Drive A Brand New Car For Less

If it really was cheaper to lease cars than to buy them, all costs being considered, the middlemen would be making neverending losses and would soon be out of business.

Szu Ping Chan at least points out the main area where companies make their profits. " Hefty penalties".
You are far better off if you own your own house, and your car, without borrowing or renting off finance companies.

Buying today offered PCP the family friend would have cost another 33% to acquire at end of the 3 years. Even borrowing at 5.9% the children will get the car at the end of the agreement. Do not know if PCP has penalites for over mileage? Not mentioned in sales pitch.

The answer is 'Finance Lease' -you can get a new vehicle, pay only 1 month 'up-front' then monthly, for a period you choose [and the funder accepts] in line with affordability. Commonly 1+47 months on a car or 1+59 on a van, interest is 'fixed' and no penalties as commented above due to the fact that you dispose of the vehicle at the end and keep circa 97.5% of the sales proceeds -therefore if you have looked after the vehicle you will sell it for more thus keep more

Suggest if you are interested you contact www.wvl.co.uk. Their advice and service is excellent and they can talk you through all types of car leasing.

An important point that the article does not mention and which can make leasing a very good deal is that, occasionally, manufacturers will fund very deep discounts for leasing deals which they are less inclined to fund for forecourt sale. You have to watch out for them on a site such as contracthireandleasing.com (a portal used by almost every car leasing company in the UK). By this means we have leased two cars, a Vauxhall Meriva and a Honda Jazz, both at £109 plus VAT per month plus 2 months up-front payment (although the fact that the road fund licence is part of the deal sort of offsets this up-front cost). The Vauxhall has since gone back, having reached the end of its lease, and although the condition was good there was inevitably a bit of "wear and tear", but we were not charged anything for that. At £109 per month plus VAT you are not even standing the depreciation cost of the car, let alone financing costs, although this does depend heavily on spotting the deeply discounted deals.

Has any one any information on leasing companies in and around east Devon? Having recently had my car written off by an inconsiderate driver I think my best way forward would be to lease.

Faintly ridiculous statement in article about having to take out fully comprehensive insurance. Anybody who buys a brand new car and only takes out third party insurance is not driving on the roads I drive on

I've bought my last few BMWs using PCP. At the end of 3 year term, the car has been consistently worth more than the guaranteed final value so this counts towards the deposit on the next car.
Adding up the amount I put aside each month towards the next car's deposit and the monthly finance payments, I end up paying around two-thirds what the car would cost if I bought outright and I'm indirectly 'insured' against BMWs falling in value significantly. Yes, I don't own the car at the end but, as others have pointed out, a car is a wasting asset and I like having a new car every three years!

After 19 years in the car leasing industry I can safely say that sometimes Car Leasing or Contract Hire [PCP,PCH,BCH] is more cost effective than buying and owning and sometimes it's not! To ensure you make the correct decision you need to evaluate all the variables, each time you consider having a new car! Of course there are some good rules of thumb and trade secrets to make the job easier but unfortunately they don't come free of charge ... :)

The dynamics of the market is such that the top 50 UK leasing companies predict residual values based on the derivative and contract terms.

They then 'price' according to the 'risks' inherent in the contract.

The main factor in determining the cost to the end user of a lease is the difference between what the leasing company can buy the car for [and that could be thousands of pounds less than an individual] and will vary from leasing company to leasing company] and the expected sales proceeds [again can vary widely from leasing company to leasing company - the 'depreciation' which results can account for 70%+ of the monthly rental.

Often when car manufacturers and to a lesser extent the franchised car dealers want to push or offload a particular model range or specific derivative they throw money at one or more of the leasing companies to shift the stock. THIS APPROACH MEANS THE MANUFACTURERS CAN HEAVILY DISCOUNT THE PRODUCT EFFECTIVELY WITHOUT DISTRESSING THE BRAND AND CAUSING RIPPLES IN THE USED CAR MARKET WHICH IN TURN WOULD AFFECT SALES PROCEEDS FOR ANYONE WHO 'OWNS' THIS MODEL TYPE IN YEARS TO COME.

When this happens, sometimes the rentals produced are so low compared to the list price you don't need a discounted cash flow to determine it's a deal not to miss. For example a few years ago I leased a Porsche Boxster for 18 months for £239 per month inc Vat - from a market leading company!

If the timing is right for you and you can live with the make, model, derivative and engine on offer there's not much evacuating to do!

Alternatively, some people choose the car first, add preferred options and then want to know if they should buy or lease it.... this is normally a much more difficult decision. How do you determine what the car will be worth in 2, 3 or 5 years time? If your estimate is wrong by 10% what does that do to your calculations? Clearly a 10% movement in expected sales proceeds received for a prestige car compared to a van, after just 2 years compared to 5 years will have a huge impact on the outcome.

Many leasing companies price these risk factors into the leasing rental.

in my experience people who 'buy' and 'own' their cars never, ever do the math when it comes to selling, to see if they would have been better off taking a lease route instead!

