Buy outright, Lease or finance?

I think already prices are coming down and in term of finance deals are good right now.
 
Thought I would wake up this thread from last year as I know many people still unsure how best to get a car.

This is the best video I have seen on subject, giving a good example with actual figures of the options that are open and the huge variation on prices

 
I was just looking at lease deals. I've never leased a car so committing to paying £250+ a month is a little daunting as generally I prefer saving up and buying things outright.

I bought a 1 year old car for my wife last year as we saved up the cash for it but our 2nd car is a 13 year old Vauxhall Zafira which is becoming a little embarrassing to drive but, as we are all aware, buying 2nd hand cars is expensive and you really need £12k+ just to get anything slightly decent.

So would I be better off leasing?
I'm thinking maybe a T-Roc or Skoda Octavia
 
It's all down to what you can afford and are prepared to pay.

You might be able to afford those cars now, but other than repairs and normal costs has your Zafira cost you anything in the last few years. At the age it is I'm guessing you've had no car payments to pay on it?

Whereas a new leased car is going to cost you every month for the same duration of time. Just every 3/4 years or so you'll get a new car.

There's also quite a difference in the size of those cars. Looking at your quoted price of ~£250 month I'm not sure if I'd go for the Skoda as it will only have a 1.0 Litre engine.

To me, and others may disagree, that's a very small engine for the size of the car.
 
I few years ago i got a brand new ('66 plate) Jaguar XE 2.0l Diesel on lease that cost me about £325 per month (4 year lease).
I worked out when i went back it cost me almost £15,600 which i had absolutely nothing to show for.

This time (in 2020) i got a £16,000 4 year bank loan and bought a 2016 Mercedes E350d (convertible) which was costing me around the same per month (about £330).
When it was due to be paid off * the car will be 10 years old and still be worth around £10,000 which i can put towards a new car.

So getting a lease car, yes you will get a brand new car, but will have nothing to show for it when it goes back, which i found hard to stomach. After the 3 years, its still your responsibility to get it through an MOT and you still have to pay for servicing too (which has to be kept up to date).

* i have actually already paid it off early.
 
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New car deals are coming back in now, particularly if you have a decent motor to trade in. We've just replaced our 20 plate Puma with a brand new one without seeing any increase in PCP cost. That's with higher interest rates and purchase costs. The car was built to order, but we got an early build slot, and the dealer admitted that he'd already got a buyer for our old one, such is the strength of the second hand market.
 
without seeing any increase in PCP cost.
Except another 3 years of monthlies......

Our friends have just handed back their Mini on PCP and got £4k back in equity such is the strength of the used car demand. They have bought a 12reg Astra until the market settles.

PCPs and leases are high at the moment due to the uncertainty in the motor trade so they need to hedge their bets on the GFV, which will likely tumble.
 
Except another 3 years of monthlies......

Our friends have just handed back their Mini on PCP and got £4k back in equity such is the strength of the used car demand. They have bought a 12reg Astra until the market settles.

PCPs and leases are high at the moment due to the uncertainty in the motor trade so they need to hedge their bets on the GFV, which will likely tumble.
That's fine, but would I rather pay £239 per month for a brand new car, with full manufacturer warranty and support, including breakdown cover and replacement car, or knock around in a 10 year old banger which I will need to repair if (when) it breaks down, sort out the MOT, breakdown cover, replacement car etc.

This car is used by my wife, who uses it to look after her elderly father, so reliability and a high level of support is high on our requirements. I have a leased Golf GTD, but will be swapping it for an EV on salary sacrifice once it's up for renewal. I can get a Volvo XC40 EV fully insured and all consumables covered for less than £400 per month net. That's less than I would pay on a bank loan, traditional lease or PCP.
 
That's fine, but would I rather pay £239 per month for a brand new car, with full manufacturer warranty and support, including breakdown cover and replacement car, or knock around in a 10 year old banger which I will need to repair if (when) it breaks down, sort out the MOT, breakdown cover, replacement car etc.

This car is used by my wife, who uses it to look after her elderly father, so reliability and a high level of support is high on our requirements. I have a leased Golf GTD, but will be swapping it for an EV on salary sacrifice once it's up for renewal. I can get a Volvo XC40 EV fully insured and all consumables covered for less than £400 per month net. That's less than I would pay on a bank loan, traditional lease or PCP.
I think car (un)reliability is rather over egged.

I have a 64 Reg Octavia which is coming up to 100k. It has needed a single rear wheel bearing which cost me £35 in all those miles (Previous "owner" is my best mate).

Costs £30 a year to tax, £40 to MOT (which didn't have a single advisory), £180 a year to insure and I have breakdown on my bank account.

It is also worth £500 less than I paid for it 5years ago with 48k on the clock.

