Buy or Lease

M

marchantsuk

Veteran
 Somerset
Looking to replace main family daily diver. Have leased for the past few years without to much thought of pros and cons.
It's time to start looking at replacement options and had thought maybe I would buy a used 3 series or 5 series type around 5 or 6 years old and up to 50K miles. Budget is around £13,000. Don't do high mileage (probably around 12k per year)
Or do I stick with leasing, maybe find a more cost effective lease (Honda CRV Black edition on 0% interest over 3 years) and have a hassle free driving experience.

So put a big dent in savings up front and maybe experience some garage bills as car will be of the age where things start to wear out, but have something of value to trade in 3 years.
Or
Pay a smaller deposit and small monthly (£249 pm) over 3 years and at the end have nothing to trade.

Anyone been through similar issues and decisions?
 
I've been using BMW Select PCP on new cars for the past few years and found it good and hastle free. I'm not so sure though on using it to buy a high value new car as you need a decent deposit to keep the monthlies reasonable and then all you are doing for the first 3 years or so is paying the interest and if giving the car back then you have nothing to show for it, the depreciation is also quite eyewatering. I think its great though if you are planning on buying a very cheap new car on a 0% APR where available. I will be using BMW Select PCP again when I take delivery of the M140i but I think this will be the last time and plan on buying the car off BMW at the end of the 4 year term. Basically when I swapped to the Z4 in 2012 I paid around 3K deposit, then swapping 2 years later to the M135i it cost me 4.5K and then again to the M140i another 4.5K cost to change, however I've added alot more options on the M140i which pushed my deposit up somewhat, so if doing it on a regular basis it does work out expensive. The flipside is I got over 7K off list price off the M140i.

End of the day its new verses second hand, both have plusses and minuses and whether simply you like to have a new car every few years which I do with a warranty. I've been mulling over replacing the Z3 with a cheapo runaround like a Hyundai i10 or Kia Picanto on a PCP which you can do for 80 quid a month or so which I think is cheap motoring and where I think a PCP or leasing can work more in your favour.

The best new car I ever bought with cash was a MINI Cooper S which cost £16800 on the road and 4 years later sold it privately for 13K which I thought was pretty good depreciation wise.

Tim.
 
I've got a few mates in decent jobs where it pays for them to have a lease car with their fuel allowance etc but I often ask why. Its reliablitly they say but each time they get a new car they pay more and more to have the a newer model. They often say but they have option to buy it but never do they just upgrade. The only upside is they get to drive brand new models and don't loose money much on depreciation after selling them. Id always have a used car myself but depends on you.

here's some id probably choose for 14k as 13k sounds unlucky.....
520d
http://www.autotrader.co.uk/classified/advert/201607115752040?search-target=usedcars&make=bmw&model=5_series&price-from=500&price-to=14000&sort=pricedesc&page=1&radius=1500&postcode=b321en&searchcontext=default&onesearchad=new%2Cnearlynew%2Cused&logcode=p&adPos=1
630i
http://www.autotrader.co.uk/classified/advert/201606164991039?search-target=usedcars&make=bmw&model=6_series&price-from=500&price-to=14000&searchcontext=default&radius=1500&postcode=b321en&sort=pricedesc&page=1&onesearchad=new%2Cnearlynew%2Cused&logcode=p&adPos=3
635d
http://www.autotrader.co.uk/classified/advert/201606245234547?search-target=usedcars&make=bmw&model=6_series&price-from=500&price-to=14000&postcode=b321en&radius=1500&page=1&sort=pricedesc&onesearchad=new%2Cnearlynew%2Cused&logcode=p&adPos=7
330d
http://www.autotrader.co.uk/classified/advert/201606164992303/sort/pricedesc/make/bmw/model/3_series/price-from/500/price-to/14000/searchcontext/default/radius/1500/postcode/b321en/onesearchad/new%2Cnearlynew%2Cused/advert-type/ymal/dealer-id/757/usedcars?logcode=flp
 
I quite like the CRV, and looks great in the Back Edition, interiors a bit dark though. We all have our own opinions on new through lease/PCP or used through cash/loan and there really is no right or wrong, just a personal choice. For me I would rather have a new CRV than a six year old car that someone has done something unspeakable with/in. However if I had to have a smaller SUV, I think I would prefer something else like the new Tiguan (receiving very good reviews), X3 or perhaps the new discovery sport, but it would depend on the monthly payments
 
This is a situation I'm going to be in soon, my DD Polo is at 150k miles at 13 years old, owes me absolutely nothing but clearly won't go on forever.

Leasing is something I need to consider, I have to get the mind-set around the car never being mine having never leased a car before, a simple way of me looking at this is that if I get a lease car it'll probably be a much more expensive car than I'd be able to fork our for outright.

Op , I know this doesn't help at all but I'll watch this thread with interest.
 
Completely different class of vehicle but the Mrs was just considering the same thing looking at either a polo or an Ibiza...

She ended up buying the Ibiza just under 3 years old paid the pretty much the full amount on a 0% purchase credit card (less the sale of her old shed) but by going for a second hand car and paying the same monthly payments as with the best finance deal after just over 2 years she owns her car outright so thats a year less of payments to start with...

And if she had gone the finance route the balloon payment at the end to keep the car would have been the same as she has just paid to buy her car so the total cost would have been over double!....

