PCP or lease?

Keep_pedalling

In the past I have always purchased cars outright, but I will shortly be ordering a new EV to replace my ID3 and the car I am almost certainly going to go with I can get  0% PCP with and £3,500 deposit contribution. This looked a bit of a no brainer with little in the way of discounts for cash purchases available, until I ran the numbers against leasing costs.

Three year costs for leasing run out about £3-3.5k lower than PCP so I can either save around £1k per year or pay around the same for a higher spec. My only concern is what happens if for some reason I can no longer drive or kick the bucket during the lease, coming up to 71, but no health issues at the moment, so I think the risk is low. 

I normally replace my cars at 3-4 years anyway so having the ability to pay to own at the end of a PCP is not really of great importance, so apart from the a bit of morbid thinking is their any other reason I should opt for PCP over leasing? 

sheslookinhot

Just be aware, if a car is leased then you cannot “break” the lease and it is therefore required to run/ be paid for the full term.

Frozen_up_north

Keep_pedalling said:

Three year costs for leasing run out about £3-3.5k lower than PCP so I can either save around £1k per year or pay around the same for a higher spec. My only concern is what happens if for some reason I can no longer drive or kick the bucket during the lease, coming up to 71, but no health issues at the moment, so I think the risk is low. 

My thoughts are that you need to consider a few things with regard to either finance option:

What additional costs are there if the car has excess mileage, "damage", or faults, at the end of the term? Over 3 years cars are expected to have a few stone chips at the front and the odd scuff on alloy wheels, but some companies go over a car with a magnifying glass and add every little blemish to the charges at significant cost.

I normally drive around 6000 miles a year, but recently have done a few long journeys as a result of a relative needing transport to/from a distant hospital. Nothing to do with my health, but these things happen, especially with older friends/relatives. While my car is an outright purchase, if it were a lease car the additional miles could be expensive.

Also what happens if the car is written off, would the insurance cover all the cost or would you be left with a big bill?

Well heeled friends have bought cars on finance to save money over outright purchase, so there might be an advantage in doing that, but personally I steer clear of finance. My recent car, bought new 2 months ago (petrol, not an EV), was significantly cheaper to buy outright compared to PCP. I hadn't considered leasing. I plan to keep the car for at least 5 years.

Just my 2p worth as a fellow 71 year old...

Keep_pedalling

Frozen_up_north said:

Keep_pedalling said:

Three year costs for leasing run out about £3-3.5k lower than PCP so I can either save around £1k per year or pay around the same for a higher spec. My only concern is what happens if for some reason I can no longer drive or kick the bucket during the lease, coming up to 71, but no health issues at the moment, so I think the risk is low. 

My thoughts are that you need to consider a few things with regard to either finance option:

What additional costs are there if the car has excess mileage, "damage", or faults, at the end of the term? Over 3 years cars are expected to have a few stone chips at the front and the odd scuff on alloy wheels, but some companies go over a car with a magnifying glass and add every little blemish to the charges at significant cost.

I am not too worried about that, minor damage reduces trade in or resale price and the same charges apply if you hand back the car at the end of a PCP term.

I normally drive around 6000 miles a year, but recently have done a few long journeys as a result of a relative needing transport to/from a distant hospital. Nothing to do with my health, but these things happen, especially with older friends/relatives. While my car is an outright purchase, if it were a lease car the additional miles could be expensive.

I have a very good idea of our annual mileage and it is unlikely to change much in the next 3 years.

Also what happens if the car is written off, would the insurance cover all the cost or would you be left with a big bill?

I will certainly look at gap insurance for the second and third years to minimise any shortfall with a write off. 

Well heeled friends have bought cars on finance to save money over outright purchase, so there might be an advantage in doing that, but personally I steer clear of finance. My recent car, bought new 2 months ago (petrol, not an EV), was significantly cheaper to buy outright compared to PCP. I hadn't considered leasing. I plan to keep the car for at least 5 years.

Just my 2p worth as a fellow 71 year old...

I think I fall in with your well healed friends, I can easily afford the outright purchase price, but PCP or Leasing is going to the cheapest option by some way especially when you take into account the considerable extra money that will remain earning interest in our savings accounts over those 3 years.

If you are well off, finance seems to make more sense than if you are not, which is probable why our IFA uses leasing and suggested we dis as well. 

Keep_pedalling

sheslookinhot said:

Just be aware, if a car is leased then you cannot “break” the lease and it is therefore required to run/ be paid for the full term.

Yes I am aware of that, which was my concern about what happens if something happens to me. My wife does not drive but I have to children who do so I think it would be possible to transfer the lease to one of them.

