New Cars - is Leasing going to become the new norm?

[nickfrog]

Does a leased or PCPed car depreciate at a slower rate than the same car bought cash ?

[Rick1.8t]

wemorgan said:

Mikeyjae said:

You are paying the cars depreciation over a lease term

I've not read any evidence to suggest that is always the case. AKAIK it's much more complex than that. OEM want to control the used market as well as the s/h hand market. They also need to manufacture x cars over the product cycle to see the necessary return on investment. Lease/PCP/private sales all make up the complex business model that satisfies the business.

Edited by wemorgan on Tuesday 30th June 20:22

Exactly - Its highly probable that a car, and especially a 'premium' car like a 320d will see more than one of these types of ownership before it is 6 years old, I know of somebody that PCP'd a 1 series that was 2 years old, its likely it had already seen PCP or lease ownership.

I imagine the car will then be 'allowed' to enter the used car market once its value has been tightly controlled (allows for GTV at the end of PCP term and keeps the initial lease low as they guarantee its future value)

[daemon]

nickfrog said:

Does a leased or PCPed car depreciate at a slower rate than the same car bought cash ?

No, but the finance company leasing you it can buy it a lot cheaper than you or i can in the first place.

[Dr Jekyll]

daemon said:

nickfrog said:

Does a leased or PCPed car depreciate at a slower rate than the same car bought cash ?

No, but the finance company leasing you it can buy it a lot cheaper than you or i can in the first place.

That's a yes then.

[gizlaroc]

nickfrog said:

Does a leased or PCPed car depreciate at a slower rate than the same car bought cash ?

Yes, in most cases much less.

[daemon]

Dr Jekyll said:

daemon said:

nickfrog said:

Does a leased or PCPed car depreciate at a slower rate than the same car bought cash ?

No, but the finance company leasing you it can buy it a lot cheaper than you or i can in the first place.

That's a yes then.

Fair point.

[Tractor lad]

I think we need to wait until all these cheap lease deal M135is, Golf Rs, etc flood the market.
We got £6k off our M135i for cash. The best PCP deals came out over list price once interest was included.
Leasing can be a cheap way into a car but the sums still didn't work for us.
No way is "wrong" except the majority here who assume those who actually work hard, save up and buy for cash (always at an exceptional discount) are financial idiots and that you're all enlightened.

Do you save up enough for £30k (or in many cases far more) to not be too much of a wallet basher by being a money muppet? What do you think?

Is shelling out £300pcm with a tiny deposit to rent a car with a zillion restrictions solely for the Warren Buffets of this World?

[chrispmartha]

Tractor lad said:

I think we need to wait until all these cheap lease deal M135is, Golf Rs, etc flood the market.
We got £6k off our M135i for cash. The best PCP deals came out over list price once interest was included.
Leasing can be a cheap way into a car but the sums still didn't work for us.
No way is "wrong" except the majority here who assume those who actually work hard, save up and buy for cash (always at an exceptional discount) are financial idiots and that you're all enlightened.

Do you save up enough for £30k (or in many cases far more) to not be too much of a wallet basher by being a money muppet? What do you think?

Is shelling out £300pcm with a tiny deposit to rent a car with a zillion restrictions solely for the Warren Buffets of this World?

You seem to think one way is better though?

I work hard and lease a car, not sure why it bothers some though.

Also what are you driving whilst you save up £30k?

[nickfrog]

daemon said:

nickfrog said:

Does a leased or PCPed car depreciate at a slower rate than the same car bought cash ?

No, but the finance company leasing you it can buy it a lot cheaper than you or I can in the first place.

While neither of us know, I would tend to agree but we don't know what the delta is - and they must dedicate a good chunk of the gross margin for their own operating costs / capex / profits, otherwise lease deals would always be cheaper than cash. Which in my experience they can be (Mercedes), but not that often compared to cash deals when bought properly (often through brokers that are also leasers incidentally).

The Qashqai for us was the obvious one and hopefully the M135i will be the same if the trend carries on as at no point a M135i was ever cheaper than buying cash. Some flip them yearly and yielded £175/month depreciation, so high are the discounts and so few are people paying cash.

[daemon]

chrispmartha said:

I work hard and lease a car, not sure why it bothers some though.

They think you cant "afford" it and are in some way driving a car beyond your means solely to impress the neighbours and fool yourself into thinking above your station with regards to class, when clearly you havent even got a pension sorted out and are going to be left without a car to drive when you retire.

I think that sums up the mindset of a few.

[Tractor lad]

chrispmartha said:

You seem to think one way is better though?

