Leasing V Outright purchase

[wemorgan]

Quite a timely article

BBC News - Rent-to-buy credit sector 'morally bankrupt'

It cited a three-year rental arrangement with a well-known weekly payment store that cost £1,074 for a fridge freezer, compared with a High Street price for the same product of £430

Consumers aren't so good at self assessment of affordability, neither retailers and the banks have been shown to be less than competent too. Who's left?

 

[nick mercedes]

Quite a timely article

BBC News - Rent-to-buy credit sector 'morally bankrupt'



Consumers aren't so good at self assessment of affordability, neither retailers and the banks have been shown to be less than competent too. Who's left?

To be fair to the £10k fridge people, they provide credit to scum who cannot get credit anywhere else.

It's not like these people could even save up their benefits, the lure of scratchcards, crack and Superkings is too much for them.

 

[Colin_b]

What do you think happened before people could borrow money for cars, plenty of cars were sold and a number being upmarket models.

You could always borrow money to buy cars. Its simply that in the 'good old days' lenders were more careful about how they loaned money.

Then the lenders became complacent, and started lending unwisely to equally unwise borrowers.

It doesn't matter how you buy your house, car or toaster. All that matters is that you can repay any debt incurred.

 

[stevieb15]

I come to this thread very late but the generally accepted maxim in business is
"If it appreciates buy it, if it depreciates lease it", right now leasing looks by far the best bet for car "purchases" where the only consideration should be total cost over the lifetime of
"ownership"

 

[wemorgan]

It's the marketing of cars latest gadgets and urban myths that cars become unreliable after 60k or engines explode after 100k that makes people want a repalcement car more often than is financially sensible.

There's little wrong with a 3 year old car out of warranty that's 1/2 the price of the new car but I suspect a straw poll on the high street will say otherwise.

 

[BTB 500]

I suspect it's more to do with wanting to be seen in the latest model than any real belief that a 3 year old car will become unreliable.

 

[Colin_b]

I suspect it's more to do with wanting to be seen in the latest model than any real belief that a 3 year old car will become unreliable.

I think there is truth in that, but cars are becoming more complex and can be very expensive to fix. That can be a genuine concern, the fear of large unexpected bills vs predictable cash flow.

 

[Harrythedog]

The leasing vs outright purchase is certainly a "horses for course" scenario. People should do their own sums to see if it's worth it or not so I don't thinkl any hard set ruling can be applied. If leasing a car for 3 years works out cheaper than buying one and keeping it for 3 years then go for it. You usually find that the easier it is to buy a certain model then the more it will depreciate.

 

[BTB 500]

I think there is truth in that, but cars are becoming more complex and can be very expensive to fix. That can be a genuine concern, the fear of large unexpected bills vs predictable cash flow.

Possibly, but my perception is that most people who buy/lease new vehicles seem to 'upgrade' them long before they reach an age/mileage where reliability might genuinely become an issue. And of course you can always take out an extended warranty if you want to 'insure' against unexpected bills.

 

[Colin_b]

Possibly, but my perception is that most people who buy/lease new vehicles seem to 'upgrade' them long before they reach an age/mileage where reliability might genuinely become an issue. And of course you can always take out an extended warranty if you want to 'insure' against unexpected bills.

Again, agree When it comes to buying cars, one size doesn't fit all. I do know some people don't think enough about their car purchases and paying for them...

 

[BTB 500]

I don't have any problem with people leasing or buying whatever they want btw. Just making the point that most of the time it is driven by *want* rather than *need*

We would like to replace our old Audi, but while it's still reliable and running well I prefer to put the money into overpayments against our mortgage each month That's a personal choice - for us the peace of mind from clearing chunks off the mortgage is more important than the pride/pleasure involved in having a new(er) car. But for other people it will be different.

 

[gIzzE]

My car was bought at 4 years old cash, it has lost more in the last 2 years than I could have contract hired a new one for, plus I have had to pay out for more repairs than I would have with a new car under warranty.

For those that like to run newer cars for peace of mind, then contract hire is probably the way to go at the moment as it is cheaper than buying cash.
You need to buy around 4 years old and 50k+ miles to get the costs around the same.

Buy an 07 plate E Class estate for example, or a C Class estate and you will be looking at around £15k, and it will loose around £10k over the next 3 years, so around £280 a month.
You then need to consider a warranty, will be around £50 a month, so £330 a month.
If you need to borrow the money you will need to pay some interest on it, around £70 a month on £15k, so up to £400 a month.

After 3 years it is yours, and costing you nothing, but at 7 years old so many people just start over again with something else, and so the cycle starts over.

