Pros & Cons With Car Leasing

[Matheous-2]

I have already Googled this and can't find any straight answers- hence my request to any ABrs with leasing experience.

As usual- thanks in advance for any replies....

[BRIGHT SPARK]

Mat.........do you want a new car....what sort.....how long will you keep it and whats your annual mileage

[Clanad]

We lease one of our cars here in the U.S. It's a Toyota Highlander All Wheel Drive since we live in the country.

At any rate, there are few down sides to leasing with the exception of… mileage limits.

Out lease is 36 months and we're allowed 1,000 miles per month… 36,000 miles total. Thing is, if you exceed the mileage limit, additional mileage is charged at an exorbitant rate… about 25 cents per. We took that into account, since our other vehicles and my trust Ford F-150 four wheel drive pickup are owned. I just wanted Mrs. C. to have a totally reliable, smelling new car.

One can purchase the vehicle at the end of the lease or one can choose to lease again. Rates are usually pretty good. If it's the same in the UK as here, you may find the vehicle you'd really like to lease isn't available. But if you'll be patient, it probably will be in a few months.

The whole lease thing is a factory incentive anyway and in the case of Toyota (and most others I investigated) the lease is held by Toyota rather than a finance company or bank.

We've had no problem keeping within the mileage limit, mostly since any longer trips we take are usually done by flying. I would expect that in the UK, being a much smaller country that shouldn't be a problem.

You still have to insure the car, of course, but the scheduled maintenance is taken care of by the manufacturer.

Word of caution… when you get to the end point of actually intending to sign the lease, the salespeople will want you to purchase all kinds of extras… bug deflectors, dent repair, extra product warranty, etc. It can become attractive to purchase some of the add-ons since the cost is all rolled into the lease. However, you can find that a $300 monthly lease fee can suddenly balloon to $400 (or more).

[Matheous-2]

Thanks Clanad....Not sure of similar deals in the UK, but you have given some guidelines for thought.
BS - Yes, a new model, possibly hybrid med/large Volvo - Lexus -Toyota. Expect to keep until prior to first MOT. Will be a low annual mileage, probably less than 10k.

[chas2008]

so many people are anti lease, but it can work out cheaper and an easy way to get into a new vehicle every 2-3 years, often the lease payments are far less than the amount the vehicles devalues.
There are some deals on Peugeot 208,s at £125 a month (12 x 125 = £1,500) that vehicle could easily lose £2,000+ in the 1st year.
Just watch mileage limitations..

[Clanad]

A few other thoughts, Matheous... Some terms you need to become familiar with if leasing are residual[i and [i]gap coverage[i]... at least here in the u.s.

The singular reason that leasing is far cheaper than buying is that all you're paying for is the difference between what the car is valued at at the itme of purchase and what it will be worth at the time of lease-end. [i]Et voila] Residual. Thing is, some cars will depreciate faster than others so be sure to understand and find out what your residual will be. It was one of the major reasons we selected the Toyota.

Gap coverage is simply the car insurance coverage in case the car is destroyed in an accident (or is stolen, for example). Your insurance will cover up to what the car is valued at at the time of the incident, which may be less than what replacement value of the same car is resulting in a gap that you would have to pay. If gap insurance is offered check it out, but be frugal.

Finally, keep in mind that to lease a car... any car... an upfront fee is charged. This is very much like a down payment if purchasing... but if you had a car to trade in at the onset of the lease it may cover those fees. Probelm is, at the end of the lease, you won't have a car to trade in for another lease or purchase and will have to come up with the upfront fees.

One suggestion is to Google to see if a lease buy-out program is offered in the UK. People sometimes get into a financial pickle and would be happy to sell the remaining part of a lease for a reasonable amount. There are legal ways this can be done to your benefit. Here in the US one company that handles these kind of transactions is Swaplease.com. I have no way of knowing if there are other companies in the UK that could do the same...

[Matheous-2]

Thanks again Clanad....!

[BRIGHT SPARK]

You can have personal or business contract hire (the only difference is the vat).1..2 or 3 years...2 years can work out cheaper than a 3 pro rata. You could have maintenance included...but as you do low miles it may not be worth it.
There are loads of sites on the net, but I would go to a dealer ...choose the car and ask them to match the net price.On a high end car the cost of lease/hire will be nowhere near the depreciation over 2/3 years. Try to be flexible with your model as some manufacturers will give better deals..and do the deal towards the end of a quarter when they need to get the sales up. IMO in your circumstances its the only way to go.

[Matheous-2]

Methyl- Thanks for that too......Details noted!

[Matheous-2]

Would I be correct in thinking a larger deposit would mean lower monthly lease payments?

[Clanad]

Absolutely, Matheous... keeping in mind the only thing you're financing is the difference between the new car cost and the expected value at the end... the more you bring that cost down, the lower the payment...

[BRIGHT SPARK]

Yes Mat...but be careful..if the car is a total loss early in the contract the deposit may be lost.BTW..the depreciation on a hybrid..or anything using lithium polymer cells is very high.

[Matheous-2]

BSpark- I would have expected insurance would cover a total loss ?

[BRIGHT SPARK]

Generally it will....however there could be a difference between what the insurers say and what the lease company say its worth.Always take out shortfall/gap insurance at the outset to cover this...its not expensive..around £300 for £10k cover.

[Matheous-2]

Thanks once again BSpark......Noted

[mccfluff]

i've just leased a car - ive got it for two years from new and £6k mileage per annum came out at £113 pm with a £300 dep - however its a c1, you want something bigger so expect to pay more. if you are keeping it for 2/3 years then consider whether you need full maintenance or not. With me as there is no charge for RFL and i shouldn't need tyres, the only thing i need to cover is the first service (£70), so i knocked maintenance off the bill. You need to bear in mind any knocks or scrapes on the car when you hand it back can be charged back to you if its deemed outside of fair wear and tear.

the advice i had was go direct to dealers, you can get better deals with them and they are (allegedly) less picky when you hand the car back, i have yet to find this out.

The dealer also gave me gap insurance for 12pence a month as i said no to the original quote of £7 a month. (it was month end and he needed to get his sales up)

so far i have had no problems but i'm only 5 months in now, the only bug bear is parking, i'm so paranoid about other people smacking the car with their doors that i park miles away from where i want to be :-)

[Matheous-2]

Mccfluff -Thanks for sharing your info......Think of the extra distance to your car as excersize !