I work hard and lease a car, not sure why it bothers some though.

Also what are you driving whilst you save up £30k?

The funds were saved many years before so impossible to say but all reasonable, cash bought motors; a two year old 335d preceded the M135i.

It doesn't bother me; what does irk me is those that are so insecure about their decision to rent/buy on the never never that they must basically call those that use cash "idiots."

They aren't, they are usually fully aware of all options and could lease/PCP. I bet the majority of leasers/PCP people couldn't buy with cash.

I'm sure they'll be a stampede of disgruntled leasers claiming they could buy a new F12 if they wanted but instead chose to rent a small hatchback.

[daemon]

nickfrog said:

While neither of us know, I would tend to agree but we don't know what the delta is - and they must dedicate a good chunk of the gross margin for their own operating costs / capex / profits, otherwise lease deals would always be cheaper than cash. Which in my experience they can be (Mercedes), but not that often compared to cash deals when bought properly (often through brokers that are also leasers incidentally).

The Qashqai for us was the obvious one and hopefully the M135i will be the same if the trend carries on as at no point a M135i was ever cheaper than buying cash. Some flip them yearly and yielded £175/month depreciation, so high are the discounts and so few are people paying cash.

Fair point.

[nickfrog]

chrispmartha said:

Tractor lad said:

I think we need to wait until all these cheap lease deal M135is, Golf Rs, etc flood the market.
We got £6k off our M135i for cash. The best PCP deals came out over list price once interest was included.
Leasing can be a cheap way into a car but the sums still didn't work for us.
No way is "wrong" except the majority here who assume those who actually work hard, save up and buy for cash (always at an exceptional discount) are financial idiots and that you're all enlightened.

Do you save up enough for £30k (or in many cases far more) to not be too much of a wallet basher by being a money muppet? What do you think?

Is shelling out £300pcm with a tiny deposit to rent a car with a zillion restrictions solely for the Warren Buffets of this World?

You seem to think one way is better though?

I work hard and lease a car, not sure why it bothers some though.

Also what are you driving whilst you save up £30k?

There is no best way, it's down to personal cash flow and fiscal positions. You don't need to save £30k, you just save the depreciation, exactly the way you pay "monthlies". If you have a choice of paying cash or lease then it's a simple calculation. In the case of the M135i that's quite a quick one. Once you've used up your ISA allowance and you don't want any more tenants nor CGT exposure, why would you be happy with 1.5% yield pre-tax return on cash when buying a car cash reduces overall depreciation by something like 30% in this instance (ie £250/month depreciation at worst vs £350 lease at best) ? Plus you can track it and enjoy total flexibility as to when you sell it and at what mileage.

But it doesn't always work ! It's a case by case, car by car.

Edited by nickfrog on Tuesday 30th June 22:31

[daemon]

Tractor lad said:

The funds were saved many years before so impossible to say but all reasonable, cash bought motors; a two year old 335d preceded the M135i.

It doesn't bother me; what does irk me is those that are so insecure about their decision to rent/buy on the never never that they must basically call those that use cash "idiots."

They aren't, they are usually fully aware of all options and could lease/PCP. I bet the majority of leasers/PCP people couldn't buy with cash.

I'm sure they'll be a stampede of disgruntled leasers claiming they could buy a new F12 if they wanted but instead chose to rent a small hatchback.

Really? Funny because if you look back at the thread, the bulk of negative comments tended to be back handed anti leasing comments. In fact it only took to response number 3 for that to happen.

I dont lease, never had, and probably wont in the forseeable future either. The concern for me is if you had a drastic change of circumstances they can be costly to get out of.

One of my cars is on straighforward repayment car finance, the other bought with cash.

[J4CKO]

I like the idea of leasing but my issues with it are that, correct me if I am wrong,

You cant mess about with your purchase.

It has to be new really

It seems to be geared strongly towards German, and/or diesel Stuff

It is never quite as cheap as it seems

I dont do enough miles.


But, if I need a daily for doing proper mileage, then I would consider it.

[chrispmartha]

nickfrog said:

There is no best way, it's down to personal cash flow and fiscal positions. You don't need to save £30k, you just save the depreciation, exactly the way you pay "monthlies". If you have a choice of paying cash or lease then it's a simple calculation. In the case of the M135i that's quite a quick one. Once you've used up your ISA allowance and you don't want any more tenants nor CGT exposure, why would you be happy with 1.5% yield pre-tax return on cash when buying a car cash reduces overall depreciation by something like 30% in this instance (ie £250/month depreciation at worst vs £350 lease at best) ? Plus you can track it and enjoy total flexibility as to when you sell it and at what mileage.

