Buy a "fancy" car or just lease it?

AdrianC

JackeeBoy wrote: »

I'm going to buy it cash, half what I have in the bank and the other half via a credit card.

That's not cash. That's borrowed money.

One question I do have is why the car depreciates so much?

It might be £40k list, but what would you actually pay for one?

and who in their right mind will buy one new when a used one is so cheap!

Finance.
Latest plate.
Spec to choice.

F1F93

AdrianC wrote: »

Buy the used one, and in 4yrs time, you have a £10k asset.
Rent the new one, and in 4yrs time, you have nothing bar a potential bill for the handback.

Not quite. Assuming you start with the same amount of money, if you rent it then you will not have had a large initial outlay so should theoretically have plenty of cash left in the bank, a far more liquid asset than a 5 year old car.

OP can either spend 25k now or 17k over 4 years - they will not have a car at the end of it but they will have the 8k left in the bank that they havent spent on the car in the first place.

So, yes, theyll have 8k rather than a 10k asset. 2k extra to have a brand new car, in the exact spec OP wants, with an extra year of manufacturer warranty, nothing on their credit card, plus the flexibility of having a load extra in the bank for a while because they havent spent it all upfront? I know which one I'd rather go for.

Scrapit

JackeeBoy wrote: »

Thanks all. I'm going to buy it cash, half what I have in the bank and the other half via a credit card. One question I do have is why the car depreciates so much? Assuming there are no mechanical major mechanical problems early on, I'm happy paying £25k for a car that can comfortably fit my family, looks good and drives even better. What I don't understand is why it depreciates so much after a year and who in their right mind will buy one new when a used one is so cheap! Relatively speaking of course

Have you got a way of paying off the credit card to avoid APR?

username901

Lease for 2 years, perhaps 3. Never 4. If you buy the deal rather than the car the cost of the lease is usually much cheaper than that of depreciation. A good target for a 2 year lease with 10k per annum mileage is 20% or less of p11d value, so for a £40k car I'd expect to pay around £8000 over the 2 years. 25% is usually in line with depreciation, but obviously you don't have the hassle of selling or paying the £300+ VED. Anything approaching 30% usually means its a poor deal or a tesla

Owning a BMW out of manufacturers warranty would terrify me personally.

DrEskimo

F1F93 wrote: »

Not quite. Assuming you start with the same amount of money, if you rent it then you will not have had a large initial outlay so should theoretically have plenty of cash left in the bank, a far more liquid asset than a 5 year old car.

Money for what though? If the OP is sensible, they will have cash reserves for emergencies and other savings. This should be money ear-marked specifically for buying a car. Interest from a savings account would be small, and the time frame too short for any reasonable investment without high risk of capital loses.

F1F93 wrote: »

So, yes, theyll have 8k rather than a 10k asset. 2k extra to have a brand new car, in the exact spec OP wants,

They don't though. The get a car with zero spec, as adding any options will result in a much higher cost. A sunroof alone is £995. This is why the used car is even better value, as a comparable lease would be even more expensive.

Remember we are talking a 2019 BMW with <5k. I would suggest you couldn't even tell it apart if the plate was covered and both the lease and the 'used' model were parked side by side..except that the used would have metallic paint and other options maybe!

So you are paying £2k extra to get the same car with less options and with more restrictive terms of use. If having money sitting in a bank is so important than just borrow it. You can do it for less than £2k with current APRs.

DrEskimo

username901 wrote: »

Lease for 2 years, perhaps 3. Never 4. If you buy the deal rather than the car the cost of the lease is usually much cheaper than that of depreciation. A good target for a 2 year lease with 10k per annum mileage is 20% or less of p11d value, so for a £40k car I'd expect to pay around £8000 over the 2 years. 25% is usually in line with depreciation, but obviously you don't have the hassle of selling or paying the £300+ VED. Anything approaching 30% usually means its a poor deal or a tesla

Owning a BMW out of manufacturers warranty would terrify me personally.

Doing it based on the RRP is just misleading. It's a price no one is paying and creating a false sense of value that doesn't actually exist.

With the exception of a Tesla...lol

JackeeBoy

Scrapit wrote: »

Have you got a way of paying off the credit card to avoid APR?

Going to get an interest free credit card. and do a balance transfer after two years, hopefully paying everything off year 3..

motorguy

What miles do you do per year? If its not massive, i'd consider a 520i M Sport. A 9 month old, 6k miles example can be had for £22,995 and thats an approved used car

https://usedcars.bmw.co.uk/vehicle/201911134332177?

motorguy

daveyjp wrote: »

I thought the used price looked optimistic, but having looked on BMW website I am now wondering how much more they will depreciate.

Mid to high 40k cars when new now advertised at mid £20k after less than a year.

The 5 series is obviously a car not many buyers now want.

Several things :-

• Its not a high £40K car. The first broker i looked at quoted £36K for a 520d M Sport auto, and £33K for a 520i M Sport auto.
• The 3 series is that big now most people who want a saloon car will just go for that
• People who want a bigger car than a 3 series will probably go for an SUV model

motorguy

JackeeBoy wrote: »

Going to get an interest free credit card. and do a balance transfer after two years, hopefully paying everything off year 3..

Will the car dealer take the credit card as 50% of the price? I think most now wont as they have the fees to pay out of it.

If not, how much does it then cost you to draw down the cash in to your current account from your credit card? Theres normally a charge for that?