Is it any wonder people lease/PCP?

DrEskimo

BOWFER said:

DrEskimo said:

People are on a limited budget....so the most financially sound thing you advise them to do is buy a brand new car every 2/3yrs.....read that back to yourself and think for a minute....

What these people should be doing is buying a much cheaper car without finance, and ensuring they still have a fully funded emergency fund.

Yup. that's precisely what I'm saying.
If they really need a reliable car with limited budget, decide on what that budget is per month and lease one.
Keep the thousands they've managed to put together to buy one in the bank to go towards the payments.
Just today we've got someone who's bought a mini for £3600 and can't afford to repair the clutch.
We've got someone else with a Ford with a fancy gearbox that will cost £XXX(?) to fix and they can't afford it.
Wouldn't they better putting £50 a week towards leasing a car?
£200 a month gets you a surprising choice of cars.

No....because all you are doing is saying "Don't buy that car for £3,600, which will only depreciate a couple of grand over the next few years, as you might get landed with a a repair bill. Instead, lease a car over 3yrs for £7,200, where you are guaranteed to pay thousands more than that potential repair bill over the term in depreciation/finance costs'.

It makes absolutely no sense financially...you simply substitute an unknown cost, with a prohibitively large known cost. 

Pay for the repair. In a few months without that lease payment they will have their savings back and in all likelihood the car will run just fine with no further big repair bills for years to come (or however long they wish to keep it).

photome

BOWFER said:

DrEskimo said:

People are on a limited budget....so the most financially sound thing you advise them to do is buy a brand new car every 2/3yrs.....read that back to yourself and think for a minute....

What these people should be doing is buying a much cheaper car without finance, and ensuring they still have a fully funded emergency fund.

Yup. that's precisely what I'm saying.
If they really need a reliable car with limited budget, decide on what that budget is per month and lease one.
Keep the thousands they've managed to put together to buy one in the bank to go towards the payments.
Just today we've got someone who's bought a mini for £3600 and can't afford to repair the clutch.
We've got someone else with a Ford with a fancy gearbox that will cost £XXX(?) to fix and they can't afford it.
Wouldn't they better putting £50 a week towards leasing a car?
£200 a month gets you a surprising choice of cars.

anyone on a limited budget should not be getting a new car every 3 years, that makes no financial sense

BOWFER

DrEskimo said:

No....because all you are doing is saying "Don't buy that car for £3,600, which will only depreciate a couple of grand over the next few years, as you might get landed with a a repair bill. Instead, lease a car over 3yrs for £7,200, where you are guaranteed to pay thousands more than that potential repair bill over the term in depreciation/finance costs'.

It makes absolutely no sense financially...you simply substitute an unknown cost, with a prohibitively large known cost. 

Pay for the repair. In a few months without that lease payment they will have their savings back and in all likelihood the car will run just fine with no further big repair bills for years to come (or however long they wish to keep it).

Fundamental point on which I disagree.
I'm of the opinion that, on older cars, one fault will be replaced with another.
But I admit I'm a perfectionist and won't 'suffer' faults that other people will happily keep driving around with until they're forced to fix it.

Herzlos

DrEskimo said:

BOWFER said:

DrEskimo said:

People are on a limited budget....so the most financially sound thing you advise them to do is buy a brand new car every 2/3yrs.....read that back to yourself and think for a minute....

What these people should be doing is buying a much cheaper car without finance, and ensuring they still have a fully funded emergency fund.

Yup. that's precisely what I'm saying.
If they really need a reliable car with limited budget, decide on what that budget is per month and lease one.
Keep the thousands they've managed to put together to buy one in the bank to go towards the payments.
Just today we've got someone who's bought a mini for £3600 and can't afford to repair the clutch.
We've got someone else with a Ford with a fancy gearbox that will cost £XXX(?) to fix and they can't afford it.
Wouldn't they better putting £50 a week towards leasing a car?
£200 a month gets you a surprising choice of cars.

