New leased cars working out cheaper than used ones?
Discussion
I hear this more and more these day, that because of the great finance deals available on these lease cars you're better off getting a new car than a used one.
For me it's more or less an economic impossibility, most of the time, put simply, if the new cars really were working out cheaper and there wasn't a waiting list, then there would be no one to buy the used ones, until they dropped the price to the point that they are cheaper.
The only times i've seen it as a real possibility is the free insurance deals, where the owner would otherwise be paying a very high premium.
I saw a comparison example on one of these we-rip-you-off car credit companies, and it was borderline fraudulent the way they had manipulated the figures to show a new leased car being 'cheaper'.
Does anyone have any real life examples where the numbers really do add up?
For me it's more or less an economic impossibility, most of the time, put simply, if the new cars really were working out cheaper and there wasn't a waiting list, then there would be no one to buy the used ones, until they dropped the price to the point that they are cheaper.
The only times i've seen it as a real possibility is the free insurance deals, where the owner would otherwise be paying a very high premium.
I saw a comparison example on one of these we-rip-you-off car credit companies, and it was borderline fraudulent the way they had manipulated the figures to show a new leased car being 'cheaper'.
Does anyone have any real life examples where the numbers really do add up?
Loads on here lease, and loads on here hate them for doing so!
Plenty of evidence to show some financially sound deals being done.
It's easy to cost a lease deal, it's not so easy to cost an outright purchase unless you've got fixed mainenance and buyback costs.
I lease, and so far love it. Have recommended to others who are now also leasing.
If your circumstances are right, it's a great way to have a new car for a defined cost.
Plenty of evidence to show some financially sound deals being done.
It's easy to cost a lease deal, it's not so easy to cost an outright purchase unless you've got fixed mainenance and buyback costs.
I lease, and so far love it. Have recommended to others who are now also leasing.
If your circumstances are right, it's a great way to have a new car for a defined cost.
I can provide an example...
I leased a Volvo V60 for 18 months @ £320 a month (actually 3+17 payments). In that time I had to get it serviced once (£300) but didn't have to get any tyres and road tax was included. Works out at £4460 per year.
I'm at an age where insurance seems to cost the same no matter what car I have, so we'll exclude it...
I can compare it to the S60 I previously owned the traditional used car way, by buying at 3yrs old and running it for 4 yrs.
Over that time it depreciated £9000, cost c. £500 a year to service (there were always some minor service items, such as engine mounts needed), £100 a year to tax, discs and pads all round (£600) I reckon I bought at least 4 tyres for it (£500) and only had one 'breakdown' where the handbrake had a catastrophic failures when a spring failed and took out one of the cast alloy uprights (£750).
Grand Total = £13,250 equals £3310 per year.
So, the used car is cheaper, to the tune of around £100 a month. So there's your premium for driving a newer car.
I leased a Volvo V60 for 18 months @ £320 a month (actually 3+17 payments). In that time I had to get it serviced once (£300) but didn't have to get any tyres and road tax was included. Works out at £4460 per year.
I'm at an age where insurance seems to cost the same no matter what car I have, so we'll exclude it...
I can compare it to the S60 I previously owned the traditional used car way, by buying at 3yrs old and running it for 4 yrs.
Over that time it depreciated £9000, cost c. £500 a year to service (there were always some minor service items, such as engine mounts needed), £100 a year to tax, discs and pads all round (£600) I reckon I bought at least 4 tyres for it (£500) and only had one 'breakdown' where the handbrake had a catastrophic failures when a spring failed and took out one of the cast alloy uprights (£750).
Grand Total = £13,250 equals £3310 per year.
So, the used car is cheaper, to the tune of around £100 a month. So there's your premium for driving a newer car.
Edited by Truckosaurus on Friday 10th October 07:35
ging84 said:
I hear this more and more these day, that because of the great finance deals available on these lease cars you're better off getting a new car than a used one.
For me it's more or less an economic impossibility, most of the time, put simply, if the new cars really were working out cheaper and there wasn't a waiting list, then there would be no one to buy the used ones, until they dropped the price to the point that they are cheaper.
I asked a similar question last week. For me it's more or less an economic impossibility, most of the time, put simply, if the new cars really were working out cheaper and there wasn't a waiting list, then there would be no one to buy the used ones, until they dropped the price to the point that they are cheaper.
New leases can't be cheaper than used cars or it would be unsustainable in the long term.
Leasing may be Cheaper than a brand new car, because lease companies but their cars very cheaply.
