Leasing V Outright purchase

[pjs]

I'll add the figures on my deal for what its worth. For 20k miles per year 3 + 23 at £490 inc Vat for a 250cdi sport coupe ed 125 auto. Asking for full leather & hfs cost me an extra £30/month otherwise it would have been £460. Whilst the deal was a with a broker, the agreement is with Mercedes. 10p mile penalty.

I'll do 50k miles in the 2 years so total cost to me is £12960 inc the penalty for doing the extra 10k miles. That to me is value.

Alternatives I explored were 2009 plate E350 coupes with 20-30k miles on but they were retailing at high 20's. After another 50k miles what would they have been worth as a 5 year old 75k coupe - £15k perhaps.

 

[gIzzE]

Whilst the deal was a with a broker, the agreement is with Mercedes.

Yeah the brokers often just put you in touch with a main dealer, just that Mercedes can't advertise some of the deals directly.
It is all a bit of a nonsense really, but I guess they have to protect themselves from come back from existing customers who have paid far more?

 

[hawk20]

Have a look on contracthireandleasing.com.
.

I did and I do not find the fab deals so many claim. There are cheap deals on Exec models and some manuals but once you ask for Sport or Avantgarde E saloons with auto box (220cdi or 250cdi) the rentals are not very different from those on the MB website.

And note they are of course ex vat so private buyers need to add 20%.

And note that many of the deals are 6 months up front plus 35 payments making 41 payments in all versus only 36 on the MB site.

I certainly think many could buy new and beat or at the worst equal these figures (inc vat) over three years. And I am sure almost anyone could beat them by buying a year or 18 months old. I looked at every permutation I could find on the ML and buying about 18 months old handsomely beat any deals for private customers on new ones.

 

[Dieselman]

And I am sure almost anyone could beat them by buying a year or 18 months old.

Would that still be a new car?

 

[gIzzE]

I did and I do not find the fab deals so many claim. There are cheap deals on Exec models and some manuals but once you ask for Sport or Avantgarde E saloons with auto box (220cdi or 250cdi) the rentals are not very different from those on the MB website.

And note they are of course ex vat so private buyers need to add 20%.

And note that many of the deals are 6 months up front plus 35 payments making 41 payments in all versus only 36 on the MB site.

I certainly think many could buy new and beat or at the worst equal these figures (inc vat) over three years. And I am sure almost anyone could beat them by buying a year or 18 months old. I looked at every permutation I could find on the ML and buying about 18 months old handsomely beat any deals for private customers on new ones.

You have missed them.

The really good deals were on the Edition 125, and especially sports.
They have now finished production, so the deals have gone.
The Edition 125's came with all the options that add value to residuals, and as they were free options it brought the contract hire deals down.

But wait for the new deals, they will be out at the end of January for cars being delivered before end of March.



There are a couple of people with Edition 125's left, but stock cars and not as good a deal as the last 3 months...

C250cdi Sport estate Edition 125, £350 month inc.....

Mercedes-Benz C Class contract hire | £292.00 per month | Gateway2Lease | Ref: 4e34400943

E250cdi Sport Estate Edition 125, £390 month inc....

Mercedes-Benz E Class contract hire | £327.69 per month | Applied Leasing Limited | Ref: B322846ALL

E350cdi sport estate Edition 125, £460 month inc....

Mercedes-Benz E Class contract hire | £378.29 per month | Autobuddy | Ref: 48401-C-6/48[10000]B

E250 CDI SE Estate Edition 125, £320 month inc....

Mercedes-Benz E Class contract hire | £269.99 per month | DCMD Ltd | Ref: 5738B

 

[gIzzE]

By the way, if you know you are going to do more than the 10 or 12k miles add it at the start, taking it to 18k miles for example only adds around £15 a month on an E250cdi estate, so far cheaper than paying excess mileage at the end.

 

[BTB 500]

Interesting article on Yahoo Finance today: Lease versus purchase

In its last survey, consumer magazine Which? reviewed 12 cars to find out which are cheaper to buy than to lease. Here's the magazine's advice:



Make and model
Buy or lease?

Audi A4 Avant 2.0 TDI 143 SE
Buy

Audi TT 2.0 TDI Quattro
Buy

Citroen C4 Grand Picasso 1.6 HDi SX
Buy

Honda Jazz 1.2 i-VTEC S
Buy

Jaguar XF 3.0D V6
Buy

Mazda 2 1.3 TS2 5-dr
Buy

Renault Modus 1.5 dCi 86 Dynamique
Buy

VW Golf 2.0 TDI 110 SE 5-dr
Buy

VW Scirocco 2.0 TSI GT (DSG)
Buy

Honda CR-V 2.2 i-CTDi SE
Either

Nissan Qashqai 1.5 dCi Acenta 2WD
Either

Ford Mondeo 2.0 TDCi Zetec
Lease


Notes

1. Based on three years and 36,000 miles.
2. Loan interest charged at 8.9% APR.
3. Costs exclude fuel, servicing, Vehicle Excise Duty ('road tax') and car insurance.

