Car leasing vs buying

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  • Car leasing vs buying
  • Offroading
    Member

    Hello,

    Following on from my recent post about looking at Audi A1’s I’m torn and just curious what the general thought is.

    Basically looking to get a new car (and by new i mean 3 years old)

    But recently went into the BMW dealers and they had a brand new 3 series for £300 a month.

    I would most likely take out a loan to buy anything so would be paying around £200-250 a month if i went that route.

    Im thinking 250 ish on a loan for years for a car that would be 3 years old vs 300 a month for something new covered under warranty etc etc

    Anyone done it recently ?

    Advice/pitfalls ?

    Premier Icon somouk
    Subscriber

    Bare in mind that the lease will be a 3 + 36 so you will need to save for a deposit on it.

    You will also have to check the mileage allowances on the lease and if it includes VAT and maintenance or if you need to add those on top.

    The main disadvantage to leasing is you never own the vehicle so it is money down the drain, at least buying at the end of the deal you have some cash value in the car. You can also sell the car if your priorities change in life.

    Offroading
    Member

    Good points.

    I have enough for a deposit already, as far as im aware the £300 was all in for 4 years.

    I do roughly 6000 miles a year and the allowance was 8k so should be ok on that front. I’m a mechanic so can service it myself.

    The point about not owning is very true, but then again leasing i’d not have to deal with the value dropping, major faults on the engine etc etc

    hora
    Member

    Lease = Not great for a mountain biker.

    Is BMW signed upto the British Lease bod? (I.e fair terms on handback condition?)

    300 a month over 3yrs? = almost 10k lost. Plus any delapidation charges ontop.

    Leasing would mean you couldn’t rub your tyres on the roof lining, as I seem to do on every car I’ve ever owned.

    Are you intending to service the lease car yourself!?
    That probably won’t be allowed.

    hora
    Member

    Sure you’d be allowed to self-service?

    Ask to see all the T&Cs to review before a deal

    Premier Icon somouk
    Subscriber

    Yeah, almost all lease cars have to be serviced by main dealers.

    Also build in money for any damage to the vehicle when handed back like dents or scuffs to the interior.

    Offroading
    Member

    Didn’t know that wasn’t allowed 😆

    johndoh
    Member

    What model 3 series? If it’s base, then that is one hell of a lot of money. FWIW I pay £400 a month (3 x 48) on an A6 Avant V6 tdi auto Quattro Sline Black edition. (10k pa)

    mrmo
    Member

    Best way to think of leasing is your paying the depreciation plus a bit for profit.

    If you trash the car then the resale is less so you’ll have to pay the difference.

    It is also why the lease price doesn’t always reflect what the car costs. BMW for instance hold their value better than some, hence the lease cost is less.

    johndoh
    Member

    BMW lease costs are huge. Mercs are the cheapest at the moment.

    Premier Icon honeybadgerx
    Subscriber

    I think you’ll be hard pressed to do better than a loan to be honest, Nationwide are doing them for ~5% I think, plus you’ll completely own the car at the end of it. Buying new I never see much point in, especially as most big main dealer will have a few in that are ~1 year old with low mileage for a lot less.

    Offroading
    Member

    320d m sport with all the toys

    Offroading
    Member

    The above is true. Saw a 120d 5 door, 2000 miles on the clock demo car car. Was 23K they wanted £16k for it.

    johndoh
    Member

    All the toys? If fully loaded with all extras then it might be okay. But… 20d? Get a 30d for proper fun.

    nickewen
    Member

    I think 300/month to drive a brand spanking 320 ms is very reasonable tbh.

    Just gotta figure out what you want though.

    I went the loan route last year on a 325 and although one day I’ll own the car I s*** myself everytime it makes a little noise or rattle thinking about what its gonna cost me to fix.. With a lease you have peace of mind around catastrophic repair costs..

    Premier Icon simon_g
    Subscriber

    I’d always bought cars at between 6 months and 2 years old, then run for anything from 2 to 5 years. Always just saved and put that towards the next one.

