The whole car lease new car sales deal thing.

[TONY R]

Went for a ride today over my mates place, his niece was visiting with her fiance, seemed a decent lad. in a brand new mercedes.

Conversation over tea in the workshop turned to the merc, turned out to be leased cant remember the exact details but abbout 300 a month and cant do more than x miles a year then he can buy it for x pounds or leave it and get another car start all over again.

All sounded very expensive to me but he seemed totaly cool with the whole deal.

Do they acctualy sell any new cars these days or are most leased, guess i am understanding how people can buy these expensive cars now. it makes the whole HP thing of my day look fair.

Aparently leasing works for some people but what i am struggling to understand is HOW>> HOWW CAN IT WORK> .

There is dead money and there is dead and buried money that poor lads money is dead and buried as i see it.

Is this what the motor trade as dreamed up now new cars are so expensive and loadded with every item known to man. Wonder what % acctualy walk in dealerships and simply buy a brand new car these days.

[Medic1281]

He's effectively just paying off the depreciation of a new vehicle without having large sums of money invested in it. If he's the sort to always want/have a new car then it nearly makes sense. It makes the most sense to business users though.

The lease company can't lose, they buy cars in cheap, get them leased out, costs are covered by lease holder. At the end of the term the lease company have a car of gauranteed value.

[pegasus bridge]

Cars will only ever lose money (with very very few exceptions), find the most efficient way to lose it! Often that's leasing, you also don't get the hassle of disposing of it.

 

Edit- if you do lease, be proactive and get the damage repaired before it returns- it will cost you a fraction. If you "owned" the vehicle you could chose not to repair - but you would still pay for it with lower residual values. Might be worth accruing a small amount each month you lease to cover minor repairs at the end.

Edited April 22, 2016 by pegasus bridge

[Catamong]

It's all about depreciation, which, in simple Rydale terms is "loss of value", i.e, you buy a new car for cash at £30k, three years later that car is worth only £14k, so why not lease a car at say £450 per month over that 3 year period, you're basically paying for the depreciation over that period.

 

I've leased several cars over recent years, it works well if you receive a monthly car allowance of say £450 net, you just pay it to the leasing company every month, and that's it, pure and simple.

 

Problems can arise if you go over the agreed annual mileage, so it pays to be realistic about what you expect to do every year, also make sure that you get all of the dinks in the bodywork put right by a local guy before you hand it back, otherwise the leasing company will crucify you..!

 

Cat.

[HDAV]

PCP with gaurantee future minimum value........

[OJW]

I agree with the above. It also seems more sensible to me than buying a new car because that 30k you would have spent can be invested elsewhere in the mean time and hopefully generate you a small return in the mean time.

 

The downside is getting yourself locked in for the three years. If your situation changes, e.g you loose the job who are giving you the aforementioned £450 a month your paying it off with it will quickly become a burden. At least with your own car you can sell to help your cash flow in those situations.

 

I've bought in the past but I think I will always lease in the future, unless I make mega money!

[Hamster]

There is nothing complicated about leasing/PCP/contract hire provided you accept that cars drop in value. People who struggle with the concept tend to be those who buy cars that have already dropped a fair bit in value (i.e, used) and then keeping them for a very long time, say 5-6 years or even more. In these situations it is of course possible to spend relatively little on cars, a 5 year old car bought for £5k and kept for 5 more years with a residual value of £500 will have cost the owner well under a grand a year to run but the person who is prepared to spend £3600 per year will get an infinitely different motoring experience and quality of motoring/peace of mind etc, etc.

 

It is no different to eating fish and chips as opposed to dining out in a top end restaurant, both are food and both fill you up but the experience is very different. Only the idle rich buy top end cars for cash, the smart money rents them because they want to make whatever money they do have to work for them.

 

Incidentally the excess mileage charges are entirely reasonable in most cases, going over the agreed mileage by say 5000 miles can cost as little as another £300-£400 upon handback and any body work damage would apply equally if you had chosen to buy it for cash or arrange regular HP.

Edited April 22, 2016 by Hamster

[SPARKIE]

when i worked for peugeot they used to did lease vehicles. They used it as a way of flooding the market with second hand cars which have low mileage and dealer servicing. the person who leases the vehicle first pays the depreatiation hands the car back in good condition with full service history the car then gets turned round and stuck on the forecourt....the person then leases a new car and they start again.

