Leases are expensive - really?

[IJWS15]

My superb was a 3 year personal lease (VWFS) and was collected in May a little after the lease ended.

 

Can't find the actual price of the car new but the P11d value was £27,710.  The car is currently for sale for £12,999 (in Sheffield having been collected for auction by BCA in Birmingham)  The price of £12,999 isn't what I would have got for it so lets say £11k trade-in giving  £15 K depreciation  (assuming £2k discount off list at new).

 

In that time servicing (4) would be approx £1k and tyres £350 all covered by the lease so if it had been mine it would have cost me approx £17350 over 3 years for 72k miles.  Due to covid it didn't reach 72k miles so the lease could have been a little cheaper.  I think it had rear brake pads and discs - lease company cost.

 

The lease charges in the period were just over £14k leaving me £3.5k up on buying new and changing at three years, I am sure VWFS made some money on it as well.  To match the lease I would have had to get 20-25% discount off the new price!

 

No hassle selling, it was rear ended on the M6 but not my problem as it was repaired.  

 

The car in question https://www.autotrader.co.uk/classified/advert/202007101099959?postcode=ws151gb&year-from=2017&make=SKODA&model=SUPERB&onesearchad=New&onesearchad=Nearly New&onesearchad=Used&sort=relevance&body-type=Hatchback&year-to=2017&advertising-location=at_cars&radius=1500&aggregatedTrim=SE L Executive&transmission=Manual&fuel-type=Diesel&page=1

 

All they need to do now is deliver the replacement - last time I spoke to them it was in Germany!

[gon]

Agreed, if you only consider having new cars and swap them every 3 or 4 years.

In that scenario then yes, it might be worth a lease.

But you are looking at almost £5k/year car cost and not much people can afford that.

 

I bought my Octavia vrs estate in 2019 and it is a 2013 car, it cost me 12k and 1 year later is still worth about 11k.

Totally different cost/year bracket.

 

[EnterName]

2 hours ago, IJWS15 said:

My superb was a 3 year personal lease (VWFS) and was collected in May a little after the lease ended.

 

Can't find the actual price of the car new but the P11d value was £27,710.  The car is currently for sale for £12,999 (in Sheffield having been collected for auction by BCA in Birmingham)  The price of £12,999 isn't what I would have got for it so lets say £11k trade-in giving  £15 K depreciation  (assuming £2k discount off list at new).

 

In that time servicing (4) would be approx £1k and tyres £350 all covered by the lease so if it had been mine it would have cost me approx £17350 over 3 years for 72k miles.  Due to covid it didn't reach 72k miles so the lease could have been a little cheaper.  I think it had rear brake pads and discs - lease company cost.

 

The lease charges in the period were just over £14k leaving me £3.5k up on buying new and changing at three years, I am sure VWFS made some money on it as well.  To match the lease I would have had to get 20-25% discount off the new price!

 

No hassle selling, it was rear ended on the M6 but not my problem as it was repaired.  

 

The car in question https://www.autotrader.co.uk/classified/advert/202007101099959?postcode=ws151gb&year-from=2017&make=SKODA&model=SUPERB&onesearchad=New&onesearchad=Nearly New&onesearchad=Used&sort=relevance&body-type=Hatchback&year-to=2017&advertising-location=at_cars&radius=1500&aggregatedTrim=SE L Executive&transmission=Manual&fuel-type=Diesel&page=1

 

All they need to do now is deliver the replacement - last time I spoke to them it was in Germany!

I suppose it depends on your definition of the word "expensive".

£14,000 for 3 year's motoring sounds extortionate to me, but may sound like peanuts to other people.

[newbie69]

Incredible figures regarding leasing cost in the UK, but it clearly boils down to a much worse depreciation in your market for whatever reason.

Out of interest, comparing to Sweden, starting prices are not that more expensive, a 2016 2.0 TDI Superb would have costed the equivalent of £30K  so roughly 10-15% more expensive, however, such cars from 2016 and 30-60K miles today are sold for around £20-22K, almost 80% more expensive  than in the UK (or 80% less depreciated) 

Both my last two cars I had the option of leasing them but I chose to buy them fully and when I calculated my loss upon resale it ended up being more economical than If I had leased them (in Sweden), unfortunately it's not a good option here yet for most cars.

In fact, setting the price and age criteria the same as in your car, you can mostly find Fabias, not even Octavias  in the second hand market.

With such a bad depreciation it's clearly the smarter move for someone switching cars every 3 years, just for the lack of re-sale hassle alone.



 

30 minutes ago, gon said:

I bought my Octavia vrs estate in 2019 and it is a 2013 car, it cost me 12k and 1 year later is still worth about 11k.

Totally different cost/year bracket.

