Any - Depreciation of leased cars

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Wed 10 Jul 2024 21:04
Any - Depreciation of leased cars - JonestHon

I had a look at a certain money saving site for links to leasing companies. The site point that in leasing deals the depreciation is bared by the leasing company seemes odd, is that really the case?

I am looking at a personal leaese so trying to understand the business model here in case of strong depreciation (looking at a new Pug 308 1.6 estate).

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Wed 10 Jul 2024 21:20
Any - Depreciation of leased cars - Adampr

Of course. If you lease a car, you pay a fixed amount every month. Of course, that amount includes a chunk for depreciation.

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Thu 11 Jul 2024 08:04
Any - Depreciation of leased cars - JonestHon

Of course. If you lease a car, you pay a fixed amount every month. Of course, that amount includes a chunk of depreciation.

Understood. What is personally less understood by me is the business logic in the lease company taking a massive loss on larger than charged for depreciation at the end of the lease if I decide to give it back and get a new one?

Looking at some cars including bev, there is in some cases over 40% loss of value in the first 36 months, but the fixed monthly payments seems to contain a smaller portion to account for depreciation unless my calculation is flawed.

I never used personal lease before so I am looking to avoid scams etc'.

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Thu 11 Jul 2024 08:17
Any - Depreciation of leased cars - leaseman

Unlike credit agreements, like Hire Purchase etc. there is no cash price stated on leasing agreements. So the actual (probably heavily discounted} price paid by the Lessor is unknown to the Lessee

Lessors negotiate volume deals with Manufacturers or Dealers allowing much lower depreciation figures without "distress sales^ data becoming public knowledge.

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Thu 11 Jul 2024 10:31
Any - Depreciation of leased cars - SLO76
The big leasing firms negotiate huge discounts through bulk buying from manufacturers, plus they claim tax back on the costs as a business expense. Compared to a PCP which is essentially leasing in itself you’ll generally find contract lease noticeably cheaper and at the end of term you’re in pretty much the same position, hand the car back and lease another. They don’t check if you say you’re a business operator either so if that’s cheaper take it via telling a fib or two. I did.

The only worthwhile reason to go for a PCP over the cheaper lease would be if you wanted to buy the car at the end. You can still do this with contract leasing but it’s much more complex as for tax reasons you or any immediate family can’t buy it, you need to get a friend to do it on your behalf. I ran a Honda CRV on contract lease for 4yrs and it was substantially cheaper than a PCP on the same model. I asked for a price to buy at the end which was just a bit too close to retail for similar age/mileage examples. I wish I’d bought it though as the search to find another good one failed, thanks to people neglecting their PCP/Lease cars.

Edited by SLO76 on 11/07/2024 at 10:32

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Thu 11 Jul 2024 12:02
Any - Depreciation of leased cars - JonestHon

Interesting, as a financial service I assume any business will be able to offset some cost with the tax payer to some degree.

I am trying to get my head around the fact that some cars depreciate 50% in 36 months vs the discount the lease company get when they acquire the car (which as Leaseman say is a confidential business transaction).How are they don't end up with a big black hole in their business? surely they don't get such huge discounts? is this rolled up to the manufacture?

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Thu 11 Jul 2024 12:05
Any - Depreciation of leased cars - SLO76
You’re thinking too much about it, this is just a reminder of how much Joe Public is overcharged by car manufacturers. There’s no concerns with leasing a car, as long as you stick to one of the well known firms.
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