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Author: Subject: car finance (lease) why would you do that?
Mr Whippy

posted on 24/7/18 at 11:24 AM Reply With Quote
car finance (lease) why would you do that?

seems to be the norm now but to me appears utterly daft beyond belief

1) you never own a car, your effectively paying to rent a car, probably covering the deprecation for that car that someone else will then sell on once you've had a shot.

2) you have to pay for their car getting serviced at the dealers

3) restrictions on mileages and penalties for going over it

For someone who buys second hand cars and pays feck all for them and services them myself what the hell is going on here??? have people gone completely mad??

I'm under the assumption that since it seems all manufactures are peddling these deals it's just a way of screwing their customers out of even more money...

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peter030371

posted on 24/7/18 at 11:49 AM Reply With Quote
Agree 100%

Have you tried walking into a dealers and saying you want to pay cash...they look at you as if you are from another planet I think even the sales guys are brainwashed into these deals as being 'a good thing' when they are nothing of the sort unless you are the finance company funding it all. Land Rover garage tried to tell me these deals are better with my money in the bank earning interest. Do they not think I can do the maths and quickly realise they are costing a fortune long term

Mobile phones are the same. I can pay £25 a month for 24 months for phone 'y' and get x amount of data/minutes/txt per month....or 10 minutes research and I can pay £150 for a new, unlocked phone (often direct from Samsung, Sony etc) plus £10 a month for a SIM only deal that has the same if not better data/minutes/txt

I was taught from a young age that if I can't afford to pay for it now I can't have it, simple. If I want it work hard and save the money for it. A large amount of society thinks living in debt is OK. Only thing I borrow for is my house and I am paying that off as quickly as i can.

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Mr Whippy

posted on 24/7/18 at 11:59 AM Reply With Quote
yeah I was brought up to save for things too and debt was a bad thing...end of
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nick205

posted on 24/7/18 at 12:00 PM Reply With Quote
Agree with you Whippy - it's never made sense to me either.

I prefer to pay less money for a 2nd (or more) hand car and service it myself. Paying rent and depreciation on a car you'll have to give back seems daft to me.

I can only see it as the dealers geting you hooked - you start on the process and when it comes time to return the car most customers simply carry on with another one.

As peter030371 the only debt for me is a mortgage and I'm making every effort to get that paid off ASAP. The thought of living in debt for anything else would make me feel very uncomfortable.

If you don't have the money you don't have the things, but at least you're not under a debt trap!

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adam1985

posted on 24/7/18 at 12:01 PM Reply With Quote
Im with you i dont think i would ever do it but i know some people who get a option of basic company car or a car allowance through there work taking the car allowance could get you a better car, Some jobs they will require a car no older than x years too so if you brought a new car every 3 years you would loose a huge amount.
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Rod Ends

posted on 24/7/18 at 12:20 PM Reply With Quote
Just waiting for the claims of miss-selling - "I didn't know what I was getting into" - and demands for compensation.
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Mr Whippy

posted on 24/7/18 at 12:20 PM Reply With Quote
I can't think anyone I know who would have a company car, all that died out here years ago
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adam1985

posted on 24/7/18 at 12:29 PM Reply With Quote
quote:
Originally posted by Mr Whippy
I can't think anyone I know who would have a company car, all that died out here years ago


We have one, easiest/cheapest car we have ever had ford focus 1 litre ecoboost, Mate has just had a passat gte company car and hes pleased with that

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big_wasa

posted on 24/7/18 at 12:29 PM Reply With Quote
1)Curb appeal, or keeping up with Jones's.
2)No servicing , no repairs probably won't even need tyres.
3)No Mot if you have a new one every three years.

If a car is just a tool to get from a to b and your not a petrol head and you would like something nicer than you could buy out right then it can make sense.

Me on the other hand, i would sooner own several bangers at once.

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miskit

posted on 24/7/18 at 12:42 PM Reply With Quote
It can be pretty good for a small business. A customer of mine (a 2 person operation) for years ran a medium old banger of a transit, broke down occasionally and then had a big break down or two, - so they had the issue of the van being off the road, unplanned expenditure of a couple of K and the faff of getting hire vans.
So they ditched it for a new one on lease, all service, breakdown, courtesy vehicle included - they paid a fixed amount every month and got on with running their business. - Knowing them personally I can tell you that their stress level dropped considerably!

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owelly

posted on 24/7/18 at 12:43 PM Reply With Quote
I know plenty of folks who are happy to get a new car every three years and just think of the payments as another monthly outgoing. At the end of three years, there's no balloon payment as they just choose another car and carry on with the payments. They know what the car is going to cost them each month and if there's a problem, they get another car. I can see the appeal especially if you're not in a position to maintain your own vehicles and if I had enough spare cash, I could be tempted even if it was just for reassurance that I won't get the phone call from SWMBO telling my the car has shat it's gearbox all over the road, or the air con is spitting gravy at the kids, or whatever other faults she inflicts on my cars.....





http://www.ppcmag.co.uk

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Angel Acevedo

posted on 24/7/18 at 12:54 PM Reply With Quote
In Mexico there are Tax advantages as rent is fully deductible (?) and purchases are not.
That is, if you rent a car, you won´t be paying 30% ON TOP of what thee monthly bill is.
That is enough incentive to go leasing.
You may pay 12% more, but that gives a net 18 % on the black...
Or so I was told...