    I just got my first lease car, mostly swung by a very cheap deal. If you’re not too hung up on a particular model, there are some spectacular deals, especially around this sort of time when orders are quieter but the factories still have the same capacity. If you’re comfortable with basically renting a car for a fixed period of time, and happy with the cost, then no problem really. If you’re the sort who’d definitely be changing after 2/3 years anyway then it can be a lot cheaper than the depreciation – lease companies buy the cars much cheaper and can claim the VAT on them too.

    Mine came from gateway2lease.com. It’s a 2 year lease so will only need one service in that time. They pay the VED. It has to be handed back in good condition, except fair wear and tear – and the guidelines aren’t too bad – light scratches/dings (up to 2 per panel), light wheel kerbing, etc. The only real problem is if you absolutely had to get rid before the lease was up – you’re tied in for the term.

    number18
    Member

    I don’t think it’s an issue that with leasing you never own it, I don’t think it’s money down the drain. Those who buy very rarely actually liquidise the equity invested in the car they’ve bought. Assuming the alternative is to have a loan as opposed to buying outright, once the car is paid off any equity goes towards the next car. The monthly cost is basically car ownership, what difference does it make if it is leased or ‘owned’?

    However, I don’t lease because you have to sign up to a fixed period of time. I like the fact that with a loan I could always sell the asset and pay off the loan if my circumstances changed. I like that flexibility and peace of mind.

    I have a 325i coupe and love it!

    Premier Icon tonyg2003
    Subscriber

    It really depends on the car you want. If you want a new car which retains a high re-sale value (like the BMW) then leasing is probably the way to go. Getting a good purchase deal on a 1-2yr old car is cheaper but you have bigger risks (car out of warranty – although that doesn’t bother me), you generally have small mileage allowances, adding options ups the costs dramatically and you have to look after the car. Conversely you don’t need to apply for a loan / save up for the money, you have a car in warranty that might only need a single service and you are driving a new car. Leasing deals can be spectacular at times and they are better than even buying a 1-2yr old car with a lot of depreciation taken into account. Try carandleasing.co.uk which is sort of a comparison site for leasing companies.

    I think that it was Rockefeller who said “If is depreciates lease it. If it appreciates buy it”.

    sbob
    Member

    Offroading – Member

    Advice?

    Not that you’ll want to hear it, but I’ll drive a better car for much less money by buying one I can afford.

    Not trying to sound like an arse but you need to work out what is most important to you.
    If that’s a newer car then go for it. For me it would be an older car with near supercar performance for much less money. 😀

    If you want a brand new car every 3 yrs you’d be crazy not to lease even if you’ve got the cash in the bank. If you’re not too fussed about make/ model/spec you’re best looking out for lease company stock clearances, they can be very good value.

    If you’re not bothered about having a new car every 3 yrs and are happy with used or nearly new and keeping for more than 3 yrs then leasing doesn’t work out cheaper.

    FunkyDunc
    Member

    Sbob – go on what is this amazing car.

    As above leasing is good if you want a new car every 2-3 years. ‘Buying’ a car on HP only works out cheaper if you keep the car until the loan is complete + some years at which point you are patting for servicing, repairs, MOT’s etc.

    I will be getting a 320d on lease soon and I ride an mtb. I’ve never managed to knacker the inside or get scuff marks on a car. I accept on a lease car that I may have to pay for scratches/kerbed wheels, but if its that bad it will go to the local back street place who does a very good cheap job.

    Personally I prefer the no hassles motoring point of view v. Owning and risk.

    Premier Icon mikewsmith
    Subscriber

    I think that it was Rockefeller who said “If is depreciates lease it. If it appreciates buy it”.

    And a very good point, you need to do the sums but if you don’t want to own it for a good few years why take the hit on the depreciation?

    Put all the numbers and scenarios together and work from there also get a few quotes on lease packages and decide what you want in and out. There is something to be said for having most/all potential big bills covered by warranty and maybe covered by the lease company too rather than buying older and then watching the gearbox fall out or need a costly part that nobody expected to fail.

    Also worth adding up how much the finance will cost you to own something that is worth significantly less than the original price and worth even less than the finance you have paid out.

