Sticky: the FAQ for the Best Lease Deals thread

Sticky: the FAQ for the Best Lease Deals thread



Original Poster:

1,439 posts

149 months

Tuesday 31st July 2018
quotequote all
"'Tis better to have leased and lost than never to have leased at all"

FAQs for this thread. If you are new to the thread, the topic, or the site, please read through this first before posting questions. The FAQs talk about dealers; this is a general term to include actual dealers, brokers, and manufacturers. Leasing here means Personal Contract Hire for individuals or Business Contract Hire for companies.

1. The first rule of lease deal club is that we definitely talk about lease deals. This includes helping others to achieve the same deal. If you are going to post information about a deal, please include a link to it. This will also save you a flurry of requests to post a link when you FTK on an Aventador for £300 a month.

2. Which is better, PCP or Leasing ?
2a. Leasing is better than PCP because the overall cost is less. This is the total cost including things like servicing, repairs, and VED.
2b. PCP is better than leasing because the overall cost is less. This is the total cost including things like servicing, repairs, and VED.
2c. There is no right answer. Every deal is different and everybody's circumstances are different. Manufacturers and dealers add incentives to reflect what they want to sell more or less of at any time. The only answer to this question is to calculate the all-in costs (see Amortising below) of a deal and decide if it is cost-effective for you.

3. Doesn't help. Should I get a PCP or a Lease ?
See 2c again. But, possibly the Golden Rule for the Lease Win is this: you get the best deals by not caring. If you will only consider a Lexus in dark blue with cream extended leather, then you will be getting a PCP and should brace yourself for the finance charges. Meanwhile the Lease Winner sees a deal for a police fleet spec Volvo hybrid in flat bronze with orange interior and says 'yes, I can do that, because ultimately what I need is a 4 door daily hack, not an expression of my inner being and self worth".

Just occasionally, a manufacturer wants shot of a set of cars quickly and so rather than discounting them on the forecourt will offer them out to lease at very low rates. This is how our Lease Winner turns into a Lease Superhero and is tooling around in a Golf R for £199 a month. They were not looking for a Golf, they were looking for a mid size hatch, happened to see a link to a Golf deal in this thread, and FTK because they Didn't Care.

4. Where can I get a Golf R for £199 a month ?
At any VW dealer that is offering deals for a Golf R for £199 a month.

5. My mate says that leases are only for people who can't really afford the car, and that leasing a brand new car to my spec with a warranty in no way replaces the pride of ownership of having a leggy 10 year old 4x4 on the drive, even though it's a bit iffy to start on a cold morning and I absolutely need a reliable car to get to work. He says I'll be paying all this money out and have nothing to show for it at the end because the car is never mine.
You need some new mates.

6. What about my credit score ?
You will have a credit check for the full lease cost, and your credit history will show an outstanding credit balance during the contract.

7. Can I pay a BMW business lease from my personal account thus avoiding the BIK associated tax ?
What do you think ?

8. What's this Amortised cost I keep seeing ?
Dealers will advertise a deal as £99!!! a month. Ignore this. You need to consider the total cost of the lease, which will include the initial payment (could be equivalent to up to 9 months), all the actual monthlies including any surcharge for options, any required servicing, any VED. Add all this up. Divide by your total lease term (ie 24 months). This gives you the amortised monthly cost of your lease and is the only figure you should use to compare deals.

For example, if you take the 99/month deal and it's 9+23, plus a service and a VED (say 500 all in), plus an ICE upgrade for £1k, your amortised cost is 99 * (9 +23) + 500 + 1000, all divided by 24. That's £195 a month, which is your actual cost. If you are doing a comparison to a PCP deal you must include all the finance charges and interest in your PCP amortisation to have an accurate result.

9. Do I get the initial deposit back ?
No. It's not really a deposit, it's just an initial payment. Most firms will quote for lower or higher (between 1 and 9 months usually) initial payments if you ask. See the Amortising question. Also be aware that if you pay a 9 month initial payment, collect the car and roll it into a tree on the way home, you will have to make another initial payment for a replacement car. There are no refunds. You can consider GAP insurance to cover this problem, or only sign a deal with a low initial payment.

10. Do I need GAP insurance ?
You might want to think about a short term GAP policy if you are signing a deal with a large initial payment.

11. Can I spec options on a lease car ?
Yes you can if you are getting it built to order. The very cheapest deals are usually - not always - for stock cars. But many deals come from factories wanting to keep production running in periods of low demand, so you end up getting a good deal on a car to your spec. The catch is that options are usually fully charged over the lease period, which can really sting.

