Buy or Lease

danm

Guys. hearing the mantra to always lease a depreciating asset, but unless I am either missing something or my situation is unique, I am not sure I understand it..


Range Rover Evoque - below are rough numbers

Paid around 33K - valued today at 18,500 - 4 years old (so cost me 15K over 48 months. £310p/m)

Quick look at select leasing and I see similar car, based on same mileage would be £2200 upfront +£252 per month - or £14,300

So cost over 4 years is 15K vs 14K.... for outright versus lease...

Am I missing something- I would be paying pretty much the same, but then give the car back, versus own the asset?

motorguy

danm wrote: »

Guys. hearing the mantra to always lease a depreciating asset, but unless I am either missing something or my situation is unique, I am not sure I understand it..


Range Rover Evoque - below are rough numbers

Paid around 33K - valued today at 18,500 - 4 years old (so cost me 15K over 48 months. £310p/m)

Quick look at select leasing and I see similar car, based on same mileage would be £2200 upfront +£252 per month - or £14,300

So cost over 4 years is 15K vs 14K.... for outright versus lease...

Am I missing something- I would be paying pretty much the same, but then give the car back, versus own the asset?

Yes - though dont forget you would need to raise the £33K in the first place for the Evoque, and have it tied up for four years, and then return £18,000.

Lease it and you've no equity tied up in it

ARandomMiser

We always lease because, generally speaking, i think it works out slightly cheaper thanbuying. But we like to change our cars every 4 years. Maybe if we kept them longer then buying would be better value.

System

Buying them at even 1 year old instead of new would be better value. The bulk of the depreciation and therefore cost is in the first couple of years.

Shaka_Zulu

Instead of an evoque go for something slightly less popular, or about to be rteplaced and you will save even more.

Personally I preferred 3 year lease deals when I was leasing to avoid MOT and being out of warranty etc.

Ebe_Scrooge

danm wrote: »

Paid around 33K - valued today at 18,500

Quick look at select leasing and I see similar car, based on same mileage would be £2200 upfront +£252 per month - or £14,300

So cost over 4 years is 15K vs 14K.... for outright versus lease...

Am I missing something- I would be paying pretty much the same, but then give the car back, versus own the asset?

Forgive me if I'm also missing something ... and I may well be !! But you're looking at the cost of 4 years' motoring, lease vs buy. The overall costs are broadly similar. In the "lease" scenario, you hand it back and have nothing to show for it. In the "buy" scenario you now own an asset worth £18.5k - which you can keep, or sell, or do whatever you want with ? If that's the case, it's a no-brainer in my book.

By the way, I'm not being arsey here. Guys at work are always taking the wostit out of me when my ( 11 year old, I've had it for 8 years ) car needs to go in for repairs. But when I point out to them that, all in ( purchase price, repairs, consumables, etc. ) it's cost me very roughly £6k all in over that time ... then they work out what they've spent on their shiney new lease cars ....

AdrianC

Owning is about flexibility.

If you like your owned car, and want to keep it longer - you can. It gets cheaper thereafter.
If you don't like your owned car, and want to sell it earlier - you can.
If your owned car depreciates less than expected - you get the benefit of that.
If you do more miles than planned - you don't need to pay a penalty.
If you do fewer miles than planned - you aren't paying a premium for miles you're not using.

F1F93

No, the overall costs are drastically different. Leasing costs 14k, buying costs 33k.

With buying, you spend 33k but have an asset worth 18k, so a NET cost of 15k. With Leasing, you spend 14k and have no assets, worth 0k, so a NET cost of 14k.

So, buying and leasing are broadly similar NET costs. The deciding factors will be whether you have 33k cash lying about to buy, whether you want to keep the car beyond the lease term, your attitude towards fixed monthly payments etc.

motorguy

Ebe_Scrooge wrote: »

Forgive me if I'm also missing something ... and I may well be !! But you're looking at the cost of 4 years' motoring, lease vs buy. The overall costs are broadly similar. In the "lease" scenario, you hand it back and have nothing to show for it. In the "buy" scenario you now own an asset worth £18.5k - which you can keep, or sell, or do whatever you want with ? If that's the case, it's a no-brainer in my book.

You are - the cost of buying the Evoque in the first place. You might well have an asset worth £18.5K but it cost you £33K to do that.

If you took the same £33K and paid the monthly lease payments from it at the end of the same timeframe you'd have £33K - £14,300 leasing costs = £18,700 in the bank.

Ebe_Scrooge wrote: »

By the way, I'm not being arsey here. Guys at work are always taking the wostit out of me when my ( 11 year old, I've had it for 8 years ) car needs to go in for repairs. But when I point out to them that, all in ( purchase price, repairs, consumables, etc. ) it's cost me very roughly £6k all in over that time ... then they work out what they've spent on their shiney new lease cars ....

Yes, buying a car outright and running it over an extended period will most often work out cheaper. But some people have a preference to change their car every 3 years and are happy to pay a premium to do so.

parking_question_chap

Buy at a few years old, will save you a fortune over both of the above options.

thescouselander

Tarambor wrote: »

Buying them at even 1 year old instead of new would be better value. The bulk of the depreciation and therefore cost is in the first couple of years.

That's not the reality of it in my experience. Usually there are good deals to be had on new cars that take the actual price paid down to near what a 1 year old model would cost. In fact I'd say buying a car that's a year old is the worst of all options because a new car could be had for the same money and you'd get an extra years warranty.

I think a lot of people make the mistake of thinking people pay list price for new cars when in fact it's quite normal to get 20% off the list price by the time various "contributions" are accounted for.