Leasing, PCP etc vs outright purchase

[harvin1975]

Hi - have bought my new car through outright purchase. But curious to find out how much it would've cost per month to have same car for 3 or 4 years.
I bought outright as I usually keep my cars a long time - however, never considered cost of shorter term alternatives.

For those in the know, can you get a price for the below?
e250 Petrol estate
AMG Night Edition
Premium Plus
Hyacinth Red
Airmatic
Driver Assistance Package
Surround Camera
Privacy Glass

Many thanks.

 

[Giantvanman]

Try the "what do you want to know" thread, run by an MB dealer employee.

 

[Red C220]

There are sometimes finance arrangements that save you money, but these are generally ones that involve a finance contribution by Mercedes as an incentive to buy the car.

If you sit and do the maths it can work in your favour.

It's rare (but not impossible) that leases or contract hire or PCP is cheaper than buying outright if there is a small deposit and regular monthly payments.

I'm buying an MB that the moment which won't arrive until next year and I have a number of options including paying for it outright.

However if I pay outright I lose some of the deposit contribution that's coming from MB Finance.

So to that end I've figured out if I pay a "deposit" that is equal to the purchase price less the balloon payment I end up with a nominal monthly payment that even if I allowed it to run 36 months would still be less than the contribution being offered.

Of course I could pay the whole lot off in 14 days after I bought and save even more.

Fundamentally if there's a finance incentive it can sometimes pay to take finance, in most other cases cash is still cheaper ignoring what you would be doing with that cash if it weren't tied up in a car.

 

[Peter DLM]

I don't think I've seen any finance product that beats cash for a 4 year ownership proposition, there may be some however, just that I've not seen any.

I have seen plenty of 2 year deals that does make financial sense to PCP/Lease if you don't want to keep it instead of using cash.

 

[Deane x]

Hi - have bought my new car through outright purchase. But curious to find out how much it would've cost per month to have same car for 3 or 4 years.
I bought outright as I usually keep my cars a long time - however, never considered cost of shorter term alternatives.

For those in the know, can you get a price for the below?
e250 Petrol estate
AMG Night Edition
Premium Plus
Hyacinth Red
Airmatic
Driver Assistance Package
Surround Camera
Privacy Glass

Many thanks.

by out right purchase do you mean cash no finance no loan ? Not sure if this is any thing to go by but my C350e is leased with NHS fleet and is going to cost 15k for 3 years and that comes with insurance for 5 people ,servicing and so on .I just have to put in fuel in which I think the car will lose more then 15k in 3 years

 

[Deleted member 6183]

While some deals can be good or bad value, most visibly measured by interest rate, it is individual circumstances which will dictate whether one purchase is most suitable to you over another. Some may not have £30 or £40k sitting in the bank to buy a car, some will prefer to invest in a business, some live their life month by month and some receive a car allowance after years of using company cars so are looking what to buy with their monthly allowance.

What doesn't make this process any easier is that the dealer will always try and push you down the finance route as they will make more profit this way, that is the ONLY reason that they do this.

It's a shame in some ways that car finance is not better regulated so that the sales guys would need to show clear reasoning behind their advice to buy via finance rather than cash to include cost to bail out of a finance agreement.

 

[Dryce]

Hi - have bought my new car through outright purchase. But curious to find out how much it would've cost per month to have same car for 3 or 4 years.

With PCP deals it tends to be a mixture of deposit contribution and artificial inflation of the GFV that gives a low monthly - where the GFV is an invention to conceal the discount on list when manufacturers are being aggressive.

With contract hire there are sometimes crazy deals on some models where the monthly is lower than the rate of depreciation - even after other discounts for cash/finance - and taking into account the initial rental. BUT. You get whacked disproportionately with any additional options - and these can rapidly reduce a headline deal that looked great to something that looks expensive.

So beware that there isn't a simple answer and that no matter what great deal you get using purchase, traditional finance, PCP, or contract hire - there's always a better looking one you can convince yourself that you missed!

