New Cars - is Leasing going to become the new norm?
Discussion
Most of the time, leasing deals seem good value to the economically illiterate. Typically, people who would never buy a new car (because they would think it too much money) spend years and years cycling every 3 years from one new car to another. People will easily spend £100,000 leasing very dull new cars over 30 years. Pretty astonishing when you think of it that way!
Yeah, if it got to the point where I was bankrupt I would rather have £30k stashed than sat on the drive in metal.
Now the point you make about used cars is interesting, used cars seem to be the most expensive I have ever known them currently.
Why is this?
I think it may be because more of the market is being controlled by the manufacturers.
I have been looking for a 530d Touring again as a work horse, new...
TOURING 530d M Sport 5dr Step Auto £37,460.00
Cheapest 3 year old one out there with less than 36k miles is this...
http://www.autotrader.co.uk/classified/advert/2015...
61 plate at £28.5k.
Three and half years and 30k miles for £8k less? Hardly seems worth it.
I bought my year old E61 535d for £32k (£51k list) with 12k miles on it 10 years ago. You pretty much knew a 3 year old car was going to be roughly half the price of a new one. Not anymore. I do think the contract hire culture has helped residuals in the UK.
Now the point you make about used cars is interesting, used cars seem to be the most expensive I have ever known them currently.
Why is this?
I think it may be because more of the market is being controlled by the manufacturers.
I have been looking for a 530d Touring again as a work horse, new...
TOURING 530d M Sport 5dr Step Auto £37,460.00
Cheapest 3 year old one out there with less than 36k miles is this...
http://www.autotrader.co.uk/classified/advert/2015...
61 plate at £28.5k.
Three and half years and 30k miles for £8k less? Hardly seems worth it.
I bought my year old E61 535d for £32k (£51k list) with 12k miles on it 10 years ago. You pretty much knew a 3 year old car was going to be roughly half the price of a new one. Not anymore. I do think the contract hire culture has helped residuals in the UK.
ORD said:
Most of the time, leasing deals seem good value to the economically illiterate. Typically, people who would never buy a new car (because they would think it too much money) spend years and years cycling every 3 years from one new car to another. People will easily spend £100,000 leasing very dull new cars over 30 years. Pretty astonishing when you think of it that way!
As opposed to what?Remember we are discussing those that want to buy a 'new' car here.
How would you do it?
It can often be far cheaper to buy a car at the right point of the depreciation curve using some finance than it can to buy a car that is older that is within your cash budget, but that is a different matter.
Obviously the cheapest way is go and buy a 10 year old car for buttons, but that is not the point.
Are you saying that it is better to lease a new car rather than keep swapping cars every three years?
ORD said:
Most of the time, leasing deals seem good value to the economically illiterate. Typically, people who would never buy a new car (because they would think it too much money) spend years and years cycling every 3 years from one new car to another. People will easily spend £100,000 leasing very dull new cars over 30 years. Pretty astonishing when you think of it that way!
Have you read the previous 11 pages?wemorgan said:
Have you read the previous 11 pages?
Nope. I know exactly what the lease-lovers say, and it can be summarised as 'I don't equate a monthly payment with the amortised value of a purchase, so I think it's cheaper' . If, instead of leasing, you would buy a new car every 2-3 years, it may sometimes be slightly cheaper. But would anyone realistically do that unless they had a LOT of money? Handing over £30k every 2-3 years would bring home the true cost of always driving a new car.
ORD said:
If, instead of leasing, you would buy a new car every 2-3 years, it may sometimes be slightly cheaper. But would anyone realistically do that unless they had a LOT of money? Handing over £30k every 2-3 years would bring home the true cost of always driving a new car.
Yes, if they wanted a new car every 2-3 years buying would generally be cheaper. End of Argument.Where's the honesty?
Aged 23 I was earning good money but had little savings. I bought a new car on finance. Monthly payments were totally affordable, all seemed good.
I then went travelling/on a six month honeymoon and kept it (idiot!) then needed to sell it; it halved on value and once I calculated the interest on top, I had spent big money. Never ever again.
But why don't many admit they're the same rather than come out with the "opportunity cost" nonsense? I did it because I was on good money but had naff all savings (those I did save went on our honeymoon). I bet 90% of leasers/PCPers are the same.
Aged 23 I was earning good money but had little savings. I bought a new car on finance. Monthly payments were totally affordable, all seemed good.
