Car Leasing

[Tim Over Whelmed]

Collective advice needed please.

I've always just purchased personal and company cars but am now considering leasing, what are the pitfalls?

Looking at around 12,000 pa so will go for that or a 15,000 pa contract, probably over 36 months, with what looks like a standard 3 month payments deposit.

Anything else I should consider?

Thanks in advance.

Tim

 

[cloud]

It's funny you should mention it, I was just looking into leasing the other day. I was wondering whether there is such a thing as a Leasing broker, who can get the best deal for you, like a mortgage broker would.

 

[Cian]

Going for a slightly higher mileage contract is always advisable as the over-mileage fees can be painful and on a lease fleet of 1 you can't really rotate cars around the lowest usage drivers.

Beware that you'll be hammered for even the most minor damage to the vehicle on return.

If you take an insurance option you can be left with NCB issues or no driving other cars cover; if you insure yourself that's irrelevant obviously.

 

[n1 gull]

We lease our car, I have conceded we are going to have to buy the f*cker after the lease is up as
a combination of kids and dog have destroyed the interior

 

[Superphil]

I have a PCP lease, you pay only to cover the finance cost with a guaranteed final value figure. When its up, I can either pay the balance, and own the car, or hand the keys back. If there is any equity in it I can use it as a deposit/trade-in on the next car I get. Been doing it for a while now, had 3 Audis and the wife's had 2 Minis on the same sort of plan. It makes sense to go for a car that will higher residual value, as then you are financing a smaller proportion of the value, ie.

German Brand car costs £20K new, at end of lease the guaranteed final value is £10K, you pay for finance on £10K

French Brand car costs £20K new, at end of lease the guaranteed final value is £5K, you pay for finance on £15K

NB, figures are purely for demonstrative purposes.

 

[Tim Over Whelmed]

Cheers all, more research needed me thinks.

Other option is to carry on with the XF but concerned it could get expensive in the later years?

Don't like buying new as you get hammered with depreciation, there must be people who return 3-6 month old cars do they try to re-lease those types of cars or ship them off to auction / car warehouses?

Thanks again,

Tim

 

[Superphil]

Cheers all, more research needed me thinks.

Other option is to carry on with the XF but concerned it could get expensive in the later years?

Don't like buying new as you get hammered with depreciation, there must be people who return 3-6 month old cars do they try to re-lease those types of cars or ship them off to auction / car warehouses?

Thanks again,

Tim

I never buy new, always go for ex demos or 12 month old cars, I think to have a PCP lease the car has to be less than 5 years old at the end of the term.

 

[narly101]

Whats wrong with the bus?

 

[beorhthelm]

Whats wrong with the bus?

very expensive repayments, high running costs, difficult to park an excessive for all but the very largest family. you can use the dedicated lanes around towns though.

 

[Simster]

We lease our car, I have conceded we are going to have to buy the f*cker after the lease is up as
a combination of kids and dog have destroyed the interior

We do too. Seems to work well for us to be honest, but the car is still in decent nick.

I'd recommend it.

 

[kingcole]

We have always leased our cars (not PCP - usually that's a lot more money). Google Nationwide leasing or leasing for cars.

On a 3 year plan you will typically pay 3 months plus 35. A 2 year plan will cost more, you will pay 3 plus 23. Look out for offers that seem good. They may have 6 +35. That's a load more up front.

An earlier poster said go for higher mileage plans. I say the complete opposite, unless you know you will use it. In just about all cases the pence per mile over rate is exactly the same as choosing the higher mileage option in the 1st place. EG, it might be 8p per mile. You go 4000 over and it's £320. You will prob find that a 2 year contract will be £15 a month extra for a 12000 mile contract rather than a 10000 one. They won't give it back if you don't use it!

Other advantages are that your road tax is included, although maintainence isn't as standard, you will prob need one set of tyres and 2 services max - everything else will be under warranty.

The only dissadvantage is unlike a PCP you are in for the length of the contract with no escape. There will be no equity at the end either.

Companies work out prices on depreciatation, so cars that perform well are cheap to lease. An E class Mercedes will for example probably work out less than a well spec'd Mondeo, so you might be able to drive a car you could not have afforded to buy.

 

[Garage_Doors]

We have always leased our cars (not PCP - usually that's a lot more money). Google Nationwide leasing or leasing for cars.

you will typically pay 3 months plus 35. A 2 year plan will cost more, you will pay 3 plus 23. Look out for offers that seem good. They may have 6 +35. .

Can you expand on what this means? are these monthly payments ?

 

[Simster]

Can you expand on what this means? are these monthly payments ?

You pay an agreed amount for 35/23 months after paying that amount x3 up front before you take the car.

So for our Qashqai we paid 750 then 250 per month for 35 months. After this period you either hand the car back or sometimes get the option to buy, depending on your contract.

Leasing is great if you are happy to shop around for a good deal (Merc C class is only 300 a month or so at the mo according to my wife!), like driving a new car and don't want the hassle of selling when you're bored of it.

As for mileage, you simply need to do the maths and have a handle on how many you expect to clock up. Our contract is for 8,000 pa and I reckon we'll come in about 1,000 short of the 24,000 entitlement.

 

[Superphil]

We have always leased our cars (not PCP - usually that's a lot more money)..

