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Car Leasing.

Hi Mull, if your daughter as you mentioned earlier is not fussed (within reason) about the year ID on the plate then maybe the answer is to be found there.

I know quite a lot of folk who budget say for arguments sake £300 a month for a lease. At the end of the lease the idea is (or their idea is) they keep paying the £300 but jump in to another latest plate vehicle.....without pain, or at least pain that they realise.

Now I can understand leasing for business, ie appearances, reliability and the rest, however I'm buggered why some people who do shopping mileage bother.

A lot of people as I've said before on here are driving cars they can't afford to own, I know you daughter can Mull but would love to know what she'll be using it for and how many miles per annum she reckons on.

Some sensational deals on "nearly new" at present which if she's keeping it for a few years has to be a better bet then getting strapped up with a lease.

Everyone's circumstances differ and a lease is obviously right for some, but a folley for others. Yes, I've leased cars for business but I just couldn't do it for a none business vehicle.

Cheers.
 
Mullardman said:
Daughter is looking for a replacement for her written off Citroen DS3. Would like same model. (Top of range.. naturally.. as befits Her Majesty... ;) )

Looking around for decent s/h but also considering leasing.

I know nothing about leasing and neither does she.

Any pointers? Pitfalls to be wary of or other generally useful info would be appreciated.

Thanks,

Mull
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My daughter recently bought a new (brand new) car. She was advised that leasing or pcp or whatever was not a good idea if she intended to run it for more than 3 years. pcp finance cost 7% interest at that time.

She bought it on 0% finance.
 
I have just signed a contract for a new car through a leasing scheme at 0.9% finance. My current car (at three) is coming to the end of its lease and I will then buy it. I have an agreed PX value against the new car agreed but will also make a half hearted effort to sell it privately. I always make sure that the final payment (to own it) is small. The new lease is an all in one that includes full servicing, new tyres, changes of wheels twice a year.
 
RobFTM said:
Well they must have left my charger behind when I picked up my Aston. Still I use the car every week so I suppose that's OK.

Rob.
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The usually come with one like this
http://rover.ebay.com/rover/1/710-5...0001&campid=5338728743&icep_item=382000038533

Or this
http://rover.ebay.com/rover/1/710-5...0001&campid=5338728743&icep_item=142292729446

Porsche have a similar one to the first one but I think it's an option, I had one but never needed it as I used the car often enough.

Which Aston do you have? My cousin's brother in law has a DBS, that has the charger, stunning car.
 
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kennyh said:
Hi Mull, if your daughter as you mentioned earlier is not fussed (within reason) about the year ID on the plate then maybe the answer is to be found there.

I know quite a lot of folk who budget say for arguments sake £300 a month for a lease. At the end of the lease the idea is (or their idea is) they keep paying the £300 but jump in to another latest plate vehicle.....without pain, or at least pain that they realise.

Now I can understand leasing for business, ie appearances, reliability and the rest, however I'm buggered why some people who do shopping mileage bother.

A lot of people as I've said before on here are driving cars they can't afford to own, I know you daughter can Mull but would love to know what she'll be using it for and how many miles per annum she reckons on.

Some sensational deals on "nearly new" at present which if she's keeping it for a few years has to be a better bet then getting strapped up with a lease.

Everyone's circumstances differ and a lease is obviously right for some, but a folley for others. Yes, I've leased cars for business but I just couldn't do it for a none business vehicle.

Cheers.
Click to expand...

If you buy carefully and look after a car properly then a used car with a few miles on it should be good for more than shopping mileage. I drove an 18 year old Golf GTI to Scalford and back (56 miles each way) on Sunday with absolute confidence that I'd have no issues!

A two or three year old DS3 should be probem free for a few years and that's the route I would take. I have never brought cars new.
 
This an interesting topic. My wife and I (pause for clapping) have always been of the "never a borrower or lender be" mindset and have never borrowed money for anything except a mortgage.

We fairly recently bought for cash a 18 month old car for which we had saved for and the pressure from the garage to finance it was huge. Quite extraordinary level of pressure really with the sales guy having a go then passing me to their finance specialist and I had to be pretty blunt to stop the pitch.

I get the depreciate story but I like wholly owning my cars and I can do what I like with them, track day, chip, modify, take abroad all without having to ask permission or pay extra.

The level of sales pressure only confirmed to me how much money they must get from a finance deal which I am unwilling to subsidise.
 
cutting42 said:
This an interesting topic. My wife and I (pause for clapping) have always been of the "never a borrower or lender be" mindset and have never borrowed money for anything except a mortgage.

We fairly recently bought for cash a 18 month old car for which we had saved for and the pressure from the garage to finance it was huge. Quite extraordinary level of pressure really with the sales guy having a go then passing me to their finance specialist and I had to be pretty blunt to stop the pitch.

I get the depreciate story but I like wholly owning my cars and I can do what I like with them, track day, chip, modify, take abroad all without having to ask permission or pay extra.

The level of sales pressure only confirmed to me how much money they must get from a finance deal which I am unwilling to subsidise.
Click to expand...