 

Comparing buying a 6.y.o. car vs. buying new is clearly irrelevant in this case?!


 

16 minutes ago, EnterName said:

I suppose it depends on your definition of the word "expensive".

£14,000 for 3 year's motoring sounds extortionate to me, but may sound like peanuts to other people.

Again, missing the point completely. The topic is not "where you'd best spend 14K in 3 years"  but a very clear:  "buying new: buy cash/loan or lease"  and is comparing the costs between those two options. People buy new for lots of reasons and are aware of the extra cost this deliberate choice brings upon them (or at least they should be...)



 

Edited 31 July, 2020 by newbie69

[EnterName]

10 minutes ago, newbie69 said:

Again, missing the point completely. The topic is not "where you'd best spend 14K in 3 years"  but a very clear:  "buying new: buy cash/loan or lease"  and is comparing the costs between those two options.



 

I wouldn't say it's missing the point completely. But certainly in this instance, leasing was the most cost effective way of driving that particular vehicle for 3 years.

I'm not sure that in all instances of a brand-new car purchase for a term of 3 years, leasing would be the cheapest option.  There seem to be a fair few variables that could swing the deal either way in favour or against the buyer.

Maybe I'm wrong, but that's my perception.

That said, kudos to IJWS15 because I would have most likely bought the car via cash or loan (as I have an aversion to leases), and hence ended up with a worse deal. 👍

Edited 31 July, 2020 by EnterName

[gon]

yes, if you pick and chose the sentences of my post it becomes irrelevant, I apologise for that 😒

[IJWS15]

I was expecting the price difference to be negligible, I did a similar calculation three years ago and based on what i could see as used prices at 3 years old then a lease was about break even to buying and selling on but took the worries away.  

 

14k for three years motoring does look a lot but there are a lot of people buy new and change regularly.  The thinking around new was:

• I drive (used to) high mileages of approx 24k a year so keeping for 4-5 years effectively means an almost worthless car at the end - who wants a four year old car with 100k miles, just coming up to needing the suspension bushes renewing and the drivers seat has sagged. ( I once put 128k miles on a company car in 4 years, the excess mileage was expensive).
• Buying almost new - do you really know why it is on the market? Is it a lemon?  Doesn't sit well with needing to get to work and high mileages
• 3 years ago I was a contractor so the company would not provide me with a car for travel to other sites
• as a contractor I was expected to get to the office or didn't get paid - moved to perm 2 years ago.
• I can spec the options I want (heated screen, interior colour) that are almost impossible to add after market - I spend a minimum of 2 hours in the car on a working day.
• I don't have any hassle if it breaks, even out of warranty, and this car was out of warranty before it was 3 years old.
• I don't need to take time out of work to deal with selling - important when I didn't get paid holiday.
• A lot of the miles in the first year and a bit were paid as mileage by my Ltd company, at 45p a mile, so no cost to me directly.
• I can afford it and if no-one does where are you all going to get your pre-owned cars from, there will be a shortage due to the 3 month stoppage in production we have ahd this year.

Just surprised that, having found the car on autotrader, I had actually come out better than if I had bought it and changed after three years.  

 

As an aside my son works for one of the big UK leasing companies and they are seeing an increase of £1000 plus on average in the sale price of end of lease cars over what they expected so it could have been much better.

 

It could also have been worse, the initial lease was 2 years and I looked at changing last April but the lease would have gone up by about £150 a month so I extended this one for a third year.  There is a lot in the timing.

 

Now if the one that is due for delivery shortly doesn't have any problems I may buy it at the end of lease as it looks as if I will only be an occasional visitor to the office and it may see me through to retirement, the lease on the new one, before I dropped the mileage by 8k a year, was about £30 more than this one (three years inflation and a car worth 3-4k more), reducing the mileage makes it about £50 a month less.

 

[J.R.]

45 minutes ago, IJWS15 said:

• I drive (used to) high mileages of approx 24k a year so keeping for 4-5 years effectively means an almost worthless car at the end - who wants a four year old car with 100k miles, just coming up to needing the suspension bushes renewing and the drivers seat has sagged.

 

I would any day of the week!!!!!

 

The epiphany for me was taking a risk on a 3 year old Octavia MK1 with 188000 miles for a littme more than nothing but cheap enough that if I had to throw it away after a year I would not be crying into my beer.

 

It turned out to be the best investment that I have ever made, I had 13 trouble free years and put another 137k miles on it and even then would not have needed to scrap it had I invested in VCDS, it was so reliable that I never had to.

 

It never left me stranded and the repairs I did were only ever £10 or £20, I never needed to replace any suspension bushes, I bought rear wishbone bushes with the intention of fitting them believing them to be a known fault but never needed to, I did replace the springs & shocks from a crashed Police car because they were heavier duty and I used the estate as a van and towed a lot.

