Car purchase vs lease .....

R

Rob_benton

Member
 Bedfordshire
Hi

I was hoping someone might be able to explain leasing benefits to me.

I'm looking at a 320d msport 2012 touring 30,000 miles for £20,000

After the part ex I would be looking to get a loan for £12,000 over 4 years. My wife drives 15,000 a year.

A loan would be approx £260 a month.

What's the craze with lease ?

I can get a 330d msport touring for 4 years, 15k a year, deposit £2000 and £400 a month.

If I brought a 320d, after 4 years it might still be worth £8,000.
With a lease car I would have nothing.

Am I missing something regarding leasing deals?

Any advice would be appreciated .

Thanks Rob
 
Hi Rob

Well, to start with I'd try and get a level playing field for comparison... You're comparing a 4 year old 320 with a new 330. And you're comparing monthly costs with a 2k deposit vs an 8k deposit. And also I think the valuation of an 8 year old 320D with 90k on it looks wrong, £8000 seems very optimistic.

Another way of looking at it would be that for only an extra 150 a month you've got a stonking new 330, £6k in the bank and no warranty worries.
 
It's all about the convenience and if the numbers work for you. I'm about to take delivery of my second lease, I looked at used cars in the £15-20k range but leasing worked out cheaper without the hassle of being tied into 4-5 year finance deals.
You also get brand new cars with warranty, options are expensive on lease though.
 
Basically as a general rule leasing is cheaper, fleet discounts come into play with leasing that you don't generally get in the dealer on a PCP or straight finance deal.

Good example of this recently a friend of mine walked in to a local renault dealership after a new top spec Kadjar (£27K). He had already got a few solid quotes from various fleet/lease companys at around the £290-300 mark on a 3+36 year 15k annual mileage deal. Renault came back with a price of £385 a month on a 3 year PCP with a £1,000 deposit 15k a year.
He then told them he was going down the lease route and they said they could also do a contract hire deal for him, matching the terms of his best quote for a lease. The sales guy even explained that on a PCP there is only dealer level discount available, on contract hire the manufacturer fleet discount comes into play, hence the massive difference in price.

The proof in the pudding so to speak, check it out for yourself but like for like deposit, on new vehicles contract hire is always cheaper. So if you want new and will only keep a car for 3 or 4 years it becomes a bit of a no brainer really.

Now if you think you may want to keep hold of a car longer than that PCP comes back into play, as with contract hire you cant generally purchase the vehicle at the end of the lease. Although sometime you can, depends on the flexibility of the lease company etc.
 
Rob
As a general response you're not missing much.
All variants of PCP, leases, long term hire, etc. get people into cars they could not otherwise afford compared to buying them cash or loan. In essence you are either just paying for the depreciation on the car (plus interest, profit, etc.) or deferring the purchase to a later date (end of PCP lump sum)

Great for garages as they shift metal and retain customers who at the end of a PCP can't pay the final instalment, so enter a new PCP. They also sell on repayment not costs, because people don't think about it.

In your example the dealer can get you into a new better BMW for just £140/mth, extra...easy sell. Project forward and you then have to start again or in the case of the purchase own some sort of asset.

No surprise that as people want great cars that some 85% of new cars are now on leases or PCP

Don't take any of the above as cynical - I'm a consumer finance banker
 
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