Why are Lease Deals Frowned Up Particularly on Prestige Cars

Why are Lease Deals Frowned Up Particularly on Prestige Cars

Author
Discussion

wemorgan

3,578 posts

177 months

Saturday 4th July 2015
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M5Fan said:
I love these threads. Each to their own, but I'm regularly amazed how people are happy to spend thousands to 'rent' a car. I suppose this is a car forum though and it's a free country biggrin

People always used to talk of renting a house as 'dead money' (paying someone elses mortgage for them to eventually own the house) - I see lease deals in a similar way way, I can't see how leasing is the most economic way to run a car.
Then go back and reread the threads - as the answer is very clear why some people do chose to lease/rent and others don't.

M5Fan

100 posts

172 months

Saturday 4th July 2015
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wemorgan said:
Then go back and reread the threads - as the answer is very clear why some people do chose to lease/rent and others don't.
No not the reasons why people lease - I mean which is the most economic approach, lease, pcp, buy outright etc.

Muzzer79

9,806 posts

186 months

Saturday 4th July 2015
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M5Fan said:
I love these threads. Each to their own, but I'm regularly amazed how people are happy to spend thousands to 'rent' a car. I suppose this is a car forum though and it's a free country biggrin

People always used to talk of renting a house as 'dead money' (paying someone elses mortgage for them to eventually own the house) - I see lease deals in a similar way way, I can't see how leasing is the most economic way to run a car.

The trouble is though these threads usually degenerate into "why do you care how I buy a car", "I can afford £250 per month", "why don't you just buy a 3 year old car with a bank loan" , "you've got a mortgage haven't you it's the same thing" etc,etc and stray from the economics of the different approaches. Can someone good at maths knock-up a spreadsheet or something to answer this question once and for all? wink
It's really not that complicated. Most people who are better off leasing are not on PAYE.

Most people who don't understand the concept are on PAYE....

Zoobeef

6,004 posts

157 months

Saturday 4th July 2015
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I don't do leasing as I cannot work out how to fit it into my car choices.

How do I lease a car which over say 5 years of use and 100k miles would cost me less than £2k? (Only original car price not servicing)

Get me a Noble or equivalent that goes up in value?

Get me a track car which goes up in value?

Slow

6,973 posts

136 months

Saturday 4th July 2015
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My step mum leases her cars.
She likes the fact she just hands it back and gets a new car with no fuss of selling it or anything.

Dad however bought a pickup brand new for cash and still has it 8 years later. Different people different choices.

Let people do what they want tbh.

daemon

35,724 posts

196 months

Saturday 4th July 2015
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Tractor lad said:
Leasers/PCPers also have a habit of near lynching cash buyers.
Can you show us an example of that?

From what I've seen , the worst that happens is that a leasing advocate dares to suggest that leasing could work out cheaper over a specific term and people like you then throw your toys about and complain of being oppressed

daemon

35,724 posts

196 months

Saturday 4th July 2015
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Tractor lad said:
I always find the "I can invest elsewhere" argument amusing.
Can the financial geniuses suggest place to invest our healthy pot currently mostly in ISAs earning sweet FA? Many thanks.
Please tell me you're not on here defending buying something that depreciates heavily with cash, when you rent the very thing you have a good chance of appreciating in value?


daemon

35,724 posts

196 months

Saturday 4th July 2015
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Mr2Mike said:
ging84 said:
Victorian attitude to debt
You think getting into significant debt is somehow a great idea in the modern age?
Getting in to debt would be having a large unsecured loan. That I would have a problem with.

Financing a car with a bit of a deposit down so that it's worth more than you owe at any given time as a means of owning the car I don't have a problem with.

Leasing is effectively renting over a fixed term so you don't 'owe' the £40k the car might be worth so I don't have a particular problem with that either though I haven't done it .

daemon

35,724 posts

196 months

Saturday 4th July 2015
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Granfondo said:
Finance works best for people that DON'T need it! wink
And for people like you who use it but pretend you don't

daemon

35,724 posts

196 months

Saturday 4th July 2015
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Dr Jekyll said:
Tractor lad said:
I always find the "I can invest elsewhere" argument amusing.
Can the financial geniuses suggest place to invest our healthy pot currently mostly in ISAs earning sweet FA? Many thanks.
+1

If that argument is correct, why bother with the car at all? Why not just borrow to invest?
Some people do

daemon

35,724 posts

196 months

Saturday 4th July 2015
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gregs656 said:
I don't think lease deals or debt that is frowned upon, and I am not sure if frowned upon is the right word at all. I think the issue is that the temptation with lease deals is to stretch your finances beyond the point which you might otherwise if you were paying in a lump sum. That's not a new problem, nor one exclusive to cars.
Nor exclusive to finance or leasing

I've seen people buy cars with cash they clearly couldn't afford to run And maintain then had to sell them at a massive loss.

M5Fan

100 posts

172 months

Saturday 4th July 2015
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The topic is too open-ended imo. You need to define some specific scenarios....e.g.

Scenario 1.
Bob wants a new M5.