Beware of what you wish.. for it may come true....

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Irony

posted on 24/7/18 at 12:56 PM Reply With Quote
This is the wrong place to get a opposite opinion on this. It is Locostbuilder.co.uk. Clue is in the title. Lots of people at my work have leased cars. More and more are looking at it.

1. New Car. Some people believe 'new' means better by default.
2. Getting your car serviced and MOT'd is a hassle
3. No thinking required.
4. Absolute known monthly cost, no surprises, even if it costs more.

Mother - in - law is getting a leased car after her clutch went in her Golf at 90k. £1k plus repair because she has taken it to the main dealer because she 'doesn't trust street mechanics'. Rather than demand a courtesy vehicle she turned around walked down the street and into Avis and hired a car for the week at £195. Over the road is 'thifty car hire'. Half the price for a similar car. She didn't go in there because 'thifty' sounds cheap and unsafe.

I drive a battered Peogeot Partner van and I will never lease a vehicle.

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Stevie_P

posted on 24/7/18 at 12:57 PM Reply With Quote
I think it's mental as well but each to their own.

Brother has a BMW X4 XDrive M Sport whatever on this PCP deal.

He's paying £500 A MONTH for it (though I think it's a near £50K car).....

If that's not bonkers enough. He has a company van and his other half works about a mile away from home !!!!

I guess it's a way of driving a car you have no hope of actually buying for cash but why you'd do it is a bit beyond me.

Steve

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nick205

posted on 24/7/18 at 12:59 PM Reply With Quote
I've had company cars in the past. Never had the option of an allowance instead though.

The company stipulated the cars had to be 4 door diesels (not really a worry for me). It's fair to say that having a brand new car was very nice. Not having to worry about service costs was good too.

The thing that got me in the end was the ever increasing personal tax sting the cars brought with them. This encouraged me from a rather perky MK1 Seat Leon Cupra TDI through a Passat 2.0 TDI S then to a Volvo V50 1.6D Drive in an effort to minimise the personal tax cost.

The company folded in 2011 and since then it's been buy/run your own car. I went back to a Passat 2.0 TDI SE of the same age as the one I'd had before. Didn't cost too much to buy or run and did me just fine. Serviced it myself to further control costs.

Already said it above, but getting trapped in a personal car lease has never appealed to me and I can't see it ever being so.

Since 2014 epilepsy's stopped me driving altogether. A bummer, but it's reminded me that you can get about just fine (where I live) by public transport and walking.

[Edited on 25/7/18 by nick205]

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Angel Acevedo

posted on 24/7/18 at 01:19 PM Reply With Quote
quote:
Originally posted by nick205...7
Since 2014 epilepsy's stopped me driving altogether. A bummer, but it's reminded me that you can get about just fine (where I live) by public transport and walking.


Maybe even better...
As walking regularly will improve your overall health...






Beware of what you wish.. for it may come true....

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SJ

posted on 24/7/18 at 01:25 PM Reply With Quote
As soon as the company car landscape changed a few years ago and the option of a car allowance came up I took it. Prior to that I had a company Prius which was very tax efficient - effectively a free company car like it used to be in the old days.

When I took the car allowance I bought a low mileage 3yr old Mondeo and kept it for 4 years. In that 4 years it cost me [including buying it, insurance, servicing, tyres etc - all in] about 2.5 years car allowance after offsetting company mileage against tax.

The big plus for me of owning a car is if you get made redundant, when you really need a car that isn't costing you, you have one.

The other big plus is the time saved by NOT having a dealer involved in servicing it or having to use a specific tyre supplier.

The money I saved paid for my MK

[Edited on 24/7/18 by SJ]

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James24785

posted on 24/7/18 at 01:34 PM Reply With Quote
Nothing wrong with leasing in my opinion. If you want a brand new car, do low miles, and change every 2 years then it's the best way to do it.

Having said that, I've not done it, nor do I plan to, but that's only because I don't use a car daily.

It makes zero financial sense to buy a car with cash outright at the moment when borrowing is so cheap. Money is far better off in your own bank, rather than someone else's!


2nd hand cars dont count, as you can't compare a new car with a 2nd hand one. It's apples and oranges

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Toys2

posted on 24/7/18 at 01:51 PM Reply With Quote
Actually, most of the comments are really new car vs 2nd hand, but....