Odd, PCP always seemed to have the cheapest monthly payments for me, does depend on the type of car though, as I explained earlier, and as you eluded, if you go for a car that is regarded as better quality, then you pay less. I had to opt out of a company car scheme 6 years ago, by leasing on a PCP I pay pretty much the same amount I used to in company car tax, but I have 100% choice of what car I have and how long I keep it for.

 

[Cian]

W
An earlier poster said go for higher mileage plans. I say the complete opposite, unless you know you will use it. In just about all cases the pence per mile over rate is exactly the same as choosing the higher mileage option in the 1st place.

UK market is obviously different to here, its been anywhere up to 10x dearer to pay per mile on some contracts here (Ford's own one comes to mind!)

 

[scooter1]

With PCP, you're generally expected to pay the balance of the car at the end of the contract. With leasing, its normally a straight "hand the keys back", but you can also ask to purchase it if you've become attached to the car, and you don't pay VAT on a PCP.
I used to work for a leasing broker and, invariably any deal you see on the web via a broker is just an enticer. Then you have to pay an extra for metallic paint, or alloy wheels. Most of these things are standard, and the price you see on the web is potentially for a car that doesnt exist. IE - we used to list Audi A3's at £199 per month. This car had solid paint and steel wheels according to the funders system. However, you couldn't get an A3 with solid paint or steel wheels, so you had to pay and extra £10 for the alloys and £10 for metallic paint. Hence the car is not £199 as advertised, but in fact £219 + vat.
i'm very glad to be out of that business, but I know loads of people who lease cars and like the fact that they always have a new car and its generally trouble free.
If you're offered GAP insurance, negotiate. This used to be £10 a month and covers all damage/shortfall when the car is returned. This is a scam by the broker. GAP insurance costs around £3 a month and is just used to top up the brokers commission....

 

[Superphil]

With PCP, you're generally expected to pay the balance of the car at the end of the contract. With leasing, its normally a straight "hand the keys back", but you can also ask to purchase it if you've become attached to the car, and you don't pay VAT on a PCP..

I've never been expected to pay the balance of the car on PCP, I've handed back 3 so far, none had made the guaranteed future value, so I just got rid before getting another one.

 

[Box of Frogs]

Been looking into this myself as our old jalopy is starting to cost us a lot in repairs so we thought we would look into PCP.

Was looking for something for about £100-£120 per month and paying about £2k deposit. So far we have narrowed it down to a new Hyundai i20 or a nearly new Toyota Yaris.

 

[kingcole]

With PCP, you're generally expected to pay the balance of the car at the end of the contract. With leasing, its normally a straight "hand the keys back", but you can also ask to purchase it if you've become attached to the car, and you don't pay VAT on a PCP.
I used to work for a leasing broker and, invariably any deal you see on the web via a broker is just an enticer. Then you have to pay an extra for metallic paint, or alloy wheels. Most of these things are standard, and the price you see on the web is potentially for a car that doesnt exist. IE - we used to list Audi A3's at £199 per month. This car had solid paint and steel wheels according to the funders system. However, you couldn't get an A3 with solid paint or steel wheels, so you had to pay and extra £10 for the alloys and £10 for metallic paint. Hence the car is not £199 as advertised, but in fact £219 + vat.
i'm very glad to be out of that business, but I know loads of people who lease cars and like the fact that they always have a new car and its generally trouble free.
If you're offered GAP insurance, negotiate. This used to be £10 a month and covers all damage/shortfall when the car is returned. This is a scam by the broker. GAP insurance costs around £3 a month and is just used to top up the brokers commission....

I don't want to appear argumentative, but with a PCP you are NOT expected to pay the balance at the end. At the end (as you refer to it as!) there is a GFV (guaranteed future value). If you fee your car is worth more than this figure, then you would be daft not to pay it off and either keep the car (you could also re-finance if you wish at this time) or flog the motor and pocket the difference.

What you might be referring to is 'Lease Purchase'. This is like a PCP yet at 'the end' you have to settle the balance. You could do this by selling the car or p/xing it if you wish, but you do not have the option to hand it back. As a rule the APR is a little less on Lease Purchase than a PCP so will be lower monthly payments.

One of the reasons PCPs (and lease purchasing) can be costly in relation to a straight lease is due to the fact you are paying interest on a balance that will not reduce to zero at the end of the term.

Say you buy a new mini for £17000 on a 3 year PCP. The GFV is £8000, so the interest is worked out from the inital balance of 17k (minus a deposit) to 8k. In this case on an APR of of 10% the finance might be £4500. So during the 3 years, you are paying back £17,000 + £4500 minus £8000 or £375 per month (£347 if you put a £1000 deposit down).

I am using the above figures as an example as my wife recently got a quote from Chandlers.

A similar quote from Nationwide vehicle contracts has about £1000 down and then 35 payments of £281 + VAT. This is about a £10 a month saving, but would include road tax.

To argue with another point you made. The PCP does include VAT. All cars have VAT and the above example for the PCP includes nearly £3000 VAT.

If you were a company, you might be able to reclaim this, just as you might be able to reclaim the VAT on the monthly payments of a lease.

For clarity, lease is often referred to as contract hire. It really is just like taking a hire car, but for a bit longer than the normal two weeks!

 

[Tim Over Whelmed]

Whats wrong with the bus?

With businesses in Partridge Green, Ford, Ockley, Arundel, Yapton and Brighton this could prove a little problematic and a tad inefficient!