Long term lease/pcp prices
Discussion
Hi what are everyones view on the long term prediction for the cost to lease a car or take out a pcp?
At the moment there are some amazing cheap deals to be had and it is very comparable in some cases to running a newish second hand car and a lot less hassle
I have noticed a large increase recently of people leasing and pcp with a view to change every time the contract is up. This is from work colleagues friends, family and online. But if everyone starts going down this route there will be a massive overpsupply of 2 to 3 year old cars that will push the 2nd hand prices down (and there will be be less people buying 2nd hand due to more of these people leasing)
Also the current cost of borrowing is very low.
This must long term have an impact on the resale value of the lease companies/car manufacturers cars.
They must then have to increase the prices of their lease/pcp deals to compensate for the poorer car residuals.
What do other people think about this or am Being stupid I cant see how these low prices can carry on?
At the moment there are some amazing cheap deals to be had and it is very comparable in some cases to running a newish second hand car and a lot less hassle
I have noticed a large increase recently of people leasing and pcp with a view to change every time the contract is up. This is from work colleagues friends, family and online. But if everyone starts going down this route there will be a massive overpsupply of 2 to 3 year old cars that will push the 2nd hand prices down (and there will be be less people buying 2nd hand due to more of these people leasing)
Also the current cost of borrowing is very low.
This must long term have an impact on the resale value of the lease companies/car manufacturers cars.
They must then have to increase the prices of their lease/pcp deals to compensate for the poorer car residuals.
What do other people think about this or am Being stupid I cant see how these low prices can carry on?
It's been this way for ages IMO. The good deals are only available on a small selection of what they sell, usually when they've got too much stock and need to shift it. Remember too that interest rates are incredibly low at the moment making financing a car a lot more attractive than it would be if the base rate was 4 or 5 percent.
It probably is why private sales are decreasing because the lease companies will often put cars straight to auction after the contract ends.
Also mechanically cars are not being looked after i.e. Suspension some people even laugh at how hard they hit the speed humps at work because its not 'theirs' and they will just get another brand new car at the end of the lease.
surely though if more and more people lease though the residuals for 2 to 3 year old cars(especially common cars i.e fiesta) must take a hit.
Once the lease companies dont get the expected returns on their stock, they will in turn have to raise prices for their deals. At minute now cars are going for crazy high prices at auction and a lot of leases companies will base this for future prices.
Also mechanically cars are not being looked after i.e. Suspension some people even laugh at how hard they hit the speed humps at work because its not 'theirs' and they will just get another brand new car at the end of the lease.
surely though if more and more people lease though the residuals for 2 to 3 year old cars(especially common cars i.e fiesta) must take a hit.
Once the lease companies dont get the expected returns on their stock, they will in turn have to raise prices for their deals. At minute now cars are going for crazy high prices at auction and a lot of leases companies will base this for future prices.
The lease companies I've dealt with are just middle men taking a commission. The cars came direct from the OEM finance company.
I doubt anyone has accurate predictions of sales beyond 3-5 years.
Supply and demand will dictate prices, who has a crystal ball able to predict that?
My crystal ball says lease and second-hand prices will remain broadly as they are over the next 3-5 years.
I doubt anyone has accurate predictions of sales beyond 3-5 years.
Supply and demand will dictate prices, who has a crystal ball able to predict that?
My crystal ball says lease and second-hand prices will remain broadly as they are over the next 3-5 years.
velocemitch said:
I wonder if this trend is responsible for the massively reduced number of Cars you see for sale privately. There used to be plenty of three year old Cars to choose from in private sales, now there seems to be hardly any.
If you're talking about Autotrader,they've pretty much positioned themselves as the de facto choice for dealers.Also, most people these days would rather pay the relatively small premium and buy a 3 year old car from a dealer and get dealer facilities to do so.
PistonheadRob said:
Hi what are everyones view on the long term prediction for the cost to lease a car or take out a pcp?
