New Loan vs Car Leasing?

Phowarth

Please can someone give me advise. I think this may be something I have to decide btu I would like someone elses opinion. I currently lease a car costing me £360.00 per month. I have a £1900.00 penalty clause if I terminate the agreement now. I now think £360.00 pe rmonth is waisting money. I've looked around and can get a £11500.00 loan over 6 years (£1900.00 penalty included) for around £195.00 per month. I've done all the math and worked out how much I would save using the loan but I can't help thinking i'm taking an additional £1900.00 debt. I can't decide if I shoudl stick with the car or go for a loan and buy one.

Can someone kick me in the right direction.

HeadInSand_2

swapaplease1 wrote: »

Hi Phowarth

.co.uk have a link on their main page which is really helpful for this type of evaluation. Also if you need out of the lease car early and not pay penalty try plug! plug!

You'll get your wrist slapped for plugging your own website, not allowed here...

Undercovercarrot

Have you looked at voluntary termination (also known as voluntary relinquishment) rights? This means for most people, when you reach the midpoint of your contract (eg after 24 months on a 4 year contract) then you can hand the car back to the finance company without any penalty. Obviously then you have no equity in the car, but at least you are out of the deal.

If you are before the mid point of your deal, then you can still pay up to the mid point amount. Ask your HP company regarding this.

You may wonder why HP companies do not tell you about this: there is a very simple reason - profit. If you carry on paying, they are making money hand over fist, particularly if you are on a higher APR. However, it IS your right to terminate. It is included in your HP package.

Common tactics used to dissuade you are:

1) You'll have to pay a charge.
- nope. The only charge that they are allowed to make is a reasonable collection charge (my HP company was £45) and also a charge for any unreasonable damage to the car above normal wear and tear.

2) It will affect your credit rating.
- No, no, no!!! This is part of YOUR consumer rights. As long as you have not had a notice of default served, then you will have settled the finance legally and acceptably under the terms of your HP.

3) You'll not get credit from that company again.
- Well, that's up to them, quite frankly. However, if you are already being tortured by a very high APR, is this exactly going to bother you? There are hundreds of companies falling over themselves to get you as a customer.

Something worth noting is that if you have GAP/RTI/PPI insurances on the car, then you may well have to pay an extra charge to these people to cancel the insurance.

If you want to go through with this, phone up your HP company and ask to cancel under your voluntary termination rights. They will then provide you with all the relevent information and arrange for someone to inspect and collect your car if you go ahead with the deal.

Hope this helps

scooterpig

Undercovercarrot, thanks for the advice. Does this also apply to agreements that feature a balloon style payment.