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Dead Car: New Car, leasing vs HP

Discussion in 'The Lounge - Off Topic' started by Fergal1982, Jul 20, 2012.

  1. Fergal1982

    Fergal1982 Petabyte Poster

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    Hey guys. I put my car into the garage the other day (10 yrs), and it's come back needing a whole new engine. :cry::cry:

    Since it's so old, a new engine (even second hand) is going to cost more than the car is worth. So I'm thinking I might just buy a new one.

    I've got a couple of options though. I could buy a car thats 1-2 years old, and get it on finance.

    However, I've had a few people (including some who used to work in the motoring industry) advising that the way to go is Car Leasing (such as from Car Leasing - Contract Hire - Cheap Car & Van Leasing Deals). It definately seems interesting. I can definately see how your money goes further with this type of operation (I can get a brand new Focus Titanium X for about £300pcm.

    Has anyone actually gone through leasing to get their car? If so, what did you think?
     
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  2. Theprof

    Theprof Petabyte Poster Forum Leader

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    It depends, if you put a lot of mileage on the car, you're better off buying as its going to be expensive if you go over the agreed limit or you'll need to pay more to get more mileage. Also when you return the car after a few years, it needs to be in good condition, anything damaged like the body for example will need to be fixed so that's more money.

    Other than that, if you're okay with it, then go for it, I bought a car for the first time this year, but I got it at 0% interest so it was worth the investment.

    Of course the terms might be different in the UK, but I am just speaking from experience.
     
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  3. Nyx

    Nyx Byte Poster

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    unless you want to change it try a different garage? Like in IT, some people fix things others put a fresh image on;)
     
  4. demarrer

    demarrer Byte Poster

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    Compare all your options by looking at the total amount you will pay for the car with each scheme.
    Was looking at a new golf gtd the other week. Very nice :)
     
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  5. dmarsh

    dmarsh Terabyte Poster

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    £300 pcm = £3600 pa = £11k over 3 years, that buys you a decent second hand auto at trade prices.

    With leasing you won't own the car after 3 years and will have spent £11k, if you break any of their terms you'll have to pay extra.
     
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  6. Fergal1982

    Fergal1982 Petabyte Poster

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    Thats a fair point. Which Car? have a page on calculating lease vs buying costs which is fairly interesting. That said, it's all based on getting a brand new motor.

    Still deciding to be honest, I think I need to crank some numbers.

    - - - Updated - - -

    So, a rough calculation going on. Assuming I only kept the car for 2 years:

    Leasing: Focus Titanium X 1.6TDCi (no extra options)
    Deposit: 1132.03
    Monthly Payment: 298.10
    No. of Payments: 23
    Fees: 180
    (Maintenance included, 10k annual mileage)
    Total Cost: 8168.33

    Buy on Finance (6.7% APR) Focus Titanium (61 Reg)
    Intial Price: 12988
    Deposit: 0
    Monthly Payment: 579.12
    No of Payments: 24
    Resale Value: 7625
    (Road Tax/Servicing/Repairs not included)
    Total Cost: 6273.88

    Just rough calculations, obviously.
     
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  7. dmarsh

    dmarsh Terabyte Poster

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    If you have money you wouldn't need the loan so its even cheaper, but of course your money is tied up so you have 'opportunity cost' and to be fair leasing doesn't have an opportunity cost (other than the deposit).

    It makes no sense for an individual to pay the ticket price to buy new, none of the big corporations will pay that for their fleet cars, you're better off buying 'pre-registered' to avoid this.

    Focus Titaniums go for around £20k new but you'd be mad to pay that, like you mention they are available on 60/61 reg for £10-12k.

    Fords are cheap common motors, I'd think leasing makes more sense with more exotic motors.

    The big advantage of a new car is low servicing for the first two years and no MOT. So really the lease company is giving you nothing here when they say maintenance free, all you should need is tyres and a couple oil changes, say ~£500.

    Basically the lease companies buy their cars at huge discount and reclaim most this cost when they sell the motor second hand, all your rental payments are pure profit.
     
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  8. Toasty

    Toasty Byte Poster

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    Warren Buffet said “you buy if the product goes up in value and lease if the product goes down in value”
     
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  9. Shinigami

    Shinigami Megabyte Poster

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    An interesting question to which you'll find a ton of different answers depending on the automotive forum you visit.
    For example, I like convertibles and visit a number of forums that talk about them.
    Places like miata.net will tend to have blokes that strongly prefer the option of buying a second hand car, whilst on some other forums the general populace will be happy to just lease one.

    Sometimes, when leasing, you can also buy the car outright at the end of the deal by paying the difference, but you'll always pay more for the vehicle in a lease. A car loses most of its value the moment you drive out the door, and thus second hand makes an interesting argument. But with second hand, you may not have access to free services and a warranty.

    If you like having something new but cannot afford to buy a vehicle outright, a lease makes a lot of sense. That is, if you can also afford the payments and all that.

    Definitely, if I wanted a more 'exotic' vehicle, leasing would be the only option. For something I would think of as a toy, I would just buy second hand.

    But when it comes to making your decision, it really helps to take out a calculator and start doing the math. See how much things will set you back, perhaps on a mile per mile, month per month, and a yearly basis. Find out the cost for services, tires, etc... Sometimes you can get a great deal on a second hand car, only to find out the tires need replacing, the next service due in a thousand miles is the most expensive one requiring a belt replacement and more, and that particular year model comes 'just' before the manufacturer updated the engine with a more gas efficient version still delivering the same amount of ponies.

