Another bill short of a grand means it’s time to consider my next move. I’ve had a BMW 3 Series for almost 6 years now, and with it approaching 185k miles, it’s soon time we’ll need to part company I’m not quite ready to make the move yet but I know I’ll have to at some point. Therefore, I’m tentatively in the market for a new car, but I’m not sure how I should go about financing it… I could go new/used and opt for PCP, or lease something from new. Here’s the thing… I have absolutely no interest in owning the car after 4 years which seems to be part of the perks of PCP Having spent some time scouring what’s on offer I’ve settled on the Peugeot 308 GT as the current front runner although things could and will likely change! I’ve found a lease deal for the 308 GT with a reasonable upfront instalment that would be well within the budget. The PCP equivalent on this includes dropping £6k on a deposit… But what’s the drawbacks of leasing? What should I look out for or worry about?
My work car is a lease. As RedFlames says, check the fine print for over-mileage charges. Can't recall what mine are, only that its a pence per mile rate. They can rack up quickly. (That's work's problem though, not mine) Check if the lease includes maintenance as well, and of it doesn't then check what you're expected to pay for (wipers, tyres, servicing etc on a car you don't own is a bind). Also check at the start what constitutes "fair wear and tear" to avoid any nasty charges when it comes to returning it. It's about as close to stress free motoring as you can get when maintenance is included though. I literally just put fuel and screen wash in it. Lease company sort all the tax and paperwork. Anything goes wrong, or breaks, one phone call and the lease company arrange everything. That does mean you're reliant on the lease company, and their customer service. Which, depending on company, can be terrible.
The thing with leasing is that you don't own the car. So that means no option to buy it. I understand that is your plan, but if you are someone likely get attached after a few years, it can be difficult if it's a good car. (just an observation from what you wrote in OP) Also, leasing is a fixed monthly cost. If the market value of the car looks to be high after a few years, you are effectively over paying. For example, Tesla Model 3 is £500 per month, there's no way after 3 years its value is going to be at below £25k. I would have saved much money if that car were available at that price range.
As someone who drives a 10+ year old 3-series with 185k miles, I'd suggest rinse and repeat for another used car. How many miles do you do? Most leases are fantastically expensive if you actually use the thing, and quite honestly I don't understand why everyone is so obsessed with sinking such a huge amount of cash into a car they barely use when they otherwise live fairly modestly. Spend your £6k of a PCP deposit and buy something outright, run it until it dies, repeat. Caveat: If I'm talking rubbish and you barely do any miles, lease is good for something shiny on your drive for the next few years with no hassle - it's not your car, it's under warranty, etc etc.
Leasing is not a problem, it's same thing as renting vs buying a house, if you are happy to pay the sub not to own it but still be responsible for it and have nothing at the end that is fine, difference with a car vs a house is the car normally depreciates more and is subject to more wear and tear related issues overtime but most car shouldn't experience any big issues in 6yr/100k. Something like a 308GT will in a normal market depreciate a stackload so the the risk of owning it might see you stuck with it if you are financing it, a PCP gives you an out if you are happy with the numbers, other cars depreciate less so, I was going to PCP a Cayman GT4, purely because I had an itch to scratch and didn't mind loaning one at £25k for 2 years, thing is because of the car it was at the end of two years its 71k list price became 85-90k on used market after two years, Corona helped, so the GT4 would have been cheaper to own than an i10 Can't beat getting a spreadsheet out really, for our Volvo, adding in tyres, maintenance and servicing, plus car tax etc, leasing was the most still expensive over the 3yr term, PCP was next but required a 16k dep (well my choice for a lower monthly as I had the dough, it could have been lower) , and care by volvo was the cheapest. now the spread was only 1-2k either way between either so it just depends what is more convenient to you, but the three methods were 500/month 745/month and 840/month, for two at the end I had no options but to hand back and no dough returned, with the PCP again after the period due to current market our car can sell for what we paid (as we negotiated 10k off list, plus had a few k off to take finance deal) which makes getting the next one cheaper of course. I would say these shortages aren't abating for a couple of years and who knows when this war will end, so reckon car prices could remain stout which might make the PCP the better option as in my two examples, as mentioned I wouldn't normally put a Peugeot in a bracket that would do well but the market being as broken as it is you might win, will depend on whether the numbers work for you, if you don't have the deposit then its no go anyway, but if you are able it is always worth seeing what price you can negotiate first, you might get a cracking deal, use the likes of carwow as a starting point. Jus because there are shortages and demand is strong for somethings there are still deals to be made, remember cheap leases etc only exist because someone is making a deal, even on new cars in demand, ok might not be as good as our Volvo deal, I only managed 1k off of the Niro EV but you can't even get one yet If you are able to charge at home and have no special requirements like towing etc, an EV is probably worth considering. Have you checked if you can do salary sacrifice at work, this can be a cheap route for those who lease.