I then went travelling/on a six month honeymoon and kept it (idiot!) then needed to sell it; it halved on value and once I calculated the interest on top, I had spent big money. Never ever again.
But why don't many admit they're the same rather than come out with the "opportunity cost" nonsense? I did it because I was on good money but had naff all savings (those I did save went on our honeymoon). I bet 90% of leasers/PCPers are the same.
Edited by Tractor lad on Saturday 4th July 21:16
gizlaroc said:
If i had £250k in the bank maybe I would think differently, but I haven't, so a massive chunk of my savings would go into 'buying' a new car.
My money would be sat there tied up in a car.
I guess the answer is save the £500 a month I am happy to loose on a car until I have the £30-40k I need. But that would be at least 5 years and I can't see the point if I can be in one now for the same amount of money each month as it would be depreciating at anyway.
I also think monthly payments make you really stop and think what a car is loosing each month, where as when I bought my 5 Series with cash I was never really sure until I had to sell it, and then the reality hit home. It was at that point I started financing them and that allowed me to set a limit to what I was prepared to 'waste' on a car each month.
I also started to use finance to get into newer cars, buy a 3 year old one for £20k cash and loose maybe £350 a month in
depreciation or lease a brand new one and pay maybe £400 a month in rentals.
The new car had no warranty issues, servicing much cheaper, better MPG and all the benefits of being in a new car vs an older one. The extra it cost each month is easily recovered in savings elsewhere.
Different strokes for different folks.
The only thing that is right is what you feel happier doing.
"pull your socks up and work a bit harder". My money would be sat there tied up in a car.
I guess the answer is save the £500 a month I am happy to loose on a car until I have the £30-40k I need. But that would be at least 5 years and I can't see the point if I can be in one now for the same amount of money each month as it would be depreciating at anyway.
I also think monthly payments make you really stop and think what a car is loosing each month, where as when I bought my 5 Series with cash I was never really sure until I had to sell it, and then the reality hit home. It was at that point I started financing them and that allowed me to set a limit to what I was prepared to 'waste' on a car each month.
I also started to use finance to get into newer cars, buy a 3 year old one for £20k cash and loose maybe £350 a month in
depreciation or lease a brand new one and pay maybe £400 a month in rentals.
The new car had no warranty issues, servicing much cheaper, better MPG and all the benefits of being in a new car vs an older one. The extra it cost each month is easily recovered in savings elsewhere.
Different strokes for different folks.
The only thing that is right is what you feel happier doing.
One thing i would say is that the original question i posed was one from an objective viewpoint, but everyone seems to be debating it from their own subjective view
Objectively - i think new car sales will probably move to predominantly lease deals both by the manufacturer and by third parties. Cash buyers are in a small minority anyway even as is, and i dont see that changing.
Subjectively - if i was buying a new car, i'd still be wary about the constraints around leasing in terms of if your circumstances change, etc, so i'd probably still look for a PCP deal with a manufacturer incentive OR a straightforward deposit and finance route.
Objectively - i think new car sales will probably move to predominantly lease deals both by the manufacturer and by third parties. Cash buyers are in a small minority anyway even as is, and i dont see that changing.
Subjectively - if i was buying a new car, i'd still be wary about the constraints around leasing in terms of if your circumstances change, etc, so i'd probably still look for a PCP deal with a manufacturer incentive OR a straightforward deposit and finance route.
daemon said:
Subjectively - if i was buying a new car, i'd still be wary about the constraints around leasing in terms of if your circumstances change, etc, so i'd probably still look for a PCP deal with a manufacturer incentive OR a straightforward deposit and finance route.
Why not cash?The UK seems to have fallen into the trap thinking that cars melt and expensive things break after their 3 year warranty ends, panic sets in and they buy/lease a new one. Take care of the maintenance and a car should last you a good 10 years +. Just look at other many countries where old cars, taxis, works cars etc are working perfectly fine and reliable.
Finance companies are multi billion pound companies, this is how they make their money. Car manufactures are clever marketing machines that have fooled us into changing cars when warranties end. This is how they sell cars.
If I paid £250 a month rental for 6 years, it would have paid for my current car outright. While others walk away from this, my car would still be worth £8000 ish and will last me another 5 years. For me cash worked and saved me £10,000 off the list of the price new, I had much more leverage + I own it, extended the warranty to 7 years and three years free servicing (inc in the deal).
If you want to rent new cars that you change every two years, it will cost you for the privilege.
