Nice car on personal lease…why does it feel 'uncomfortable'??

So we’ve a fairly decent diesel octavia coming up for 10 years old; we’ve had it for about 4..

A friend showed me a pretty good deal on a personal lease on a new 1.4TSI Yeti (top spec model) – basically it works out as just under £5k for 2 years ‘rental’ essentially. WITH road tax paid. And no servicing needed given the age/mileage. And no MOT.

At the end of the 2 years I’d give it back, and be £5k lighter.

On one hand, this seems genius – our Octavia has already cost me about £2.5k in servicing, MOT, Aircon breaking etc. I’ll not see that money again. But..I do own the car. An old diesel octavia. Go me…

I think it would be nice to have a nice new car, not worry about anything going wrong, and then after 2 years, probably get another nice new car and repeat..
I challenged the finance guy asking how do they make money? If i were to buy the Yeti it’s about £28k. There’s no way I’d sell it after 2 years for more than £23k, so I’m ‘quids in’ that way.

In simple terms, I’m paying £5k to rent a new car for 2 years.
To me this seems equal parts ‘silly’ and ‘genius’. Which is it?
Apart from a dealer, no one really ‘makes money’ on cars (t4s etc aside)…

Thoughts!!

DrP

they don’t pay as much as you would for the yeti.

I always assumed there was some catch, too — maybe how much they deduct if you’re scuffed or scraped it – which would be OK if it was yours but a definite penalty if you were leasing and handing back.

can you check somewhere like drive the deal to check that a Yeti is £28k?

Don’t forget the mileage and condition restrictions. They will examine it with some kind of nuclear microscope afterwards and foot you with a bill for repairs only second to touching up a scratch on the international space station.

This probably isn’t a problem for you but it would cost us about £100,000 in wear and tear lol- we’ve just been weighing it up as an option ourselves and decided to stick with what we’ve got for now.

^^ Yeah, I get that (don’t worry, I don’t feel sorry for them!).
But looking at it from what I WOULD pay (at best) and what I’d be able to sell it for after 2 years, surely it would depreciate by more than £5k?

DrP

and then after 2 years, probably get another nice new car and repeat..

As long as you’re happy paying £2500 a year to rent a car then it’s up to you what you do with your money.

Is the fiance 0% and how many miles a year are you ‘allowed’.

When they collected my last lease car chap walked round it looked inside briefly and asked me to sign his PDA device that everything was ok and mileage was correct. All done in under 5 mins

Leasing isn’t for me either, but I can see it makes a lot of sense if you HAVE to have a new car for whatever reason.

Both our vehicles are coming up for 10 years old too, but I hope and expect to get another few years out of them yet.

Is the fiance 0%.

You mean finance??

It’s not finance. Basically it’s just rental money.
I never own the car, and don’t get the chance to at the end either.

DrP

They’re certainly not paying £28k for a 1.4 Yeti.

Also, although your Octavia has cost you £2.5k, that’s over 4 years. So £625/year.

The Yeti will cost you £2.5k/year + handback repairs/wear charges.

Only you can decide if the ‘new’ car feel is worth it.

this goes round every so often!

Did the maths earlier this year & ended up buying a 7yr old car for around 5K.

I have to keep it for 2-3 years to be in the black over leasing, but at that point it’s ‘free’: I have a car to keep whereas with leasing I wouldn’t.

But it’ll be 10 years old then. Some people don’t like having a 10 y/o car, personally I’m happy to run a car for as long as it still goes.

I was surprised how marginal the cost differential is though. If you place a value on owning a new car over a 7 yr old car, leasing probably comes up trumps.

(Personally, the knowledge that I’d have the most nickable car on my street, and look like a flash git, and the stress that someone could ding it in Tesco car park probably make that a negative value. But whatevs)

same situation here, though with a decent car allowance from work. Having worked through various figs for high end Skoda, BMW and Audi I found that the ‘quality’ German marques end up often cheaper than the ‘lesser’ ones, due largely to the residuals at the end of the PCP (ok, not same as lease, but same idea)

(Personally, the knowledge that I’d have the most nickable car on my street, and look like a flash git, and the stress that someone could ding it in Tesco car park probably make that a negative value. But whatevs)

This is the thing – I agree with you there; I’m not fussed about having a new car at all. I like the octavia for what it is. I like the fact I can pull a handie in a trail centre car park, and do a bit of light off-roading in it. I don’t mind if it gets a bit scraped up.

However, the wife quite fancies a white yeti. And to be honest, we all sit here harking on about our crappy old cars and how sensible we are, when I know I’ve spunked £600 on suspension forks, £150 ona new (unnecessary) brakeset etc etc…
I suppose I’m accepting my priority in life is different to hers and vice versa.
We shouldn’t’ judge people for liking nice cars, and I know once I’m in it, it IS a nicer place to be..