Leasing gives you a regular budgeted monthly cost -it's very predictable. The only downsides are if it suddenly becomes unaffordable due to, say, redundancy, but it's sometimes possible to sell a lease on to someone else.
The only unknown costs really are charges for damage when handing the car back, some people report high charges, some report no problems whatsoever. It's more consistent now I believe with industry guidelines being in place.
The only unknown costs really are charges for damage when handing the car back, some people report high charges, some report no problems whatsoever. It's more consistent now I believe with industry guidelines being in place.
a real world example here:
my dad bought his o/h a mini convertible it cost around 7k and had around 2k spent on it during 2 years ownership (was a lemon i think)and it was sold for just under 5k (so i make that a loss of 4k in 2 years). they had enough of the financial ruin and found the cheapest lease car.
chopped in an 07 plate suzuki sx4 with over 150k on clock (worth 2k at a push) and got a vauxhall adam on £99 a month.
mini cost around 6k in 2 years, adam on lease costing £99pm (with 2k trade in) i make that nearer to 4.4k over 2 years, i'd say that was a saving?
sorry for excessive use of 'k'
Maths revisited.
my dad bought his o/h a mini convertible it cost around 7k and had around 2k spent on it during 2 years ownership (was a lemon i think)and it was sold for just under 5k (so i make that a loss of 4k in 2 years). they had enough of the financial ruin and found the cheapest lease car.
chopped in an 07 plate suzuki sx4 with over 150k on clock (worth 2k at a push) and got a vauxhall adam on £99 a month.
mini cost around 6k in 2 years, adam on lease costing £99pm (with 2k trade in) i make that nearer to 4.4k over 2 years, i'd say that was a saving?
sorry for excessive use of 'k'
Maths revisited.
Edited by JamesD1 on Friday 10th October 08:59
This discussion has been had many times, the general consensus is this:
- Leasing a car may be cheaper or no more expensive overall than buying it new outright
- Leasing a car is always considerably more expensive overall than buying a used car (3+ years old)
JamesD1 said:
a real world example here:
my dad bought his o/h a mini convertible it cost around 7k and had around 2k spent on it during 2 years ownership (was a lemon i think)and it was sold for just under 5k (so i make that a loss of nearly 6k in 2 years). they had enough of the financial ruin and found the cheapest lease car.
Bought for £7k sold for £5k = £2k loss, + £2k repairs = total £4k loss (not £6k).my dad bought his o/h a mini convertible it cost around 7k and had around 2k spent on it during 2 years ownership (was a lemon i think)and it was sold for just under 5k (so i make that a loss of nearly 6k in 2 years). they had enough of the financial ruin and found the cheapest lease car.
If you have to finance or get a loan for a used (nearly new) car purchase, then I can see that it could be cheaper to lease a new one. But it depends how long you would want to keep the used car, and whether you want to actually own it. If you are a cash buyer then it wouldn't work out cheaper.
JamesD1 said:
a real world example here:
my dad bought his o/h a mini convertible it cost around 7k and had around 2k spent on it during 2 years ownership (was a lemon i think)and it was sold for just under 5k (so i make that a loss of nearly 6k in 2 years). they had enough of the financial ruin and found the cheapest lease car.
chopped in an 07 plate suzuki sx4 with over 150k on clock (worth 2k at a push) and got a vauxhall adam on £99 a month.
mini cost around 6k in 2 years, adam on lease costing £99pm (with 2k trade in) i make that nearer to 4.4k over 2 years, i'd say that was a saving?
sorry for excessive use of 'k'
Willfully bad example.my dad bought his o/h a mini convertible it cost around 7k and had around 2k spent on it during 2 years ownership (was a lemon i think)and it was sold for just under 5k (so i make that a loss of nearly 6k in 2 years). they had enough of the financial ruin and found the cheapest lease car.
chopped in an 07 plate suzuki sx4 with over 150k on clock (worth 2k at a push) and got a vauxhall adam on £99 a month.
mini cost around 6k in 2 years, adam on lease costing £99pm (with 2k trade in) i make that nearer to 4.4k over 2 years, i'd say that was a saving?
sorry for excessive use of 'k'
As has been said £7K purchase price - £5K selling price + £2K running costs = £4K.
New adam over the same timeframe is £2K + £99 * 24 = £4376.
And has been pointed out. You're not comparing apples with apples. An adam != a mini.
Hub said:
If you have to finance or get a loan for a used (nearly new) car purchase, then I can see that it could be cheaper to lease a new one. But it depends how long you would want to keep the used car, and whether you want to actually own it. If you are a cash buyer then it wouldn't work out cheaper.