Bob also wants another new car after 3 years of driving the M5 (Bob's got cash to burn..)

Bob has enough cash in the bank to buy an M5 outright.

Bob does 12k miles a year.

Bob can expect a 5% discount off RRP if paying by cash.

There is 1 years free servicing regardless of how the car is obtained.

What else needs to be taken into account - Bob is able to invest the money elsewhere, servicing, tax, estimated value after 3 years ???

Is Bob better of financially (i) buying the car outright (ii) using a PCP deal (iii) using a lease deal (iv) there is no difference (!)

Can someone plug some real numbers in - is this enough to answer this scenario (I've never leased , what else needs to be considered e.g. gap insurance?)

They'll have questions like this in GCSE Maths one day (Bob isn't me by the way biggrin)

daemon

35,724 posts

196 months

Saturday 4th July 2015
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M5Fan said:
The topic is too open-ended imo. You need to define some specific scenarios....e.g.

Scenario 1.
Bob wants a new M5.

Bob also wants another new car after 3 years of driving the M5 (Bob's got cash to burn..)

Bob has enough cash in the bank to buy an M5 outright.

Bob does 12k miles a year.

Bob can expect a 5% discount off RRP if paying by cash.

There is 1 years free servicing regardless of how the car is obtained.

What else needs to be taken into account - Bob is able to invest the money elsewhere, servicing, tax, estimated value after 3 years ???

Is Bob better of financially (i) buying the car outright (ii) using a PCP deal (iii) using a lease deal (iv) there is no difference (!)

Can someone plug some real numbers in - is this enough to answer this scenario (I've never leased , what else needs to be considered e.g. gap insurance?)

They'll have questions like this in GCSE Maths one day (Bob isn't me by the way biggrin)
That scenario is heavily skewed towards leasing or a pcp deal being the cheapest way of driving the car.


daytona365

1,773 posts

163 months

Saturday 4th July 2015
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Surely if you don't tell anyone, they'd never know ?

Zoobeef

6,004 posts

157 months

Saturday 4th July 2015
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I just like the safety of being able to sell all my cars and have more than a years wages to then use as a buffer.
I wouldn't like to tie myself into something.

Then again, I wouldn't spend more than a few £k a year on renting or owning(in depreciation) any car. Does that keep me out of nice cars? No. But then many think cars are only nice if they are brand new.

M5Fan

100 posts

172 months

Saturday 4th July 2015
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daemon said:
That scenario is heavily skewed towards leasing or a pcp deal being the cheapest way of driving the car.
Go on then prove it smile - seriously though, have you got some figures which would show that, or what makes you say that? We can then agree what scenario 2 looks like...

ORD

18,086 posts

126 months

Saturday 4th July 2015
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M5Fan said:
Go on then prove it smile - seriously though, have you got some figures which would show that, or what makes you say that? We can then agree what scenario 2 looks like...
A 5% cash discount is a vast underestimate, for a start. You would have to try to get less than 10% and, in all likelihood, could get considerably more.

If a lease is cheaper than buying the car, it's simply because there is a huge discount on the purchase by the leasing company. A smaller but still very considerable discount is usually available to cash buyers of those cars (although not always).

Manufacturers that don't discount heavily on sales to leasing companies have terrible leasing rates - these simply reflect the cost of using someone someone's asset & so paying the depreciation plus their operating costs and cost of capital (admittedly lower than yours).

daemon

35,724 posts

196 months

Saturday 4th July 2015
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daytona365 said:
Surely if you don't tell anyone, they'd never know ?
He was caught out because he takes a very anti pcp / finance stance on mainstream threads presumably to rile people but had said on a more obscure thread that he'd a car on a pcp deal.

daemon

35,724 posts

196 months

Saturday 4th July 2015
quotequote all
M5Fan said:
daemon said:
That scenario is heavily skewed towards leasing or a pcp deal being the cheapest way of driving the car.
Go on then prove it smile - seriously though, have you got some figures which would show that, or what makes you say that? We can then agree what scenario 2 looks like...
Typing in a smart phone with one finger. Would need to be on a laptop. Home tomorrow pm so will have a look then

Tractor lad

150 posts

105 months

Saturday 4th July 2015
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swerni said:
You're quite happy to rent a house but not rent a car ?
Yep; almost a house in the bank, we get to live in lovely houses, we pay no interest to hateful banks, we get on with our landlord, we claim a good chunk of rent and bills back den our business (in turn our business has a cheap office with sea views), the houses we rent are always fully owned so no worries about paying someone else's mortgage, houses here are just a rip off, there'll be a massive crash soon, if not we'll just buy something in France when the kids leave, we are also in line for a healthy inheritance one day, we pay far less rent than the interest on a mortgage, no worries, stuff gets repaired for "free'" we refuse to join the insane property ladder nonsense, we make money with our business, many friends and relatives have lost a fortune on houses as well as some making money, our country relies on pretending it's rich because of the utterly ridiculous housing market and it's killed our economy.

Basically no debt, no paying any interest to the villain banks, total freedom and flexibility, happy kids and the joy of not doing what 99% of the public do.