New Cars - is Leasing going to become the new norm?
Discussion
Just watching the leasing thread and also the amount of really decent leasing deals that pop up on hotukdeals now and it got me thinking - is the market here moving more towards the american model whereby the vast majority of new cars are leased?
I know the most popular format at the moment is probably PCP deals but there are disadvantages to that for both the customer and the finance company, and i'm hearing more and more adverts for monthly deals that end with "there is no option to own the car".
After all, if you buy a new car and you change it every three to four years, does it really matter if you dont "own" it, particularly if its an everyday workhorse?
I know the most popular format at the moment is probably PCP deals but there are disadvantages to that for both the customer and the finance company, and i'm hearing more and more adverts for monthly deals that end with "there is no option to own the car".
After all, if you buy a new car and you change it every three to four years, does it really matter if you dont "own" it, particularly if its an everyday workhorse?
I've been PCP'ing my everyday car for years (currently an Evoque). Think i'll lease next time (fancy a 5 series next). I don't want to own it, just want a nice, modern, reliable, comfy car that gets changed every 3 years and costs what it says on the tin. Never going to get attached to the thing.
My weekend car I buy. It tends to be a bit older, something I can tinker with, something I want to own and I do tend to get attached to.
Horses for courses I guess.
My weekend car I buy. It tends to be a bit older, something I can tinker with, something I want to own and I do tend to get attached to.
Horses for courses I guess.
I'm leasing my ST and I've become rather fond of it. I've had it 9 months already, so nearly halfway through the lease. I'm kind of thinking should I have purchased it, but then this way I'll change my car rather than sticking with the same car for around five years. I want to try many more cars.
Although I think leasing will become the go to option as cars become more complex and out of warranty repair bills start to crop up.
Although I think leasing will become the go to option as cars become more complex and out of warranty repair bills start to crop up.
groundcontrol said:
Yes, because saving for things and buying them is super uncool.
Well it is uncool to hand over a large chunk of hard earned/saved money on a product that just depreciates, and fairly rapidly too.Financially its far better to save and pay off your home than waste it on a car.
You can generally lease far cheaper than you can buy one for with cash, simply because the manufacturers can sell them with massive hidden discounts that the public don't actually see. They get the car back and keep control.
I think the big thing for leasing etc. though will be other credit, as in mortgages etc.
Just been told that if I stop my X3 lease at £330 a month I can borrow another £72,000 on the mortgage.
So maybe we will go back to seeing more people run older cars that are paid for cash, until the mortgage is sorted anyway.
Problem with leases is you can't get out of them if you need to, unlike a PCP where you call up and get a settlement figure at any point, and that may put many off leasing. Need a mortgage and they want you to end your lease? Tough, loose your job and need to get out of the lease? Tough. Don't like the car a couple of months in? Tough.
This is where being a cash buyer or using a PCP type agreement can be better than leasing (we are talking contract hiring rather than leasing but everyone seems to call it leasing for some reason).
I think the big thing for leasing etc. though will be other credit, as in mortgages etc.
Just been told that if I stop my X3 lease at £330 a month I can borrow another £72,000 on the mortgage.
So maybe we will go back to seeing more people run older cars that are paid for cash, until the mortgage is sorted anyway.
Problem with leases is you can't get out of them if you need to, unlike a PCP where you call up and get a settlement figure at any point, and that may put many off leasing. Need a mortgage and they want you to end your lease? Tough, loose your job and need to get out of the lease? Tough. Don't like the car a couple of months in? Tough.
This is where being a cash buyer or using a PCP type agreement can be better than leasing (we are talking contract hiring rather than leasing but everyone seems to call it leasing for some reason).
gizlaroc said:
I'm with you, I would much rather pay cash so I can laugh at those crazy fools who are using credit and saving thousands of pounds, they're not going to make me look like an idiot!!
The interest you pay on a car is nothing compared to your mortgage. Reduce that with extra cash/savings and not only will you be better off but also you'll be spending on an appreciating asset. Not necessarily crazy and definitely not foolish!!
clarki said:
Financially its far better to save and pay off your home than waste it on a car.
