Explaining real costs
Discussion
Ok, so I have recently been trying to justify my driving expenses to someone I know.
They drive a small hatchback which they lease on a 3 year deal for £130 PCM (May be plus VAT, they don't know) and £1000 up front as an initial payment, this gets between 50-70MPG for their 50 mile a day commute. They pay their insurance monthly at a cost of £50 PCM, they don't have the money to pay it all in one go apparently, although I don't understand that statement. They have some sort of maintenance plan that they pay £50 PCM towards, this covers all consumables such as servicing, tyres, etc.
My car is a 2005 Saab 9-5 Aero estate. The car set me back £2250 on purchase, it costs £280 a year to tax and averages 28MPG on my 26 mile commute, I insure the car on an annual policy paid in one lump sum for £600. Consumables this year have set me back around £400, this includes a full service and two tyres.
My small minded friend cannot see how my car can be cheaper and constantly attempts to persuade me into leasing a wallet friendly numb mobile, so I broke the costs down for them.
Their eco-box
Purchase - £1000 + 35 x £130 = £5550 (Possibly plus VAT).
Road tax - Zero rated.
Fuel - £1500 per annum based on 60MPG over 15k miles.
Consumables - £600 per annum fixed.
Total per annum - £3950
My mega expensive Saab
Purchase price - £2250
Road tax - £280
Fuel - £1714 per annum based on 28MPG over 8000 miles.
Consumables - £400 (but could be a lot more)
Total per annum - £2644 (based on 10% depreciation)
As you can see, the Saab is cheaper for me to run than their leased hatchback, however if I did the same mileage as them then their car would be cheaper.
So my question is, why do people assume that leasing a new, mega economical car is cheaper than running a slightly thirsty, older (but much nicer) vehicle?
They drive a small hatchback which they lease on a 3 year deal for £130 PCM (May be plus VAT, they don't know) and £1000 up front as an initial payment, this gets between 50-70MPG for their 50 mile a day commute. They pay their insurance monthly at a cost of £50 PCM, they don't have the money to pay it all in one go apparently, although I don't understand that statement. They have some sort of maintenance plan that they pay £50 PCM towards, this covers all consumables such as servicing, tyres, etc.
My car is a 2005 Saab 9-5 Aero estate. The car set me back £2250 on purchase, it costs £280 a year to tax and averages 28MPG on my 26 mile commute, I insure the car on an annual policy paid in one lump sum for £600. Consumables this year have set me back around £400, this includes a full service and two tyres.
My small minded friend cannot see how my car can be cheaper and constantly attempts to persuade me into leasing a wallet friendly numb mobile, so I broke the costs down for them.
Their eco-box
Purchase - £1000 + 35 x £130 = £5550 (Possibly plus VAT).
Road tax - Zero rated.
Fuel - £1500 per annum based on 60MPG over 15k miles.
Consumables - £600 per annum fixed.
Total per annum - £3950
My mega expensive Saab
Purchase price - £2250
Road tax - £280
Fuel - £1714 per annum based on 28MPG over 8000 miles.
Consumables - £400 (but could be a lot more)
Total per annum - £2644 (based on 10% depreciation)
As you can see, the Saab is cheaper for me to run than their leased hatchback, however if I did the same mileage as them then their car would be cheaper.
So my question is, why do people assume that leasing a new, mega economical car is cheaper than running a slightly thirsty, older (but much nicer) vehicle?
Willy Nilly said:
Your costs are lower largely because you are doing half the miles.
This is what I am trying to tell that person but they believe that because their car gets better MPG that they will automatically be better off. How do I explain in laymans terms that fuel economy is not the be all and end all of motoring?
Ive got a friend with a similar mindset.
He was in the market for a different car to accommodate their sprog. After spunking £12k on a diesel Megane he was saying how he would have loved a more powerful,sporty and exciting car but needed something with decent mpg. His annual mileage........4k!
I did try and explain to him how after taking depriciation into account and the low amount of miles he does he could easily have afforded something a bit more desirable but he just couldnt see it. So many people seem blinkered with high mpg
He was in the market for a different car to accommodate their sprog. After spunking £12k on a diesel Megane he was saying how he would have loved a more powerful,sporty and exciting car but needed something with decent mpg. His annual mileage........4k!
I did try and explain to him how after taking depriciation into account and the low amount of miles he does he could easily have afforded something a bit more desirable but he just couldnt see it. So many people seem blinkered with high mpg
Eski1991 said:
Willy Nilly said:
Your costs are lower largely because you are doing half the miles.