For example, if you have a standard spec car on a 24 month lease, but add say bluetooth and bigger wheels and extra leather and better hifi for a total cost of £2k, your monthly cost will go up by £2k/24 = £83. This is mostly extra profit for the dealer as the options are rarely completely worthless in the second hand market. For this reason it can be cheaper to lease a higher spec car with no options than the base model with bits added on.

12. I saw an offer on a C63 for £399 a month but when I phoned them up they quoted £999 a month because the one car had been sold. Are they just phishing for my details ?
Yes. If it seems too good to be true it is. You may now need more email storage space to cope with the dealer spam you are about to receive.

13. What would be really useful would be a sort of rule of thumb guide I could use to see if a deal was broadly worthwhile, before spending a lot of time digging into it.
A rough percentage guide is very much like making love to a beautiful woman/partner/exotic fruit. Approach it flexibly and keep your options open and be prepared to pull out of the arrangement if it looks like you're being taken for a ride. The collective PH wisdom says:

a Calculate the total deal cost as per the Amortisation section. This is usually done on the basis of a 24 month 10k miles per annum lease.
b Obtain the cost for you to buy the car outright in cash at the dealer. Scholars disagree here about which price you should use - the full list price, or the real world market price. You'll get different ratios if these are wildly different. The idea though is to compare the various ways to have a new car sitting on your drive, so the real world price is probably the best to use, especially as some manufacturers use absurd list prices to be able easily to offer a forecourt discount. ,
c Calculate a as a percentage of b, and see below. This is just a rough yardstick; the real test once you are interested enough is whether you think the total lease cost is lower than the total cost of buying outright including depreciation, running costs and costs to re-sell.

If your percentage is
under 20% = either an Awesome Deal, or a surprisingly common 'mistake' by the dealer
20% to 25% = Pretty Good Deal, and where you're most likely to end up if you follow Lease Deals Rule 3
25% to 30% = OKish Deal
over 30% = Poor Deal.

14. Do I have to get it serviced ?
This will be specified in the contract, and you need to follow what it says or you can be surcharged at the end of the lease. The contract may require you to take the car to a main dealer for servicing. The EU servicing exemption rules do not apply here because it is not your car.

15. What will I be charged if I have smashed every panel of the car and kerbed all the wheels ?
You will be billed for any significant damage. You may well get away with a couple of parking scratches and a scraped wheel. All reputable dealers follow a code of conduct on pricing for damage which is publicly available. Anecdotally, damage charges seem to be lower than you might expect and lower than it would cost you to have them fixed yourself at a proper facility.

16. Can I buy the car at the end of a lease deal ?
In general the person who leases a car may not buy it at the end of the term, due to some detail of UK tax laws. A relative or other third party is allowed to buy it. For instance VW explicitly say "As the agreement holder, you are not allowed to buy the vehicle yourself, however, if you know of a third party interested in buying the vehicle, they can get a quote from us". Despite that there are reports of people being invited to buy their car at the end of the lease. You should contact your lease company near the end of the lease and see what they say. Brace yourself for a quote of a full retail price though.

17. Can I get a lease on a second hand car ?
Technically yes, but this is not a well developed market in the UK and PCP or bank loan is by far the more common route to finance used cars.

18. Who is on the paperwork ?
The lease company is on the V5. All the bureaucracy you are likely to bump into - insurance companies, police checks, residents' parking - are familiar with leasing and the owner and driver being different. If you do get a traffic or parking ticket it will go to the lease company not you, and they will usually charge you an admin fee to pass it on. Equally, the lease firm will usually sort out and pay for the VED.

19. Can I put my private plate on a lease car ?
Yes, though you will usually be charged an admin fee by the lease firm, and it is up to you to transfer the plate back before the end of the lease.

20. Can I put a tow bar on ?
Maybe. You must request permission first. Get it in writing. You may not be required to remove it at the end of the lease. You'll also need a copy of the V5 if you need an additional number plate.

21. What is FTK ?
FTK stands for 'pulling the trigger', via Fisting The Kumquat. Shorthand for 'I have decided to go ahead and sign the deal'. It's a long and winding in-joke, originally from the Watches forum.

These FAQs made possible by Whiskasfelix, ib170, Gdcuk, theoriginalpaul, PHuzzy, JaredVannett, TomScrut, Funk, AlwynMike, Skodaman1, talksthetorque, and NK51XXX who inspired the original layout.