They make money on the finance, in fact they can make as much or even more on the finance with used cars than they do on the car itself so they will always try to push you to take it, you will often find a better deal with your own bank though... but like you, I've always been a cash buyer.

Their other trick is to try and sell extended warranty and paint/fabric protection, they make a fortune from it.
 
I tried leasing. It cost a lot of money. The best way is to buy using cash upfront.
 
I have recently taken delivery of my 8th leased car. I care not if I own it or not. When I had Boxster S's I did track days with their blessing, and they tweaked the car for me.

As for money, well for me getting a new car every 2 to 3 years, leasing costs me minimal amounts little cash up front, but also allows me to use a car of a value that i'd never save for or use a traditional bank loan for.
 
If you do lease a car do not put down a deposit. The monthly costs are higher but manufacturers vastly inflated the residual values leading to punters thinking the car was worth enough for the next deposit. It won't be. My local dealer said that as a result of so many doing PCP's the secondhand market is awash with cars that that can't be sold. The residuals are now more sensible but this is putting up the monthly cost. Having said that, my daughter just picked up a New Ford Kuga Titanium with 180 BHP Diesel engine 4wd and metallic for £331 a month and no deposit. She did get an extra grand off as she works for a Ford manager which makes it a little cheaper a month.
 
As with CUTTING 42, I wouldn't dream of leasing; I'd be petrified of getting any blemish on the vehicle, especially as I rarely clean it and it's like a refuse dump inside.

I can imagine that leasing is cost-effective if you can set it against tax, but surely, if you can't, buying a 2 to 3 year old car with provenance is the better way forward.

My current car is the only one I've bought new, and I enjoyed the 3 year warranty comfort feeling, but its predecessor was bought ex Renault with 6K on the clock, and it gave no problems in 14 years of traversing England and Wales annually.
 
We're just getting to the end of two years leasing a car for my wife. The mileage limit is a bit of a gamble, and the dealer who serviced it also damaged it and denied responsibility (very minor, but no doubt we'll end up paying out). We're not immediately getting another as the cost of leasing the same car again has gone up by 60%, and we'd not get another from that brand, as the local dealers are awful. No other cars actually appeal, so we're going to try living with one car and a rural bus service...
But, as a fixed cost way of running a car, I feel it works fine, I just suspect that the future used value of cars is going to fall as the realities of our economic lemming impression start to take hold. However, buying a used car in 2019 could be appealing!
 
We must be careful here. Leasing and PCP are not the same, not even a little bit. The monthly numbers can look similar.

PCP merely structures a purchase with the option to pull out at the last minute and roll into a new deal instead. Residual value matters here.

Leasing proper is rental, and there is no purchase option built in. Of course you can seperately do a deal to buy it after 2 or 3 years. Residual value here matters but you will not see it - only the finance company cares about it.
 
I've been looking at cars in last few weeks. Nearly new and 1 year old cars are going to cost more than buying a brand new one as interest rates are so much better on new ones. So who is buying nearly new?

I was offered 25% off a Merc C-class if I took finance, 10% off if I paid upfront for it. An ex-demo Jag XE was going to cost £20 a month more than ordering a brand-new one with the spec I'd choose myself.

I will never do a PCP again, its just like paying for the car twice. I was told there would be plenty equity in the car when the PCP ended, but actually now the time is approaching, funnily enough there is going to be pittance equity. I really think PCP is going to be the new PPI.... seriously thinking I should complain and raise the matter with the Financial services ombudsman.
 
We're just about to start a lease deal on a Ford Galaxy (we need lots of space for teenage kids and 7 full size seats to transport grandparents on occasions too). The list price of the car is c .£36k and a 3+35 deal is £390/mth - so a bit less than £15k in total including the road tax too. With interest costs so low the opportunity cost of using cash is negligible, so no point doing a discounted cash-flow.

The reason leasing looks so appealing is because of this very low rate of interest and the discounts that a dealer can get on the new price. I checked out the 2nd hand values for a 3 year-old Galaxy (£15k-£20k) and to equal the lease cost I'd have to get a discount of at least £6k - doable, but better than most internet sites were offering.

If I had £30k sitting in the bank earning nothing, then it would probably be a slightly better deal for me to buy it outright with the best deal possible.

It seems to me that by leasing I'm trading a loss in flexibility (keep 2 years or 4 or whatever) for certainty of outgoings, and (this is a big deal) a lack of worry about the value in 3 years - if values of big diesel cars drop through the floor then it's Ford's problem not mine.

I even looked at buying a 2 year old car and it seemed to me that slightly lower depreciation would be offset by higher maintenance costs, MOT, tyres etc, so again not actually much in it.

If interest rates go back up by a chunk I suspect the popularity will fall away.

cheers
Phil
 
JensenHealey said:
We must be careful here. Leasing and PCP are not the same, not even a little bit. The monthly numbers can look similar.

PCP merely structures a purchase with the option to pull out at the last minute and roll into a new deal instead. Residual value matters here.

Leasing proper is rental, and there is no purchase option built in. Of course you can seperately do a deal to buy it after 2 or 3 years. Residual value here matters but you will not see it - only the finance company cares about it.
Click to expand...

