I've seen a number of mentions of leasing as an alternative to buying recently, and I'm bemused.
People talk of avoiding depreciation, but leasing doesn't avoid depreciation - the car still depreciates, it's just that you've paid a middle man to predict the depreciation in advance. And because he can't predict that exactly, he's going to make sure he doesn't get burnt by erring on the side of higher depreciation.
It seems to me that in a simple open market, leasing is *always* going to be more expensive than buying, just because you've added an extra party who needs to make a profit. There needs to be some skew to the market to make it cheaper, like tax breaks.
Is there some skew to the market that I don't know about? Or am I just wrong? Can anyone quote any concrete figures for any car that shows leasing is a better deal financially? If not, why is anyone even considering it?
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>Is there some skew to the market that I don't know about?
Only that leasing companies can buy the cars very cheaply - compared to list price. So the total depreciation they suffer is less than the depreciation you would suffer. So the two numbers might be closer than you might imagine.
Remember car hire companies make a profit (or at least they did a few years ago and I assume it is the same now) on cars they buy and hire out for 6 months as they get (got) very cheaply in large quantities & then launch on the 'unsuspecting' public.
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Hi Dylan,
There are 3 adverts in the back of What Car at present advertising the Chrysler Crossfire for £199 and month +vat on a 3+11 basis - total cost £3276 - I bet the Crossfire loses a fair bit more than that over the year - not to mention the cost of borrowing £27,000.
If you're flexible enough to take the special deals when they come up there is value to be had, If you want a specific car, you're probably better off buying it.
CF
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You mean...I could have a brand new £27k car for a year for £3276? That's it? Nothing else to pay?
Maybe I should look into leasing...
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Smokes,
get yourself a 'What Car' and check it out my friend - for some reason a crossfire is £199/month amd and 1.7D astra is about £250/month - errrrrr..... now let me think about that for a few nanonseconds......
I'll have the Astra please, a yellow one.
CF [hic]
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& that includes insurance? & servicing? & AA cover? & what mileage? & what is 3+11?
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I'll have the Astra please, a yellow one.
Me too, but only if it comes with factory-fitted fluffy dice in the windscreen.
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If the user is a business, there are tax differences too. IIRC, the total lease rentals paid in the businesses tax year are allowable as a revenue expense in the businesses tax year, whilst HP or cash purchases allow all the % annual depreciation to be taken even if the asset was purchased in the final month of the businesses tax year.
These differences can be particularly significant, from a cash flow point of view, if the business has a substantialm fleet.
--
Roger. (in the UK for 2 more weeks and then back to the sun! )
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From a business point of view there is also the advantage that you can reclaim VAT on vehicle lease charges, whereas you can't when purchasing. That gives the lease companies a 17.5% advantage before you start getting into the fact that they get the cars far cheaper in the first place.
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Hey CF,
Can you remember the name of the company offering that deal. Im looking for a cheap lease crossfire
Cheers
Wophie ;)
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Has anyone else noticed the tasty offer on leasing the megane CC that HJ has linked to?
It works out to £2450 to own the dci 120 version for a year inc Vat - that's pretty cheap motoring for an interesting car.
CF
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