For those people who choose to buy cars they can enjoy the flexibility of being able to change their cars at will and as budget allows. Leasing customers often have to keep cars they don't want because early terminating is just not economically viable.

This brings me onto the main reason why Retail car leasing has such a low take up in the UK. The PENALTIES the leasing companies levy for terminating a contract early makes a huge amount of PROFIT for the industry!

Of a market of 30 million cars on UK roads only 2 million are leased - why is that?

Take a look at some of the bank based leasing companies' profits and that may shed some light!

So in conclusion sometimes leasing is more cost effective and sometimes not ... if you have a fixed monthly budget and can cope with a New C Class, 3 Series, A4 or a IS220
instead of ‘owning’ a Mondeo, Vectra or Avensis or Passat then at the moment, leasing is the way to go and in it’s favour leasing clearly shows you the true costs of keeping a car and fixes these costs upfront and that's worth a lot!

I had a PCP a few years back and it worked out really well - but you need to get the car for a good price in the first place. The agent from the leasing company was able to search a database to find models of cars I liked and found me my "dream" car. He negotiated an excellent price for me and I was really happy. I just had to travel to pick it up, but it was well worth it. I finally bought the car just before the end of the agreement and then sold it for the deposit on my next car.

However, now that my partner gets a hefty discount from a major manufacturer, it pays us to buy new cars outright. Although we are effectively tied to one manufacturer, having the discount covers the cost of all the nice extras. Last year he bought a small car for me, got all the extras he could think of and bought three years' servicing upfront. Unbelievably the road tax was only £30 this year! But if we could not get this discount I'd probably opt for another PCP.

Few people are able to calculate the whole cost of owning a car. It is a complex calculation and involves a good deal of educated guesswork. The motoring organisations publish cost per mile figures from time to time but most of us choose not to believe them. In fact, for most people, owning a car is difficult to justify at all.
One major advantage of leasing (in whatever form) is that the monthly bill is a real and predictable expense. The problem, as previously mentioned is its inflexibility.
In truth it makes no sense at all for a private individual to buy a new car. If you must have a personal car then go to a reputable auction house and buy one of those nice, three year old, well maintained, ex-lease cars that make up the bulk of the sales; keep it until it is no longer economic to maintain (another seven years at least), then sell it on e-bay and buy another.

I am thinking of leasing a car for my business. I estimate that my mileage will be circa 15-20k per annum. Can anyone offer advice to my best route. The kind of car i would look for would be estate or 4x4 as i carry lots of kit in my car plus kid's stuff at weekends.

Fitzboy - I'm not sure you want a finance lease - these ageements suit businesses that can benefit from tax, cash and balance sheet considerations. Small car fixed budget means scouting around for dealer based retail incentive programs or a simple personal contract hire deal. Small car, low budget leaves less scope for making the wrong decision and often convenience and time savings can outweigh any cash benefits of one method over another. Look to Mercedes Smart Car PULSE from £95+vat , corsa, clio, punto around £120+vat!

AUDI A3 from £176+Vat if you can wait for a factory order also great value!

With so many people buying a new car and keeping it for three years, surely the real Fool snaps up one of the three year old cars for a fraction of their new value. He will not need to pay the extortionate main dealer servicing costs, and a couple of years down the line the car will still be worth a reasonable proportion of what he paid for it. Any kind of deal which costs over £100 per month and at the end you have to give the car back is the kind of deal I would always avoid.

Although I'm sure that there are some good, well maintained, three year old cars to be had, in my experience this is when cars start to go wrong and should be got rid of! Servicing costs more because more expensive items start to wear out and are less likely to be covered by any warranty. Before I made the decision to always buy new cars, I had many a phone call from the service place where the representative takes a deep breath and says "Are you sitting down Mrs....?" You just don't know how a previous owner has treated the car and it's such a risk.

So really you have to factor in peace of mind and reliability, when calculating your motoring costs. OK there's depreciation, but what price can you put on the enjoyment of driving a brand new car? A commuter friend of mine paid £300 a month just to drive a Golf at the weekends. She said she got £300 worth of pleasure from driving it just at those times.

Hi swapalease1..many thanks for your advice.

Please excuse spelling - fingers not working properly after a few glasses of Rioja!!

Hi all, I've been following this thread with interest as I am looking at leasing a new car. Currently I drive a 206 LX which was my first car and I've had it for 3 years. (at least it will be in July 2008)

On the weekend I test drove an Audi A4 cabriolet which I have wanted for ages and I LOVED it! However I am trying to be realistic and given that I have yet to see a monthly price for less than £300, I will probably have to look for something else :(

I would like a convertible hard top (I only like the soft top on the A4 and I've heard its a pain to clean) and a pretty reliable car -- Japanese? or the 207 cc ....
Can anyone advise on where to look out for good deals?

Swwapaplease1

Having lived, worked and leased cars in USA, I would say the main reason people in general lease is because of the greater dependency - public transport does not offer a viable alternative outside of cities and in the areas we lived in there is a culture of slight snobbery around using public transport. Having an unreliable, older car would be one more stress a lot of Americans could not contemplate.