Leasing... whats the downsides?
Discussion
Evening All,
I haven't given leasing a thought before coming to this forum. Seeing the kind of prices you can pay for the car is very tempting to me.
I have a 10k budget for a new daily but i am now thinking of going down the leasing route.
Can anyone tell me the downsides of leasing vs pcp? or if there is a thread explaining it all please let me know!
Thank you!
I haven't given leasing a thought before coming to this forum. Seeing the kind of prices you can pay for the car is very tempting to me.
I have a 10k budget for a new daily but i am now thinking of going down the leasing route.
Can anyone tell me the downsides of leasing vs pcp? or if there is a thread explaining it all please let me know!
Thank you!
A couple to start you off;
- A lease can be expensive to end early, you will be liable for between 50 and 100% of remaining payments to do so.
- damage charges are a bit of a PITA, you pay for damage in one way or another however you fund a car but being directly invoiced for it makes it hurt a little more.
- A lease can be expensive to end early, you will be liable for between 50 and 100% of remaining payments to do so.
- damage charges are a bit of a PITA, you pay for damage in one way or another however you fund a car but being directly invoiced for it makes it hurt a little more.
Having done a few now I can only truelly see value in leasing the cheapest of the cheap heavily manufacture discounted often about to be revised models usually in a low-key spec.
There is(was) some blinding deals to be had if you look with an open minded approach.
If you go in targeted to a specific make / model with x-y-z of additional options then it can work out more expensive than buying the equivalent car. Always worth looking into what buying the same car would work out.
I shudder when people are reporting on going with 5/600 a month with 9 upfront deals for 4yrs.
I'm on my 3rd lease but looking at recent offerings I think it may have had its day for me.
^all my personal opinion before somebody with a leased S5 and with air con- seats & heads up display and 5500 deposit down wants an argument
There is(was) some blinding deals to be had if you look with an open minded approach.
If you go in targeted to a specific make / model with x-y-z of additional options then it can work out more expensive than buying the equivalent car. Always worth looking into what buying the same car would work out.
I shudder when people are reporting on going with 5/600 a month with 9 upfront deals for 4yrs.
I'm on my 3rd lease but looking at recent offerings I think it may have had its day for me.
^all my personal opinion before somebody with a leased S5 and with air con- seats & heads up display and 5500 deposit down wants an argument
I considered it a while back as it is a great way to have use of an otherwise unaffordable car. I considered for instance leasing options on a new 340i. In the end I chose not to as
1. Mileage limits that can cost you if you underestimate usage or your circumstances change;
2. Condition must be maintained. Would you always fix a scratch on a £10k car or refurb the wheel? You might have to on a leased car or face a bill at the end;
3. What to do at the end. Options are more limited as you have no asset to part exchange for a new car, so you may be tied into another lease deal by default. Getting out of the loop would be harder then getting into it.
4. Modifications won't be permitted. Not for everyone, but some like to modify or personalise their car;
5. It is not yours. You will always be driving someone else's car, this might not matter much to many, but it just didn't feel right to me and;
6. New cars just don't seem as interesting as older ones. This one is entirely subjective and many would argue just plain wrong, but so many modern cars are so anodyne and formulaic that I struggle to fall in love with them. Objectively so much better of course, with many more bhp for much less mpg.
I don't deny there are so many benefits to leasing, but they were the cons that I considered.
1. Mileage limits that can cost you if you underestimate usage or your circumstances change;
2. Condition must be maintained. Would you always fix a scratch on a £10k car or refurb the wheel? You might have to on a leased car or face a bill at the end;
3. What to do at the end. Options are more limited as you have no asset to part exchange for a new car, so you may be tied into another lease deal by default. Getting out of the loop would be harder then getting into it.
4. Modifications won't be permitted. Not for everyone, but some like to modify or personalise their car;
5. It is not yours. You will always be driving someone else's car, this might not matter much to many, but it just didn't feel right to me and;
6. New cars just don't seem as interesting as older ones. This one is entirely subjective and many would argue just plain wrong, but so many modern cars are so anodyne and formulaic that I struggle to fall in love with them. Objectively so much better of course, with many more bhp for much less mpg.