Finance companies are multi billion pound companies, this is how they make their money. Car manufactures are clever marketing machines that have fooled us into changing cars when warranties end. This is how they sell cars.
If I paid £250 a month rental for 6 years, it would have paid for my current car outright. While others walk away from this, my car would still be worth £8000 ish and will last me another 5 years. For me cash worked and saved me £10,000 off the list of the price new, I had much more leverage + I own it, extended the warranty to 7 years and three years free servicing (inc in the deal).
If you want to rent new cars that you change every two years, it will cost you for the privilege.
Edited by johnnnnnnyy on Wednesday 8th July 21:11
Edited by johnnnnnnyy on Wednesday 8th July 21:13
Dr Jekyll said:
daemon said:
Subjectively - if i was buying a new car, i'd still be wary about the constraints around leasing in terms of if your circumstances change, etc, so i'd probably still look for a PCP deal with a manufacturer incentive OR a straightforward deposit and finance route.
Why not cash?ORD said:
That's really what strikes me about it. Obtaining a new car every 2 or 3 years is a hugely expensive extravagance. Only very rich people would do it by outright purchase, but lots of people who would think that wildly expensive will spend the same or more on leasing.
Theres maybe something in that. Dishing out, say, £50K on a car, some people cant get their head around that, even though after 3 years they might get £25K of that back. £400 a month doesnt seem so bad.If i was putting £50K of cash into a car though, i'd be looking something in which you'd have a fair chance of getting a decent part of it back.
daemon said:
Theres maybe something in that. Dishing out, say, £50K on a car, some people cant get their head around that, even though after 3 years they might get £25K of that back. £400 a month doesnt seem so bad.
If i was putting £50K of cash into a car though, i'd be looking something in which you'd have a fair chance of getting a decent part of it back.
Precisely. Me too. It's a really strange element of human psychology (and we all have it) that we fall for disguises even when we know they are disguises. I think most buyers know that 400pm is actually a bloody huge amount of money over 3 years (repeated forever) but it still LOOKS and FEELS quite small. If i was putting £50K of cash into a car though, i'd be looking something in which you'd have a fair chance of getting a decent part of it back.
ORD said:
Handing over £30k every 2-3 years would bring home the true cost of always driving a new car.
That's not actually the case though, since the 2-3 year old car would still have a residual value that would be offset against the new car. Say, for example, a £30k car is worth £20k after 3 years, this would have cost the owner approximately £300 per month (£10,000/36). This would not be too far off the cost of the monthly finance / leasing payments.
There must be a fair few people that either don't know about leasing at all or or just completely rule it out as an option. I only really properly knew about it a few years ago some months before ordering my car via lease.
A friend in work told me about it when he said that our company do not do any company cars or salary sacrifice schemes, even though i work for a hire company. I still find that odd but hey ho. I would have never considered it before as i always believed in buying something upfront in cash. However, when i looked it further it really swayed me and i went for it and haven't really looked back.
I was getting my car serviced the other week and while waiting around a young lad with a Polo come in to speak to the sales guy about upgrading into a different car. It became clear that the he had it on a PCP and wanted to chop it in for a new Scirocco. I could hear the sales guy going on about how much it would cost him alongside all of the additional insurances and tyre cover and all that stuff. All in all it was way too expensive and out of his reach entirely and left it at that.
I thought to myself i wonder if he's even considered or looked into how much a lease would be or would have been? I couldn't hear everything but for what they were about to charge him even taking out of account his current polo and just starting on the Rocco as fresh it was way more than i'm paying on mine.
A friend in work told me about it when he said that our company do not do any company cars or salary sacrifice schemes, even though i work for a hire company. I still find that odd but hey ho. I would have never considered it before as i always believed in buying something upfront in cash. However, when i looked it further it really swayed me and i went for it and haven't really looked back.
I was getting my car serviced the other week and while waiting around a young lad with a Polo come in to speak to the sales guy about upgrading into a different car. It became clear that the he had it on a PCP and wanted to chop it in for a new Scirocco. I could hear the sales guy going on about how much it would cost him alongside all of the additional insurances and tyre cover and all that stuff. All in all it was way too expensive and out of his reach entirely and left it at that.
I thought to myself i wonder if he's even considered or looked into how much a lease would be or would have been? I couldn't hear everything but for what they were about to charge him even taking out of account his current polo and just starting on the Rocco as fresh it was way more than i'm paying on mine.
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