Personal vehicle leasing versus buying a car outright.

[STAH]

Guys,

Do any of you have any thoughts on the above? I am unsure as to whether to buy a car outright, or get a car on a vehicle lease.

I am thinking of getting a VW.

Thanks in anticipation!

Scott

[Finance Guy]

If you can afford to buy it outright, that is the obvious answer, in order to avoid finance / interest costs.

However, if you are self employed, there is some great tax advantages to contract hire, although you will never own the car or be able to but it at the end of the hire period. (you can however, get a family member or friend to 'buy' it from the finance company at the end of the term - they usually do not mind and are just obeying the law, relating to the fact that ex-contract hire vehicles cannot be sold to the actual hirer).

If you are employed and prefer finance (for some reason), try to hunt down a 0% finance deal via VW and spread your payments. You ARE paying 'interest' on it however, via the actual car cost. With that in mind, I would recommend a nearly new model to avoid the rapid depreciation of a new vehicle.

I bought my wife a 3 yr old, 2.0 GTi Golf last Christmas and paid less than 6k, from a dealer, by hunting around and driving a hard bargain (pardon the pun!!).

Hope that helps, good luck

[STAH]

Finance Guy,

Thanks for your answer. I work for one of the big four so I will be looking carefully at any small print, and paying close attention to the APR.

One of the things that appeals me is that I will have a new car out of the deal. So I believe that I will saving money through MOT costs, and there should be a warranty in place should the car need attention. I had also taken into account any depriciation of the vehicle.

Certainly, there are lots of things to take into account, and I know the various benefits to the self employed of going down this route.

Nevertheless, I shall be searching around, and I believe my work offers a similar deal (leasing a vehicle). It will be interesting to see what they have to offer when I get back into the office tomorrow.

We do have the savings there, however, I would feel comfortable leaving them in place as a security blanket.

Thanks for your clear and perceptive resonse.

Kind regards.

Scott

[Oneeyedvic]

Bear in mind two advantages of buying on hire purchase (as opposed to other forms of finance):

1) The finance company has an equal liability with the dealer - so if something goes wrong (eg your dealer closes down, you will still have the same warranty)

2) After you have paid back half the amount of the credit, you can hand the car back to the finance company - very useful if you have negative equity in your vehicle.

[STAH]

Thanks for your additional comments also, Vic.