leasing: 9+23, 6+23, 3+23?

[wemorgan]

Playing (not very seriously) with the idea of leasing a small cheap family car for a couple of years.

Options are: 9+23, 6+23, 3+23. But when you add up the total amount paid, they all arrive at the same value. So the 3+23 looks best deal. But I thought the 9+23 were meant to be cheaper overall.

Is this just an anomaly with the car I'm looking at or is this always the case?

 

[wemorgan]

anyone?

 

[Deleted member 37751]

Common sense says that the more you pay upfront, the less interest you should pay over the duration of the loan, making that the cheaper option.

Obviously not in this case though, maybe they genuinely believe that no-one will work out the final figures?

 

[Carrsey]

Never done leasing or even looked at it, am i right in thinking the first number (9+ or 6+) is the number of monthly payments you pay upfront as a deposit..

 

[wemorgan]

Never done leasing or even looked at it, am i right in thinking the first number (9+ or 6+) is the number of monthly payments you pay upfront as a deposit..

yes that's correct.

One example I've seen

£197 (9+35) = £8668
£211 (6+35) = £8651
£228 (3+35) = £8664

who would ever sign the 9+35 deal with those numbers?

 

[flango]

I'm just looking at one at the moment for my daughter as our company has been offered an exclusive deal by Fiat/Alfa Romeo as we are a major supplier just need to get my head around the myriad of ways of doing it, but on this scheme the greater the up front payment the less you pay overall so as you say the 9+23 should be the cheapest option in terms of overall spend, strange they all end up at the same total spend

 

[Charles Morgan]

If all the sums add up to the same figure and you intend to keep it full term, then pay the one with the least upfront. Then you will be better off by some tiny amount of interest you gain by having your money for longer on average. If you give me the payment and interest figures for the largest upfront and the smallest upfront, I can calculate the number for you easily (simple NPV calculation).

Of course, if you cancel, you will have a higher termination sum, which might then mean you need to worry about gap insurance in the event it is nicked or written off. So if you buy that you might be worse off.

 

[Dryce]

Never done leasing or even looked at it, am i right in thinking the first number (9+ or 6+) is the number of monthly payments you pay upfront as a deposit..

They're usually described as say 6+35. So that's 6 months rental up front as first payment followed by 35 payments. The actual term is 36 months.

There may be some additional fees put in for 'admin' at the start and for termination depending on who you are dealing with. If looking at deals then watch for these.

Note that they are generally quoted without VAT.

Watch for mileage limits - on low monthly headline deals they're often 8K per year (or sometimes even less).

Leasing deals can vary widely in terms of costs for exactly the same car. If you trawl the sites on the internet then some of the offers on the same site may be very very good - others on the sams site very poor. Speak to a dealer and they may have their own specials that are much better - they may not be advertised to personal customers because they are done through the business dept but can still be available to private customers.

Even where there is a stated deal it may still be negotiable on the mileage and monthly. It's always worth asking. Don't ask don't get.

 

[Carrsey]

yes that's correct.

One example I've seen

£197 (9+35) = £8668
£211 (6+35) = £8651
£228 (3+35) = £8664

who would ever sign the 9+35 deal with those numbers?

The only advantage is if you have the money to put down you can save £31 a month... but is it worth the extra 1200 up front..

 

[wemorgan]

Of course, if you cancel, you will have a higher termination sum, which might then mean you need to worry about gap insurance in the event it is nicked or written off. So if you buy that you might be worse off.

Interesting point. Is GAP insurance a requirement/advised when leasing cars. I've never seen the value of it myself. Since I wouldn't own the car, if it is written off then the insurance company would replace it with a similar car which the lease company would take back at the end of the lease term. Is that correct?

 

[Dryce]

Interesting point. Is GAP insurance a requirement/advised when leasing cars. I've never seen the value of it myself. Since I wouldn't own the car, if it is written off then the insurance company would replace it with a similar car which the lease company would take back at the end of the lease term. Is that correct?

Situation with lease cars is a bit different.

You're liable for the contract payments. So if the car is written off or a complete loss then the money goes to the finance company for the value of the car. They then want the rest of their money.

Bear in mind that on high end cars lease payments may be apparently less than the depreciation.

Situation is also complicated by the fact that insurer may offer new replacement car in first year. So technically the finance company shouldn't care if it gets an identical replacement vehicle assigned to as a replacement.

There are GAP insurance products specifically aimed at this type of purchase - where they will cover the cost of terminating the lease over and above what your insurer has coughed.

 

[moff]

3+23/36/48 everytime.

Lower deposit for me.

GAP seems to be quite expensive and as my car is a 2 year lease I'm not going to bother.

Having said that should I or someone total my car year 2 I will no doubt have to fund the difference in value.

Pretty similar with PCP or HP though... the only difference there being if you are 50% through payment you can voluntary terminate but you can't with a contract hire / lease.

 

[moff]

My contract lease is through www.fleetprices.co.uk and then the finance is through MBFS, I've checked the mileage charge and it's 9p per mile which is acceptable to me e.g. 4000 miles over = £360

 

[wemorgan]

Situation with lease cars is a bit different.

You're liable for the contract payments. So if the car is written off or a complete loss then the money goes to the finance company for the value of the car. They then want the rest of their money.

I'm still confused why a total loss accident has to result in a cash payout. Why will the insurance company not allow a replacement with a like vehicle?

 

[Carrsey]

I'm still confused why a total loss accident has to result in a cash payout. Why will the insurance company not allow a replacement with a like vehicle?

The insurance can supply a new car if it is under a certain age, (needs to be almost new) other than that they will pay out the market value for your car. With depreciation this could be a lot less than you still have left to pay..

 

[Charles Morgan]

I suspect its because of a variety of reasons - lease companies don't want to get into a haggle about what is a like vehicle - they underwrote a specific vehicle which has been priced accordingly, they would need to check and agree its condition, the provider of the money would have to agree, the lessee would have to agree etc etc. Lots of admin hassle compared to a nice profitable lease termination.

It's just easier to terminate the lease and get the money back.

 

[wemorgan]

The insurance can supply a new car if it is under a certain age, (needs to be almost new) other than that they will pay out the market value for your car. With depreciation this could be a lot less than you still have left to pay..

But if the market value enables me to then buy a virtually identical car am I not allowed to continue the lease but with this replacement car?

 

[Dryce]

But if the market value enables me to then buy a virtually identical car am I not allowed to continue the lease but with this replacement car?

The technicality is that the lease is tied to a specific asset.

You'd think the finance company would just replace the the old asset with the new one and continue the agreement. But they seem to find it hard to do that. I've seen one owner persuade his insurer not to write off his 6 month old car because repairing it meant the agreement continued because and he couldn't afford sorting out the remaining 3.5 years on the agreement.

 

[wemorgan]

It's interesting reading this, though ultimately the chances of an accident causing a write-off are slim (*touch wood). I doubt I'd take GAP insurance as the premiums seems expensive for the sums being covered. Also, if at all, I'd only sign a 24 month lease, so limiting my exposure.

Food for thought at least.

The SLK 250 CDI for £300 (3+23) is tempting me.

 

[Carrsey]

Would it not be cheaper to do a PCP on a second hand one at a dealers, or do they not do them on second hand..