 

My depreciation  costs over any 3 year period would have been £850, if I included servicing, repairs tyres & friction materials still less than £1000.

 

There is also the cashflow side of it, the depreciation is only a cost and a financial hit when the vehicle is sold or in my case scrapped, my actual ougoings were £150 per annum or £12.50 (actually a lot less because I always used part worn tyres) whereas on a lease the £388 would have to be paid every month.

 

Is there not also an initial payment that is lost?

 

Editted, good point re drivers seat, I removed the foam from the squab of a low mileage car at the breakers yard and also at some stage replaced the steering wheel (dead cheap without the airbag).

Edited 31 July, 2020 by J.R.

[J.R.]

Why the groan?

[SurreyJohn]

Leasing can be cheaper as shown, especially if you stick to standard spec, and search out good deals.   However many of the best deals are on cars or specs that are about to get replaced 

 

However it regularly becomes more expensive if you add lots of options, do higher mileages than agreed, or your expiry date doesn’t work for a good replacement deal.

Many a person has done a lease or PCP and struggled to find a replacement at the end at a price or spec they like, so savings get negated when you average it over the lease plus next 3 years.   Most people wouldn’t say paying nearly £30k over 6 years at £5k per year is cheap (especially when car was  £27k new).  

 

Edited 2 August, 2020 by SurreyJohn

[IJWS15]

On 02/08/2020 at 06:27, SurreyJohn said:

.............However many of the best deals are on cars or specs that are about to get replaced 

 

 

The prices I was being quoted to replace it in April 2019 were because there was a new car coming six months later - the lease companies factor in the reduced residuals because there will be newer models on the market.

 

On 02/08/2020 at 06:27, SurreyJohn said:

However it regularly becomes more expensive if you add lots of options, do higher mileages than agreed, or your expiry date doesn’t work for a good replacement deal.
 

 

Mine had a few extras and an unusual interior colour - the interior made no difference to the price and you accept that you are paying full price for the options - regardless of how desirable they make the car at end of lease.  Note the lease values and the second had price ARE the same car so extra's are factored in.

 

Leases are nothing like PCP - at the end of the period you can give the car back or extend the period as I did.  You can even give the car back and go out and buy a banger and run it for a year until the numbers improve.  If the numbers to replace don't look good you are not committed to changing at the planned end of the lease.  The key is plan ahead, even with mileage, during the last lease I changed jobs and the commute when from a 2 mile walk to a 30 mile drive, changing the allowance on the lease upped the charge £150 a month but it was cheaper doing this than paying the excess mileage (about 2p a mile cheaper).  With PCP they have you by the balls. 

 

I was tempted by a new Octavia as it was announced just before I ordered but, back in January, they couldn't give me a price.

 

At one stage I was even tempted by the prices on Fiat convertibles (the MX5 copy), almost worth having a second car for £190 a month and taking 10k a year off the Superb lease - not close enough to cost neutral to do it!

[digifish]

This is all about perspective and you seem to have created a very limited one to view this from.

 

Constant leasing always puts you in the steepest part of the depreciation curve (until you die or stop leasing, whatever comes first). 

 

Compared to buying 2-3 year old cars and hanging onto them for 5 or so.

 

 

[IJWS15]

I agree, that is a choice we make for the car that must get me to work and that takes us all over Europe when we are on holiday.

 

The wife doesn't work and is never more than 20 miles from home in her car, we have just replaced it with a one year old car so missed the worst of the depreciation.

 

The point of the thread wasn't to compare leasing with bangernomics but to compare leasing with purchasing new and changing at 3 years.

[Nick_H]

Leasing is not a bad idea but I still think my approach is best. Purchased new in 2015 and will sell when the cars worth is about 40k so I have a nice little profit to buy a beer or two.

[shyVRS245]

6 minutes ago, Nick_H said:

Leasing is not a bad idea but I still think my approach is best. Purchased new in 2015 and will sell when the cars worth is about 40k so I have a nice little profit to buy a beer or two.

My Superb is currently worth 2.6 million Kenyan shillings so the wife's family think I must be loaded.

[irc]

Another experience. Bought my 1.4Tsi estate in May 2018. List price on the road including options - was £22266. I paid via DrivetheDeal  £18375

 

First two services free (Bought on PCP which was paid of early)

Current trade in value approx 13800 (values from DTD and Arnold Clark) . So depreciation after 2yrs3months approx £4500. If I sold now the cost of depreciation and servicing would  be approx £166 per month.   Call it £175pm with the new pair of tyres stuck on last month. Seems competitive with leasing to me.