IF you are the type of person that likes a new every couple of years it can make sense to lease. if you do it well, the cost of the lease purchase is only a little more than what you would loose in depreciation. Return them at the end of the term and take out another, you'll never own the car, but you'll always have a new, warrantied and (in theory) a dependable car

I was in a slightly unusual position as I used to get a good discount as my dad worked for Ford, a 1.25 fiesta Zetec worked out at about £125 a month for three years (no deposit), hand it back at the end or pay something like £4.5K to keep it. In reality, you chop it in and get another for the same monthly's. I talked them in to 3 free service's. No Mot's required and possibly not even needing any tyres in those years as that car only does about 10K a year
It's perfect for me who works funny hours to know that there's a good reliably car for my wife & kids, that's under warranty and will never get older than 3 years
I negotiated a good deal, with my Dad's discount probably saving about £3.5K off the list price

I also did the same for about 12 years with a car allowance in lieu of a company car, my company specified that the car had to be 4/5 door diesel and always less than 4 years old. It worked out that I made money on that deal

In both cases it worked for me as I got 15 - 25% discount through my Dad. Ford also do a lot of 0% finance deals and renewal bonuses which helps too



[Edited on 24/7/18 by Toys2]

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SJ

posted on 24/7/18 at 01:53 PM Reply With Quote
quote:

It makes zero financial sense to buy a car with cash outright at the moment when borrowing is so cheap. Money is far better off in your own bank, rather than someone else's!



Cheap finance is normally associated with dealer purchases so sometimes it makes sense to pay cash and get a much better deal. I saved £5.5k off the dealer price for my last car. Even with zero % and a discount I was still way better off.

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tomduffield13

posted on 24/7/18 at 02:06 PM Reply With Quote
We lease one (2017 Qashqai) and own one (2016 A6 Allroad) so I'm on both sides of the fence.

Mrs has a car allowance, and wanted a Qashqai, so I did the sums...

List Price was 26k, so I could buy one, and take an (estimated) 13 - 15k hit on depreciation over 3 years, or lease one, which over 3 years would cost me £9k, tax, breakdown and maintenance included, then hand it back, no hassle of selling or questions asked!!

No brainer from where I'm sat.

On the other side... Me... I'll run the Allroad into the ground, maintaining it myself until it becomes ineffective to do so. My circumstances, mileage and the type of car means that leasing would cost me in excess of £700 p/m. while owning it costs me roughly £300.

Again, a no brainer.

[Edited on 24/7/18 by tomduffield13]

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sdh2903

posted on 24/7/18 at 02:09 PM Reply With Quote
I do it. If you want a new car but don't want to outlay the cash. All the folks who yelp about paying cash and no debt etc really don't understand it.

For starters leasing (pch) and personal contract purchase ( pcp) are 2 totally different things. I would not touch a pcp ever as your basically tied in to get a new car from a certain dealer.

I get a new car every 2 years. I shop around for the best offers at the time and don't get fixated on any particular car. I've had a focus diesel. A fiesta St and a golf gti. All the lease rates on these have been well under the market depreciation if I'd have bought. I've never had to buy a tyre, tax or anything other than a cheap first service. I'm a car enthusiast but have no real desire to maintain a banger. I have my projects for tinkering.

I could go out and buy a new car but id rather keep my savings where they are and let someone else take the financial hit of buying. And after the 2 years I walk away into something else or I go back to an older car.

A mate who's so far into a pcp he can barely see daylight on the exact same golf as me can't believe the cost difference between him and me. And at the end of his contract he will have no equity just like me.

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nick205

posted on 24/7/18 at 02:11 PM Reply With Quote
quote:
Originally posted by Angel Acevedo
quote:
Originally posted by nick205...7
Since 2014 epilepsy's stopped me driving altogether. A bummer, but it's reminded me that you can get about just fine (where I live) by public transport and walking.


Maybe even better...
As walking regularly will improve your overall health...




True - walking isn't fast, but it's free and good for the walker and the environment

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shindha

posted on 24/7/18 at 03:05 PM Reply With Quote
Rent depreciating assets, buy appreciating assets - if your after a new car good route to go down. Personally I buy second hand and then drive it to the ground.
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peter030371

posted on 24/7/18 at 03:22 PM Reply With Quote
Some odd posts.

Savings earn LESS interest than the cost of borrowing or the financial industry would go bust. £30k in the bank will earn less interest than the cost of borrowing £30k to buy a car. Money is cheap at the moment but its still not free.

Fundamentally you cannot lease (in any way or form, PCP, HP etc) a car for less than the deprecation or the finance/car companies will lose money which is not a viable business! In comparing lease costs with buying a new car you have to factor in that sizable discounts are available for a cash purchase. If you think you have a good lease deal then a better cash deal is possible. Play hard ball and they drop the price like a lead balloon. I got 10% off a new Mini when they started out saying 'no discount is possible due to high demand', just wait until they have a sales target to hit

People buy cars on a lease so they can have a nice new car with all the toys without having to save for years to afford it. There is no financial gain in doing it that way, the car company gets your money quicker and more of it at the end of the day.

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