We test drove a 1.2 TSi (one point two!!). That’s a cracking engine – the 1.4 tsi is meant to be great!

DrP

The only 1.4 I can see the L&K edition which RRP’s for just under £25.5k

http://www.parkers.co.uk/cars/prices/new/skoda/yeti/hatchback-2009/%5B/url%5D

According to Parkers you can get a deal on that car for £19.5k, which seems a bit too good to be true, so say £23k.

Assuming you keep it for 5 years thats about £5k per annum (assuming a bit for servicing, repairs etc). and at the end of 5 years you’ll have a car thats worth (about) £5k

So leasing at your rates compared to buying seems like a good deal.

Have you factored everything in? Is there a massive upfront payment ontop of the monthly lease. I see a lot Skoda deals that are £140 per month + £2,500 up front

it’s 2.4k up front, then £119 a month.
minus the road tax, servicing, MOT, it’s as good as £5k

DrP

£28k for a Yeti? crazy talk… do some more research.

My mum got a brand new yeti for £15k with 2.0tdi, sat nav, half leather, full electrics etc just 3 years ago.

We’ve one Skoda on personal lease and one on company hire purchase. Both make sense for us for different reasons. The personal lease one replaced a 10 year old car- which we sold to pay the deposit for the new Fabia. We signed up to a 3.5 year contract after which we’ll chop it or buy it (if one of my kids IS VERY GOOD, she might get it).

It does < 10km a year, it’s a nice car to drive, we got a good deal in the Skoda Jan sale thing esp when weighing up buying a three year old one. Really wanted a DSG so 2nd hand wasn’t going to be that cheap.

The company HP one is on 19k a year with full servicing and a hire car within 4 hours if it goes wrong. Since without a car, I don’t get paid and I can legitimately pay for it using company money, it’s also a no brainer.

It does feel a bit like paying rent not mortgage except it’s hardly an appreciating asset. I’ve come round to the view that I don’t really want to own cars, music, applications, etc. I just want to rent them as cheaply and easily as I can. Different for different people.

Can’t ever imagine not ‘owning’ my bikes tho!

There are no gotchas really with leasing.

Regarding handing the car back, they have to follow industry standards(BVRLA guidelines) on what is considered fair wear and tear over the time period/mileage you have agreed, and it all looks quite reasonable to me .

One other potential issue is the mileage, if you think you can accurately predict your mileage you’re fine, but if you suddenly find yourself doing 20000 miles per annum when you initially agreed 10000 mile per annum you will end up paying more for it.

A final issue , is what happens if mid way through you circumstances change and you decide you cant pay for the car any more, It will depend on the wording in the contract, but I think for some you cant get out part way through

Leasing makes a lot of sense for a lot of people.

Oh and they make money on people being talked into buying ‘bridging insurance’ and all the other offers at POS you really don’t need!

Each time we’ve looked at leasing, we end up either buying on dealer/manufacturer finance or paying cash, doesn’t usually work out much more and no mileage restrictions nor worry over wear&tear plus no large lump sum hanging over.

Leasing makes a lot of sense for a lot of people.

Not me unfortunately. I’d love a flash new car but doing 20,000 miles a year the lease rates become much less attractive…

I have a car on a business contract hire agreement.

No deposit, tax paid, 20,000 miles per annum. One service in contract period I have to get done (doesn’t have to be main dealer).

£198 per month. 1.6 diesel, does 60mpg on average.

I use £150 – £200 of diesel a month.

Just had to top up adblue at 13,000 miles, £15

I get an average of £370 a month in mileage payments from work.

Free car.

Yes, I could effectively make money with a cheap car I bought outright, but I’d rather have no hassle.

Last car cost me £2.5k in depreciation over 2 years, probably £1k in servicing/repairs/MOT’s/rfl. Also only did 35mpg.

Julians point is the right one. Be realistic about mileage. So easy to under-estimate it and get hit with some nasty charges. On personal lease it’s way better to be a bit cautious (in case you move further away from school run for example or just don’t want to worry about it) because you’ll get some of the extra up front cost back on the final balloon payment.

PS. If I was more cash-rich at the mo I’d be looking at flogging my nine-year-old van while it still retains a lot of its value, replacing with another five or six-year-old model.

No judgement intended on people who drive new cars. Someone needs to own them before me!

Not me unfortunately. I’d love a flash new car but doing 20,000 miles a year the lease rates become much less attractive…

Interesting. Maybe HP’s different. Mine is for 20,000 per year and we worked out what it’d cost to buy one/run it/sell it with 60,000 on versus just basically renting it. There wasn’t much in it and buying a car on the company looked like a shed load of hassle (for a company of 2 people!) so we went HP.

The condition bit when you’re handing it back is proper stressful if you’re short of cash at the time like we were.