 

[harvin1975]

by out right purchase do you mean cash no finance no loan ? Not sure if this is any thing to go by but my C350e is leased with NHS fleet and is going to cost 15k for 3 years and that comes with insurance for 5 people ,servicing and so on .I just have to put in fuel in which I think the car will lose more then 15k in 3 years

Thanks all for your responses.

After some hard figures.

Deane - above is useful. Basically breaks down to £420/month + fuel.
That is cheap for what I believe is a ~40k car. I think I may consider leasing next time round.
I was fortunate to have some cash not tied up in investments that funded my current car - so bought outright with a small loan.

 

[Deane x]

Thanks all for your responses.

After some hard figures.

Deane - above is useful. Basically breaks down to £420/month + fuel.
That is cheap for what I believe is a ~40k car. I think I may consider leasing next time round.
I was fortunate to have some cash not tied up in investments that funded my current car - so bought outright with a small loan.

I don't think other leases are as cheap as NHS fleet tho ..but you will need to work for NHS ...yes it is good 45k car at £416 /month but the wait is not so much fun tho

 

[B33fy]

To lease through NHS solutions at 10K mles a year the e class specced as you have listed, would be in the region of £700- £750 a month. The 350e is an anomaly because its hybrid and the tax breaks make it worthwhile.

 

[Tilly]

With PCP deals it tends to be a mixture of deposit contribution and artificial inflation of the GFV that gives a low monthly - where the GFV is an invention to conceal the discount on list when manufacturers are being aggressive.

With contract hire there are sometimes crazy deals on some models where the monthly is lower than the rate of depreciation - even after other discounts for cash/finance - and taking into account the initial rental. BUT. You get whacked disproportionately with any additional options - and these can rapidly reduce a headline deal that looked great to something that looks expensive.

So beware that there isn't a simple answer and that no matter what great deal you get using purchase, traditional finance, PCP, or contract hire - there's always a better looking one you can convince yourself that you missed!

Dryce - ref contract hire I was with you right up until the point you mentioned the but. I personally have been in the trade for the past 11 years now and this is my forte. As such I don't agree with that because ultimately cost options are essentially dead money irrelevant of how you fund it, be it a cash sale, PCP, contract hire or otherwise.

With a contract hire as a general rule of thumb (although it depends on the vehicle discount and the cost of borrowing money) but generally if you take the cost of the option and divide it by the term it gives you an indication as to the increase in monthly cost as you will pay the total cost of the option over the term due to it not enhancing the resale value in the trade. This is the case no matter how you fund it. You could buy a car cash and add a 6CD changer, heated rear seats, upgrade the stereo and add privacy glass... it won't change the future trade value of that vehicle if they are not residual enhancing options so the cost of these options is straight down the pan but whether you pay for a grand of options split over x years or you pay for a grand of options upfront as a cash sale its still only worth what it's worth to sell so the comment is irrelevant in my opinion.

In the industry now, many finance systems/CAP valuations list certain cars under separate titles due to having enhanced residuals. For example on a new A45 although they only make the one model, the finance systems list both an A45 and an A45 Premium. It's the same car but one has the addition of the premium pack, the reason they do this is the increased residual so that it's taken into consideration on CH, PCP, FL, LP etc. Other than that most options (bar maybe metallic) are dead money, this will not change if you buy it for cash.

As a retail punter some peoples perceptions may be different in the way that you might think "well hang on a minute... I'd pay a premium for a used car if it had privacy glass and a 6CD changer" but that is personal preference and emotion. In the trade we couldn't care less

Dealerships typically quote PCP and PCP only to retail customers as it keeps things simple. One product with all the options; hand it back at the end with a GFV or pay the final payment and keep it. In reality I believe they're somewhat pointless if you're simply looking for a cheap deal.

With contract hire it's a different kettle of fish, the funders buy and register hundreds and thousands of cars so they receive increased levels of discounts and volume related bonuses so like anything, depreciation is no secret, cars lose money, as a customer all you care about is what it is going to cost YOU. Ie the difference between what the car is bought for and what it's valued at when it goes back so for contract hire funders it's within their interest to negotiate increased discounts which enable them to secure business and in addition to this they need to value the car high enough at the end of the contract so that they're competitive but at the same time not so high that they shoot themselves in the feet. Ultimately however, that's their problem, not yours.