DrEskimo

Does it have to be new?

used EV market is very good for buyers, and will save substantially over new, whether PCP or lease. 

For context leases for a Zoe back when I was looking at buying in 2019 were about £300-£350 over two years. Ended up keeping my used Zoe for well over 5yrs, and once I sold it, all in the cost to me worked out ant around £120/month. So substantially cheaper, and was fully under warranty the entire time.

I always like the flexibility. You say you like to keep your cars for ‘2-3yrs’, but remember with a lease you have to change on that exact day. You’re then forced to buy or lease whatever is available at that exact time. The option to just keep the car and know it’s paid for is worth a lot to me personally. 

Also you can get way more for your money. Picked up a used Tesla Models S performance in September, and it’s a lot of car when you consider that most new EVs cost the same or actually more. 

born_again

Take the PCP option & the pay it off.

DrEskimo

born_again said:

Take the PCP option & the pay it off.

Not much point if it’s 0%.

Keep_pedalling

born_again said:

Take the PCP option & the pay it off.

I did that last time but no point with 0%. 

Hoenir

Keep_pedalling said:

Frozen_up_north said:

Keep_pedalling said:

Three year costs for leasing run out about £3-3.5k lower than PCP so I can either save around £1k per year or pay around the same for a higher spec. My only concern is what happens if for some reason I can no longer drive or kick the bucket during the lease, coming up to 71, but no health issues at the moment, so I think the risk is low. 

My thoughts are that you need to consider a few things with regard to either finance option:

What additional costs are there if the car has excess mileage, "damage", or faults, at the end of the term? Over 3 years cars are expected to have a few stone chips at the front and the odd scuff on alloy wheels, but some companies go over a car with a magnifying glass and add every little blemish to the charges at significant cost.

I am not too worried about that, minor damage reduces trade in or resale price and the same charges apply if you hand back the car at the end of a PCP term.

I normally drive around 6000 miles a year, but recently have done a few long journeys as a result of a relative needing transport to/from a distant hospital. Nothing to do with my health, but these things happen, especially with older friends/relatives. While my car is an outright purchase, if it were a lease car the additional miles could be expensive.

I have a very good idea of our annual mileage and it is unlikely to change much in the next 3 years.

Also what happens if the car is written off, would the insurance cover all the cost or would you be left with a big bill?

I will certainly look at gap insurance for the second and third years to minimise any shortfall with a write off. 

Well heeled friends have bought cars on finance to save money over outright purchase, so there might be an advantage in doing that, but personally I steer clear of finance. My recent car, bought new 2 months ago (petrol, not an EV), was significantly cheaper to buy outright compared to PCP. I hadn't considered leasing. I plan to keep the car for at least 5 years.

Just my 2p worth as a fellow 71 year old...

I think I fall in with your well healed friends, I can easily afford the outright purchase price, but PCP or Leasing is going to the cheapest option by some way especially when you take into account the considerable extra money that will remain earning interest in our savings accounts over those 3 years.

If you are well off, finance seems to make more sense than if you are not, which is probable why our IFA uses leasing and suggested we dis as well. 

Unfortunately with the advent of finance for virtually everything. The days of a discount for cash are well past. Instead the "finance" is embedded into inflated selling prices. No such thing as a free lunch. Just smoke and mirrors. 

Keep_pedalling

DrEskimo said:

Does it have to be new?

used EV market is very good for buyers, and will save substantially over new, whether PCP or lease. 

For context leases for a Zoe back when I was looking at buying in 2019 were about £300-£350 over two years. Ended up keeping my used Zoe for well over 5yrs, and once I sold it, all in the cost to me worked out ant around £120/month. So substantially cheaper, and was fully under warranty the entire time.

I always like the flexibility. You say you like to keep your cars for ‘2-3yrs’, but remember with a lease you have to change on that exact day. You’re then forced to buy or lease whatever is available at that exact time. The option to just keep the car and know it’s paid for is worth a lot to me personally. 

Also you can get way more for your money. Picked up a used Tesla Models S performance in September, and it’s a lot of car when you consider that most new EVs cost the same or actually more. 

I know I could get near new car and save a lot, but I have not found one that meets my requirements. I won’t buy a Chinese built car ant am not prepared to touch anything that Musk has anything to do with. Plenty of EV 6s and Ioniq 5s that can be picked up at good prices but they are bigger than I need or want. As for Tesla, I can’t buy anything with the stench of Musk attached to it.

If I was proper MSE I would just keep the ID3 for a few more years ( it is still going well with little noticeable load of range), but I have to reduce my IHT liability somehow 😈