Indeed, but if you're going to get a new car by any means there tends to be very little in it between HP/leasing and drawing down against your mortgage and paying cash. Ultimately you're paying the depreciation and maintenance costs one way or another. It just comes down to where you can get the better overall cost of borrowing and that will vary from person to person. The only way to avoid it, is to drive a cheap car or one which, for whatever reason, wont depreciate.
I'm very grateful that so many people are willing to pour money into the first few years of depreciation though. That way I can get a nice five year old car for about 20% of what it cost new.
Edited by kambites on Sunday 28th June 19:12
clarki said:
groundcontrol said:
Yes, because saving for things and buying them is super uncool.
Well it is uncool to hand over a large chunk of hard earned/saved money on a product that just depreciates, and fairly rapidly too.Financially its far better to save and pay off your home than waste it on a car.
kambites said:
Indeed, but if you're going to get a new car by any means there tends to be very little in it between HP/leasing and drawing down against your mortgage and paying cash. Ultimately you're paying the depreciation and maintenance costs one way or another. It just comes down to where you can get the better overall cost of borrowing and that will vary from person to person.
Absolutely correct. PCP'ing is also very convenient I'd have to admit. Buy car, put in petrol and insure...everything else taken care of...Simples. I'm sure I pay for that convenience, but it enables me to get on with other, much more important, things.
Edited by clarki on Sunday 28th June 19:14
New Mercedes E220cdi SE which comes with everything now, metallic, leather, 7g tronic plus auto, adaptive led headlights, DAB, media interface, online, camand Nav, parking senors front and rear, heated seats and is a £38,000 car can be leased for £216 a month including vat with £1900 down.
Up that to 18k miles a year and it is still only £238 a month.
Now, you can buy that car with a massive 17% off bringing it in at £34800. However, the residual Mercedes is offering at two years old and 20k miles is £19,000. So if you bought that cash you would loose £15000, rather than the £6900 it would cost to lease. I then asked the Mercedes sales guy why I would buy one? He said he couldn't think of a single reason, however, did think the buy back price would be just over £20k rather than £19k. Hmm, great! How about an older one, he had a 2010 E220cdi that was up at £15k with 70k miles on it, however that was still coming out at £386 as they would only finance over 4 years on an already 5 year old car, and the apr was 10.9% on used, they could do 3.9 on the new btw.
Cars are becoming a monthly commodity in the same way your gas, electricity, Sky, broadband is, you have got to really want to keep it forever to even consider buying one these days imho.
Up that to 18k miles a year and it is still only £238 a month.
Now, you can buy that car with a massive 17% off bringing it in at £34800. However, the residual Mercedes is offering at two years old and 20k miles is £19,000. So if you bought that cash you would loose £15000, rather than the £6900 it would cost to lease. I then asked the Mercedes sales guy why I would buy one? He said he couldn't think of a single reason, however, did think the buy back price would be just over £20k rather than £19k. Hmm, great! How about an older one, he had a 2010 E220cdi that was up at £15k with 70k miles on it, however that was still coming out at £386 as they would only finance over 4 years on an already 5 year old car, and the apr was 10.9% on used, they could do 3.9 on the new btw.
Cars are becoming a monthly commodity in the same way your gas, electricity, Sky, broadband is, you have got to really want to keep it forever to even consider buying one these days imho.
Edited by gizlaroc on Sunday 28th June 19:22
I agree
I have always paid cash, then saved for 3 years, traded in and added savings to just to be able to renew again.
Now I have a £40,000 BMW 520D M Sport Touring Auto for 2 years at £296 per month inc VAT, servicing, tyres etc.
It is worry free motoring and having had it for only 3 weeks I am already less stressed about parking spaces, leaving it at the station car park etc.
Also means I have total control of my motoring costs.
It is also a very impressive car.
I am converted to leasing but there is a caveat.
I keep my weekend toy.
I have always paid cash, then saved for 3 years, traded in and added savings to just to be able to renew again.
Now I have a £40,000 BMW 520D M Sport Touring Auto for 2 years at £296 per month inc VAT, servicing, tyres etc.
It is worry free motoring and having had it for only 3 weeks I am already less stressed about parking spaces, leaving it at the station car park etc.
Also means I have total control of my motoring costs.
It is also a very impressive car.
I am converted to leasing but there is a caveat.
I keep my weekend toy.
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