Leasing a car
During my working life, the companies I worked for almost always leased cars as company cars for staff.
We used to get a list of cars and the monthly rate. This included servicing and car tax.
This seemed like a very good way to have a car - no upfront payment, no hassle about buying and then selling the car, known costs for the (typically) 3 years of use and the risk of depreciation taken by the lease company.
Are lease cars available to individuals?
Has anyone ever leased a car like this?
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Most privately owned cars in the UK are bought on a PCP basis - best of both worlds and certainly some very good deals around at the moment.
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Most privately owned NEW cars in the UK are bought on a PCP basis
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Back in 2012 looked at the options for getting a new car and opted for purchase as opposed to lease. Sold car earlier this month after four years and one day and the difference between what I paid and what I sold for was less than the lease cost would have been.
One factor in the decision to buy was that the car was to be our first ever new car and we wanted it to be 'ours'.
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I looked into PCP deals, but basically they are simply a loan by another name.
With PCP you borrow the cost of the car (less any deposit or trade-in value that you have) and then pay off part of the loan over a set period (maybe 2 - 3 years). Even though you will have only paid off part of the loan after that period (maybe half of it) you still pay interest on the full amount borrowed.
At the end of the agreed period, the car (like any other car) has a resale value (they seem to like to call this a 'balloon' figure) and that may or may not pay off the rest of the loan......or you can pay off the loan and keep the car.
I see no difference here to a simple loan. Except that the car companies seem to charge about 5% interest - about double that of a bank these days.
MM - when you say that loads of lads at work lease their cars, do they actually lease them or are they a PCP arrangement?
With a lease arrangement, you know exactly where you stand from the outset - what your payments will be and that all the service / repair costs are covered (even tyres, usually). All the risk is taken by the lease company.
I just wondered whether individuals as well as firms can lease cars.
MM - I know what you mean about paying out all that money and having nothing to see for it, but that's exactly what happens when buying a new car - you pay all that money and half of its value disappears in the first 3 years.
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They are definitely leased & NOT PCP deals.
Have a look at Parkers
I know the logic about loosing the money, especially with a new car, but if you bought a car for £xxx and at the end of the payment period your circumstances were different, you could decide to keep what you had for maybe a while longer ..... at the end of the lease, you'd just have the satisfaction of having drive a new car for xx months/years.
One lad has just used http://www.21stcenturymotors.co.uk/ very recently for his Superb Skoda
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I'm not sure that's quite Ians image.......
http://www.express.co.uk/news/uk/743769/Gipsies-came-to-stay-with-Bentleys-Kemsing-Kent
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The main diff betwen a loan to purchase and PCP is that with PCP when you get to the end of the contract period you can choose to either pay the final payment and keep the car or just hand it back.
You will see many deals at the moment from major manufacturers that are with 0% finance and in some cases zero deposit and on this basis you would be mad to "purchase" outright.
We recently bought a small city car on a 3yr PCP 0% finance, zero deposit, 3 year servicing included. Tyres will not need replacing within 3 years. After 3 years if the car is worth more than the final payment will will make the final payment and then either sell it or keep it. If the value turns out to be less than the final payment we will just hand it back. Frankly I don't see how you could possible get a better deal - I do of course accept that not all PCP deals are as good as this but with interest rates where they are at the moment there are some great deals about.
The other thing about PCP deals is that you can generally negotiate a lower price for the car because the dealer gets a kick-back from the manufacturers finance co', even if on 0% finance. The reason the manufacturers are so keen on PCP is that they know that it gives them a great opportunity to sell you another car at the end on the contract or indeed even subsidise you out of the contract part way through if say you wanted to change after 2 years.
Leasing generally works better for corporations because of certain tax benefits and because of their strong credit ratings - less so for individuals.
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