Is a lease car better then loan?

t3rm3y

lts on 148000 currently , and I do about 15000 per year I reckon. During lockdown travel was minimised a bit more 

Brie

t3rm3y said:

Brie said:

A lease may be cheaper than a loan but you don't own the car at the end of the period you are comparing when it's a lease.  And in order to buy the car at the end of the lease means having a nice big lump sum ready to do so (or have that credit available from elsewhere). 

When I've looked into this the leasing company couldn't tell me what I'd need to pay in 3 years because they don't know what the market for that car would be so far into the future.  That uncertainty means I can't do a proper cost comparison and as a result I've always gone for buying a car not leasing. 

For me as well I've never had a loan for one per se but used a credit card to purchase and then done a 0% balance transfer to a card with a significant period in which to pay the total off.

Ok, so you buy on a credit card with 0%? So you then pay a bit off each month? Then transfer remainder to another 0% card if the first ones offer runs out?
Or you don't have to pay anything on a 0% card monthly until their offer runs out then you pay it all off in one go ? 

I've done it both ways.  Bought a car with a CC with a 0% interest on purchases for 18 months or similar.  Or bought it on one CC and then transferred to another with a 0% balance transfer for 18 months or something.  Best and easiest way to manage it is to use that 0% card for nothing else and ensure you have a direct debit set up to pay at least the minimum each month (else you lose the 0% and get switched to 22% or something). 

If you bought something for £10k and your minimum monthly payments were 2% of your statement total you would pay £200 the first month and it would lessen on each month.  Or you might set your DD to always be £200 which would make life easy.  In the first scenario you would pay a total of about £3050 over 18 months.  In the second you would pay £3600.  Either way you still owe at the end of the 18 months so you must be prepared and be able to do another transfer to another deal or pay off the remaining amount.  (and pay a fee to do so which would be added to the balance.)

Alternatively put the purchase on a 0% card with either deal and pay the minimum each month but ensure you put another chunk in a savings account.  If you are paying a total of £550 a month (£200 to the CC in the first month and £350 into savings to get some interest) then at the end of the 18 months you have enough to clear the balance.  Takes a bit more discipline but is much more sensible in the long run.  Basically it's a loan that you are managing all by yourself.  

t3rm3y

Brie said:

t3rm3y said:

Brie said:

A lease may be cheaper than a loan but you don't own the car at the end of the period you are comparing when it's a lease.  And in order to buy the car at the end of the lease means having a nice big lump sum ready to do so (or have that credit available from elsewhere). 

When I've looked into this the leasing company couldn't tell me what I'd need to pay in 3 years because they don't know what the market for that car would be so far into the future.  That uncertainty means I can't do a proper cost comparison and as a result I've always gone for buying a car not leasing. 

For me as well I've never had a loan for one per se but used a credit card to purchase and then done a 0% balance transfer to a card with a significant period in which to pay the total off.

Ok, so you buy on a credit card with 0%? So you then pay a bit off each month? Then transfer remainder to another 0% card if the first ones offer runs out?
Or you don't have to pay anything on a 0% card monthly until their offer runs out then you pay it all off in one go ? 

I've done it both ways.  Bought a car with a CC with a 0% interest on purchases for 18 months or similar.  Or bought it on one CC and then transferred to another with a 0% balance transfer for 18 months or something.  Best and easiest way to manage it is to use that 0% card for nothing else and ensure you have a direct debit set up to pay at least the minimum each month (else you lose the 0% and get switched to 22% or something). 

If you bought something for £10k and your minimum monthly payments were 2% of your statement total you would pay £200 the first month and it would lessen on each month.  Or you might set your DD to always be £200 which would make life easy.  In the first scenario you would pay a total of about £3050 over 18 months.  In the second you would pay £3600.  Either way you still owe at the end of the 18 months so you must be prepared and be able to do another transfer to another deal or pay off the remaining amount.  (and pay a fee to do so which would be added to the balance.)

Alternatively put the purchase on a 0% card with either deal and pay the minimum each month but ensure you put another chunk in a savings account.  If you are paying a total of £550 a month (£200 to the CC in the first month and £350 into savings to get some interest) then at the end of the 18 months you have enough to clear the balance.  Takes a bit more discipline but is much more sensible in the long run.  Basically it's a loan that you are managing all by yourself.  

Ok thanks for the details on it. A little high for me at moment to do that way. 
Current car I had saved 3k and took loan for 5k, got myself a 4yearbold car on 40000 miles. And could manage the repayments , now cars cost considerably more and have higher milage..

Herzlos

Lease gets you a new car for a fixed cost over 3/4 years, but the contract is for the full term and leaving it early usually means paying it all off. At the end you hand it back and have nothing.

Loans get you any car for a fixed cost over 3/4 years, but you can sell the car at any point and just clear the balance. You also get to own the car at the end.

Generally the cheapest car you can have is the one you already own - just make sure you've got decent breakdown cover and put the £150/month into a pot until it fails and then try to get a loan for something else. You don't need to go for a 3 year old low mileage car to be reliable, just buy based on condition and service history.