I suppose I have the assurance of a "spare" car if it did need work in a garage, but my experience of dealers in the past does leave a lot to be desired with them never having courtesy cars available and repairs taking much longer than they quote or not being able to fix them fully requiring multiple visits......VW and BMW, I am looking at you!

Just watch how your pension contributions are affected on a sal sac lease scheme, especially if it is NHS.
 
I think car (un)reliability is rather over egged.

I have a 64 Reg Octavia which is coming up to 100k. It has needed a single rear wheel bearing which cost me £35 in all those miles (Previous "owner" is my best mate).

Costs £30 a year to tax, £40 to MOT (which didn't have a single advisory), £180 a year to insure and I have breakdown on my bank account.

It is also worth £500 less than I paid for it 5years ago with 48k on the clock.

I suppose I have the assurance of a "spare" car if it did need work in a garage, but my experience of dealers in the past does leave a lot to be desired with them never having courtesy cars available and repairs taking much longer than they quote or not being able to fix them fully requiring multiple visits......VW and BMW, I am looking at you!

Just watch how your pension contributions are affected on a sal sac lease scheme, especially if it is NHS.
The Ford warranty scheme is one of the better ones. A courtesy car or free hire car is provided for all warranty work, and it gets completed as a priority. On a previous Ford, we had a dodgy starter motor, and they repaired it in good time.

In terms of pension, yes, that's accounted for. We have Sal Sac for pension in place, so it gets taken first, before the reduction for the car.
 
The Ford warranty scheme is one of the better ones. A courtesy car or free hire car is provided for all warranty work, and it gets completed as a priority. On a previous Ford, we had a dodgy starter motor, and they repaired it in good time.

In terms of pension, yes, that's accounted for. We have Sal Sac for pension in place, so it gets taken first, before the reduction for the car.
Another option is extension of manufacturers warranty (not aftermarket ones). I bought my Golf R with 5yrs warranty. She was 7 years old yesterday and I've extended the warranty for £220 a year with a £50 excess. Mostly due to the fact it has a large turbo, a haldex and DSG, none of which are cheap or easy repairs.

I took said Golf in for a service on Monday and I was sat near the service desk drinking the free coffee and I was shocked at the calls some of the service people were making ripping people off on things like tyres, brakes, headlight alignment etc which a. Probably wasn't needed and b. Can be done for a fraction of the cost elsewhere.

I was advised I need new tyres as they're down to 4mm. I advised the adviser it passed an MOT last week with no advisories and a tyre that has 8-9mm new and a legal limit of 1.6mm is only around 50% worn. He went quiet after that.
 
Another option is extension of manufacturers warranty (not aftermarket ones). I bought my Golf R with 5yrs warranty. She was 7 years old yesterday and I've extended the warranty for £220 a year with a £50 excess. Mostly due to the fact it has a large turbo, a haldex and DSG, none of which are cheap or easy repairs.

I took said Golf in for a service on Monday and I was sat near the service desk drinking the free coffee and I was shocked at the calls some of the service people were making ripping people off on things like tyres, brakes, headlight alignment etc which a. Probably wasn't needed and b. Can be done for a fraction of the cost elsewhere.

I was advised I need new tyres as they're down to 4mm. I advised the adviser it passed an MOT last week with no advisories and a tyre that has 8-9mm new and a legal limit of 1.6mm is only around 50% worn. He went quiet after that.
Yep, never had much confidence in VW and my current Golf will be my last. It's had software issues with the self driving (Travel Assist) functionality, whereby it goes into Failsafe mode and decides all speeds are in KPH. This leads to it slamming on the brakes to go from 70MPH to 70KPH (44 MPH), which is not fun. It also refuses to overtake cars, as it thinks it's in Germany and we're trying to undertake cars. Both now fixed with a software update, but it took them 14 months to get there.

I've heard them tell people similar things for tyres and wiper blades, but main stealers are not alone. Auto Windscreens were offering blades for £40 when I had a windscreen changed, which was more than VW wanted for them!
 
Yep, never had much confidence in VW and my current Golf will be my last. It's had software issues with the self driving (Travel Assist) functionality, whereby it goes into Failsafe mode and decides all speeds are in KPH. This leads to it slamming on the brakes to go from 70MPH to 70KPH (44 MPH), which is not fun. It also refuses to overtake cars, as it thinks it's in Germany and we're trying to undertake cars. Both now fixed with a software update, but it took them 14 months to get there.

I've heard them tell people similar things for tyres and wiper blades, but main stealers are not alone. Auto Windscreens were offering blades for £40 when I had a windscreen changed, which was more than VW wanted for them!
No issues with the ACC on mine or my other halfs old 18reg Passat (Passat doesn't let you undertake but the Golf does!). I guess they have made it more software based since the launch of the ID models, which VW have really hashed up.

