Leasing in pandemic

jumbowindows

I need a new car and am thinking about leasing one. I can’t work out whether it’s viable considering I have no idea how many miles I will drive over the next few years. If things don’t change much I could be doing 2000 miles per year. If I change jobs and need my car for work I could do 20,000. 

To a lesser degree this is always the case - how can anyone really know how many miles they will drive in 3 years time? But this doesn’t seem to be a big issue and most people seem to be very happy with the lease model.

Am I missing something? 

TadleyBaggie

I took out a lease last year, 8000 miles per year. My normal mileage has been 10-11K but after 8 months have done less than 3K, so I should at this rate have a few K in the back for when I start to drive more. I'm retired so all mileage is social.

Grumpy_chap

What is your current car and can you keep that for the time being?
Then choose a new car in whatever finance route works for you once you know the level of mileage you will be doing post-COVID.

If you are currently only doing low mileage, then the costs of a new car seem an extravagance.  Say, you get the new car March and do 2k miles until the end of December before return to normal in January, but you are making payments of £300 monthly.  £3k paid over 10 months and 2k miles is £1.50 per mile.

Will the "new normal" ever mean a return to regular commuting in the same way as pre-COVID?

jumbowindows

Current car is in the garage for the second time and now not worth the cost of repairs. Currently sharing my wife’s Fiat 500 which is a squeeze for the four of us! Have been procrastinating over this for at least 2 months, looking at second hand cars but I’m now wary of repair costs - leasing seems like a good option apart from this mileage uncertainty 

AdrianC

jumbowindows said:

I need a new car and am thinking about leasing one. I can’t work out whether it’s viable considering I have no idea how many miles I will drive over the next few years. If things don’t change much I could be doing 2000 miles per year. If I change jobs and need my car for work I could do 20,000. 

To a lesser degree this is always the case - how can anyone really know how many miles they will drive in 3 years time? But this doesn’t seem to be a big issue and most people seem to be very happy with the lease model.

Am I missing something? 

The current situation is, of course, exceptional. It's less than a year since it hit us.

Outside that, most people have a reasonable idea of how many miles they'll cover. If you genuinely don't know, then estimate low and budget for paying excess mileage charges.

Other ways of financing the car offer more flexibility than a lease, of course - a PCP allows you to benefit from the upside of lower-than-expected depreciation, while buying the car on more trad finance gives you much more flexibility over the duration of your ownership.

Whatever you do, the vast majority of the cost over three years comes down to the same thing... You're using somebody else's money to drive around in a fast-depreciating asset.

DrEskimo

jumbowindows said:

Current car is in the garage for the second time and now not worth the cost of repairs. Currently sharing my wife’s Fiat 500 which is a squeeze for the four of us! Have been procrastinating over this for at least 2 months, looking at second hand cars but I’m now wary of repair costs - leasing seems like a good option apart from this mileage uncertainty 

The logic seems odd to me.

You seem to be worried about potential unexpected repair bills by buying used, so to circumvent that you are going to lease a brand new car where you are guaranteed to pay more in deprecation costs (likely to be much more than any repair bills..).

In answer to your question about mileage, yes, this is exactly why I don't consider lease (not to mention its prohibitively more expensive given it's a new car, and I hate being tied contractually to how long and how much I use it). I started a new job in March that meant going from 0 miles (commuted by train) to up to 20k miles a year. Then of course 3 weeks later I was doing 0 miles again....

Buying used has meant this was a non-issue, and the deprecation on such low miles on a used version of the exact same car I could have leased would have been 5-7 times the cost.
Car came with 2yrs warranty still on it, and I've kept it for another year, so simply extended the warranty for a reasonable £289 for the year. So no worries about bills either.

jumbowindows

DrEskimo said:

jumbowindows said:

Current car is in the garage for the second time and now not worth the cost of repairs. Currently sharing my wife’s Fiat 500 which is a squeeze for the four of us! Have been procrastinating over this for at least 2 months, looking at second hand cars but I’m now wary of repair costs - leasing seems like a good option apart from this mileage uncertainty 

The logic seems odd to me.

You seem to be worried about potential unexpected repair bills by buying used, so to circumvent that you are going to lease a brand new car where you are guaranteed to pay more in deprecation costs (likely to be much more than any repair bills..).

In answer to your question about mileage, yes, this is exactly why I don't consider lease (not to mention its prohibitively more expensive given it's a new car, and I hate being tied contractually to how long and how much I use it). I started a new job in March that meant going from 0 miles (commuted by train) to up to 20k miles a year. Then of course 3 weeks later I was doing 0 miles again....

Buying used has meant this was a non-issue, and the deprecation on such low miles on a used version of the exact same car I could have leased would have been 5-7 times the cost.
Car came with 2yrs warranty still on it, and I've kept it for another year, so simply extended the warranty for a reasonable £289 for the year. So no worries about bills either.

Thank you for this reply. I've been looking at second hand cars between £10k-£15k, if I got something in the upper end of this range and after two years there are engine faults with costs that run into the thousands (which is the situation i am in now*) then it would have been better to lease....i think! 

* although i should point out that the used car i bought 2.5 years ago was only £7k 

But i think, on balance i agree with you and the used car route is the right way to go...paying a little bit more for extended warranty from the dealership. 

AdrianC

2.5yrs from a £7k car that's thrown away at the end works out to £230/mo.
And that's assuming there's zero value in the car as it sits - which there isn't... It's probably worth a grand or two with faults declared, spares or repair. So that takes the amortised monthly cost down to £165 or so.

If you're looking at a 3+35 lease, then anything with a monthly of more than £150 is costing you more.
The absolute cheapest "don't care what" 3yr deals Ling has currently are £200/mo - 6+35 for a Qashqai, or 3+35 for a Skoda Scala, both on 10k.
https://www.lingscars.com/personal-car-leasing?pcp=1&budget=200&yrs=2

rexmedorum

* although i should point out that the used car i bought 2.5 years ago was only £7k 

What did you buy 2.5 years ago for £7k that's now not worth repairing?

mattyprice4004

This is always a factor with leasing - you just have to work out what you reasonably think you'll do. 
If it costs more because you go over then you pay, if you over-estimate and you're under then no harm done. 

BOWFER

Big fan of leasing, I will never buy a car again.
As close to fixed cost motoring as you can get, only servicing and consumables (tyres/wipers/bulbs) to pay for.
No repairs to worry about and roadtax (VED) is paid by the lease company.
With regard to mileage, you just have to 'best guess' and go with that.
Check what they're charging per mile once you go past, it's maybe not so bad.
Depending on he car we've been between 6p and 12p per mile over.
So even if we did a thousand miles more than the agreement, only £60 or £120 to pay - not a big deal.