Lease a car vs buying a car?

JustAnotherSaver

I guess leasing is the correct term. There's another term which i can't remember. Maybe you guys know. It's not hire car obviously but that's the only phrase in my head. lol.

Anyway can anyone here put up any positives to leasing over buying it outright in my case?

It was put to me by workmates & i can't honestly see how it'd be better but i don't want to be close minded. I also don't really know how the leasing thing works.


I bought my car in 2008. a MK4 Vauxhall Astra for £1,400.

* Since then i've bought a new stainless exhaust system at a few £100. The old exhaust was on its way out but obviously i didn't need to buy stainless.
* I've done a few subtle modifications. Not a great deal. Colour coding bump strips, a different grille, better (arguably) brakes. Nothing big & certainly nothing on the lines of bookshelf spoilers.
* When we had that really bad winter about 7 years ago i picked up a set of winter tyres. Didn't need to but chose to. Put them on in the winter.
* The ECU went last year. Picked up a new programmed one for around £200.
* Thermostat went in the first year

And that's been about it really. General maintenance. 3 cambelt changes as i had it done when i bought it & then the interval is every 4 years, so £200-£250 each time.

I think i've been pretty fortunate with the reliability to be honest.

My wife on the other hand has had a Golf for just over 12 months & it's become a bit of a problem.

My car cost me £1,400 so so far that's £175 per year. I intend to keep it another 4 years so that'd be £116 per year.

I have reservations over modern-modern cars. Too much going on, too much electrical business. To me it's like cars are being built to throw away, not to maintain so i'd prefer to buy older cars, not newer ones.




But as i don't know anything about leasing cars i don't want to say that that option doesn't have its benefits. I just don't really know them.
Is there any way that option would be better for me? What if one day i decide i don't want to pay any more, can you just hand the car back & stop payments with no black mark against your name?

bearcat16

Leasing suits some people, doesn't suit others.

On the plus side, it's a brand new car which will be covered by warranty, and as long as you don't exceed milage limits, keep to service schedules and don't cause any damage, you will have a predictable motoring cost for the whole term, and usually the monthly payments (and initial cost) will be lower than with finance. Sometimes much lower, allowing you either to save on your monthly outlay, or drive a better car than you could otherwise afford.

On the negative side, you never own the car, and getting out of the contract early (for example if you were made unemployed) is expensive. (Typically you have to pay 50% of the remaining payments)

The way to work out if it is worth doing is to calculate the 3 year cost of leasing vs the 3-year cost of other funding options (remember to include depreciation and finance interest). For many cases, leasing will work out cheaper.

One thing to watch is that prices for the same vehicle can vary crazily from one provider to another, so you have to shop around.

sonething that put me off is optional extras. If you purchase, optional extras cost more, but they also increase the value when it comes time to sell (mostly). With leasing, optional extras simply increase your monthly payment.

A good place to compare prices is https://www.contracthireandleasing.com but the internet is awash with offers.

JustAnotherSaver

Thanks for the response.

I think based on all that that leasing isn't an option for me.

A co-worker pays up just over £100pm for a little Yaris. I personally wouldn't want something so slow. My co-worker isn't bothered about speed & prefers a newer car over speed so he's happy but anyway he pays just over £100pm. So basically he's buying a £1200 car every year yet he isn't because he isn't even owning the thing.

I think for now i'll carry on buying cars. I can handle them being older. I just didn't want to be close minded.

wymondham

For the budget you're used to paying, stick to buying as lease will be more expensive....

AnotherJoe

To be fair to your colleagues you are talking about the difference between "bangernomics" and new to nearly new cars. You really need to consider loan, purchase, leasing, HP, PCP as ways of buying new cars, and which works best for you.

So compare say cash vs bank loan vs PCP for buying a £20k+ car. But you don't compare any of those vs buying an old car you'll maintain yourself. Different worlds, each to their own.

andrewf75

Seems quite simple to me. Leasing is comparable in cost to buying a new car and changing it every few years. If that is what you do anyway, then it’s worth considering. It makes little difference whether you buy or lease, you pay for the depreciation either way. But if you’re considering leasing only because a monthly payment makes it affordable and wouldn’t otherwise dream of buying a brand new car, then I think it’s a bad idea.

I think it’s actually pretty shocking that leasing has become the norm, because people on incomes which would ordinarily lead them to buy second-hand are being persuaded to pay for a new car. Yes it supports the car industry, but is it sustainable? At some point I feel it will all come crashing down.