I don't deny there are so many benefits to leasing, but they were the cons that I considered.
Fundamentally,
Unless you always take something in stock, which means compromising every time, you risk timing issues, either a car turns up early, and you need to pay for it, or late, and you have a gap. I am amazed manufacturers haven't wised up to this yet, but see some like Volvo (I think?) are starting to get with the notion of paying X and you get a car "as a service" all in, which will be swapped every X amount of time. I suspect this will mature soon as we are becoming attuned to paying for everything on the drip.
Such a service would be good for companies that want brand loyalty. Of course leasing helps them dump excess stock too, so they'll probably want to offer both types of model.
Insurance. People get excited they can get a Golf R for X pcm. Which sounds cheap. Then they have to insure it. Man maths creeps in and people focus on the relative cost of the car amortised over the hire period. They oft conveniently forget that where most costs are included, it really is "most", not "all".
Unless you always take something in stock, which means compromising every time, you risk timing issues, either a car turns up early, and you need to pay for it, or late, and you have a gap. I am amazed manufacturers haven't wised up to this yet, but see some like Volvo (I think?) are starting to get with the notion of paying X and you get a car "as a service" all in, which will be swapped every X amount of time. I suspect this will mature soon as we are becoming attuned to paying for everything on the drip.
Such a service would be good for companies that want brand loyalty. Of course leasing helps them dump excess stock too, so they'll probably want to offer both types of model.
Insurance. People get excited they can get a Golf R for X pcm. Which sounds cheap. Then they have to insure it. Man maths creeps in and people focus on the relative cost of the car amortised over the hire period. They oft conveniently forget that where most costs are included, it really is "most", not "all".
Edited by Croutons on Sunday 24th June 10:21
I just finished a 2 year lease a couple of months back and I don't think I will go back again (never say never though)
My main concern was damage to the car, things like scuffing the wheels and minor scratches, some how it bothered me more in a lease car than it did my privately owned cars. not sure why, it probably didn't cost me any more or less than if I owned the car privately but it just played on my mind.
My lease was a bit of a bargain too, a 2 year lease cost me £9k all in, the car itself depreciated more like £15 in the same period....
My main concern was damage to the car, things like scuffing the wheels and minor scratches, some how it bothered me more in a lease car than it did my privately owned cars. not sure why, it probably didn't cost me any more or less than if I owned the car privately but it just played on my mind.
My lease was a bit of a bargain too, a 2 year lease cost me £9k all in, the car itself depreciated more like £15 in the same period....
KhabibSmesh said:
If you buy the car you have an asset sitting on your driveway.
If you lease it you have a liability.
Well, this is where double entry accounting helps.If you lease it you have a liability.
To make a purchase, you increase your assets, but reduce your cash. Balances to zero. There will be regular charges to the p&l.
Entering a lease created a long term obligation, but you may (in some circumstances) create an right if use asset. Or, you just regularly reduce cash and charge your p&l the cost in others.
For an individual, all of this is irrelevant of course.
I think 3 main factors are at play in the choice to lease:
- ease / simplicity. Want new car. See one you like. Want one payment per month. Done
- mind set about buying something that is "yours" regardless... the polar opposite of the above
- get a calculator out, and work out the equivalent cost of a period of ownership of the car you want. Take manufacturer discounts into account. Take your circumstances and likelihood of change into account. This would be what I recommend
Ian
For me, the biggest downside would be a change in circumstance & maintaining payments. A couple I know leased a couple of cars - an A3 and a 5-series. They both had really good jobs earning good money. She was made redundant 3 months into the lease and the firm he was working for went bust 5 months in. The £750 a month they could easily afford very quickly became a massive problem. If they'd bought cheaper cars, they might have been in a position to VT or sell, or even speak to the finance company and sort something out. They both ended up taking lesser paid jobs but still forking out for the cars. What really annoyed the lad was his new job came with a company car so he was paying for a car for the next 31 months he hardly even used.