You can hire a new C250cdi sport estate edition 125 for £300 a month including vat.
OK so you never own it, but then how many people keep their cars for more than 3 years anyway?
£300 a month for a brand new car, that has better toys, better mpg, no warranty worries and is costing you less than a 4 year old one with 50K+ miles.

I reckon you have to be in a 10 year old 100k mile + car to see any real financial benefit.
And even then, once you have paid insurance, tax, servicing, tyres and fuel are the savings all that?

We all like doing things differently, go with what your happy with I say.

 

[Peter DLM]

Gizze, that's far too sensible and accurate a viewpoint for this thread, please delete it immediately.

 

[Palfrem]

At the end of the day, (after tax, NI, gas, electric, council tax, VAT, rent/mortgage, food, clothing, etc) we all free to spend our wages on whatever we chose.

 

[Dr-Nab]

lolz spam monkey

 

[Dieselman]

Far too many people leveraging today, on an uncertain tomorrow... and this is why the big multinationals are leaving us and moving new efforts to greener pastures over to the east... At this rate, in 20 years the UK will be an island that no one internationally cares about...

I know this post is a long way back, but there was a discussion on R4 today about the European economy and the Euro.

The nub of it was that the Euro is still a strong currency as long as Europe holds together, Germany is the economic power, France is the diplomatic power, but Britain also has a fair bit of diplomatic clout Worldwide.

If Britain leaves the EU we suddenly become nobody's with no power or clout at all.

 

[stevieb15]

I know this post is a long way back, but there was a discussion on R4 today about the European economy and the Euro.

The nub of it was that the Euro is still a strong currency as long as Europe holds together, Germany is the economic power, France is the diplomatic power, but Britain also has a fair bit of diplomatic clout Worldwide.

If Britain leaves the EU we suddenly become nobody's with no power or clout at all.

Such a pity that the once world renowned BBC grinds its political axe and some people still chose to listen.....the bond markets seem to think something different.
I think I'll go with the money.

 

[Dryce]

If Britain leaves the EU we suddenly become nobody's with no power or clout at all.

As part of Europe our 'clout' is diluted because it's got to be in European interests.

Out of Europe we lose that not very strong wishy washy Euro muscle but the interests are solely ours.

I actually think - on balance - we carry more clout outside Europe.

And militarily NATO is more significant than the EU.

 

[hawk20]

You can hire a new C250cdi sport estate edition 125 for £300 a month including vat.
OK so you never own it, but then how many people keep their cars for more than 3 years anyway?
£300 a month for a brand new car, that has better toys, better mpg, no warranty worries and is costing you less than a 4 year old one with 50K+ miles.

I reckon you have to be in a 10 year old 100k mile + car to see any real financial benefit.
And even then, once you have paid insurance, tax, servicing, tyres and fuel are the savings all that?

.

I don't find these figures plausible without more evidence.
Let's take MB contract hire rates. On a C220cdi Sport saloon AUTO they are £349 per month BUT they are ex vat and are for 38 payments (3 in advance) so really its over £368 per month or £13,262 over 3 years ex vat or £15,912 inc vat. I could beat that cost over 3 years by buying at a reasonable discount. And could beat by a country mile buying a year old or so.

Now take PCP's which are very popular. Same car on the road at list price of £33k needs £4099 deposit plus £349 per month for 36 months a total of £16,663. That car can be bought from Drive the Deal for £5k off list at the moment and has a part-ex value after 3 years of around £15,000 so buying for cash can still be beneficial. Buying a year or 18 months old saves even more.

I accept that Mercedes PCP offers are often excellent value because the APR is low, the retailer contribution is often as good as a discount, and the GFV figures are at pretty much Glass's Guide figures. And contract hire can be good too even for those who pay VAT (though usually the figures quoted are ex vat). But check the details of the contract hire: some have been pre-registered, and some have done a few months as a hire car. Some, of course, are genuine new cars. But worth checking.

 

[gIzzE]

Have a look on contracthireandleasing.com.

You will never get those deals through Mercedes directly, they just can't offer them, no one would buy a car if they did.
Plus they simply can't be seen to be giving those sort of discounts out.

Also forget PCP, that is just like buying cash but paying extra interest.

There have been loads of deals on the Edition 125 cars over the last 6 months.

I know a couple of people who grabbed a C250cdi sport estate when they were £256+vat a month, that was with a 6 month deposit so £1800.


Contract hire deals have serious money thrown at them by the manufacturers, sometimes, but it is a case of grabbing the deals when they are there because they don't tend to last for ever.