Lease a car vs buying a car?

andrewf75

almillar wrote: »

Bingo. In the context of motoring, it's about getting a good deal on a Ferrari, and not paying full price for a Fiesta. It's NOT about everyone driving a banger.

I agree, but I think you and others are missing the point being made by myself and others sceptical of leasing.

I don’t think anyone is saying that lease deals are intrinsically bad, just that they tempt people on low incomes to finance new cars, when it makes much more sense for them to buy second hand – as would have been the norm before leasing.


Seems to me that most of the people asking the question should I lease or buy are on low incomes.

Cornucopia

Are you saying that a £150pm Lease actually costs more than that, because I don't think it does.

Sometimes times change, and I think that this is one of those times...

andrewf75

Cornucopia wrote: »

Are you saying that a £150pm Lease actually costs more than that, because I don't think it does.

Not at all. One of the advantages is that it’s a fixed payment and you know where you stand.

What I’m saying is that you are paying the equivalent to buying it new just spreading the cost per month. If you can afford a new car that’s fine.

Cornucopia

andrewf75 wrote: »

Not at all. One of the advantages is that it’s a fixed payment and you know where you stand.

What I’m saying is that you are paying the equivalent to buying it new just spreading the cost per month. If you can afford a new car that’s fine.

What does "afford a new car" mean though? Why would someone who can afford £150pm worry about whether they can afford the original list price of £15k?

andrewf75

Cornucopia wrote: »

What does "afford a new car" mean though? Why would someone who can afford £150pm worry about whether they can afford the original list price of £15k?

Most probably don’t worry, but that just sums up the problem. Wages aren’t rising, housing is more and more unaffordable, people aren’t saving enough for their retirement etc. etc. yet they are happy to pay £150+ a month for a car when they could do it for well under £100.

This is the kind of bigger picture issues that concern me. And as this site is specifically about money saving, the advice I would give would reflect that, but it’s only my opinion.

laidbackgjr

OK - let's assume a lease is £150 per month for 3 years on a £15k car - so fixed cost is £5,400.

Now let's assume I buy the car for £15k and then after 3 years sell it for £10k - I've paid £5,000 for 3 years use - therefore buying outright was cheaper than leasing.

andrewf75

laidbackgjr wrote: »

OK - let's assume a lease is £150 per month for 3 years on a £15k car - so fixed cost is £5,400.

Now let's assume I buy the car for £15k and then after 3 years sell it for £10k - I've paid £5,000 for 3 years use - therefore buying outright was cheaper than leasing.

I think for buying a new car that comparison could go either way...

Where the savings are much more significant is when you compare to buying say a £7k second hand car and keeping it for 6 years. Depreciation is fastest in the first few years And leasing locks you into that high-depreciation period, whereas if you buy you have the option of keeping the car and enjoying lower costs after that.

Cornucopia

laidbackgjr wrote: »

OK - let's assume a lease is £150 per month for 3 years on a £15k car - so fixed cost is £5,400.

Now let's assume I buy the car for £15k and then after 3 years sell it for £10k - I've paid £5,000 for 3 years use - therefore buying outright was cheaper than leasing.

Those figures sound suspiciously round, but illustrate the situation all the same. There is a cost to putting £15k into a car. Okay, so the savings sacrifice might only be 1% at the moment, but it hasn't always been that low. Or you could finance it, and maybe get 5-6% APR - a bit less with good credit. Also, you would be doing extremely well to lose only 33% over 3 years - 50-60% is more typical.

Even with all that missing from your figures, you're still only showing a £400 advantage over 3 years.

laidbackgjr

Cornucopia wrote: »

Those figures sound suspiciously round, but illustrate the situation all the same. There is a cost to putting £15k into a car. Okay, so the savings sacrifice might only be 1% at the moment, but it hasn't always been that low. Or you could finance it, and maybe get 5-6% APR - a bit less with good credit. Also, you would be doing extremely well to lose only 33% over 3 years - 50-60% is more typical.

Even with all that missing from your figures, you're still only showing a £400 advantage over 3 years.

But then - where are you finding a lease for £150 a month on a £15k car - I've just had a quick search and for a lease of £150 a month you get a car around £9 to £10k - plus you have to find a deposit - so it's not the simple numbers I used or that you used - but it's the logic of comparison that you need to develop.

andrewf75

Cornucopia wrote: »

There is a cost to putting £15k into a car. .

There is also a cost to being locked into a contract.
If you buy a 15k car and lose your job in a months time, you can sell the car.....you're in control if your circumstances change and you actually have the car at the end of the 3 years comparison

See my last post as well for why the saving are a lot more if you keep your car for longer than 3 years.