Leasing vs 2nd hand

ronny1976

I've been a long time believer of buying my own car outright. I have previously purchased a brand new car but I tend to buy 2nd hand cars that are up to 3 years old.

I've normally stayed away with leasing (PCH and PCP) because I never liked the thought of being limited on mileage and being tied into monthly costs which I may not know if I can afford in the future.

If you're comparing leasing vs buying brand new then I can understand the appeal of leasing. But when you are buying 2nd hand, the bulk of the depreciation has already been incurred and thus I feel I wouldn't gain so much from leasing.

This is of course because I don't feel it necessary to own a brand new car. Having a car a couple of years old is good enough for me.

Can you get leasing agreements for 2nd hand cars? I.e. the monthly payments of the car is based on the depreciation of a car that's ages 3 years old until 6 years old? Maybe that would be a fairer comparison and something considering?

Thoughts?

neilmcl

Firstly, like a lot of posters here, you need to make the distinction between leasing (contract hire) and a Personal Contract Purchase (PCP). PCPs are not leasing arrangements, they are a finance agreements, in fact a form of HP.

Now with that cleared up, if you want a PCP then of course this kind if arrangement is available to used vehicles, although the APR tends to be much higher, over double that of new car finance.

ronny1976

Why is the APR so much higher on a used car PCP than a new car PCP?

Car_54

ronny1976 wrote: »

Why is the APR so much higher on a used car PCP than a new car PCP?

No manufacturer contribution?

dannyrst

ronny1976 wrote: »

Why is the APR so much higher on a used car PCP than a new car PCP?

Because people are idiots.

They look at the monthly cost and think "I can afford that" without working out if its a good deal or probably even knowing how much interest they are paying! That's the beauty of a lease deal. No interest rates, no balloon payments, no options at the end...you get a brand new car for £X amount each month and afterwards, hand it back. Simples.

neilmcl

ronny1976 wrote: »

Why is the APR so much higher on a used car PCP than a new car PCP?

Simple, manufacturers want you to buy their shiny new metal.

neilmcl

dannyrst wrote: »

Because people are idiots.

They look at the monthly cost and think "I can afford that" without working out if its a good deal or probably even knowing how much interest they are paying! That's the beauty of a lease deal. No interest rates, no balloon payments, no options at the end...you get a brand new car for £X amount each month and afterwards, hand it back. Simples.

You also get zero protection should you not be able to meet those repayments throughout the lease period.

Swings & roundabouts.

missile

If you cannot afford to buy outright, I feel sure you will get lower interest rate on a bank loan.

Bigphil1474

Don't forget that the potential costs for the company of a car that is new to 3 years old, will be less than an older car - if you had an all inclusive package, a newer car doesn't need annual MOT and less likely to fail. Older car will need MOT plus everything is a bit older.
As missile says, you might find the cheapest option is to buy a second hand car on a loan than through HP. If you're lucky enough to know a good dealer, or even a good mechanic who you could slip a few quid to, and get a good second hand car, you'll be quids in. I've never had the option to buy new, but I've always been lucky to have second hand cars that have matched their value. Previous car was a £500 rover that lasted 3 years with relatively little maintenance cost, current car cost £4500 and hasn't cost me anything unusual in 18 months other than an MOT and service. Plus if you own it, you might not be bothered about the odd nick or dent that you pick up over time, whereas a leased car would have a cost if it isn't returned in good condition.

dannyrst

neilmcl wrote: »

You also get zero protection should you not be able to meet those repayments throughout the lease period.

Swings & roundabouts.

Granted, although surely you can take out PPI?

Htm

Hi all,

I'm hoping to get some advice on the following:
I am looking to get a relatively new car/brand new car (don't want to have the issues that older, used cars have as I need reliability) either on PCP or PCH for a couple of years (don't want to commit to anything longer term as I've just gotten married and bought our first house so unsure how life will plan out from here i.e. when we'll start a family and need a bigger car/ job change that makes the commute longer...). I'm thinking of going for a small petrol engine car as my commute to work is quite short and we go for long/longer drives on the weekends generally. Now here's my question-am I better off going for PCP or PCH? I understand it's quite a common question and I would've preferred a PCH but I've been thinking that with that you end up with no car at the end whereas with a PCP you end up with the car as a bargaining chip (only if you're in positive equity though) that you can use as a deposit on your next vehicle. I have no plans of keeping the car so handing it back in both schemes will be fine but part exchanging it under a PCP may be an option when moving onto my subsequent car. What do you guys think? Is this a sensible way to think of PCH vs. PCP?

Cheers!