 'deal'.

http://www.pcpcal.co.uk/

Cash is the way to, even if the Op sells in 3 years, buying via PCP doesn't change rate of deprecation, and selling a car with no outstanding finance is much easier than selling one with finance to pay off.

bigadaj

gzoom wrote: »

Doesn't matter what lies the dealer is spinning, plug the numbers into the website below and basically the OP will be paying 8% interest. Consider the bank of England base rate is now 0.25% you can see why the dealer is lying through their teeth to try and get OP to sign up to PCP.

In short its an awful 'deal'.

http://www.pcpcal.co.uk/

Cash is the way to, even if the Op sells in 3 years, buying via PCP doesn't change rate of deprecation, and selling a car with no outstanding finance is much easier than selling one with finance to pay off.

Fair points but the OP presumably doesn't have £65k lying about to pay cash.

deaston

gzoom wrote: »

Doesn't matter what lies the dealer is spinning, plug the numbers into the website below and basically the OP will be paying 8% interest. Consider the bank of England base rate is now 0.25% you can see why the dealer is lying through their teeth to try and get OP to sign up to PCP.

In short its an awful 'deal'.

http://www.pcpcal.co.uk/

Cash is the way to, even if the Op sells in 3 years, buying via PCP doesn't change rate of deprecation, and selling a car with no outstanding finance is much easier than selling one with finance to pay off.

Cash might be the way to go except I don't have that much cash. My current car is worth £26k as trade-in.

So I need to find £40,000. A personal loan would be a similar APR and I can't put it on my mortgage (would mean remortgaging, not an option at the moment).

Admittedly, looking at the figures, I'm beginning to wonder if I should hold off and do some serious saving (although my current car is 3yrs old in October so will likely lose another chunk in value) and re-visit this next year.

I just hope I can get my £500 deposit back...