leasing vs finance

[dodsi]

[Bozzy]

Just to add to dodsi's post:

Again, cost as well as personal circumstances come into it.

If you (Polarbear) are the sort of person who would like to buy a new car and keep it 10 years whilst spreading the cost, PCP or good old HP is the way to go over lease.

Sometimes cash customers are better with PCP. I know of one manufacturer that gives 0% PCP with £1500 towards deposit. Finance can be settled at any point.

Alternatively, if you want a new car every 3 years then a rental may or may not be cheaper than a purchase. You've got to look at all options.
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2004 SV650S >>> 2009 Street Triple R

[Derivative]

I feel like I wrote a post and then didn't click post. Oh well.

Today is wine day but we'll try our best.

If you buy a brand new car (finance or cash; IMO finance is nonsense unless the rate is very low), yes, you have something 'to show for it' at the 'end'.

But then you're either driving an X year old or selling it.

The entire point of leasing is to have new cars. If you were happy with a 4 or 8 or whatever year old car you'd buy one in the first place, run it into the ground and bathe in your dollars.

Comparing a lease to a not-new car is total nonsense. It's a not-new car. My microwave off the street (serious chats) was cheaper than buying a spanker from John Lewis, cool story.

[dodsi]

I think it's totally valid to compare the cost of any method of funding, lease, finance, PCP, Cash... on any age car - work our the total projected costs over time (being realistic) and comparing the costs against each other.

If I had a banger that cost £100 but I spent £1500 per year keeping it going the Nissan micra deal I posted would be surely be a better deal for me and less stress? Extreme example and totally fictitious but you can catch my drift - some spend a lot of money on failures.

A car kept 10 years and costing 23k new and being worth £3k at the end of that term is 2k per year depreciation alone let alone every other running expense on the way - you may find it cheaper in reality to find a good lease deal or change the car more often on a PCP/Cash deal.

Having new cars on the way would be a bonus with the lease but if my cost over time was cheaper it's the headline numbers that would do the talking for me.

If you don't get the mileage in and you end up 10 years on with a car that has basically worked with minimal maintenance along the years and is low mileage and will continue to run then that could be your best option.

I genuinely have no preference for any method, our last 3 good cars were citron c1 PCP because cost was best. Honda Civic - finance - low apr and skoda leased. All my other second cars were bangers paid for in cash kept for a year and cost little on the way. If my wife wasn't doing the miles and worked more local I would probably have 2 x bangers.

[iooi]

[dodsi]

[Bozzy]

[M.C]

[iooi]

[P.]

iooi, you spacker, read thread.

[iooi]

[Bozzy]

[dodsi]

My micra example: numbers may have changed as yesterday they were on the home page of the web page.

https://www.targetcarleasing.co.uk/manufacturers/nissan/6425/models/micra-hatchback/66160/cars/1-2-acenta-5dr/61925

Iooi - I quoted 2k per year in depreciation alone not including other running costs.

Please read correctly.

My only argument has ever been total running costs over time on a like for like basis that a lease is not necessarily a waste of money. Old, new whatever.

Fuck it, if it was cheaper to lease my shoes than own them I would.

[M.C]

[dodsi]

[M.C]

But wasn't that example user maintained? It is also not over a 10 year period? Also my example's the most expensive thing you can do, buy a car new then take it to a main dealer its whole life. Finally a 1.2 Micra's 8 grand OTR, this was 15k.

BTW I hate doing maths, stop making me do maths

[dodsi]

Correct, it was user maintained - but you would have a new car, in warranty and you begin each 3 year cycle with brand new consumables so you get the full wear. So consumables in 30K would be minimal and there is a few hundred a year difference to pay for those things.

However, that is not a like for like - and I am declaring my own example null and void in this circumstance unless its a comparable car or a car that fits the needs of the person.

My point is not that leasing is great and always the cheapest way of running a vehicle - it never has been. I am purely challenging the status quo and pointing out it's not totally a waste of money.

If I ran my BMW for 10K a year at 23mpg (taken from the car computer over last 800 miles since a reset). The fuel cost is £2369 over a year. have a car that doubles that MPG and that drops to £1184 over the year freeing up £1185 per year (£100 per month!) i could spend on a newer and more efficient car. I am sure I could lease a car cheaper if I was doing that sort of mileage in my £800 'banger'.

It's purely a total cost over time calculation.

[M.C]

You don't need to null the Micra example, just in the rental cost that's £15,720, for a car that costs 7 grand less. Prices for 10 year old Micra's look comparable, so you'd be losing 6-6.5k. It's half as much to tax and must be cheaper to run (Micra's are dirt cheap parts wise), but even with my figures you're looking at ~10k, and that's being extremely generous with the lease costs and disingenuous with the ownership running costs.

[bamt]

I looked at this a few years ago when my commuting mileage jumped up so I was doing about 20k a year in my XJ8. Doing the salary sacrifice lease thing, i was essentially cash neutral (taking everything into account including tyres, servicing, average repair costs) been wafting around in comfort at low 20s to the gallon or sitting in a tin box shopping car that would be hell to spend several hours a day in.

