Car leasing vs buying

[DaveShoelace]

I'm doing some research on the possibility of doing a lease deal on my next car rather than buying it. I'd love to get an idea what to expect from people who have done this.

I'm aware of all the basics, that you don't own the car and have to either give it back or pay a final amount to buy it at the end of the term. But obviously on the plus side it's a cheap way to get a better car.

From my point of view, what I am really looking for with a car is piece of mind and reliability. This is why the potential of having a brand new car appeals, as does the idea of doing it again and getting anther new one after the term ends. I'm not very savvy with cars, so I don't mind sacrificing a bit of EV if that means I don't have to worry about it breaking down.

So far I've had two cars, both of which lasted about 3.5 years. One was second hand from a loan, the other was second hand which I bought outright. I've worked out that in each instance what I essentially paid each month if you divide what they cost me by how long I had them, that amount is pretty much the same as what some of the lease deals I'm looking at.

It seems like a decent option, but it's hard to get my head round as I never considered it before. Would love some insight from those that have done it.

[RED-DOG]

If your used car savvy and know how / where to buy, what to look for,  have contacts in the trade and can do your own maintenance, then value for money wise, buying used is undoubtedly the way to go. However...

If you are none of those things but are computer literate, prepared to do your research and can drive a hard bargain, leasing can be a very good option.

[byronkincaid]

There are a few companies who pwn you hard for damage when you hand it back. I would be doing a lot of research on this if I were you. I've read some real horror stories.

[StuartHopkin]

Buying and then selling on is almost always cheaper than leasing, that is before you even factor in the nearly new cars you can get heavily discounted.

That said, I have leased for the last 7 years because it is just so easy. I email a lady and she has my car collected in the morning and a new one placed in the same spot later in the day.

If your buying or leasing new or nearly new then break downs shouldn't be a concern.

There are articles online that show the workings out as to why a bank loan and buying is a cheaper option.

[BorntoBubble]

Have a similar question at the minute and as our "car guy" has just started leasing his car it got me questioning can seem to get some really good deals

[Longines]

www.lingscars.com  no really, it's meant to look like that.

Also bear in mind that you will get creamed if you go over the agreed mileage limit.

[Ironside]

i am on my 8th leased car over 22years now through motabillity the car is looked after and i hand it back every 3 years

i could of gotten much better deals buying keeping for 3 years then selling (because i have never done the mileage after my 2nd care due to illness and injury) but the piece of mind is worth it

[StuartHopkin]

Not sure about creamed, think mine is 3p a mile with 15k allowed so £300 for an extra 10k

[DaveShoelace]

Thanks everyone, good range of answers do far.

[MPOWER]

Hi Dave

What do you want the car for?
How many miles a year?
How long do you keep a car for?
What type of car do you need?
Whats important to you about a car? Is it fast , Frugal , Technology. Looks etc
What do you want to spend?

I do help the blonde community with cars.

I'm sure wether you want a Wraith or a MINI I can give you the best advise and help.

PM me and I will give you my number/email if you want a chat.

Best regards   

M
     

   
 

[DaveShoelace]

Hi Dave

What do you want the car for?
How many miles a year?
How long do you keep a car for?
What type of car do you need?
Whats important to you about a car? Is it fast , Frugal , Technology. Looks etc
What do you want to spend?

I do help the blonde community with cars.

I'm sure wether you want a Wraith or a MINI I can give you the best advise and help.

PM me and I will give you my number/email if you want a chat.

Best regards   

M
     

   
 

thanks will do

[BangBang]

www.lingscars.com  no really, it's meant to look like that.

Also bear in mind that you will get creamed if you go over the agreed mileage limit.

Best website ever.. Ling is a legend..

I looked at the leasing option and it works out really expensive, unless you lease via a business and offset the costs..

Why not get a Low interest bank loan and buy 2nd hand?

[EvilPie]

It's not a cheap way of getting a better car. It's actually really expensive as you're owning a car during the worst of it's depreciation years then you give it back just as it slows down a bit and swap it for another new one.

All that should matter is total cost of ownership. If you're leasing a car for 3 years at £300/month then it's costing you £10800 simple as that.....

Oh apart from the 3 payments deposit you have to make which makes it £11700....

The good thing with leasing is you know exactly where you stand. 3 up front payments, 36 monthly payments, give the car back, simple.

