Leasing a Tiguan, am I thinking straight?

[Rewe]

First time considering leasing. I can research/ ask about the nitty gritty but would appreciate some advice to check I'm not making a daft error.

The family car is currently a 2009 Honda CR-V which I own outright having bought it on HP at 6 months old. It has been perfect for us and it is still very good but I fancy something newer and it strikes me that HP has been an expensive option over the years. I want something similar to the CR-V and want to change every 3/4 years. I have a deposit but I don't have 25k+ to buy it outright. I have a decent salary, disposable income and a squeaky clean credit score. My job is pretty secure in the scheme of things but who really knows what is lurking around the corner?

1. Assuming I am happy not to own outright for the next 10/12 years is leasing a new car typically as cheap as buying an older car on credit?
2. Given I wouldn't want to make the balloon payment on a PCP, will leasing typically work out cheaper?
3. If the worst happens and I lose my job in the future, can a leased car just be given back?
4. Is there a stronger argument for keeping the CR-V? It is what I would do if it was just me but given this will be mainly used by my wife and kids, I would prefer them to have something newer.
5. I want to make the decision based on financial good sense but I also just fancy having a new car

P.s. I've asked for a call back from a leasing company but would like to have my thoughts straight before that.

Thanks in advance for any advice you can give.

[anonymous-user]

1. Almost certainly not, assuming you don’t get tucked up with dealer finance at some stupid interest rate and instead finance it with a bank loan at circa 3% APR
2. Cheaper than a PCP? Possibly, possibly not, depends on the deal. Very good lease deals are hard to beat, but they aren’t that common. There were some absolutely great deals on Tiguan, not sure if they’re still around. Check out the leasing deals thread, if you can find your way past the tons of general questions and guff cluttering it up these days.
3. No, you will incur cancellation charges ranging from 50% of the remaining payments to 100% depending on the terms of the contract.
4. Yes, if it is still a reliable and good car this will be by far the cheaper option. Consider the reasons why you would prefer them to have something newer and decide if they’re rational and worth the expense or not.
5. Sadly, these are very often incompatible goals and assuming the Honda is doing a good job for you it sounds like that’s the case here.

[Sheepshanks]

When we changed wife’s car a couple of years ago (so towards the end of previous model Tiguan) it was “£89/mth” lease headlines that brought Tiguan to my attention.

Of course that price was plus VAT and there was a chunky deposit (although reduced a little as VW dealers were rebating some of it). However this was the 2WD manual 2 litre diesel and I wanted the 4Motion DSG – to my mind SUVs need to be auto otherwise it’s like driving a truck and they need AWD as getting stuck in one would be a bit embarrassing. Adding metallic bumped the lease cost up a stupid amount (more than it costs as an option) and at the time Tiguan’s spec incredibly didn’t include cruise or folding mirrors – both pretty cheap but again a disproportionate cost on lease. So what started off at £89 ended up around £300 (amortised).

So I did some calculations using PCP – VW had a £2750 deposit contribution at the time – and used Carwow to get prices. Ended up getting the car listing at £30K for £24K. GFV was £13K but of course I was told the car would be worth much more. I checked WBAC for 3yr old models with the same spec and they were around £16,500. So I was thinking worst case the car would cost £7,500 over 3yrs – far cheaper than leasing as I Withdrew from the finance to save the £3K (4.9% APR) interest charge. I’m ignoring lost interest on savings – I have too much money on deposit and it’s getting next to nothing in interest.

What’s messed it up for me is the emissions news hit. And I guess those discounts, which had been around for a couple of years on Tiguan, started to feed through to used prices. WBAC values on 3yr old cars now is around £12K but I don't know how realistic even that is - looking at Tiguan forums owners are getting horrible p/x valuations.

I did have a concern about leasing in terms of keeping the car in good nick – it lives in shop car parks and has indeed picked up side dings and a scuff on the rear bumper. Also the timing of change bothered me – as the lease nears the end I imagine panic setting in to secure a replacement.

In my case even without the emissions hit, if I’d needed to pay the PCP interest charge and discounts hadn’t been quite so large, then over 3yrs leasing would have been cheaper.

[MorganP104]

With a squeaky clean credit score, and a regular income, you'll be able to get a cracking deal on a personal loan from your bank.

For example, my bank (HSBC) is doing personal loans for those with good credit scores at 3.3% APR.

With that in mind, you could go out and buy a year-old Tiguan, which will have plenty of warranty left.

Here's one I found earlier. https://www.autotrader.co.uk/classified/advert/201...

Ignore the fact it's in Northern Ireland, and that it's white... £17k feels about right for a year old 4x4 version with DSG.

So, if you go off and borrow £17k from your bank, repayable over 3 years, you just need to work out whether that makes sense for you, financially.

Plus, you'll be able to sell the car for about £9-10k in three years time, meaning a hefty chunk back in your pocket for the next car.

[Sheepshanks]

MorganP104 said:

With that in mind, you could go out and buy a year-old Tiguan, which will have plenty of warranty left.

Here's one I found earlier. https://www.autotrader.co.uk/classified/advert/201...

Ignore the fact it's in Northern Ireland, and that it's white... £17k feels about right for a year old 4x4 version with DSG.

That's the old model of course and it's near as dammit 2yrs old - they stopped making them towards the end of 2015 and they disappeared pretty quickly. Does show how much they've dropped when I was seeing WBAC's price for 3yr old models at £16,500.

[Rewe]

Thanks all, plenty of food for thought here.

It has been years since I have done this and I'm pretty rusty!

If I buy new, say 28K discounted down to 26K with a dealer contribution. I'm assuming I'll get no further discounts or any different rates to the ones on their website.