I have been a lifelong VW fan and I didn't even bother to test drive the ID.4/5 as it is truly a bad car with poor efficiency and appalling infotainment system which is downright dangerous.

On the flip side, for service, I had a Tesla mobile tech come out to me yesterday (no waiting around a dealer) to replace a faulty wing mirror and he was the nicest guy you could meet. Makes you wonder why other manufacturers don't have mobile techs for the simpler "on the drive" jobs.
 
No issues with the ACC on mine or my other halfs old 18reg Passat (Passat doesn't let you undertake but the Golf does!). I guess they have made it more software based since the launch of the ID models, which VW have really hashed up.

I have been a lifelong VW fan and I didn't even bother to test drive the ID.4/5 as it is truly a bad car with poor efficiency and appalling infotainment system which is downright dangerous.

On the flip side, for service, I had a Tesla mobile tech come out to me yesterday (no waiting around a dealer) to replace a faulty wing mirror and he was the nicest guy you could meet. Makes you wonder why other manufacturers don't have mobile techs for the simpler "on the drive" jobs.
Yep, my Passat was fine for ACC, but didn't have traffic sign recognition. The Golf has Travel and Traffic Jam Assist, so quite happily drives itself on dual carriageways and in heavy traffic.
 
Bump for this, im thinking of a new car to replace my 2013 focus st estate. Its done ove 110k so I wouldnt get a good amount for it. Ive been thinking of leasing, but having never done it, its a bit daunting tbh…any tips and advice?
 
Bump for this, im thinking of a new car to replace my 2013 focus st estate. Its done ove 110k so I wouldnt get a good amount for it. Ive been thinking of leasing, but having never done it, its a bit daunting tbh…any tips and advice?
I would say to make sure you don't put too large a deposit in if you are looking to Contract Hire (where you basically agree to hire the car for a set number of years). Many deals are advertised with 9 or 12 months as an initial rental but this really doesn't make any sense to do when contract hire is involved. For leasing (PCP) you have an ownership stake in the car so a larger deposit can be useful if you wish to lower the monthly payments. However, be aware that a large deposit at the start of the deal does not mean a large deposit at the end of the deal - the deposit will be reduced due to the reduction in the monthly payments. Your percentage of equity in the car remains the same at the end of the deal whether you have a large deposit or not.

Most importantly you need to add up exactly how much car will cost you over the term of the deal. There is no point paying 25k over three years for a 40k car contract hire for example. I cannot stress enough how important it is to know exactly how much the total cost of the deal is. It is very easy to get sucked into the 'it's only x amount more per month' and you end up paying much more for the car than you want to.

The other thing to look for is whether you can get your vehicle nearly new for much cheaper. Some models have good supply and it means you can get a 2 year old car for half price and you can then get a bank loan rather than pay the relatively high aprs that dealers are offering at the moment. Yes, there are some good deals on finance out there, but they tend to be attached to 30% deposits, etc.

And finally, do you want ownership (or potential ownership ) of your car? Personal Contract Hire means no ownership and it gets handed back no matter what. PCH also has penalties for handing back early - they will want the remainder of the payments as well if you end early. PCP means you have the option of changing any time in the term of the contract by getting a settlement figure (like HP), trading the car in at the end of the term and having a guaranteed value for it (it may be worth more then this but unlikely) or just handing the car back with no penalty as long as you are within the mileage limit you set at the start of the term.

Don't know whether this helps, but above all, look at the cost of the car you want to buy and then see the options available regarding finance. I find Carwow very useful as you can put in the exact spec of the car you want and 5 dealers will send their best price along with finance options so you can see how much the car would cost along with the finance costs which you can adjust for deposit amount, term and mileage.
 
With leases, the deposit is actually initial rental, so the total cost is usually exactly the same over the life of the agreement.

We recently secured a new Ford Puma on a 2 year PCP for 1.9% APR. The same car on a 3 year PCP was 5.3%, so worth shopping around. We're paying £270 per month for ours, with no initial deposit, as the RVs outstripped the guaranteed future value and left some equity in the previous car. That one was on a 3 year deal at £278 per month and a £1000 deposit.
 
Thanks for that, lots to consider.
Just something else to consider: Are you at risk if the mortgage rate goes up further during the next 2-3 years you 'own' this lease car? You're tied into the payments, with penalties for early cancelation if you find you're struggling to afford the payments and you can't just take it down to WBAC (though I suspect used prices for nearly new cars might start to dip more if a recession does hit).

Caveat: I can't get my head around paying thousands to then hand it back after 2-3 years, so I'm not the target audience for PCP, leasing, etc as I prefer to run an older car that I've paid for.
 