Personally I've always gone for financing through a dealer as this works out cheaper than leasing. I can't tell you much about leasing but I can definitely help with financing through a dealer (which is what M Power will offer). You can look at dealer financing the same way as leasing because at the end of it you can just give the car back.

You'll definitely get a much better deal if you go to a dealer but you've got to be really careful. The salesman will sell you the car then someone else sells you the finance. That's generally how it works at the big dealerships. M Power's lot all have separate finance sections now because it's such huge business. You'll get a good deal but don't accept their first offer. I promise they can beat it.

When you go to a dealer and sign up for a finance deal they completely muff you with numbers. I'm really good with numbers and I can say without doubt that they had me tied up in knots. How some people who are a little bit less savvy (or just plain stupid) go on I'll never know, they must just sign up for anything.

When they give you your quote just go away and think about it for a while. Add the numbers up carefully and check that all important 'total cost of ownership'. Don't sign for it without going away and checking it all over with a calculator and a pen and paper.

M Power will doubtless offer a good deal on a BMW but you'll definitely get better if you put in some legwork and borrow the money elsewhere. Sainsburys will do a decent lump of a loan at around 5% and there's no way Sytner will get near that no matter what they say. Just check the APR and then work out what it costs overall. That being said BMW deals are very good just not the absolute best.

When I bought my latest BMW I haggled like crazy over the finance. They're desperate to sell it to you. I got the total cost over 3 years down from his initial "brilliant deal" by around £2.5k just by being a bit pushy and showing him how much it would cost by going elsewhere. The APR dropped from over 10% to 7.2% which on a car of any decent value is a big chunk of money.

I eventually took the BMW finance because they threw in a few extras if I agreed to take it. 1 month later though I took a different loan out to pay that off and will save £2k over 3 years.

The problem with financing a car yourself is you have to borrow the whole amount. On a £30k car that's a big loan. If you finance or lease it you only have to borrow enough money to cover the depreciation and interest on the difference. Don't forget whatever happens you're still paying interest on the full value, not just the bit you're paying off. They'll try to baffle you by making the monthly payment look appealing but please don't forget to account for your deposit in the monthly calculation because you won't be getting that back at the end of it.

Don't be shy about talking to the finance companies by the way. They don't only finance brand new cars. If you find a reasonably new car and approach a finance company they will often buy it on your behalf and lease it to you. That obviously saves a big lump of depreciation. The company I've financed my car through will finance pretty much any car as long as it won't be more than 8 years old at the time the finance deal finishes. I could've bought a 5 year old car and financed it for 3 years if I really wanted to.

If I was you I'd recommend working everything backwards. Decide how much you're prepared to lose on a car per year and then take it from there. If you're buying a £30k car then you know that in 3 years it's going to be worth around £15k so at best it's going to cost you £5k/yr in depreciation. Factor in interest at 8% which is £1200/yr on the bit you never pay off and maybe around £600/yr on average for the bit you're paying off and suddenly you're at £6.8k/yr or £560/month for a £30k car. Now what they do is persuade you to put a deposit down to reduce your monthly payments. Do not be fooled by this!! if you put a £6k deposit down your payments would drop to maybe £380/month and suddenly you think you've got a great deal but chances are you'll never see that deposit again so when you come to buy your next car you've got no £6k to put down and are faced with £560/month to get back to where you want to be. So if you always want to be in a nice £30k car less than 3 years old you're going to be spending around £7k a year for the privilege unless you can buy it outright.

All this is just words of warning. There are some great deals to be had from dealers especially around 'new reg' time but just don't rush in to anything.

One more thing with regard to Sytner (M Power). At new reg time they aren't shy of pre registering a few cars to get their numbers up. That means that if they're a bit short of their targets at the end of March/September they'll buy a load of new BMWs or Minis and you get huge savings. I saved £12k off the book price on a car which had 10 miles on the clock. This means I'm looking at much lower depreciation than I would have been which turns in to big savings per month.

If you choose to go the dealer financing route let me know and I'll happily chat you through what I did. I'll also tell you that although I love my shiny new car with hindsight I should've got one a year or 2 old!!! Be very careful buying new!!

Good luck.

[titaniumbean]

www.lingscars.com  no really, it's meant to look like that.

Also bear in mind that you will get creamed if you go over the agreed mileage limit.

I fking love ling <3

[Marky147]

Alex and Matt back in the same weekend!

TfT is running like shit, but Blonde is on a heater <3