For those of us with a money-saving mentality though, it’s great because it means that second hand cars have become really good value.

dannyrst

Leasing will generally be cheaper than buying a new car because the company you lease from will get the cars cheaper than you could if you went to the dealership, and will have companies like Motorpoint lined up to buy them. You need GAP if you lease (realistically) and you also need to keep money aside for damage repairs.

Someone else may be able to confirm, but if you PCP a brand new £20,000 car, you have finance on your credit record of £20,000 (even if you don't intend to keep the car). If you lease, surely you wouldn't have that as you are never in a position to own the entire car.

gilbert_and_sullivan

andrewf75 wrote: »

.

I think it’s actually pretty shocking that leasing has become the norm, because people on incomes which would ordinarily lead them to buy second-hand are being persuaded to pay for a new car. Yes it supports the car industry, but is it sustainable? At some point I feel it will all come crashing down.

.

Agreed, whilst this way to finance cars might be fine for many, it isn't right for everyone, nor is PCP.

How many threads have we seen here where people sign up to these deals and 3/6/12 months later they've lost their job, getting divorced, having a baby (which means we need a 7 people carrier at least) or any one of a hundred different scenarios, but they've signed up to a 3 or 4 year deal of £199/299 a month as a well as the sometimes hefty deposit they put up front to make those monthly payments appear good deals.

It all looks so simple via those easy payments whilst you are being wooed in the shark's lair in the showroom looking longingly at those polished wheels.

A lease deal over 3 years might well see total payments (just to rent the car) of around £6000/£10,000 or more if a big car tempts.
How many, if they had £10,000 of hard earned sitting in their savings accounts, would draw it out walk down the showroom with it and hand it over in the knowledge that they will be handing that same car back in three years time and possibly getting further bills for damage/mileage/missed servicing.

We've been there before when people have indebted themselves up to the eyballs, is history going to repeat itself yet again?, blaming Brexit or Farage for profligate throwing/promising money about (you haven't got) isn't going to change the outcome when the bailiffs come knocking.

As you rightly mention this is a money saving site, not a spend what you don't have site.

Cornucopia

PCPs/Leases get a hard time on this forum.

Personally, I see them as offering total clarity on the kind of deal on offer compared to other forms of vehicle financing. They also offer a potentially useful guarantee against excessive depreciation, too.

I'm sure there are people who sign up for such deals without doing the very basic maths of 36x Monthly Payments + Deposit = Total Cost over 3 years. But at least the figures are there if they can be bothered.

The comparable calculation for HP is just too vague and too hard: 48 x Monthly Payment + Deposit = Total Initial Commitment. Then: Car Value after depreciation - Early Settlement costs from Finance Co. + Installments not paid = Final Value. Or something like that.

I think people ARE walking into showrooms and making bad deals, but it has always been that way. At least with PCPs/Leases, we can be fairly sure that it is the fault of the customer, not the industry.

Even if a Lease is not right for you, the figures can make a useful comparator to what is being offered by a Dealer, and so often on these forums, the Lease comes out looking quite good compared to a Dealer PCP, and PCPs/Leases will almost always give a good approximation to the relative total cost over the car's first few years.

Cornucopia

JustAnotherSaver wrote: »

Thanks for the response.

I think based on all that that leasing isn't an option for me.

I'm slightly surprised that you thought it might be.

A co-worker pays up just over £100pm for a little Yaris. I personally wouldn't want something so slow. My co-worker isn't bothered about speed & prefers a newer car over speed so he's happy but anyway he pays just over £100pm. So basically he's buying a £1200 car every year yet he isn't because he isn't even owning the thing.

Owning/not owning often comes up, and perhaps some people may draw a small amount of satisfaction/security from the depreciating asset sitting on their drive... depreciating. However, for most people the maths is simple: their car will be worth X% of what they paid in Y years time, and they will pay for that one way or another.

There are only really 2 ways around finding an unknown amount of money at trade-in time. One is Bangernomics (buying something that is old enough to have done most of its depreciation already). The other is Leasing/PCP where the cost of depreciation is built in to the agreement from the outset.

In terms of your co-worker, for example, he isn't "buying a £1200 car" every year. He is buying a £9000 car every 3 years, and someone is taking the pain and effort of that level of depreciation and breaking it down into a single monthly figure. I would have thought that £25 per week to buy a brand new car was quite a good deal, personally.

andrewf75

Cornucopia wrote: »

PCPs/Leases get a hard time on this forum.

Hardly surprising given the name of this website!

As I said before, there is nothing wrong with leasing in comparison to buying a brand new car. The issue is in the sense of financing a brand new car as opposed to a second hand one. Buying brand new cars is an expensive way of motoring. Fine if you can afford it, but there are plenty of people leasing cars who earn 25k a year and who complain about high rents meaning they can't buy a house!