At the moment there are some amazing cheap deals to be had and it is very comparable in some cases to running a newish second hand car and a lot less hassle
I have noticed a large increase recently of people leasing and pcp with a view to change every time the contract is up. This is from work colleagues friends, family and online. But if everyone starts going down this route there will be a massive overpsupply of 2 to 3 year old cars that will push the 2nd hand prices down (and there will be be less people buying 2nd hand due to more of these people leasing)
Also the current cost of borrowing is very low.
This must long term have an impact on the resale value of the lease companies/car manufacturers cars.
They must then have to increase the prices of their lease/pcp deals to compensate for the poorer car residuals.
What do other people think about this or am Being stupid I cant see how these low prices can carry on?
Its been like this for at least a decade. The only people buying new cars for cash are the Powerfully Built Company Directors on here and one or two others. Everyone else is using a PCP deal or finance of some sort.At the moment there are some amazing cheap deals to be had and it is very comparable in some cases to running a newish second hand car and a lot less hassle
I have noticed a large increase recently of people leasing and pcp with a view to change every time the contract is up. This is from work colleagues friends, family and online. But if everyone starts going down this route there will be a massive overpsupply of 2 to 3 year old cars that will push the 2nd hand prices down (and there will be be less people buying 2nd hand due to more of these people leasing)
Also the current cost of borrowing is very low.
This must long term have an impact on the resale value of the lease companies/car manufacturers cars.
They must then have to increase the prices of their lease/pcp deals to compensate for the poorer car residuals.
What do other people think about this or am Being stupid I cant see how these low prices can carry on?
The cars come back to the manufacturers finance arm after the two or three year term and are sold off to the main dealers or car supermarkets at usually private auctions for used stock.
The cars that are traded in against them are bought by the next tier down of traders who are the small indies. The cars probably go through a couple of iterations in these dealers before too old to put a warranty on and make decent profit on, so they're sold on to home traders who'll stick them on gumtree.
The main dealers have seperate new and used sales staff, so if you go in looking for a 3 year old car, you're not told about the deals on new cars, so you dont twig you can buy new for not much more in terms of payments.
I now work for a dealer with 5 Franchises, i was brought on board to set up the Business Centre. 95% of everything I've done so far has been Contract Hire (Business and Personal). I'm still getting to grips with it all as I've only worked in the industry for 6 weeks, but it's been absolutely fascinating and quite an eye opener to date.
A lot of the quotes I've done so far have left me speechless.
A lot of the quotes I've done so far have left me speechless.
MrsFallon said:
I now work for a dealer with 5 Franchises, i was brought on board to set up the Business Centre. 95% of everything I've done so far has been Contract Hire (Business and Personal). I'm still getting to grips with it all as I've only worked in the industry for 6 weeks, but it's been absolutely fascinating and quite an eye opener to date.
A lot of the quotes I've done so far have left me speechless.
I'd enjoy hearing more?A lot of the quotes I've done so far have left me speechless.
PistonheadRob said:
It probably is why private sales are decreasing because the lease companies will often put cars straight to auction after the contract ends.
Also mechanically cars are not being looked after i.e. Suspension some people even laugh at how hard they hit the speed humps at work because its not 'theirs' and they will just get another brand new car at the end of the lease.
surely though if more and more people lease though the residuals for 2 to 3 year old cars(especially common cars i.e fiesta) must take a hit.
Once the lease companies dont get the expected returns on their stock, they will in turn have to raise prices for their deals. At minute now cars are going for crazy high prices at auction and a lot of leases companies will base this for future prices.
When you say "The lease companies don't get the expected return" you're assuming they own the vehicle. In many cases they don't. They are a broker, a middleman and the car is registered to MB or BMW finance. Also mechanically cars are not being looked after i.e. Suspension some people even laugh at how hard they hit the speed humps at work because its not 'theirs' and they will just get another brand new car at the end of the lease.
surely though if more and more people lease though the residuals for 2 to 3 year old cars(especially common cars i.e fiesta) must take a hit.