Anyone who believes cash buying a car is the better option is for 99% of the time living in the past, money can work better for you elsewhere. If the car you want is on a deal you'll save a fortune. For example... VW Scirocco R's at the moment. There's a contract hire deal knocking about which as an example is £2000+VAT deposit + 23 payments at £150+VAT at 10k miles per annum so add that up... £5450 + VAT = £6540. This is a brand new car and includes road tax for the full duration. List price on a Scirocco R is the best part of £32k.

Cheapest one on AT at the mo is £23291 so the car has lost £8709 AT RETAIL SALES PRICE plus don't forget on a new car cash you only get 12 months tax so we need to add £265 for the second year tax which is now £8974 but whatever your car is worth trade in so probably knock £2k off their sale price putting depreciation to near £11k in realistic terms. You could have leased and kicked it back at the end for £6450 a saving of circa £4500 over the two years.

Granted you won't pay list price for a car if you barter but a. Would you get £4500 discount off that car as a cash sale? I very much doubt it because we couldn't get that level of discount on a cash sale, especially not on an R model. and B. could you be bothered going through the aggro of buying and selling anyway? and C. with a residual value arguably somewhere around the level of £21k trade at 2 years. Wouldn't you rather have kept hold of that £21k rather than inevitably tying it up in a car? When you sell one car you're just going to buy another so surely the £21k you've worked so hard for you're never going to see again because it's tied up in a depreciation heap of metal where instead it could be working for you with investments, home improvements, holidays or genuinely not leading a boring life but hey ho

 

[Deane x]

To lease through NHS solutions at 10K mles a year the e class specced as you have listed, would be in the region of £700- £750 a month. The 350e is an anomaly because its hybrid and the tax breaks make it worthwhile.

It does depend on your salary to what price you get tho I could of had the tesla or Porsche panorama for that money

 

[S-class]

Dryce - ref contract hire I was with you right up until the point you mentioned the but. I personally have been in the trade for the past 11 years now and this is my forte. As such I don't agree with that because ultimately cost options are essentially dead money irrelevant of how you fund it, be it a cash sale, PCP, contract hire or otherwise.

With a contract hire as a general rule of thumb (although it depends on the vehicle discount and the cost of borrowing money) but generally if you take the cost of the option and divide it by the term it gives you an indication as to the increase in monthly cost as you will pay the total cost of the option over the term due to it not enhancing the resale value in the trade. This is the case no matter how you fund it. You could buy a car cash and add a 6CD changer, heated rear seats, upgrade the stereo and add privacy glass... it won't change the future trade value of that vehicle if they are not residual enhancing options so the cost of these options is straight down the pan but whether you pay for a grand of options split over x years or you pay for a grand of options upfront as a cash sale its still only worth what it's worth to sell so the comment is irrelevant in my opinion.

In the industry now, many finance systems/CAP valuations list certain cars under separate titles due to having enhanced residuals. For example on a new A45 although they only make the one model, the finance systems list both an A45 and an A45 Premium. It's the same car but one has the addition of the premium pack, the reason they do this is the increased residual so that it's taken into consideration on CH, PCP, FL, LP etc. Other than that most options (bar maybe metallic) are dead money, this will not change if you buy it for cash.

As a retail punter some peoples perceptions may be different in the way that you might think "well hang on a minute... I'd pay a premium for a used car if it had privacy glass and a 6CD changer" but that is personal preference and emotion. In the trade we couldn't care less

Dealerships typically quote PCP and PCP only to retail customers as it keeps things simple. One product with all the options; hand it back at the end with a GFV or pay the final payment and keep it. In reality I believe they're somewhat pointless if you're simply looking for a cheap deal.