As you can see, Which? recommends buying nine of these 12 cars, as most are family or upmarket cars which hold their values well. Of the remaining three, only the Ford Mondeo is best leased, but it's a close call for the Honda CR-V and Nissan Qashqai.

In general, mass-market models which are popular with company fleets usually work out much cheaper to lease than buy. Conversely, vehicles which hold their value well (including upmarket German cars from the likes of Audi, BMW and Mercedes-Benz) usually work out cheaper to buy.

(my bold)

 

[@MARK]

Interesting article on Yahoo Finance today: Lease versus purchase



(my bold)

How could this be worked out

Is the assumption that you lease and then buy at the end?

Otherwise on lease you would end up paying say £15k out in payments then hand the car back against buying where you pay out £40k but clearly have a car at the end of it.

Based on money that has left my bank account, lease costs me less

So how do those figures work?

 

[BTB 500]

I assume that's based on you buying the car with a loan and then selling it on yourself at the end of the 3 year period.

Edit - if you buy the car with cash it's presumably even more skewed against leasing, since the interest you're 'losing' on the capital would be less than you'd be paying on a loan?

 

[@MARK]

I assume that's based on you buying the car with a loan and then selling it on yourself at the end of the 3 year period.

But it doesn't work like that.

These figures are misleading at best as they are not comparing like with like

 

[BTB 500]

These figures are misleading at best as they are not comparing like with like

Why - in both cases you start and end without the car?

They are saying that in most cases it's cheaper to buy new with a loan then sell after 3 years than lease for 3 years and hand the car back.

As mentioned, if you buy with cash you're avoiding the assumed 8.9% APR loan interest, so it's even more in favour of buying.

 

[@MARK]

Why - in both cases you start and end without the car?

They are saying that in most cases it's cheaper to buy new with a loan then sell after 3 years than lease for 3 years and hand the car back.

As mentioned, if you buy with cash you're avoiding the assumed 8.9% APR loan interest, so it's even more in favour of buying.

Ah

I see what you mean.

But surely the monthly payments on say a £40k new car over 3 years would be huge compared to a lease so whilst the total cost over 3 years might be less, could a typical buyer actually afford those sorts of payments.

Cash is a different story of course.

 

[gIzzE]

I would say based on the average lease price then their results make sense, however.....


You need to look at the car you want and see which is best at that time.

There is no general rule as leases don't work like that, and also a PCP etc. is a lease, they call it a lease and then go on to talk about contract hiring.

Hiring works when manufacturers are throwing money at their metal to get them out there.
If there are no discounts to be had, either hiring or buying, then buying will always be cheaper, but that is not the case, the hire companies get discounts we can't dream of when buying, they are currently getting discounts that are around 100% higher than main dealers get margin, hence why the hire deals are so good on some cars at the moment.

Mercedes simply couldn't advertise a new car with 28% discount, it would write off their existing customers who have just paid top dollar and it would kill the used market overnight.

This is not as black and white as the article makes out.

 

[hawk20]

The author of the Yahoo article seems somewhat confused. First saying leasing is cheaper then quoting Which? saying pretty much the opposite for many cars.

Here is a crucial passage: -
The monthly repayments to lease a car are usually much lower than those needed to buy it. In some cases, they can be less than half the repayments for a loan. However, over two or three years, the total cost can be higher, because you don't have a car to sell on when your contract expires.

What's more, it's normally cheaper to buy cars which hold their value well and have strong resale values. On the other hand, it's usually better to lease vehicles which depreciate rapidly.

 

[BTB 500]

Yes ... it was the very specific results / comments in the Which? survey that I thought were worth mentioning.

 

[hawk20]

There are no hard and fast rules in the real world. We all differ. Somebody with a 7% mortgage could gain by taking a zero percent PCP and using spare capital to repay some of the mortgage. And a PCP with Mercedes at a typical 5.8% APR could be beneficial for that person. But it would not be beneficial financially for someone with a 3% tracker mortgage.

Need to know if the buyer has cash or not. And what he could use that cash for if he/she did not use it to buy a car. If it is merely going into an ISA at say 3% then that is the 'opportunity cost' of using it to buy a car. Lease or PCP at say 5.8% means you can invest at 3%. You lose but not much by doing a PCP. And if having less hassle and a guaranteed residual after three years is worth a couple of per cent on money, then why not?

Many business people who are short of capital in their business and can earn high returns on their money can gain by leasing instead of using up scarce caoital to buy cars.

Need to examine each case on its merits.