Once the lease companies dont get the expected returns on their stock, they will in turn have to raise prices for their deals. At minute now cars are going for crazy high prices at auction and a lot of leases companies will base this for future prices.
As for residuals dropping, these companies know exactly what they are doing, managing supply and demand, balancing offers with availability and new models coming on line.
Don't kid yourself into thinking they are left with thousands of cars they can't shift, they've a huge dealer network and partnerships with major auction houses.
PistonheadRob said:
They must then have to increase the prices of their lease/pcp deals to compensate for the poorer car residuals.
You do have to wonder where it will end - BMW keep saying that profit is better than volume and they were supposed to be cutting back on the broker deals but I know a couple of people who have got BMWs on PCPs recently at tremendous discounts.What baffles me is, bearing in mind the size of the market, how much more expensive cars are in the rest of Europe. If anything, you'd think with the limited UK RHD market, we'd be paying more for cars.
Well everything I've done so far has been using manufacturer owned or appointed financiers.
With one exception everyone has gone for a 3+35 profile. The headline deals that have been advertised at a national level usually involve you using full dealer margin. There have been 2 exceptions to that where we get no control/involvement whatsoever with the monthly rental we offer the client because it's dictated 100% by the manufacturer and we just receive a handling fee.
The handling fee can be dependent upon the size of the vehicle. Indeed there are 2 vehicles from 1 manufacturer where the handling fee is so low the only benefit in doing it would be that the registration would go to quarterly target.
If you stack a quote, one manufacturers finance arm will then be happy if there is a sensible business case e.g Multiple Units to do a rate cut behind the scenes.
Metallic Paint is generally FOC.
At least one non manufacturer owned financier I know of might give a very good rate on CAR A this month and a worse one on CAR B because the previous month they have financed so many of CAR B that they are trying to avoid 3 years down the line having a massive glut of CAR B's coming to market and it having a negative effect on residuals.
The best one I've seen so far was a very popular small car on a 3+24 month profile, 35K miles a year for £202.00 a month + VAT.
Having said that I've just quoted a client for 3 light commercials on outright sale. On one of them, I've been able to offer him 49% discount which will probably take some beating. However don't assume that a dealer will always have a huge margin, there is 1 manufacturer where we really do only have 2%.
With one exception everyone has gone for a 3+35 profile. The headline deals that have been advertised at a national level usually involve you using full dealer margin. There have been 2 exceptions to that where we get no control/involvement whatsoever with the monthly rental we offer the client because it's dictated 100% by the manufacturer and we just receive a handling fee.
The handling fee can be dependent upon the size of the vehicle. Indeed there are 2 vehicles from 1 manufacturer where the handling fee is so low the only benefit in doing it would be that the registration would go to quarterly target.
If you stack a quote, one manufacturers finance arm will then be happy if there is a sensible business case e.g Multiple Units to do a rate cut behind the scenes.
Metallic Paint is generally FOC.
At least one non manufacturer owned financier I know of might give a very good rate on CAR A this month and a worse one on CAR B because the previous month they have financed so many of CAR B that they are trying to avoid 3 years down the line having a massive glut of CAR B's coming to market and it having a negative effect on residuals.
The best one I've seen so far was a very popular small car on a 3+24 month profile, 35K miles a year for £202.00 a month + VAT.
Having said that I've just quoted a client for 3 light commercials on outright sale. On one of them, I've been able to offer him 49% discount which will probably take some beating. However don't assume that a dealer will always have a huge margin, there is 1 manufacturer where we really do only have 2%.
Edited by MrsFallon on Sunday 14th September 11:57
Edited by MrsFallon on Sunday 14th September 12:15
Gassing Station | General Gassing | Top of Page | What's New | My Stuff