I was going to wade in with the same.

The easiest way for anyone to think about cars is this:

If you rent it, then it's a monthly charge for the length of the lease. You never own the car.

If you buy it, there are three standard routes:

Cash
HP
PCP (which is basically HP made to look like a lease)

In reality, when buying a car, all you do is fund the difference between the purchase price and the (almost all of the time) lower price when you sell it/part exchange it. It's depreciation.

So, with buying a car, all you have to worry about is how you choose to fund your depreciation. Do you lock up your liquid cash in a slightly less liquid asset. Or do you use someone else's money and keep your cash in the bank. Using someone else's money comes with a cost - shop around.

Why everyone gets their knickers in a twist about whether they empty some/all of a bank account into a car or borrow the same, I have no idea. And as for the "people are financing cars they can't afford to buy". So what? Why does this irk people so?

-------------

Anyway, back on topic - I'll probably lease my next car (I've done cash, HP and PCP purchases already) because, with very few exceptions, cars are like washing machines: tools that lose money and need to be replaced every now and again.

AIUI the secret to leasing cars is threefold:

Never, over two years, pay more than 25% of the list price
Be prepared to be flexible on what you drive - there are lots of good leasing deals out there on end of line models, etc.
Don't bother with options - you pay 100% of the option cost over the lease term (effectively subsidising the lease company).

@ Mull - get your daughter to have a read of the famous Pistonheads leasing threads.
 
Rodrat said:
If you do lease a car do not put down a deposit. The monthly costs are higher but manufacturers vastly inflated the residual values leading to punters thinking the car was worth enough for the next deposit. It won't be. My local dealer said that as a result of so many doing PCP's the secondhand market is awash with cars that that can't be sold. The residuals are now more sensible but this is putting up the monthly cost. Having said that, my daughter just picked up a New Ford Kuga Titanium with 180 BHP Diesel engine 4wd and metallic for £331 a month and no deposit. She did get an extra grand off as she works for a Ford manager which makes it a little cheaper a month.
Click to expand...

Interesting and useful, but should we still be buying diesel at all?
 
Thanks for a very comprehensive set of replies chaps. I'll run them past my daughter, although I suspect some of the more subtle points will be lost on her.. as they are on me.
I was with her for an hour or so tonight and she now seems to be cooling off the idea of leasing a bit...

She's had 3 cars.. all relatively inexpensive. First an old Punto, second a less old Punto of mine written off by a taxi driver and the last one a s/h DS3 from the famous 'Ford's of Winsford'.
She paid cash and was not pressured towards finance at all. She also took out 'Gap' insurance just in case she drove it into the wall opposite on collecting it from Ford's :)

It's currently looking like she will lose very little if anything in cash terms taking the 'write off' settlement and the 'Gap' cover for the difference. ( What will happen to her insurance premiums OTOH.. even if she can get a 'no fault' decision...)

There is also the question of the neck and shoulder injury she sustained. She's only just got over whiplash from being hit from behind and bounced into another stationary car about 12 months ago. No fake claim there. She was hurt.

This time she was sideswiped hard enough (by a bus!! ) to spin her through 360, set off airbags and write off the car... So we shall see.

So she's currently looking for a similar car again.. as she actually liked the last one. Low miles and tidy. year or so old.. that sort of thing.

I can't say I blame her as the cash is there and it's something she already paid out once that is coming back to her.

Just a case of finding the right car.

Slightly off topic but I saw the car after the bump. Airbags everywhere on passenger side. Dented quarter panel on passenger side.. though it looked like the wheel had taken a lot of the impact. Rear bumper 'sprung' and rear light cluster destroyed. Similar damage to front driver side. Could well have been serious twisting of subframes or other structural damage after that sort of impact.
TBH.. I wouldn't have been too happy with her driving it if they had fixed it. It kept her alive and relatively unscathed once. Twice is asking too much.

Mull
 
Hi MM
No right or wrong on this.

Leasing works well because leasing companies get big discounts off manufacturers and finance is cheap. Where it falls down is if the rv is crap. But generally leasing is very good value DS3 new stars at about £130pm on a 6+24 at 10k per annum.

By the way don't buy directly from a dealer if leasing. The best deals will be via a comparison of brokers.

Don't know who is buying the galaxy but for info you can get galaxy's starting at about £180 per month.
 
"Don't know who is buying the galaxy but for info you can get galaxy's starting at about £180 per month"

sorry - you can't. Two points:

The deal I got is 3+35, which at £180/mth is less than £7k in total. Given that even the road tax is gonna be close to £1k that leaves £6k to cover the depreciation on a £36k car over 3 years, the borrowing cost and some profit for the lease company. Simply won't work

After about half a day of surfing and phoning various dealers, brokers and finance companies you get to around the same lowest possible deal from them all - I had about 5 quotes which were within around £3 per month of each other.

Perhaps your £180 is for a business lease (excl VAT), for a poverty spec car and on a 12+48 payment cycle. Not the same as personal lease on a 3+35 cycle.

cheers
Phil
 
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