Selling current car for cash and buy a car on lease?

Scofield448

Hi guys, I need some advice on car leasing, please read below my current situation:
So currently I own a car that is worth around £7k, it is 4 years old but its started to have problems. I am thinking of selling this car, saving this money in my bank account and buy a decent car on lease for £300 a month. With insurance the total cost per month will be £410. After all of my bills and including this payment, I will have around £600 left over to spend on food clothes etc.

Is this a wise decision to make? With that 7k I was thinking of spending £300 for the initial rental of the lease and keep the rest of the money in my bank account in the savings account to be used in the future as part as a deposit for a house. I am 23 years old, I have a decent graduate job and in the next 5 years I aim to buy a house hence why I want to lease cars from now on as I don’t want to buy them cash anymore. My credit history is very strong as I have never missed any payments.

Is this a wise financial decision to make? Would be great to hear your views and thoughts. Many thanks everyone 

Grumpy_chap

If you are saving for a house deposit, then the best thing would be to keep the car you have (at only four years old, it should be good for a long time yet).  If you tie yourself up with car finance, that will impact your affordability when any lender is assessing mortgage options.

So, you added a complication that the 4yo car, worth £7k, is giving you problems. 

• What type of car is it? 
• What mileage is it? 
• Did you buy new or used?
• What are the problems? 

It is hard to imagine a 4yo car that has been well cared for and properly serviced (has it?) being so unreliable that it need to be got rid of.

CoastingHatbox

It depends on the terms on the lease. I'm assuming it is a maintained - just add fuel - type arrangement? Are you responsible for rectifying any damage to the vehicle (parking dings etc.) before returning it?

What is wrong with your 4 year old car?

Honestly, that £300 a month spent on leasing will amount to £18,000 over five years, so I think it is a very costly option. Especially when there is bangernomics. Up until 2019 I was running cars anything over 14 years old and I was spending a lot less than what you are planning to.

TimSynths

This plan is madness! What 4 year old car would need the equivalent of £300pm maintenance spending on it? Bugatti? 

Grumpy_chap

Scofield448 said:

How will this impact when I apply for a mortgage if I keep up with all of the car payments? And say in 3/4years time when I have paid off the whole lease, won’t this look good on my credit file?

This is madness.

I cannot believe that a 4yo 50k mile Vauxhall is ready for the scrapper.  You have avoided really saying what the faults are.

In another four year's time, when you have paid the lease, you will be 48 x £300 (£14k) plus whatever deposit you put in less well off.  And the lease (PCP?) car will need to go back, or you will need to pay the large balloon payment.
Keep the current car.

That £14k will be a big help added to your deposit fund for buying a house.

KimJongUn88

You want a new car.  Just go for the lease. Nothing anyone says on here will change your mind. 

Nobbie1967

A lease is an inflexible way to own a car since it commits you to 2 or three years and circumstances might change. It doesn’t help getting a mortgage since the monthly outlay of £300 reduces the amount they will lend you due to affordability checks.

If you don’t like you’re current car, trade it in against something slightly newer and pay off the finance with the £300 you’re not paying on the lease. In a year to 18 months you’ll have paid off the new finance and be saving for a deposit with the £300 a month. You’ll be in a much better position get a mortgage.

AdrianC

If the current car has 50k at 4yrs, that's an average of only 12.5k/year. That's not exactly high mileage. Depending on the pattern of use, it may not be enough to keep a modern diesel happy.

Over the course of a three year lease, you will have spent c.£11,000, and will have nothing at all to show for it at the end - you will hand the car back to the lease firm, and walk away.

If your current car is not reliable, or if your requirements have changed and it's no longer suitable, change it. I would certainly expect a 4yo, 50k car - whatever the brand - to be reliable.

AdrianC

If the current car has 50k at 4yrs, that's an average of only 12.5k/year. That's not exactly high mileage. Depending on the pattern of use, it may not be enough to keep a modern diesel happy.

Over the course of a three year lease, you will have spent c.£11,000, and will have nothing at all to show for it at the end - you will hand the car back to the lease firm, and walk away.

If your current car is not reliable, or if your requirements have changed and it's no longer suitable, change it. I would certainly expect a 4yo, 50k car - whatever the brand - to be reliable.

jimjames

If you lease then in 3/4 years time you'll be handing the car back and have nothing to show for it then have to take out a new lease for another vehicle. 4 years old shouldn't be ready to get rid of, my car is 19 years old and still reliable. 

sheslookinhot

Investigate and sort the water leaks. Batteries don’t “play up”. Find out what are the real electronic issues and have them resolved.