UKC

After 9 years of good service my trusty Jag estate is now costing more to repair than it's worth (clutch, flywheel, drive shafts in the last year) and despite spending £3k last year its broken down once already this year (new steering pump, water pump, pulley assembly) I can feel another drive shaft is on its way out, brakes pads and discs due, and probably exhaust as it's never had one.

So I'm thinking about replacement. Having spent a lot last year I'm some what reduced in capital for the replacement. so I'm thinking of leasing something but as I haven't done this before I'm a bit wary as it seems like a bit too good to be true.

- New Car so latest safety, gadgets etc and in Warranty so only wear and tear maintenance (tyres & pads)
- Fixed cost

So who has leased before? have you done it again? Are they really anal about minor damage e.g. car door dinks etc?

What should I look out for? I understand its quite critical to not go over your agreed mileage

Gap insurance sounds like a must?

I know you can add maintenance contract as well but this seems overkill with an in warranty car doing 10Kmiles a year

Cheers for your help

In reply to balmybaldwin:

Ok. So leasing is simply a different way of borrowing money. As a result you need to know what the interest rate is on the lease and what the residual value is at the end of the lease. Essentially you are paying for the interest and depreciation. This is why they get anal about mileage, dings etc. because their depreciation calc is based on set standards.

Is this a manufacturer's lease or someone else's? Can you buy the car at the end of the lease? How long is the lease period for?

The reason why a lease might look better on the monthly payments is because you aren't building up any equity in the vehicle i.e. If you buy a car over 5 yrs your monthly payments will be higher than if you lease a car over the same period. But if you buy it then at the end of 5 yrs you will have a car to sell whereas if you lease it, you won't.

The problem is that there is a lot of "smoke and mirrors" used by salesmen depending on their targets etc.

IMHO, you are better to buy if you can.

In reply to balmybaldwin:
We've leased a Fiat 500 for the missus for the last 5 years. As you say brand new car with no hassles for breakdown etc. Doubt the maintenance contract is value for money but again it's about paying for convenience. When we traded for a new one 2 years ago she upgraded to a better model which of course means more per month, but hey she's happy. The contract wasnt due for renewal for another year but obviously they're always looking for sales. Downside of course is we will never own the car. But that will work in our favour in the long term.

In reply to balmybaldwin:

Counter intuitively, you will normally access better headline prices for the vehicle by using dealer finance. Paying cash puts you at the mercy of the salesman's negotiating experience, while going the finance route puts the onus on the dealer to produce the best "monthlies"

Of course you will pay interest on the headline value but I suspect the different emphasis has significant benefits to your overall cost.

Mileage and condition are important. They won't accept bald tyres (or budget ones) on hand-back.

In reply to balmybaldwin:
One thing to watch for is this. Often if you lease they will give a substantial discount. Usually, possibly always it is possible to pay of the lease after a short period i.e. a day, week, month. Therefore the lease discount is available if you are financing a purchase, with cash or a bank loan. Also as if they have a discount scheme targeted at certain people, you may be able to wangle onto this.

In reply to Lenin:

I think you might want to give a better explanation of your thoughts here because, from where I'm sitting, this doesn't make any sense.

In reply to balmybaldwin:

Are you definetly doing under 10k a year mileage?

In reply to Removed User:

If you buy Car X it is 20K.
If you lease for 4 years Car X the manufacturer will give an incentive of 1K so car now 19K plus lease cost over 4 years.
They will not give you 1K off if you buy outright.
However if you take the lease for 4 years, you can pay it off after a week or a month. I think it is somnething to do with consumer credit law. The dealer will not tell you about this unless pushed. Or that is what I found.

In reply to Lenin:

But there is no advantage. Paying off a lease contract doesn't give you ownership. So if you had no car, then leased one for a discounted price, then paid it off, you'd still have no car

In reply to Lenin:

It's a lease, not hire purchase/finance. You don't get to own the car.

In reply to Removed User:

Whatever. I am telling the OP a route to a potential discount. I may have explained it badly.

In reply to balmybaldwin:

I bought a new car in 2011 on finance, which isn't dissimilar to hire purchase, and I regretted it. Essentially a three year contract of oayments, then a balloon payment at the end which they claim would be the minimum value of the car in three years. I could either pay the balloon, or sell them the car back for that minimum value (if worth more, I'd keep the profit). I'd say that was a much better option than what my parents did - a three year lease. They would make payments each month to lease the car, they had option to buy at the end, or they could just hand it back.
They were stuck to a maximum mileage allowance, and on hand over, they were very strict with dings and such.

The advantages are, as you've said, you get a nice new car, don't have to worry about maintenance as much etc. but you never own it, you've got nothing to show for the money you've paid at the end, it's like renting a house. Wouldn't you rather just buy?

Then you've got the disadvantages of a new car, leasing or buying on finance, you'll be taking a huge loss in depreciation, which simply isn't worth it when you look at alternatives.

You're stuck with that car, leasing will charge you for early termination, finance deals let you sell back at any point, but you basically spend the first two years in negative equity, so selling back will cost you dearly.

I mentioned the house thing, you'd much rather get a mortgage and buy a house, and at least have something to show for what you're paying towards? Do the same for a car.

New cars are great, but you can easily find nearly new cars. Ex display models at dealers, or even just 6 months old used ones. You get just as much car, with a hugely reduced price tag simply because it's not new. Let someone else pay the depreciation for you.

Get a loan from the bank, and buy a nearly new car. You'll be paying the same monthly fee essentially as if you were on a lease, but you own the car. A car that's just as good, and you haven't paid over the odds for it.

Ime, with finance, i wanted rid of the car after a year, but I couldn't private sell as it had finance markers on it, so I had to sell back to the dealer at a disappointingly small price. I then used that to pay off the finance, but was a grand in neg eq, so had to deal with that.

In my parents experience, with lease, they had three years of hassle free motoring, in a nice car, but then had to pay towards cosmetic repairs and hand back fees, and had nothing to show for what they had paid over the three years c.£9000.

In reply to Tomtom:


I guess if they had bought 'a nice car' the deprecation over the three years could well have been of the same order? No free lunches out there!

Chris

In reply to Chris Craggs:


Quite.

What has put me off getting a "nice " car and especially a lease one if having to look after the cosmetics.

Off road driving, camping gear , sleeping in it, ice axes , mountain bikes , split coffee, dropped chips and new cars do not go together very well. Every scratch, stain or broken bit of the interior is going to reduce your residual value.

In reply to neilh:

I'm not, but I could easily cut it down I do about 16K a year but at least 8k of that is work and I can use a pool car if I wish. It's something I'm thinking about - would I rather pay the extra and be able to use my own car for work (and get expenses per mile) or use a work car

Thanks for all the advice.

In reply to Tomtom:



Yes that makes sense for a house which maintains (or appreciates) value, the problem I see is after 100K miles the car is again not worth much so your equity evaporates


Did this with my current car - 19050 for an 18 month old Jag with 20 miles on the clock (yes just 20) list price £38K for same model and options new. 7 years later and 108K miles and its worth £3K at best. (and costing me 3K a year to maintain on current form)
The car before that was a really poor purchase - a new Mazda RX8 that I traded in for half its value 2 years later as the fuel costs had escalated to £300 per month (petrol was 1.40 + litre and climbing and the RX8 struggles to do 20 mpg)

Quite frankly I'm a bit disillusioned about owning a car as the Jag (xtype diesel - so not fancy just a mondeo in a frock) was meant to go on until at least 150K miles before it became un economic to fix - and I don't use the main dealer - just a local garage I trust