I did the only sensible thing - kept the Jag and bought a motorbike!

[Sun Wukong]

There was an interesting Khan Academy video on renting/buying houses...

Funny, the whole "but you are putting money in to something".

Yes, paying back the rent on the money you borrowed (ie interest) to the bank.

Pay rent on the house, or pay rent on the money. You still pay rent.

Could be a similar thing with cars.

Would be interesting to actually crunch the numbers and see.

One extra thing about why renting a house is often better than buying is the opportunity cost. If I could go back in time and tell younger Richard one thing, it would be "don't forget about the opportunity cost" (or rather, go look up what it is, and then never forget it).

You buy a 400k house. You put in 100k cash, you borrow the rest.

So you are paying rent on 300k (interest), and most of your payment is just going in to paying the debt on that.

But, you also have 100k of your cash sat in the house.

Now, if you rent a house, you have no interest to pay, and you still have that 100K to use for investing. If you generate 4% / interest with that, that is 4k / year.

Suddenly that 12k / year rent doesn't look so stupid. When you remove the property tax, which is probably about 1% of house value, so 4k a year as well.

But I agree, it feels like a waste of money.
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Top cat
"Hard times lead to hard people. Hard people lead to good times. Good times lead to weak people. Weak people lead to hard times." Smegballs
"Oh and STE balloons would be one of the nicer things we would receive at the office, the amount of dog turd in jiffy bags is not funny." Jsmith86

[M.C]

So ignoring the fact most people renting in that London are paying more than those with mortgages? You lot must do all your shopping in Brighthouse

[Sun Wukong]

[dodsi]

Interesting point regarding home 'ownership' as when I look at my mortgage statement and projection I am paying only about £100 per month off my actual equity in my home. The difference is security and the house is normally an appreciating asset (political standpoint put to one side) and I have a good amount of equity due to spending money on my home renovating it so I think I have well more than doubled what I have totally put into the property (deposit and renovation costs). But I have never considered the amount of 'rent' I am paying in terms of mortgage interest.

The point I have been banging on about with leasing of cars is that it's not really an evil thing if you work out the total cost of ownership over the time period and the mileage that you expect to do. In my experience it is stacking up wel against running many different types of car in terms of overall cost.

There are big drawbacks with leasing compared to other methods and it is not blanket the 'best' way to run a car. You have to consider the mileage you are doing - too many and you will find it's possibly quite expensive. Too few and I would argue it's a total waste of money - for me to spend just under £3500 per year for my Mrs to pop to the shops in a big flash white car would piss me off no end. In fact I wouldn't let it happen and insist she pays for it all herself if that's what she frivolously wanted.

Then, as with anything you must shop around for the right lease deal and look at what is available at the time for what cost. If I had wandered into my local skoda showroom and taken out the same car on their straight deal I would be more than £50 per month worse off on the same car on the same terms. That's not my style and I got a price match with them on a deal I saw online with a big discounter on leases.

If you are set on a particular make and model then you may struggle to find a good deal and could end up paying a lot of money out compared to a competitors car - in my case if I was set on a Mondeo or Mazda6 these may not be as cheap as the superb or vice versa. So you need to potentially be flexible on the car you end up with.

And then there is the damage thing, if you hand it back outside of the acceptable fair wear and tear condition at the end of your term (there are industry standards which does protect the consumer) you could end up with a hefty bill.

So there are risks and downsides with the lease but for me - cost over time it works out well compared to a lot of other options. At the end of my term I will look for another deal on a car and will consider all methods of ownership over again rather than just settling for another lease 'because that's what I do'.

[stevo as b4]

Two final questions from me as this topic isn't really about me or my thing.

1, Put simply for someone like me to understand, what are the primary and most common reasons for people to want to always drive new cars and or say have a new one every 2years or so?

2, Regarding the buy own car and run for 10years thing. Firstly that average depreciation of 2k a year don't sit right with me as most of a vehicles depreciation happens in year 1, 3 and 5maybe. A 2year old isn't often worth massively less than a 1year old, and likewise the 3and 5yr milestones tend to wipe much more value off a vehicle than the usually negligible depreciation from years 5-10? So yeah an average 2k over 10years is one thing, but if the first few years result in say 5x the depreciation that years 6-10 experience, it's not that relevant to work it out as long-term cost.

And secondly, do people that buy a brand new vehicle and keep it for 10years, actually expect it to achieve some resale value worth having after that period? I know it's probably out of date thinking with cars now, but there used to be the old theory that if you buy and run a vehicle for 10years, its done it's thing, earned it's keep, and owes you nothing at all. If someone gives you a few quid for it after all that it's a bonus? I realise the above with today's cars could easily be rescaled to 15years or more in some cases, as cars today are built to last longer than they were in the 70's/80's, which is where the above mentality probably came from.

[M.C]