With contract hire it's a different kettle of fish, the funders buy and register hundreds and thousands of cars so they receive increased levels of discounts and volume related bonuses so like anything, depreciation is no secret, cars lose money, as a customer all you care about is what it is going to cost YOU. Ie the difference between what the car is bought for and what it's valued at when it goes back so for contract hire funders it's within their interest to negotiate increased discounts which enable them to secure business and in addition to this they need to value the car high enough at the end of the contract so that they're competitive but at the same time not so high that they shoot themselves in the feet. Ultimately however, that's their problem, not yours.

Anyone who believes cash buying a car is the better option is for 99% of the time living in the past, money can work better for you elsewhere. If the car you want is on a deal you'll save a fortune. For example... VW Scirocco R's at the moment. There's a contract hire deal knocking about which as an example is £2000+VAT deposit + 23 payments at £150+VAT at 10k miles per annum so add that up... £5450 + VAT = £6540. This is a brand new car and includes road tax for the full duration. List price on a Scirocco R is the best part of £32k.

Cheapest one on AT at the mo is £23291 so the car has lost £8709 AT RETAIL SALES PRICE plus don't forget on a new car cash you only get 12 months tax so we need to add £265 for the second year tax which is now £8974 but whatever your car is worth trade in so probably knock £2k off their sale price putting depreciation to near £11k in realistic terms. You could have leased and kicked it back at the end for £6450 a saving of circa £4500 over the two years.

Granted you won't pay list price for a car if you barter but a. Would you get £4500 discount off that car as a cash sale? I very much doubt it because we couldn't get that level of discount on a cash sale, especially not on an R model. and B. could you be bothered going through the aggro of buying and selling anyway? and C. with a residual value arguably somewhere around the level of £21k trade at 2 years. Wouldn't you rather have kept hold of that £21k rather than inevitably tying it up in a car? When you sell one car you're just going to buy another so surely the £21k you've worked so hard for you're never going to see again because it's tied up in a depreciation heap of metal where instead it could be working for you with investments, home improvements, holidays or genuinely not leading a boring life but hey ho

I tend to buy when a car is 3-4 years old (normally E class type cars) with 70k or so on the clock, use it for a similar amount of time and then sell, overall it always work out much less then leasing, it is tempting to drive a newer car but figures always work out much more overall when comparing, I last compared quite a while ago so not sure if things are different now.

 

[Deleted member 6183]

Tilly.

My Mrs is thinking of leasing a cheapo motor for a few years, through her work she has access to some privilege deal which means a Fiat 500 at £1500 down and £90 per month for 37 months. List price £10420 with £1750 discount.

How does this deal stack up?

 

[B33fy]

It does depend on your salary to what price you get tho I could of had the tesla or Porsche panorama for that money

Its a ball park figure for the OP for his spec car, rather than a comparison against the 350e which is poles apart. As you know there are huge variables in all of the car owning options.

 

[Deane x]

Its a ball park figure for the OP for his spec car, rather than a comparison against the 350e which is poles apart. As you know there are huge variables in all of the car owning options.

Oh I know m8 , you have to play about with it a bit , I added intelligent LED headlights and it bought the price down ...the C350e is about the same price tho

 

[Bonecho]

I was keen to get the MB and dealer contribution for a PCP agreement but without the PCP. In the end I settled for a HP agreement with a loan for just £3000 over two years. I think the interest is around £200 instead of around £2,500 but I still qualified for the contributions.

I will be hoping to keep the car for around 5 or 6 years and as I only do around 7000 miles a year I could not see any advantages in buying 2 cars over the 6 years via two PCP's

 

[harvin1975]

Ok, thanks all. Crunched a few numbers and believe i've done the right thing for the length of time i plan to keep the car.

 

[Alf Barnet]

Harvin, it yours with no lease inspection £££ scandal at the end to contend with, I hope you got a healthy discount though! I purchased outright too.

I still can't believe there are 2 petrol S212's in Hyacinth!

 

[JBD]

Using a C350e on NHS fleet as an example is definitely not a useful comparison.

I can run a quote for you if you wish, but it would definitely cost you more to finance it through MB that buy it outright on the current E class campaign. You really need to see if your money could be used better somewhere else, like in investments