I have absolutely no interest in tracking my car that I use as a daily driver for my business, I chose an m135i as it was a good deal, I claim my mileage back from my business and I'll be quite happy handing it back next year as it will have done its job, and I'm quite happy with what it will have cost me over the 2 years.

There's no right or wrong way it's all down to the individual.

Would I personally have paid the £33,000 list price of the 135i in cash? No way on earth, am I happy to spend around £8,000 renting one for 2 years, yes I am. I'm thinking I might buy something second hand next time but I'll wait and see what deals are about.

The only thing that irks me about this endless debate are the people that just assume people who lease cars are just doing it to impress other people and are living beyond their means, what that may be the case for some it's certainly not the case for all.

[daemon]

J4CKO said:

I like the idea of leasing but my issues with it are that, correct me if I am wrong,

You cant mess about with your purchase.

It has to be new really

It seems to be geared strongly towards German, and/or diesel Stuff

It is never quite as cheap as it seems

I dont do enough miles.


But, if I need a daily for doing proper mileage, then I would consider it.

Yes. And to clarify, you dont own it at all, so its not your purchase.

Also, i would add, it will be expensive to get out of if your circumstances change.

[chrispmartha]

J4CKO said:

I like the idea of leasing but my issues with it are that, correct me if I am wrong,

You cant mess about with your purchase.

It has to be new really

It seems to be geared strongly towards German, and/or diesel Stuff

It is never quite as cheap as it seems

I dont do enough miles.


But, if I need a daily for doing proper mileage, then I would consider it.

When you lease you don't have a 'purchase'

It's exactly as 'cheap' or as 'expensive' as it seems, that's the point, you know upfront exactly how much that car will cost you over the term.
Lease deals generally aren't good if you do do s lot of miles.

[nickfrog]

chrispmartha said:

nickfrog said:

There is no best way, it's down to personal cash flow and fiscal positions. You don't need to save £30k, you just save the depreciation, exactly the way you pay "monthlies". If you have a choice of paying cash or lease then it's a simple calculation. In the case of the M135i that's quite a quick one. Once you've used up your ISA allowance and you don't want any more tenants nor CGT exposure, why would you be happy with 1.5% yield pre-tax return on cash when buying a car cash reduces overall depreciation by something like 30% in this instance (ie £250/month depreciation at worst vs £350 lease at best) ? Plus you can track it and enjoy total flexibility as to when you sell it and at what mileage.

I have absolutely no interest in tracking my car that I use as a daily driver for my business, I chose an m135i as it was a good deal, I claim my mileage back from my business and I'll be quite happy handing it back next year as it will have done its job, and I'm quite happy with what it will have cost me over the 2 years.

There's no right or wrong way it's all down to the individual.

Would I personally have paid the £33,000 list price of the 135i in cash? No way on earth, am I happy to spend around £8,000 renting one for 2 years, yes I am. I'm thinking I might buy something second hand next time but I'll wait and see what deals are about.

The only thing that irks me about this endless debate are the people that just assume people who lease cars are just doing it to impress other people and are living beyond their means, what that may be the case for some it's certainly not the case for all.

That's totally fair enough Chris. The track thing is only just a bonus. The thing is the car can be bought cash at 20% discount (which amusingly includes the BMW FS contribution if you borrow £5k and pay it back straight away - without fees). But because so few people pay cash (and rarely get that much discount if they do), the second hand values so far are in the hands of the network, ie high.

[Tractor lad]

chrispmartha said:

I have absolutely no interest in tracking my car that I use as a daily driver for my business, I chose an m135i as it was a good deal, I claim my mileage back from my business and I'll be quite happy handing it back next year as it will have done its job, and I'm quite happy with what it will have cost me over the 2 years.

There's no right or wrong way it's all down to the individual.

Would I personally have paid the £33,000 list price of the 135i in cash? No way on earth, am I happy to spend around £8,000 renting one for 2 years, yes I am. I'm thinking I might buy something second hand next time but I'll wait and see what deals are about.

The only thing that irks me about this endless debate are the people that just assume people who lease cars are just doing it to impress other people and are living beyond their means, what that may be the case for some it's certainly not the case for all.

But you would have paid £28k if you'd bought with cash and negotiated. We got £6k of ours; factory order from a local dealer. That skews your numbers rather a lot. That £28k car will probably be worth say £22k in two years with average miles. So you've paid more than depreciation and have no car.

Anyway the numbers can be argued to death but neither is wrong; but cash buyers always could take the leasing route and are aware of it. The reverse is rarely the case.