That's what would put me off more than anything.
That's what would put me off more than anything.
I have recently started leasing - more so as a stop gap until the petrol vs diesel debate settles and hopefully the local councils have played their cards. Hopefully by end of lease will also see a greater improvement in petrol economy and possibly electric car range so can the possibly purchase - or, TBH, the petrol cars that now have the best economy will be, by then, three years old and at the age I would normally buy.
Also, with man maths stepping in, gives me a new car on the drive for a few years so less hassle.
Also, with man maths stepping in, gives me a new car on the drive for a few years so less hassle.
I've bought cars by every method known to man and they all have their downsides.
I would say there are 3 main considerations (call them that rather than downsides) with leasing.
1. Timing. You're at the mercy of the supplying manufacturers supply chain if it's a factory order. Cars can get delayed by months quite easily and it's often the case that the expected delivery date will change. This becomes more of an issue if you are reliant on your car and are already on a lease that has a return date although some manufacturers will allow you to extend.
2. Being tied in. You CAN get out of a lease and in my experience it costs less than a PCP to end early. However, don't be daft enough to get into a longer term lease if you think any of your life circumstances will change within that time. Changing job and increasing mileage, starting a family a year into leasing a 2 seater etc.
3. Possibly limited choice. To make it really cost effective you've got to be prepared to be flexible on make, spec, colour etc. You've also got to be prepared that you could go from something amazing to something s
t.
For me leasing has been pretty good. Certainly better than PCP which I swear I will NEVER do again. For me the benefits have far out weighed the downsides. However, I agree with the other poster that looking at deals now it seems to have had it's day. Deals may seem ok now if you are new to it but I'm used to the days of a golf R for £169pm.
I would say there are 3 main considerations (call them that rather than downsides) with leasing.
1. Timing. You're at the mercy of the supplying manufacturers supply chain if it's a factory order. Cars can get delayed by months quite easily and it's often the case that the expected delivery date will change. This becomes more of an issue if you are reliant on your car and are already on a lease that has a return date although some manufacturers will allow you to extend.
2. Being tied in. You CAN get out of a lease and in my experience it costs less than a PCP to end early. However, don't be daft enough to get into a longer term lease if you think any of your life circumstances will change within that time. Changing job and increasing mileage, starting a family a year into leasing a 2 seater etc.
3. Possibly limited choice. To make it really cost effective you've got to be prepared to be flexible on make, spec, colour etc. You've also got to be prepared that you could go from something amazing to something s
t.For me leasing has been pretty good. Certainly better than PCP which I swear I will NEVER do again. For me the benefits have far out weighed the downsides. However, I agree with the other poster that looking at deals now it seems to have had it's day. Deals may seem ok now if you are new to it but I'm used to the days of a golf R for £169pm.
I'm approaching the end of a 2 year lease on a Focus ST3.
I could have gone PCP but I'd need to put a lot more down as an initial payment/deposit and would have had much higher monthly payments. I could easily risk being in negative equity on a PCP, something that's biting a few TDCI ST owners at the moment.
I've got a 2 year lease, its cost me a lot less than the same car on PCP over the same time, Iike to change my cars every couple of years, leasing means it's easy and cheaper than 'buying' or having one on PCP.
As for damage, doom-mongers will have you think unless a lease car is factory fresh you'll get penalised at the end of the lease. Not so, it's fair wear and tear just like a returned PCP. It's needed one service and a set of tyres. It gets washed and looked just as I would my own car.
I've just ordered my next lease from BMW, it's approximately half the cost of a PCP for the same car so being as I have no interest in buying a car I can have the same one with a small initial payment and much lower monthly cost.
To me leasing suits my needs perfectly.