Over the same timeframe - yes it can.Look at the deals that have been floating about on a Golf R for example.
Truckosaurus said:
I can provide an example...
I leased a Volvo V60 for 18 months @ £320 a month (actually 3+17 payments). In that time I had to get it serviced once (£300) but didn't have to get any tyres and road tax was included. Works out at £4460 per year.
I'm at an age where insurance seems to cost the same no matter what car I have, so we'll exclude it...
I can compare it to the S60 I previously owned the traditional used car way, by buying at 3yrs old and running it for 4 yrs.
Over that time it depreciated £9000, cost c. £500 a year to service (there were always some minor service items, such as engine mounts needed), £100 a year to tax, discs and pads all round (£600) I reckon I bought at least 4 tyres for it (£500) and only had one 'breakdown' where the handbrake had a catastrophic failures when a spring failed and took out one of the cast alloy uprights (£750).
Grand Total = £13,250 equals £3310 per year.
So, the used car is cheaper, to the tune of around £100 a month. So there's your premium for driving a newer car.
You also have to take into account that new cars are far more efficient so your fuel would be lessI leased a Volvo V60 for 18 months @ £320 a month (actually 3+17 payments). In that time I had to get it serviced once (£300) but didn't have to get any tyres and road tax was included. Works out at £4460 per year.
I'm at an age where insurance seems to cost the same no matter what car I have, so we'll exclude it...
I can compare it to the S60 I previously owned the traditional used car way, by buying at 3yrs old and running it for 4 yrs.
Over that time it depreciated £9000, cost c. £500 a year to service (there were always some minor service items, such as engine mounts needed), £100 a year to tax, discs and pads all round (£600) I reckon I bought at least 4 tyres for it (£500) and only had one 'breakdown' where the handbrake had a catastrophic failures when a spring failed and took out one of the cast alloy uprights (£750).
Grand Total = £13,250 equals £3310 per year.
So, the used car is cheaper, to the tune of around £100 a month. So there's your premium for driving a newer car.
Edited by Truckosaurus on Friday 10th October 07:35
Probably been covered elsewhere but what worries me about a lease is that any mishap has to be fixed so thinking of at least two of my cars bought new, constant vandalism, parking dings and a major keying would have cost me thousands if I were to hand it back to a lease company in good repair whilst as an owner I just wouldn't bother spending to fix and in one case took the hit come resale whilst in the other case I still have the car, 16 years later.
Thus I think a lease can be a good deal if you are lucky enough to get through the 2 or 3 year period unscathed.
Thus I think a lease can be a good deal if you are lucky enough to get through the 2 or 3 year period unscathed.
i see the mistake, its early! i thought something was up with it haha.
as for it being a bad example i don't really think so, dads o/h wants a small car that doesn't break every 10 mins (like a lot of the general public).
in this case it cost about the same to run a brand new car vs something that is 7 years old regardless of badge snobbery.
if you want a cheap car that works then lease is probably better, on the asumption you chop and change every 2 years i.e not running cars into the ground.
if you want a branded car and don't mind buying older i.e not brand new then cash is your friend.
as for it being a bad example i don't really think so, dads o/h wants a small car that doesn't break every 10 mins (like a lot of the general public).
in this case it cost about the same to run a brand new car vs something that is 7 years old regardless of badge snobbery.
if you want a cheap car that works then lease is probably better, on the asumption you chop and change every 2 years i.e not running cars into the ground.
if you want a branded car and don't mind buying older i.e not brand new then cash is your friend.
JamesD1 said:
i see the mistake, its early! i thought something was up with it haha.
as for it being a bad example i don't really think so, dads o/h wants a small car that doesn't break every 10 mins (like a lot of the general public).
in this case it cost about the same to run a brand new car vs something that is 7 years old regardless of badge snobbery.
if you want a cheap car that works then lease is probably better, on the asumption you chop and change every 2 years i.e not running cars into the ground.
if you want a branded car and don't mind buying older i.e not brand new then cash is your friend.
But if your dad had run a 1.2 Corsa over the timeframe he probably wouldnt have had any repair bills and similar depreciation.as for it being a bad example i don't really think so, dads o/h wants a small car that doesn't break every 10 mins (like a lot of the general public).
in this case it cost about the same to run a brand new car vs something that is 7 years old regardless of badge snobbery.
if you want a cheap car that works then lease is probably better, on the asumption you chop and change every 2 years i.e not running cars into the ground.
if you want a branded car and don't mind buying older i.e not brand new then cash is your friend.
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