This is what I am trying to tell that person but they believe that because their car gets better MPG that they will automatically be better off. How do I explain in laymans terms that fuel economy is not the be all and end all of motoring?Willy Nilly said:
Pen, paper and calculator. Then sit them down and explain it to them like a child. You will need to show them your servicing and consumables because these can be high on an older car but remind them that their depreciation/lease payments are still more.
This was the other issue they were having. The say that their consumables amount to a yearly service (They aren't sure if this is just an oil and filter or a full service) and 4 tyres every 18 months. This would cost less than £600 a year surely? They don't believe me.They are risk averse and just want to know how much their car is going to cost them each month.
They like shiny new things.
Anyone who is willing to pay £600 a year on maintenance for possibly 2 tyres and 1 service, must be daft. I'm paying £730 per year for maintenance for 30k miles a year (2.0 TDI VAG)and I only pay that because I'm going to take it out of warranty over the course of the lease, and don't want a (possible) clutch/ expensive electonic component and /or a set of pads and discs to bite me in the arse right at the end of the lease. Theirs will still be in warranty.
Next time they bring it up, Belm at them until they leave
They like shiny new things.
Anyone who is willing to pay £600 a year on maintenance for possibly 2 tyres and 1 service, must be daft. I'm paying £730 per year for maintenance for 30k miles a year (2.0 TDI VAG)and I only pay that because I'm going to take it out of warranty over the course of the lease, and don't want a (possible) clutch/ expensive electonic component and /or a set of pads and discs to bite me in the arse right at the end of the lease. Theirs will still be in warranty.
Next time they bring it up, Belm at them until they leave
talksthetorque said:
They are risk averse and just want to know how much their car is going to cost them each month.
They like shiny new things.
Anyone who is willing to pay £600 a year on maintenance for possibly 2 tyres and 1 service, must be daft. I'm paying £730 per year for maintenance for 30k miles a year (2.0 TDI VAG)and I only pay that because I'm going to take it out of warranty over the course of the lease, and don't want a (possible) clutch/ expensive electonic component and /or a set of pads and discs to bite me in the arse right at the end of the lease. Theirs will still be in warranty.
Next time they bring it up, Belm at them until they leave
What is a belm?They like shiny new things.
Anyone who is willing to pay £600 a year on maintenance for possibly 2 tyres and 1 service, must be daft. I'm paying £730 per year for maintenance for 30k miles a year (2.0 TDI VAG)and I only pay that because I'm going to take it out of warranty over the course of the lease, and don't want a (possible) clutch/ expensive electonic component and /or a set of pads and discs to bite me in the arse right at the end of the lease. Theirs will still be in warranty.
Next time they bring it up, Belm at them until they leave
talksthetorque said:
They are risk averse and just want to know how much their car is going to cost them each month.
They like shiny new things.
Anyone who is willing to pay £600 a year on maintenance for possibly 2 tyres and 1 service, must be daft. I'm paying £730 per year for maintenance for 30k miles a year (2.0 TDI VAG)and I only pay that because I'm going to take it out of warranty over the course of the lease, and don't want a (possible) clutch/ expensive electonic component and /or a set of pads and discs to bite me in the arse right at the end of the lease. Theirs will still be in warranty.
Next time they bring it up, Belm at them until they leave
Don't quite get this post. The first two lines seem to be bashing the euro-box diesel sThey like shiny new things.
Anyone who is willing to pay £600 a year on maintenance for possibly 2 tyres and 1 service, must be daft. I'm paying £730 per year for maintenance for 30k miles a year (2.0 TDI VAG)and I only pay that because I'm going to take it out of warranty over the course of the lease, and don't want a (possible) clutch/ expensive electonic component and /or a set of pads and discs to bite me in the arse right at the end of the lease. Theirs will still be in warranty.
Next time they bring it up, Belm at them until they leave
te, the you go on to admit to owning one...? If your Saab is more than two years old then totally ignore the purchase price in your comparisons.
A lease requires £130 every month for ever, plus deposits.
The purchase was £2500 once.
After 2 years (roughly) they cancel each other out.
(Edit. Actually closer to one year now I've added the deposit.)
The lease vs purchase cost comparison starts widening a lot more if the keep the purchase car for four years and compare it against 2x two year leases.
A lease requires £130 every month for ever, plus deposits.
The purchase was £2500 once.
After 2 years (roughly) they cancel each other out.
(Edit. Actually closer to one year now I've added the deposit.)
The lease vs purchase cost comparison starts widening a lot more if the keep the purchase car for four years and compare it against 2x two year leases.
Edited by Snowboy on Sunday 22 December 21:48
are they happy with the deal, if so then leave them to it, personaly ive got more pressing things to worry about than a friends car lease, face it some people just want an easy to budget monthly bill, and iften are happy with a eurobox, this my friend is why your a member on here and not them
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