Pros and cons of leasing vs PCP

ComicGeek

So as per the thread title, I'm currently looking at options for a new car - I've bought cars with cash before and had PCP before, but not had a lease. I don't see myself keeping the car beyond the 3 years, so looking at the lowest cost option for a car that I want to drive over the 3 years.

On paper it looks like a no brainer for lease over PCP - particularly as dealership interest rates for 1 car I'm looking at is 5.9% apr, which is just crazy. I can get the same car on lease for 3 years with a lower deposit for nearly £200/month less than the PCP deal, so a massive £7200 over 3 years plus the £5000 deposit difference. That's on the same annual mileage allowance.

Any opinions on lease agreements? I don't see the point of paying an additional £12200 for the option to purchase the vehicle at the end of the PCP contract when I'm not going to do that, but wanted to check that I'm not missing something here!

I'm looking at leasingoptions as suggested by MSE - prices seem to be better than others I've looked at, but any other suggestions in case I can reduce the costs further?

Krisharris77

Always been a cash buyer myself, but now struggling to get a large sum of money together for a new one so have been doing some research into financing - like you I do not want to buy out at the end of contract as will budget in monthly costs and get a nice shiny new car every few years for the same money regularly.
I would say that leasing gives the best flexibility and you can start with a 1 month deposit but that does increase the monthly payment - but like I say I'm struggling to get a large amount of money together as so many other outgoings.
My next problem is who to use as their are so many leasing companies out there - do you play it safe with the big ones on Google or use a smaller independent. Would love to hear if anyone has any recommendations of good leasing companies - or ones to avoid
Thanks

neilmcl

ComicGeek wrote: »

So as per the thread title, I'm currently looking at options for a new car - I've bought cars with cash before and had PCP before, but not had a lease. I don't see myself keeping the car beyond the 3 years, so looking at the lowest cost option for a car that I want to drive over the 3 years.

On paper it looks like a no brainer for lease over PCP - particularly as dealership interest rates for 1 car I'm looking at is 5.9% apr, which is just crazy. I can get the same car on lease for 3 years with a lower deposit for nearly £200/month less than the PCP deal, so a massive £7200 over 3 years plus the £5000 deposit difference. That's on the same annual mileage allowance.

Any opinions on lease agreements? I don't see the point of paying an additional £12200 for the option to purchase the vehicle at the end of the PCP contract when I'm not going to do that, but wanted to check that I'm not missing something here!

I'm looking at leasingoptions as suggested by MSE - prices seem to be better than others I've looked at, but any other suggestions in case I can reduce the costs further?

The only thing to be aware the penalties for getting out of a lease are usually much higher should your circumstances change, you simply can't settle the agreement as you could do with a PCP/HP. As you've no intention on keeping the car then a lease is pretty much a no-brainer if you want a new car.

neilmcl

Krisharris77 wrote: »

Always been a cash buyer myself, but now struggling to get a large sum of money together for a new one so have been doing some research into financing - like you I do not want to buy out at the end of contract as will budget in monthly costs and get a nice shiny new car every few years for the same money regularly.
I would say that leasing gives the best flexibility and you can start with a 1 month deposit but that does increase the monthly payment - but like I say I'm struggling to get a large amount of money together as so many other outgoings.
My next problem is who to use as their are so many leasing companies out there - do you play it safe with the big ones on Google or use a smaller independent. Would love to hear if anyone has any recommendations of good leasing companies - or ones to avoid
Thanks

Let's stick to the OP's questions first, you may want to start your own thread if all you want are recommendations of lease companies.

ComicGeek

neilmcl wrote: »

The only thing to be aware the penalties for getting out of a lease are usually much higher should your circumstances change, you simply can't settle the agreement as you could do with a PCP/HP. As you've no intention on keeping the car then a lease is pretty much a no-brainer if you want a new car.

Thanks for the response - just wanted to get a sense check on it, as it looks like a lease would be £12k cheaper on one car and £6k on the second. Very similar list price, main difference is the manufacturers' different interest rates on PCP. Also looks like there are lots of good lease deals available on the car with the higher manufacturer's interest rate, so that further skews that one when comparing.

PCP prices don't take into account any negotiations or carwow etc,but still can't believe that it will anywhere near the leasing price. Found cheaper leasing prices on nationwidevehiclecontracts this afternoon as well, another £25/month cheaper.

System

ComicGeek wrote: »

Any opinions on lease agreements? I don't see the point of paying an additional £12200 for the option to purchase the vehicle at the end of the PCP contract when I'm not going to do that, but wanted to check that I'm not missing something here!

If that is the intent then you're probably better off leasing. Only downside is there's no escape clause ala Voluntary Termination or the ability to sell the car to clear the PCP early should you find yourself in financial dire straits.

ComicGeek

So after test driving both cars, I decided to go for the one that was £6k cheaper over the 3 years on lease over PCP. Car OTR price of £38k.

I tried to negotiate down the lease rates, but found that no one was willing to move on those. I took the best online lease deal to a local dealership, and said that this is what they would have to match for the PCP to get my order. Surprisingly they were able to match it so that the total cost over the 3 years would be the same - if you don't ask, you don't get!

I can't see this working every time, but did on this particular car. Definitely some good lease deals out there if you're not picky on the car model and colour.

AnotherJoe

Nice one! added text

Robby1988

You did the right thing. Print off your leasing quotes and present them to the dealer and say "match it or i'm off".

My father in law recently dealt with a Skoda dealership. They told him they don't offer personal leases originally, then when he took in cheaper quotes all of a sudden they had a change of heart. In the end he got the top spec model for £20 a month cheaper over a 36 month term on lease, than the mid spec model over a 48 month term on a PCP!

PCPs are alright if there is 0% interest on offer because you in with a good chance of being in positive equity at the end of the deal. Otherwise i'd leave everytime. I've never met anybody with a car on PCP who has any intention of buying it.

One thing i'll add... if your taking out a PCP don't fall into the trap of setting the mileage too low. Dealers will swear blind it doesn't matter as they try and keep your quote down to bag a sale, but it will effect the actual value of your car at the end of your deal which will cost you in equity if you end up going elsewhere for your next one.

Krisharris77

neilmcl wrote: »

Let's stick to the OP's questions first, you may want to start your own thread if all you want are recommendations of lease companies.

Thank you I will

loskie

never lease more than 36m and certainly consider 24 m over that. Remember to be as accurate as you can with the miles or you will be stung at the end. I don't think anyone mentioned the benefit that with a lease you do not owe on the whole car with a PCP you do so your credit rating may look better.