Assuming I put in about 4K deposit and take VW finance at 5.1% over 48 months it indicates that I will be paying about £320-350 per month with an optional final payment of about 10K after 4 years (or £400 over 36 months) Is it safe to assume that it won't be worth much more than that after 4 years? It will have cost me 4K + 48 x 320 = £15,364. Would l be handing it back with the difference between it's actual value (if any) and the balloon payment to use as a deposit against the next one? Say 2K?

I can see lease deals for about 1K down and £250 per month for 36/48 months. This will cost over 4 years about 13K? I'll have 3k of the original deposit to put away and IF I save the £100 a month saving I'd then have 48 x 100 +£1k = £5800 towards the next deposit?

If I take out a bank loan of 22K(3.9%) I'll be paying £400 per month over 60 months and because it will be front loaded I'm assuming that after 3 or 4 years there may not be any equity in the car when it comes to change, therefore no deposit towards the next one? I'm assuming that I could take the VW finance to get the 2K discount then pay it off with a bank loan (although is this a risk? Would the bank lend me 22K knowing I have just taken out a similar amount with VW and would VW lend it to me if i already had it with my bank. £400 per month is more than I would be comfortable paying.

If I spend, say 17K on an older Tiguan, would I still get the new model? If so, it makes more sense because with 4K deposit I could borrow only 13K (3.9%) which would be about £240 per month over 60 months and I would eventually have a 6/7/8 year old Tiguan to use as the next deposit (£3-4K?) If I also saved £100 per month I guess I would have about £9-10K for the next deposit. The downside is we would be driving a car out of warranty and starting to need work.

To my mind it looks like buying new with a 5 year bank loan and only keeping it 3 years makes the least sense, followed by buying new with VW PCP. Buying second hand with a smaller bank loan seems a good option, albeit one which leaves me in a similar position as I am now, with an older car which is out of warranty.

I keep thinking that leasing new seems like the best option but every instinct is telling me it isn't and I have made some poor assumptions!

[Yegap]

Just fyi you can get a £22k loan through Sainsburys for 3.1% APR and anywhere else is more expensive I believe. Use moneysavingexpert to compare them but I'm pretty sure they've had the best rates for a while now.

I think the actual question here is being clouded by the fact you don't have anything to compare except for generalisations and thus too many assumptions.

Get a lease quote for a tiguan over 3 years (I wouldn't go 4 as with a lot of manufacturers you then start to get in to loss of warranty territory). Then go on coast2coast (google it) and get a quote for a new tiguan from a main dealer along with a finance quote. Then you have a direct comparison for which you can run the numbers. Also consider that a lease may often include road tax. Just try to take everything in to account in accordance with the specific deal.

Then you have to weigh up whether you get a bank loan and purchase the car outright, go with dealer PCP (often 5.9% APR or higher, often works out better to bank loan if you have a reasonable deposit built up) or lease.

Then you get to the used car argument. A lot of the depreciation may already have been done. I would imagine that there would be some decent used tiguans on the market now given the lease deals that have been available in recent years and thus a flood of 2-3 year old cars on the market? I'd have to look tbh as not sure. If you're happy in a used car it is almost always cheaper (unless you get a stonker of a lease deal?). Seems a bit of a personal choice. Servicing costs and all other standard costs of maintenance probably aren't that significant but worth thinking about.

So yeah, sorry for the ramble post but in summary I think you need specific comparisons through quotes etc in order to make an informed decision.

[Sheepshanks]

As said above, have a look at one of the brokers and see what the pricing really is. I found DriveTheDeal the cheapest but they wouldn't pass me on to "their" dealer unless I agreed to wait the factory lead-time. Through CarWow I got a car from a local dealer in 8 days. I found the discounts always assumed we'd be taking VW finance - at the time it was £2750 deposit contribution but got a similar amount of discount on top of that.

Some Tiguan models (petrol 1.4's, particularly) are on long lead-times at the moment so that might work against discounts. I'd be nervous about buying a diesel now, but if you lease or PCP intending to hand back, then diesel suits the car better.

One thing about HP is that it isn't really front-loaded - OK, the interest charge is higher early on as you owe more, but if you pay it off after, say, 3 years of a 5 year deal then you don't pay the last 2yrs interest.

I can't help about swapping finance deals - in my cash I was lucky enough to have the dosh to just pay it off (Withdraw) as soon as we'd got the car. Withdrawing means you don't pay any interest penalty or fees - just a daily amount until you say you want out - it was about £30 for me, and only that much as I left it a few days to make sure the car was OK.

[silver1011]

Sounds to me like your current method has worked out really well, why not repeat?

Your Honda CR-V is 8 years old, fully paid off and been reliable?

The current CR-V isn't that dissimilar to what you have now, just slightly fresher looking, but it is extremely reliable.

If I was planning to buy a car with a longer term view I'd be looking for out-of-warranty reliability.

A fully loaded 6 month old CR-V SR or EX can be had for less than £25,000.

Or an equally reliable Toyota RAV-4?

As nice as the VW Tiguan is you are paying a premium for the VW badge, with Honda that premium goes on reliability.

If you'd rather not pay a premium at all but still fancy something from the Volkswagen Audi Group (VAG) the SEAT Ateca and Skoda Karoq are good alternatives, in fact a 7-seater Skoda Kodiaq can be bought (or leased) for less than a VW Tiguan (same platform).

Edited by silver1011 on Sunday 3rd December 18:36

[Rewe]

Thanks to everyone who has replied with sage advice.

Silver, I've come to the conclusion that you (and others are right). The CR-V works for us and doesn't cost a penny. I'll hang on for another couple of years now and think again then. It seems crazy to let someone else take advantage of (arguably) the best thing about it - that it is still reliable later in life.

By then we should also have a better idea which way the wind is blowing with Diesel engines as well.

So, to end this topic the final answer is I'll do nothing yet.