    Premier Icon takisawa2
    Subscriber

    I keep reading these threads on leasing vs buying, & was always firmly in the buying camp, but will be looking into it a bit more when our car is paid off.

    I don’t particularly want a new car. What I want is hassle free motoring, ideally with servicing etc covered, & I’m warming to the fact that its a proper warranty as opposed to something full of loopholes & clauses, as is usually the case if its a 2/3yr old model.

    How many manufacturers/dealers will give you a full warranty, (as in covering that would be covered with a new car), on a 2/3yr old model…?

    I quite fancy risk free motoring, without the hassle of a huge bill waiting to bite me in the rse. We currently have a now 10yr old car, that will have swallowed £160 a month for the last 4 years, & come the time to sell it/put it as a PX it will be worth jack all.
    Buying a 2/3yr old car is all well & good, but its effectively out of a proper warranty & just another bloody headache if anything goes wrong.

    I know modern cars are more reliable, but repair costs if they do fail have also gone up by ten fold. (DMF’s, DPF’s etc). 😐

    For the past ten years I reckon we’ve outlayed as much in buying, running & repairing the second hand cars we’ve owned, as if we’d just leased them, & its not like I’m sitting here with £10k worth of owned cars on the drive. 😐

    hora
    Member

    6, 000 per year in a diesel?

    Buy a petrol 330.

    Lease cars are great if you get a car allowance. At 300+ a month though of your own money?

    FunkyDunc
    Member

    The 320d will be way cheaper to rent than a 330 petrol. Plus a 320d is plenty fast enough, after all they are just a car and not a sports car.

    320d is less than 8 seconds 0-60 and 340lb/ft torque. Plenty.

    I wouldn’t want 4 yr lease though, you are paying more for new car premium. 4 years isn’t new IMO

    hora
    Member

    Buy a 330 petrol. OR why not a slightly older M3?

    I’m only a fan of leases if you have a car allowance or the deal is absolutely crackers in the customers favour.

    If the OP’s situation changes in 18months time, i.e. has a baby, work becomes drastically reduced he’ll still have to find the £300 every month until the end of the lease. Its not like HP where you can hand back mid-term or with a loan where you can sell the car at any point and cut your losses.

    The only appeal of a lease car to a normal punter is its new (lasts about 2months) and its covered under warranty. Buy a good car and put alittle aside every month for those unexpected bills.

    What I found with a lease car is you notice every scratch you put on the car, you notice every scratch anyone getting into it puts on the car (thanks hora junior), you fear supermarket carparks etc.

    To ‘get into’ such a car – is it to please others? Yes its not a bad car but its hardly worth almost £15,000 of dead money over 4yrs and god knows how much of main dealer major service costs etc.

    b r
    Member

    I’ve had lots of new (company) cars, and they aren’t new very long…

    If the OP’s situation changes in 18months time, i.e. has a baby, work becomes drastically reduced he’ll still have to find the £300 every month until the end of the lease. Its not like HP where you can hand back mid-term or with a loan where you can sell the car at any point and cut your losses.

    And this is important; happened to a pal of mine. Company went bust (he was a Director at MFI) and he’d two leased BMW’s on the drive, £900 per month; took him a year to find work…

    Lease cars are great if you get a car allowance. At 300+ a month though of your own money?

    But a car allowance is no less ‘money’ than your net pay – you don’t have to spend all your allowance.

    hora
    Member

    you don’t have to spend all your allowance.

    True and/or.. you could pocket it and keep running an old existing car (depending on the rules of your company- imagine to customers when visiting etc.

    Or Keep the allowance, drive existing and use pool cars when needed.

    £900 per month; took him a year to find work

    Oh. Not good 🙁

    peterfile
    Member

    But a car allowance is no less ‘money’ than your net pay – you don’t have to spend all your allowance.

    +1

    I almost took the plunge on a car which would have used up all of my allowance, then thought better of it, bought something much cheaper and now spend the rest of the cash on fun stuff like travelling and crack.

    Spend money on whatever makes you and your family happy.

    pdw
    Member

    I’ve never looked particularly hard at leasing, but I’ve always been curious about how it can work out as a better deal (assuming you have the funds)

    If you buy a new car, keep if for three years, then sell it, you lose a lot on depreciation.