In the end I thought we’d get stung for a couple of hundred quid at least but they were very reasonable, and didn’t charge us a penny.

Probably would do it again, but not until the kids are older/we’ve got some spare cash.

An interesting thread for me this, living in Holland where new cars are expensive compared to the UK and currently running a 16 year old Defender.

I am starting to look at my options for a car where it doesn’t rain on the inside. I have a mileage that I can be certain of and have started saving up for a “new” car, but am currently no where near having enough in the bank to buy one outright.

I would spend two years worrying about putting a dent in it/ripping the seats with a chainring/someone scratching it with a pushchair etc. and what effect it might have on the hand back value

I am on my second lease car, it has been almost completely hassle free. Main reason for this is my wife has more than enough to do when I am away at work without worrying about car trouble ( which used to happen quite a bit in the past with previous decent second hand cars ). It is an expensive way to drive a car, but I regard this expense as a small price to pay for convenience and peice of mind.

One of the reasons it has worked well for us is that I also have an old 4×4 I use for bikes, trips to the woodyard and dump etc, that reduces the wear and tear on the Lease car.

I still have the same uncomfortable feeling that you mention, that something is not quite right about leasing, however the current lease is up in February, and looking around at second hand cars atm…..and I am almost certainly going to lease again.

Yeti is a step down in space though. I’d go for an Octavia, the new model gets released in Jan, should be able to drive a good deal on the existing one which is a world apart from your current one. (And better looking than the next one tbh.)

You’re buying peace of mind, factor that into the cost too.

I had an excellent deal via my Dad years ago. I paid £200 per month, I got a top spec Peugeot 307 XSi HDi all in – insurance, tax, servicing etc. I only had to pay for fuel. On top of that I had to give it back every 9k miles and they would give me a new one.

At the time I was doing 2k miles per month so every 4 months or so I had a new car. I went through 4 of them before I had to stop. My employer changed their expenses policy and I had to have business travel covered on my insurance which didn’t work with the Peugeot deal

So I had to buy my own car after that.

It was cheap @£200/mth, really cheap, but at the end I still didn’t have a car despite spending £2.4k pa on a car. So really it depends. I benefitted as I permanently had a new car, they got absolutely caned, and I just handed it back each time. But at the end I didn’t have anything

Haven’t used lease/finance since

no mileage restrictions nor worry over wear and tear

This is always given as a reason not to lease but purchase a car put 20k miles a year and let it get into a scruffy condition and you’ll always receive less when you come to sell it than if it was immaculate with half the mileage. You end up paying for it either way.

The ‘cheap’ bit of car ownership is from around 3 (as the depreciation starts to slow) to around about 8 (when statistically things start to go wrong more/wear out). So I can see that you can compare the cost of a new lease yeti to a decade old octavia, especially if you’ve been a bit unlucky.

The lease companies make money as they get a huge huge discount as they buy such volumes. I suspect they may also factor in that they get it back in 2 years and get to sell it is a newish used car then. For main dealers there is much much more profit in newish used sales than in new.

Note that with most lease deals there is no option to buy, it must be handed back.

I was offered this but costs were almost the same as a new car, new car it was.

I did it. Picked a yeti up this week. Had a passat that was starting to cost money so got shut. This will cost me what the passat cost me over the last couple of years give or take. Worry free motoring in a top of the range model and the 1.4 goes quite well.

If i were to buy the Yeti it’s about £28k. There’s no way I’d sell it after 2 years for more than £23k, so I’m ‘quids in’ that way.

This the the key bit for me. It’s like Black Friday – it’s only a bargain if you were going to buy it anyway!

grim168 – Member
Worry free motoring

straight out of the sales mans handbook, who really worries unless they have a banger!??

True.. I’m at the point of thinking about possibly toying with the idea of a new(er) car anyway…

Hmm…

Might look at 3 yr old yetis and crunch some numbers…
Once you’ve paid the deposit, £119 IS dirty cheap isn’t it!

DrP

And to be honest, we all sit here harking on about our crappy old cars and how sensible we are, when I know I’ve spunked £600 on suspension forks, £150 ona new (unnecessary) brakeset etc etc..

Thing is if you keep the old car then you could pretty much do that every month. Or have a holiday or whatever. Depends on your priorities

However, the wife quite fancies a white yeti.

You are getting a white yetl 😛

I think the cheapest option is to buy at 3 years and run for as long as you can. It’s not comparable to a lease, though as you’ve got quite an old car at the end of your ownership that is pretty low in value and potentially unreliable.

I like the idea of owning a car (I do own one anyhow!) but it’s a depreciating asset, so ownership isn’t necessarily the be-all and end-all.

I think it really comes down to how much value you place on reliability. I absolutely demand it, so I think I’ll get a PCP deal next (provided my current motor lasts 3 years).

What I won’t ever do again is take a loan out for a second hand car. Bad move!