 

think it was 2 or 3 years you could have them for and you either swapped for new gave it back or bought it from them.

[Rupert]

Leasing is just saving up for a car backwards, the young wont save 300 a month for three years to buy something so the finance house makes it happen for them.

[Hamster]

Leasing is just saving up for a car backwards, the young wont save 300 a month for three years to buy something so the finance house makes it happen for them.

 

Bingo. You have to love the logic of people who think paying cash makes a difference.

[Rupert]

 

Bingo. You have to love the logic of people who think paying cash makes a difference.

Saves the finance house Margin on the deal

[Hamster]

Saves the finance house Margin on the deal

 

Depends, buying any high ticket price item means borrowing money for 99% of us, it's basic reality of life. The only way you can avoid the finance margin is to pay cash which has dropped onto your lap without you having to work for it.

 

The person who pays cash for a £30k car would have had to save it little by little whilst NOT being able to drive that car until they pay for it all in one lump sum. From then on that car WILL drop in value on a monthly basis meaning your hard saved lolly is fast fading to nothing and in order to repeat the cycle of being able to pay cash again for your next car, you will still need to be putting X amount away - this is the bit some don't seem to quite get, that money you're judiciously saving is not earning you any money (other than maybe a pittance in interest.

 

The person who simply leases/PCP's a brand new car will benefit from driving that car straight away without having to wait, this is why you pay the interest, the interest payment is being rewarded via your access to a new car.

 

We could then start to talk about the many other benefits of new cars such as no MOT for 3 years (£150), brand new everything means little to no expense on many consumables (I have leased cars for 2 years and avoided even tyres) no repair bills compared to the possibility of say a broken engine part which can cost £800 to fix on a 5 year old car , newer cars also tend to be more economical which saves hundreds over the course of 3 years . Buying used OR new for cash simply means you're lending yourself the money.

 

Nothing is ever quite as black and white as it might seem.

[islandgun]

reading these with interest, Iv' just taken on a brand new van for work, contract hire, it costs about £35 per week and does 60+ to the gallon, My last vehicle came with the assurance of 50k on the clock, full service history, and one careful lady owner ( I know her) it cost me loads of money and is now scrap !, Im happy to pay the rental for no worries and the weekly payment is partially off- set by reduced fuel bills, it also looks the part

[bentbarrel]

I've had a PCP deal of some sorts for the past 3 cars and have now just got a fantastic quote through for a lease on an Evoque. Although I'm lucky enough to earn a reasonable wage, we would never save up the cash to buy a similar vehicle outright so the opportunity to drive a brand new vehicle and change it every few years with no issues about MOT, repairs etc is a no brainer in our household..

[BrowningB525]

I own a 2007 car. But I like the idea of leasing. My fiance has a salary sacrifice lease car from work and it comes with insurance and all repairs. It is genuinely cheaper than owning a new car outright.

 

However, the government has wised up now that her lease is up she has to pay BIK tax on the next one adding up to £50 on to the lease.

 

On another forum someone said about how not owning a depreciating asset is a good idea.

[rodp]

But the car bought for cash is bought and paid for, it's yours.

[Hamster]

But the car bought for cash is bought and paid for, it's yours.

 

Yes and so is the fact that it will be a depreciating asset, all is well until you have to find the money to pay cash for the next one, ask yourself where that money comes from.

[rodp]

 

Yes and so is the fact that it will be a depreciating asset, all is well until you have to find the money to pay cash for the next one, ask yourself where that money comes from.

Same place as the first one. Everything I have is bought and paid for, I just prefer it that way. Cash is king and no-one will ever convince me otherwise. There's some cracking deals to be had for pound notes that you just will not get by any other means.

 

Edit to say you WILL be paying for the depreciation either way, at least I have the chance of a good sales deal and recouping some of it.

Edited April 23, 2016 by rodp

[Hamster]

Same place as the first one. Everything I have is bought and paid for, I just prefer it that way. Cash is king and no-one will ever convince me otherwise. There's some cracking deals to be had for pound notes that you just will not get by any other means.