    Gotta be careful with car purchases, they're not exactly the cheapest bits of hardware we might end up with :)
     
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  10. Fergal1982

    Fergal1982 Petabyte Poster

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    Very true. thanks for the input guys.

    I've actually dropped my expectation from the Titanium to the Zetec. On comparison, the features in the Titanium over the Zetec are largely of no interest to me. Besides, the Zetec is like the bridge of the Enterprise compared to the 02 Focus CL I was driving before.

    Went out to the dealer today, and found an 11 reg 1.6 Zetec for £11488. So I'm tempted to go for it and just buy in the end. Cranking the numbers, I'll end up paying somewhere between 13-14.5k overall on finance. I'll get a couple of years worth of warranty on it anyway, and it should work out fairly viable for me.
     
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  11. dmarsh

    dmarsh Terabyte Poster

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    Yeah, gotta be careful with some models or you will pay thousands just for some trim and a badge.

    I bought a diesel Zetec Mondeo for £4k and 100k on the clock, still going strong. Only trouble is parts and servicing is expensive now so lower mileage is probably worth it.

    Diesel is good if you do lot miles and don't mind driving slow.
    If you thrash the turbo to try and get petrol like performance the MPG goes right down.
    With current prices I'd buy a petrol with maybe 20k on clock.
     
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  12. Shinigami

    Shinigami Megabyte Poster

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    Another thing I just thought of... if buying second hand, make sure the tires are the right ones for the season. Would be silly to get something with brand new summer tires when the winter seasons begins next week (to give an example).

    A slightly used car that still has the manufacturer warranty and a year or two of services left on it, would make a lot of sense. That's 20-50% off right there off the bat for meager mileage usage :)

    And if choosing between two cars, it helps to check a few things such as how often tires need to be replaced on that particular model (say, one model chews through tires at a considerably faster speed) or if there are known oil usage issues with the engine type (e.g. you need to top it off with a liter/quart of oil every 2000 miles... that's another 200quid down the hole every year if you commute 20,000 miles a year).
     
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  13. Monkeychops

    Monkeychops Kilobyte Poster

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    May work out cheaper over the 2 years, but sack paying £579 a month for 'just' a pretty standardish focus. So an 1800 difference on those figures, hard to say a resale value until time comes, plus there's tax, servicing and maintenance which whilst won't be much on that is still a cost.

    You can get some great deals on lease cars if you look around, if you're wanting something new and relatively fixed cost it's not a terrible thing to do. Too many people re hung up on the fact that you don't own anything.

    Car Leasing | Car Lease | Contract Hire | Lease Cars | Vehicle Leasing usually have some decent deals, friend of mine recently got an Audi S5 for £350 or something a month. Through his business so that's without the VAT, he can also write off some of the cost against tax or something as it's only used for work so effective cost is a reasonable amount less, crazy.
     
  14. dmarsh

    dmarsh Terabyte Poster

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    You can claim VAT as a company so it is possible to get 20% off if you buy a van, but you will have to charge VAT if you ever sell it.

    http://www.hmrc.gov.uk/vat/managing/reclaiming/motoring.htm

    It appears leasing costs can be VAT free on any car if you use it only for business use, so 20% off which is a really good deal. However unless you have multiple cars I'd doubt it would hold up so you would more likely get 10% off.

    As a private individual owning you can sell the car or keep driving it after 3 years, so you should really save a few thousand pounds unless you want a motor that is hard to get cheap on the second hand market.

    Sainsburys Bank do personal car loans at 5.8%

    If you borrow £12,000 over 2 years at a fixed APR of 5.8%

    Payment per month £529.96
    Total charge for credit £719
    Total amount you repay £12,719

    £13k - £7600 = ~£5400

    Nearly new car maintenance should be around ~£1000 for three years.

    Saving of ~£1500 over leasing if you don't run a business.

    With the VAT off as a business it looks like a better deal than purchasing.
     
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  15. Sparky
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    Sparky Zettabyte Poster Moderator

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    Do you know how long you would like to keep the car? Not into leasing myself, I prefer to keep the car for three to four years with finance. Once I own the car I can sell it privately as a deposit for a new car.
     
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  16. Fergal1982

    Fergal1982 Petabyte Poster

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    This last one was 3 years. Although I'd probably have kept it longer of it hadn't died.

    On reflection, I'm not so fussed about changing every few years (at least not at the moment). For me, a car is a wheely box to get me from A to B in a relatively fast time, whilst staying dry.

    Applied for a loan today to fund the new car. In the end, I've come down on the buying side. That might change if I ever go contract and start my own company, but for the time being its fine.

    Cheers for all the advice guys!
     
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  17. Monkeychops

    Monkeychops Kilobyte Poster

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    Personally I'd buy, unless as mentioned before I could run it all through a business, I just wouldn't buy brand new :)

    And still definitely wouldn't pay almost £600 a month for a 1.6 Focus :p

    What sort of thing you going for?
     
  18. nugget
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    nugget Junior toady

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    Don't forget about insurance either. I don't know how it is over there but in switzerland if you lease a car you generally are forced to have the full insurance package. If you buy/own the car then you can choose what kind of coverage you want.
     
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