No....because all you are doing is saying "Don't buy that car for £3,600, which will only depreciate a couple of grand over the next few years, as you might get landed with a a repair bill. Instead, lease a car over 3yrs for £7,200, where you are guaranteed to pay thousands more than that potential repair bill over the term in depreciation/finance costs'.

It makes absolutely no sense financially...you simply substitute an unknown cost, with a prohibitively large known cost. 

Pay for the repair. In a few months without that lease payment they will have their savings back and in all likelihood the car will run just fine with no further big repair bills for years to come (or however long they wish to keep it).

No what he's saying is that if you lease for £x/month then you can't get hit with a huge unexpected bill.

Paying for the repair is fine if you can afford it but not everyone can take a £1000 unexpected bill.

The smarter option is to build up a £1000 savings fund before buying the car but that could take a long time Vs just paying £50/week on a lease deal(6 months if you don't spend any of it).

For example, Lings cars will do you a new Citroen C3 on a 3 + 35 deal for £166.70/month. All you'd then need to cover is fuel/insurance/consumables.
Now you could probably buy and run an older car for less than £6,334 over 3 years but with a lot more work/risk. The days of buying a £200 banger and running it until it passes an MOT seem long gone; Autotrader has 206 cars nationally for under £500 and half of them seem to be non-runners.

ilikedrawing

BOWFER said:

DrEskimo said:

People are on a limited budget....so the most financially sound thing you advise them to do is buy a brand new car every 2/3yrs.....read that back to yourself and think for a minute....

What these people should be doing is buying a much cheaper car without finance, and ensuring they still have a fully funded emergency fund.

Yup. that's precisely what I'm saying.
If they really need a reliable car with limited budget, decide on what that budget is per month and lease one.
Keep the thousands they've managed to put together to buy one in the bank to go towards the payments.
Just today we've got someone who's bought a mini for £3600 and can't afford to repair the clutch.
We've got someone else with a Ford with a fancy gearbox that will cost £XXX(?) to fix and they can't afford it.
Wouldn't they better putting £50 a week towards leasing a car?
£200 a month gets you a surprising choice of cars.

Think you're missing the point of my post, and probably others. I needed consumer advice and I can't afford because I hadn't been paid, and I'd just bought the bloody thing for full asking price 5 days earlier. Theres a difference in giving consumer advice and then giving your personal opinion of their personal choices.

Some people can't finance or lease because their income is unsteady (self-employed, new job etc) or maybe their credit score is bad, or they don't want credit. 

You're also looking at the car situation as black and white. Cars are a luxury item, a Ford Fiesta might be the most sensible option but why isn't everyone in a Ford Fiesta? 

Grumpy_chap

I fear this thread is going too far into DT territory and will likely be closed.

Many of the OP's posts are also very "pro-lease" / "pro-PCP" and, of course, the OP is entitled to their own opinion, though the differences between lease and PCP are many and varied.

In my view, this approach to market cars really focusing on a monthly payment above all else is not correct and leads to lots of heartache when circumstances change.  Far better, IMO, to have what you can afford and build a level of personal financial resilience.

The people that really stand to gain from "innovative" financing on cars are the motor manufacturers and the finance companies. 

Just look at buying a Ford Focus would be around £400 monthly on conventional finance, but £225 on PCP.  Or, on PCP, a Jaguar XF for around £400 monthly.  Obviously, either the far more expensive, bigger, premium car, or the "half price" car has great showroom appeal.  That is how the dealers promote the package.

What they don't promote is the "half price" deal leaves you owning nothing at the end of 3 or 4 years.  

That then leaves you "trapped" at the end of term to either take another loan and continue paying for your current car, or take another loan and pay for another new car.  Hence, in most cases, another car sold and another finance deal struck.  It is a never-ending cycle that keeps the consumer locked-in.

teachfast

One option not discussed is buying an aftermarket warranty, which is likely to be cheaper than PCP as well.