 

Edit to say you WILL be paying for the depreciation either way, at least I have the chance of a good sales deal and recouping some of it.

 

I'm in the trade and cash is the least preferred payment and legally you're not allowed to give better deals to a cash buyer. You advertise a given price which you have to honour regardless of whether they borrow the money from you, the bank or another source.

 

Closing the deal by pretending to shake on a special deal because you have readies is play acting.

[rodp]

 

I'm in the trade and cash is the least preferred payment and legally you're not allowed to give better deals to a cash buyer. You advertise a given price which you have to honour regardless of whether they borrow the money from you, the bank or another source.

 

Closing the deal by pretending to shake on a special deal because you have readies is play acting.

Really ! I know exactly how much items cost before I buy, and I know when a deal's good. And, on top of that I don't pay interest, nor a "setting up fee" or whatever they call it. If you're in the trade (nearly new used) and someone walks in with a bag of cash don't tell me you wouldn't be interested, especially if he wasn't interested in any paperwork.

[Hamster]

Really ! I know exactly how much items cost before I buy, and I know when a deal's good. And, on top of that I don't pay interest, nor a "setting up fee" or whatever they call it. If you're in the trade (nearly new used) and someone walks in with a bag of cash don't tell me you wouldn't be interested, especially if he wasn't interested in any paperwork.

 

I never said they turn cash away, merely the fact that cash isn't as awesome as you think. Finance deals earn the company commission and it's miles easier to sell add on's such as warranties (which earn commission) with finance as the increase in monthly payments is usually very small and customers love it. Banks also charge us to deposit cash and it presents a certain amount of risk when sitting there counting thousands. It is not unknown for the lovely public to deliberately short change the dealer by hundreds relying on their good will to not count bundles, I have also seen the odd fake or 10 slipped into bundles.

 

Regarding your last point all depends on the kind of person/dealer we're talking about but in general selling cheap tat off your drive might allow you to overlook paperwork but any half decent dealer wouldn't do it, there are just too many ways to trip up and it's immoral.

[Davyo]

You lose all ways,cars have to be the biggest waste of money.Wifes biggest loss was a Jag Stype SE £36k drove it for 3 yrs got £8500 back.People laugh a those who drive old cars but their loss is probably just a few hundred quid.

[islandgun]

You lose all ways,cars have to be the biggest waste of money.Wifes biggest loss was a Jag Stype SE £36k drove it for 3 yrs got £8500 back.People laugh a those who drive old cars but their loss is probably just a few hundred quid.

 

Ive always driven old cars and often you get to the stage when having spent a few hundred on upkeep something else happens and you have to spend a few more hundred (better the devil you know) this has now become a £1000 odd, so its costing £20+ a week and your still driving a piece of carp with poor fuel consumption, my contract van costs the same (including fuel saving) but its new and without repair hassles

[LondonLuke]

 

I never said they turn cash away, merely the fact that cash isn't as awesome as you think. Finance deals earn the company commission and it's miles easier to sell add on's such as warranties (which earn commission) with finance as the increase in monthly payments is usually very small and customers love it. Banks also charge us to deposit cash and it presents a certain amount of risk when sitting there counting thousands. It is not unknown for the lovely public to deliberately short change the dealer by hundreds relying on their good will to not count bundles, I have also seen the odd fake or 10 slipped into bundles.

 

Regarding your last point all depends on the kind of person/dealer we're talking about but in general selling cheap tat off your drive might allow you to overlook paperwork but any half decent dealer wouldn't do it, there are just too many ways to trip up and it's immoral.

 

My understanding is that its actually now illegal for car garages to earn commission or uplift the cost of a car warranty - these now must be sold at cost so there is no benefit in selling them.

Edited April 23, 2016 by LondonLuke

[Scully]

You lose all ways,cars have to be the biggest waste of money.

 

This is how I feel about cars; the worst investment anyone can make, with very very few exceptions.

A mate was just on about this matter this last week at work, showing an example of some hot rod Nissan thingy in the paper; £350 a month for 3 years and then have the option of either buying it at its market secondhand value or simply let it go and carry on with another brand new model.

The bloke who owns the industrial estate where we have our unit does this. He has a Vogue and his wife a Merc AMG something or other. They keep them for 3 years and then swap for something else.