I could have gone PCP but I'd need to put a lot more down as an initial payment/deposit and would have had much higher monthly payments. I could easily risk being in negative equity on a PCP, something that's biting a few TDCI ST owners at the moment.
I've got a 2 year lease, its cost me a lot less than the same car on PCP over the same time, Iike to change my cars every couple of years, leasing means it's easy and cheaper than 'buying' or having one on PCP.
As for damage, doom-mongers will have you think unless a lease car is factory fresh you'll get penalised at the end of the lease. Not so, it's fair wear and tear just like a returned PCP. It's needed one service and a set of tyres. It gets washed and looked just as I would my own car.
I've just ordered my next lease from BMW, it's approximately half the cost of a PCP for the same car so being as I have no interest in buying a car I can have the same one with a small initial payment and much lower monthly cost.
To me leasing suits my needs perfectly.
Greendubber said:
...As for damage, doom-mongers will have you think unless a lease car is factory fresh you'll get penalised at the end of the lease. Not so, it's fair wear and tear just like a returned PCP. It's needed one service and a set of tyres. It gets washed and looked just as I would my own car...
I think manufacturers/brokers can take different approaches to this in terms of their charges but they are all governed by the BVRLA so as you say, their are guidelines for what is considered fair wear and tear.With my last 2 leases I've been issued an itemized "damage charge" list for any items found on return. The charges are far from ridiculous so unless you are particularly hard on a car you won't be charged much if anything.
I've actually never had to pay a single charge on a returned car and despite being careful I'm not one of those people that tends to wash a car very often (once every couple of months is enough).
PCH works fine for me.
Always go for the 24 month deal as like changing cars.
On my second deal & until now always bought a nearly new or pre reg then after two years trade/sell & go again.
Just looking at the numbers the PCH was a no brainer, if the car depreciates more than the PCH costs.
At present I have 124 Abarth Spider, £32-34K for £200 per month, some to the deals from the stealers were double that!
Previous car was 208 gti BPS, that was stupidly cheap £133 a month.
If you see a deal you need to be quick as some only appear for few weeks or days.
Rotate tyres front to back after 12 months so no new tyres needed, one oil service (hand back before 2nd) no worries as full warranty & european recorvery whats not to like.
Just put fuel in it & drive
Always go for the 24 month deal as like changing cars.
On my second deal & until now always bought a nearly new or pre reg then after two years trade/sell & go again.
Just looking at the numbers the PCH was a no brainer, if the car depreciates more than the PCH costs.
At present I have 124 Abarth Spider, £32-34K for £200 per month, some to the deals from the stealers were double that!
Previous car was 208 gti BPS, that was stupidly cheap £133 a month.
If you see a deal you need to be quick as some only appear for few weeks or days.
Rotate tyres front to back after 12 months so no new tyres needed, one oil service (hand back before 2nd) no worries as full warranty & european recorvery whats not to like.
Just put fuel in it & drive
Tomo1971 said:
I have recently started leasing - more so as a stop gap until the petrol vs diesel debate settles and hopefully the local councils have played their cards. Hopefully by end of lease will also see a greater improvement in petrol economy and possibly electric car range so can the possibly purchase - or, TBH, the petrol cars that now have the best economy will be, by then, three years old and at the age I would normally buy.
Also, with man maths stepping in, gives me a new car on the drive for a few years so less hassle.
That’s boy-maths.Also, with man maths stepping in, gives me a new car on the drive for a few years so less hassle.
If your leasing co is a BVRLA member then they'll adhere to this regarding what is allowable fair wear and tear.
Mine's through Arval and they have clear documentation as to what is accepted: https://www.arval.co.uk/sites/uk/files/media/docum...
BVRLA : http://content.yudu.com/web/xpv4/0A2cm0q/ArvalCar2...
Mine's through Arval and they have clear documentation as to what is accepted: https://www.arval.co.uk/sites/uk/files/media/docum...
BVRLA : http://content.yudu.com/web/xpv4/0A2cm0q/ArvalCar2...
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