DrEskimo

teachfast said:

One option not discussed is buying an aftermarket warranty, which is likely to be cheaper than PCP as well.

Plenty of cars with long manufacturer warranties. Many of which can be extended for reasonable sums.

For example my Zoe had a 4-year warranty and as I plan on keeping it another year, I extended the warranty for £289 for a year. I can do this until the car is 10-years old.

BOWFER said:

DrEskimo said:

No....because all you are doing is saying "Don't buy that car for £3,600, which will only depreciate a couple of grand over the next few years, as you might get landed with a a repair bill. Instead, lease a car over 3yrs for £7,200, where you are guaranteed to pay thousands more than that potential repair bill over the term in depreciation/finance costs'.

It makes absolutely no sense financially...you simply substitute an unknown cost, with a prohibitively large known cost. 

Pay for the repair. In a few months without that lease payment they will have their savings back and in all likelihood the car will run just fine with no further big repair bills for years to come (or however long they wish to keep it).

Fundamental point on which I disagree.
I'm of the opinion that, on older cars, one fault will be replaced with another.
But I admit I'm a perfectionist and won't 'suffer' faults that other people will happily keep driving around with until they're forced to fix it.

Being slightly melodramatic....

Both my partner and Dad have cars over 10-years old now. Have owned them since they were 3-yrs old and neither has had any out of warranty repairs and neither of them have faults that they have to 'suffer' with.....a Mini Cooper and a Lexus RX450h. Think both look just as good as when they first rolled off the production line too...

Johnmcl7

DrEskimo said:

BOWFER said:

DrEskimo said:

People are on a limited budget....so the most financially sound thing you advise them to do is buy a brand new car every 2/3yrs.....read that back to yourself and think for a minute....

What these people should be doing is buying a much cheaper car without finance, and ensuring they still have a fully funded emergency fund.

Yup. that's precisely what I'm saying.
If they really need a reliable car with limited budget, decide on what that budget is per month and lease one.
Keep the thousands they've managed to put together to buy one in the bank to go towards the payments.
Just today we've got someone who's bought a mini for £3600 and can't afford to repair the clutch.
We've got someone else with a Ford with a fancy gearbox that will cost £XXX(?) to fix and they can't afford it.
Wouldn't they better putting £50 a week towards leasing a car?
£200 a month gets you a surprising choice of cars.

No....because all you are doing is saying "Don't buy that car for £3,600, which will only depreciate a couple of grand over the next few years, as you might get landed with a a repair bill. Instead, lease a car over 3yrs for £7,200, where you are guaranteed to pay thousands more than that potential repair bill over the term in depreciation/finance costs'.

It makes absolutely no sense financially...you simply substitute an unknown cost, with a prohibitively large known cost. 

Pay for the repair. In a few months without that lease payment they will have their savings back and in all likelihood the car will run just fine with no further big repair bills for years to come (or however long they wish to keep it).

I fully agree and I've never had a car that the cost of the repairs was anywhere near the cost of depreciation every year and i'd need to have pretty big failures regularly before I'd come close.  I've had my current car from around three years old to just past ten years old now which is much longer than usual because it's a great car and I've had no major issues with it which is also why I haven't posted any topics on it, there's been on reason to as I'm sure is the case with many other satisfied owners.

onomatopoeia99

Herzlos said:

For example, Lings cars will do you a new Citroen C3 on a 3 + 35 deal for £166.70/month. All you'd then need to cover is fuel/insurance/consumables.
Now you could probably buy and run an older car for less than £6,334 over 3 years but with a lot more work/risk. 

Using a real world example, I bought my car used 17 years ago.  It cost me £27,000 and has averaged £1,000/year in bills (servicing/repairs).  That works out to £215/month, assuming zero residual value now.

What's the monthly lease cost on a Boxster S from Ling?  I want to know if my costs are lower than what she charges or I would have been better leasing.