It also helped that the Ibiza hasn't changed at all in the last 3 years

In this case it was a total no brainer to buy used.... On a more expensive car it may skew the other way but never looked into it that much
 
I've had brand new lease cars in the past, and also ones on PCP. As said, depends on what you want to do, ie change regularly or run it and keep for a while. I used to do the sums and work out what the overall cost was over a lease, TBH with some of the discounts given to lease companies by manufacturers, it can often work out cheaper. My next door neighbour is currently 27 months into a lease I sorted for him on a VW Touareg R Line (3.0 Tdi 240bhp) Car was something like £44k list. Specced with no options, it worked out with a deposit of £1047 and 29 months @ £349 both plus VAT, but he's VAT registered like myself, so get it back. Works out that the TCO over the 30 months of £11168. Same car has a guide residual price after 3yrs of around 44%, or £19360 having lost around 26%, £11440 in it's first 12 months alone.

He's had to pay for 1 service and replace 2 tyres, but even so it was a fantastic deal. Just looking at new ones for him, and can get the same car again on a 36 month/30k miles lease for £318!

Now to run it for 30 months, for less than the actual first years depreciation? That is a CHEAP car.

However, I now find myself in the position of not needing (or wanting) to finance cars in any way, as I hate having monthly commitments, other than the mortgage etc, so I now prefer to pay cash for any vehicles I buy. The above example of depreciation therefore now works in my favour, as I'm currently looking at 6 or 7yr old BMW X5 35D's with 7 seats, and they can be had for as little as £10k, on a car that was £50k with options...

Horses for courses lol.

Mike
 
I think most of us have debated this.

Leasing/PCP enables you to jump into new cars for a nice monthly fee - but at the cost of any potential asset build up. (£300/month over 3 years =10k in the toilet)

Buying outright can enable you to build up some equity in something that you can then re-use later. (300/month on a loan over 3 years = 10k worth of asset, less interest+depreciation - assuming you buy low in the depreciation curve)

Leasing/PCP cheap cars can be pretty sensible if it suits your goals/situation. If you're looking to slowly climb the car ladder though, it can be counter productive (unless you intend on earning/spending more in future), much like an interest only mortgage. By leasing/pcping you tend to lock yourself in at around that price level .. unless relatively it's much cheaper than your disposable income etc and you can afford to not care.

There are also some cars that can tick the 'fun' box AND be relatively sensible on the monthly cost - i personally found the m135i to be one of those - but i just wasn't totally sold on it.

I think the best thing to do is map out the costs of both options, and see where it would leave you at the end of the planned lease/pcp period - then you'll know the impact of both options and what your situation is at that point. I have a little spreadsheet to do this (covering depreciation/finance costs whether that's lost interest in savings, or pcp, or lease, or personal loan interest/fueling/insurance/tax/deposits). I found 99% of the time buying used was cheaper, but for some cars the benefits of low hassle/new car the price was comparatively cheap enough to consider versus used.

EDIT: oh and aside from a few other things i forgot - the one thing that i really like about using cash/personal loan is the flexibility it affords, vs being tied into a pcp/lease.
 
Isn't it interest rate related as well? Assuming you have the money, the return is just about 0% for the foreseeable future.
The purchase price of the car is the same from the dealer, whether you lease or not, so no extra discount to be had.

The leasing company will make a profit, so whilst you are getting 0% on your money, you pay them x% for their profit margin.
 
pvr said:
Isn't it interest rate related as well? Assuming you have the money, the return is just about 0% for the foreseeable future.
The purchase price of the car is the same from the dealer, whether you lease or not, so no extra discount to be had.

The leasing company will make a profit, so whilst you are getting 0% on your money, you pay them x% for their profit margin.
Click to expand...


The leasing companies command massive discounts on the vehicles, so much so that it can result in a lower TCO over a given period. The one thing against leases/PCP is that at the end of the term, you have to make a choice as to whether to get another or pay a balloon, whereas with finance the car just becomes yours.

If a 0% deal is offered, then usually it will be at list price, as the "cost" of the finance as it will have to be subsidised to get 0%. This means that using a broker like drive the deal can still actually work out cheaper, even if you are paying interest, as the vehicle cost will be lower. In most cases, believe it or not, the dealer makes MORE from the deal by offering 0% as they get full whack for the car and remove the haggling factor, and the finance "subsidy" ie cost of giving 0% is usually a lot less than the discount that would be given from list price. I speak from experience as 3yrs as a business manager for a large multi franchise dealer in Wigan.

Mike
 
Ducklakeview said:
pvr said:
Isn't it interest rate related as well? Assuming you have the money, the return is just about 0% for the foreseeable future.
The purchase price of the car is the same from the dealer, whether you lease or not, so no extra discount to be had.

The leasing company will make a profit, so whilst you are getting 0% on your money, you pay them x% for their profit margin.
Click to expand...


The leasing companies command massive discounts on the vehicles, so much so that it can result in a lower TCO over a given period. The one thing against leases/PCP is that at the end of the term, you have to make a choice as to whether to get another or pay a balloon, whereas with finance the car just becomes yours.

If a 0% deal is offered, then usually it will be at list price, as the "cost" of the finance as it will have to be subsidised to get 0%. This means that using a broker like drive the deal can still actually work out cheaper, even if you are paying interest, as the vehicle cost will be lower. In most cases, believe it or not, the dealer makes MORE from the deal by offering 0% as they get full whack for the car and remove the haggling factor, and the finance "subsidy" ie cost of giving 0% is usually a lot less than the discount that would be given from list price. I speak from experience as 3yrs as a business manager for a large multi franchise dealer in Wigan.

Mike
Click to expand...

Some good points I hadn't thought about before. Factual and informative info from someone who's been on the inside :thumbsup:
 
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