    If you lease a new car, keep if for three years, then give it back, you’re paying someone else to take the same hit on the depreciation AND make a profit out of the arrangement too.

    Are the deals that lease companies can get on the new cars so much better than you can get by shopping around that it makes up for their need to make a profit?

    hora
    Member

    pdw but you never pay list price on a brand new car- negotiate/shop around so that may help. I ‘think’ lease comes out ahead however you are restricted on mileage, you don’t own it, you have to ask for written permission to take it abroad and at the end of the deal is the worry that they’ll sting you for low tread, scratches, scuffs, chips on windscreen etc.

    Stone chips on front of car- unless they sign upto the British leasing fair rules- you’ll be charged for a main dealer respray of that panel.

    Premier Icon rone
    Subscriber

    Done both lease and PCP, both are a good idea if you want a new hassle free car. Often come with benefits such as breakdown and you’ve got big warranties. ‘Car Tax’ is in with leasing too.

    Not expensive, all cars suck money. I used my qashqai+2 for mtbing and didn’t pay anything on return. Just look after car as if you own it.

    It will come down to the deal and car you want. I like having a new car every three years, hassle free motoring… I got the Skoda fabia estate Monte tech, 199 a month , 3 years servicing etc. This was PCP.

    Do check with leasing if the vat ia on top.

    Are the deals that lease companies can get on the new cars so much better than you can get by shopping around that it makes up for their need to make a profit?

    Sometimes, as someone up there said car production is fairly constant, but demand fluctuates as no one has any money or wants a new car whilst the roads are covered in crap mid january. So a leasing company buying 100’s of cars will get some good deals.

    I looked into it but opted for a 30,000 mile focus instead. Still looked and felt new, and TBH after a good clean still does. 3 years in Im 3k in profit vs a lease already and have no plans to get rid untill it dies of something terminal or needs its 2nd cambelt in 2022!

    agent007
    Member

    The BMW 320 is good car, but for similar or less monthly loan payments you could get a really special car that’s just a few years older?

    If you choose well depreciation won’t be much of an issue and if you only do £6k miles a year then your fuel and servicing bills will be small even with a fuel guzzling sports car. Plus you’ll own the thing so won’t have to worry about going over your mileage allowance (if circumstances change).

    People get over worried about big bills on older cars. The reality is though that most cars these days should easily do well over 100k miles without any serious issues. To say otherwise is complete scaremongering.

    I’ve never owned a car that’s newer than 4 years old and in 17 years of older car ownership (all performance cars) I’ve never once had an unexpected ‘shock’ bill or catastrophic failure. Yet the best thing is I’m not loosing £100’s a month in depreciation. A friend traded in his 18month old 3 series last year that he’d had since new and he was down £11k in 18 months. That’s a hit of £600 per month – owch!

    I’d say go older, unless driving a NEW car is more important to you than driving a GREAT car, or the lease deal is absolutely out of this world.

    trail_rat
    Member

    **** rockerfella

    if it makes you money lease a new one(ie you have to drive for your job) , if its just transport then buy something older and look after it.

    although i saw a deal on audi a1s the other day andthought – my thats a good deal … but an A1 is about as much use as a fart in a space suit.

    the joy of older cars is that we were smashed into last week . 75 quid at the breakers has put my motor back on the road(insurance wanted to write it off for peanuts)

    the only pig in a poke ive bought was on paper the best car i ever bought …. FSH at a dealer , mint condition inside and out , 4 new branded tires and just had a timing belt/waterpump done with paperwork and stamps.

    lasted 18 months. waterpump failed , engine blew.

    now i buy privately and judge the owner as much as the car.

    I’m looking at this at the moment, if it’s between buying brand new and leasing I’d choose leasing. Nearly new leasing is quite a close thing depending on your priorities:
    For Leasing:
    -Get a new car to your spec
    -Under warranty
    -Good deals (on select models)
    -Can possibly get a more expensive car than you can afford on loan
    -You can get a lease on some approved used cars – BMW for instance – may work out well if you factor in the small risk of expensive issues.