Just something else to consider: Are you at risk if the mortgage rate goes up further during the next 2-3 years you 'own' this lease car? You're tied into the payments, with penalties for early cancelation if you find you're struggling to afford the payments and you can't just take it down to WBAC (though I suspect used prices for nearly new cars might start to dip more if a recession does hit).

Caveat: I can't get my head around paying thousands to then hand it back after 2-3 years, so I'm not the target audience for PCP, leasing, etc as I prefer to run an older car that I've paid for.
It depends upon whether you want to drive around in a brand new car, which has a full 3 year warranty and much lower service costs, or buy an older vehicle with little or no manufacturer warranty.

Although you are paying out for no return, if you buy a car outright, then you have depreciation, repairs and potentially an older car with less useful tech like Android Auto, streaming etc.
 
Just something else to consider: Are you at risk if the mortgage rate goes up further during the next 2-3 years you 'own' this lease car? You're tied into the payments, with penalties for early cancelation if you find you're struggling to afford the payments and you can't just take it down to WBAC (though I suspect used prices for nearly new cars might start to dip more if a recession does hit).

Caveat: I can't get my head around paying thousands to then hand it back after 2-3 years, so I'm not the target audience for PCP, leasing, etc as I prefer to run an older car that I've paid for.
Most agreements you can hand back the car past about half way though without issue, just check your agreement before signing. Owning a car has the downside that you have to sell it before purchasing a new one, that can be disappointing. So it is swing and round about as to which is the best option.
 
Most agreements you can hand back the car past about half way though without issue, just check your agreement before signing. Owning a car has the downside that you have to sell it before purchasing a new one, that can be disappointing. So it is swing and round about as to which is the best option.

PCP you can VT at the 50% of total payments including balloon owing which on a 48 month PCP isn't usually until month 38-40 if you put minimal deposit down. You can though on a PCP sell the car and settle any outstanding finance, current market you may be in positive equity and come out on top of break even earlier in the agreement.

PCH or lease is a whole different ball game, your tied in and if you want out the early termination can be up to 100% of outstanding payments.
 
Owning a car has the downside that you have to sell it before purchasing a new one, that can be disappointing. So it is swing and round about as to which is the best option.
I didn't mean to rattle those who are pro lease/PCP, just thought it only fair to caveat my comments. Committing to large monthly payments just to have a new car on the drive might not be the most important thing if someone is struggling with a big mortgage/big increases in the next year.

I never buy newer than about 5-6 years so it's not an issue to me about having the latest gizmos. I did have new company cars regularly when I was working, but we always bought older cars for the rest of the family. As per my other thread I do all my own DIY as well, so I'm aware I'm an outside case, but I do believe that having a lot of stuck 'on tick' might prove to be a problem for some households in the next few years. Cheap finance has trapped people into having to replace with a new car every 2-3 years, great while the rates are low, but they won't stay that way for long now I suspect...
 
Just something else to consider: Are you at risk if the mortgage rate goes up further during the next 2-3 years you 'own' this lease car? You're tied into the payments, with penalties for early cancelation if you find you're struggling to afford the payments and you can't just take it down to WBAC (though I suspect used prices for nearly new cars might start to dip more if a recession does hit).

Caveat: I can't get my head around paying thousands to then hand it back after 2-3 years, so I'm not the target audience for PCP, leasing, etc as I prefer to run an older car that I've paid for.
No im not at risk with mortgage rates now.
 
I didn't mean to rattle those who are pro lease/PCP, just thought it only fair to caveat my comments. Committing to large monthly payments just to have a new car on the drive might not be the most important thing if someone is struggling with a big mortgage/big increases in the next year.

I never buy newer than about 5-6 years so it's not an issue to me about having the latest gizmos. I did have new company cars regularly when I was working, but we always bought older cars for the rest of the family. As per my other thread I do all my own DIY as well, so I'm aware I'm an outside case, but I do believe that having a lot of stuck 'on tick' might prove to be a problem for some households in the next few years. Cheap finance has trapped people into having to replace with a new car every 2-3 years, great while the rates are low, but they won't stay that way for long now I suspect...
I would say no one should be at risk if they have done their some. It does seam to be odd to me that when rate were low people locked in for 2 years. I was locked in for 10, but this ends soon so I have chosen to lock in for 5 at 4.28% no great issue back in 2019 the BOE had been warning us of rate hikes.
Car wise it a simple case that if you have 20k in the bank you can spend in one go or in 36 goes you can take your pick. Either approach is fine and have done both. It working well having the money in the chip paying monthly at 4.21 which is close to the new mortgage rate.
You can give the car back at any point and still have the cash in the bank, that’s is as you point out assuming you not over stretched.
 

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