    For nearly new with loan
    -Mostly covered by warranty – 1 year without for which you’d be unlucky to get any major issues. Kia or Hyundai would still be covered and make good if mainstream cars nowadays.
    -If your circumstances change you can liquidise the cars value easily
    -If you’ve got cash in the bank that’s invested at a lower interest rate than the loan then buying yourself is a better option.
    -No mileage worries
    -Can ignore unimportant repairs – small dings etc

    For me the second option is the best as it’s a new job and I don’t want to be stuck with a lease car if it doesn’t work out.

    To the OP: have you considered PCP (Personal Contract Purchase)?

    I was considering leasing instead of buying, but many of the manufacturer s offer good rates on PCP on certain of their models.
    you put in X deposit, make fixed monthly payments for anything up to 48 months, then at the end there’s a final payment. At this point you can make that payment and own the car outright, give the car back and walk away, or use it as a deposit on the next car

    xiphon
    Member

    I’ve never looked particularly hard at leasing, but I’ve always been curious about how it can work out as a better deal (assuming you have the funds)

    If you buy a new car, keep if for three years, then sell it, you lose a lot on depreciation.

    If you lease a new car, keep if for three years, then give it back, you’re paying someone else to take the same hit on the depreciation AND make a profit out of the arrangement too.

    Are the deals that lease companies can get on the new cars so much better than you can get by shopping around that it makes up for their need to make a profit?

    You’re forgetting the most important factor (of middle-class Britain) – keeping up with the Joneses.

    hora
    Member

    You’re forgetting the most important factor (of middle-class Britain) – keeping up with the Joneses.

    I knew someone like that. Had a £400 a month Audi on lease, couldn’t afford to replace the worn out tyres.

    Borrowed £2,000 to give his kid a great Christmas.

    Earnt a decent enough crust to be ‘happy’ but wanted to look ‘happier’.

    agent007
    Member

    You’re forgetting the most important factor (of middle-class Britain) – keeping up with the Joneses.

    Very sad isn’t it and says a lot about some of these shallow people and their priorities. Still shouldn’t complain, as these people are funding the depreciation on the bargain second hand motor that I’ll pick up a few years later for around 1/3 of it’s original price.

    I’d always rather buy a car second hand from a private sale. There are so many dodgy dealers around these days, and at least by meeting the owner you can assess them and how they are likely to have looked after the car – just as important as assessing the car. Plus a private owner is less practiced at ‘stretching the truth’ than a dealer who will be well practiced at pulling the wool over peoples eyes. With a dealer car it will have been bought cheap at auction, you’ll never know who has owned it before, and you often just take pot luck really.

    sbob
    Member

    FunkyDunc – Member

    Sbob – go on what is this amazing car.

    E39 M5.
    0-60 in under five seconds, 187mph top speed, and whilst no go-cart it will still out perform most cars on the road.
    Not bad for a large practical family saloon with a very generous boot.
    The thousands of pounds you’ll save in purchase should easily offset the running costs.
    Not for everyone though, as obviously some people will prefer a newer car and I prefer the miniscule costs of my 18yr old Micra, at the moment. 🙂

    trail_rat
    Member

    “I knew someone like that. Had a £400 a month Audi on lease, couldn’t afford to replace the worn out tyres. “

    I took a mate to collect his Bimmer after service at john clarks.

    making idle chat with the receptionist about how they looked busy with the number of cars in the yard.

    “oh no those are the cars that the owners have not collected due to the cost of the repairs – most of them are on lease.”

    FunkyDunc
    Member

    I knew someone like that. Had a £400 a month Audi on lease, couldn’t afford to replace the worn out tyres.

    Borrowed £2,000 to give his kid a great Christmas.

    Thats is nothing to do with the pro’s and con’s of leasing though, thats about some body wanting things that he cant afford.

    I guess Im lucky on my lease. Zero deposit, Insurance, Servicing, Breakdown, Tyres, + can had the car back when I want and only have to pay 1 months penalty payment.

    However just like any thing financial, why would you take some thing out that you couldnt afford if things go belly up?

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