I've heard through the grapevine that our company will offer salary sacrifice car leasing for electric cars. As a higher rate tax payer that could be a huge "saving" but I also drive bangers which only cost a few hundred quid a year in MOT and Service and couldn't depreciate if they wanted to. Moving to a lease for a shiny new EV is tempting but would be a large monthly cost I just don't have currently. Now if it was PCP it would probably be a no brainer.
Yup always a toughie I have a few 10-15 year old cars that just keep ticking, repairs tend to be minimal and age related wear and tear, they are the cheapest things to own, all paid for, low insurance and reasonable tax, one just sits there sorn until I need it, cheapest car to own is the one you already have generally even if it needs repairs.
My company does a scheme like that. With ours you get the option to buy the car, extend the lease for another year, swap to a new car or just give it back when the term is over. If memory serves the buy at the end terms are not great and you can only have the same car for 3 years. But you do get put on the corporate insurance and breakdown recovery, which is nice.
There are EV leasing companies that are month-to-month and all-inclusive. Elmo & Onto are 2 such that spring to mind They'll lease you a car for an all-in-one monthly price that includes insurance, breakdown cover, servicing and even rapid charging. Sadly, they're not cheap. But I guess they're useful if you fall down the gap between "old car sold or died" and "new car delivered".
yeah I was wondering how this worked… feels like it could be a stress on stress situation if you’ve not got the company right…. Probably a good time to ask for recommendations!? it has been reliable for the most part, unfortunately, keeping it hasn’t been by choice. It’s just reluctance to add further debt. The intention was to replace the car when everything else was fully cleared. That’s just taken longer than I’d have liked. I’d have got rid of the car a few years back if I could. By the time I lease/pcp a car it will be the only financed expense I have. 12k-15k per year approximately (appreciate that would need to more concrete when leasing!) So EV was what drew me to leasing in some ways, a colleague of mine leases his model 3. Currengly talk of an upcoming salary sacrifice scheme for EV which certainly appeals. alas, I have no home charging options. However, if that were to come about I would then prioritise moving over a car in order to go down the EV route!
15k might be getting into the range of something that would be relatively expensive either a PCP or a lease. So much this - we've all been guilty of a bit of man maths to justify something new and shiny, but make sure that's something you actually want and not just a knee jerk reaction to a £1000 bill, that whilst not insignificant would be dwarfed by the cost a new car, even it it needs another £1000 throwing at it to get through every MOT henceforth you're still coming out on top from a purely finances point of view.
I am a cheapskate at heart but even for me there is such a concept as quality of life about purchases. Yes you can save money on many things by not buying the expensive new thing but what impact on your quality of life will it have. For example I've spent a small fortune on insulation, windows, fabric of my house that will not recoup costs of themselves in saved bills (though that is looking better this year!) or in house price appreciation (its not visible improvement). Still did it cos I didn't want to be sat in the winter having a small gale through the uninsulated suspended floor. Similar argument could be made for a car - yes any working car will get you from A to B but it might be uncomfortable, unreliable and less safe in the process. That said, a new car is a MASSIVE cost so it should be a major upgrade to justify itself.
Oh without question - hence why I said purely from a finances point of view. I can think of many, many other reasons one wouldn't particularly want a car with 185k (!!) miles on it as a daily driver.
I have never bought new, always around 6 or 7 years old, a huge saving on new. Always took care with the purchase and always got several reliable years out of them. Cars in the last 40 years have become much more durable, than they were in the days when near 100,000 miles on the clock, meant barely good enough to drive to the scrapheap. Would rather have money for other things, than put it all into a car.
Indeed there is definitely a quality of life impact and certainly with the best will in the world something with 185k will have an unknown level of wear and tear no matter how it has been looked after. I tend to work on the premise that many parts on a car will wear at 7% a year as an approximation, just based on expected lifespan and parts availability, obviously its not going to be linear, its exponential, so first few years, very little wear impact, but as the years increase so does the chance of failure, lots of materials used in vehicles that are cheap and not designed to last forever so you get age related hardening along with stress fractures and fatigue through use etc. the higher mileage of course increases chance of failure. Many will pipe up and say my car is x,y,z old and is fine and yes I do too, passing an MOT and being reliable does not mean it is in anyway as good as the box fresh car. A 12-15k mile lease will load the price, but doesn't seem too bad looking at leaseloco, Not sure what deals you had but assuming a normal 1.2 308GT it'd be approx £320 a month for 4yrs on 8k with 9 months upfront, or £356 with 15k miles, it has been cheaper in the past year but that is the problem with everything at the mo. So for your max mileage you'd be looking at approx ~£20k to borrow it over that period, car has a 30k list, with an average saving on carwow of approx 3.4k, so you could potentially buy it for 26.6k, a PCP on that amount over 4yrs would cost more monthly at 369 with a 4.9% and 3289k dep same as lease up front but I did not look for a deal, that was just halifax PCP, I am sure you could probably find a cheaper APR with a bit of leg work to bring this closer to lease. At the end of year 4 will it be worth less than 6.4k, probably not, so you may be able to absorb the loss of the extra PCP cost of ~£500 on the 4.9% deal and sell it for a few k more? Hard to predict the future of course but if we assume market supply takes 2-3yrs to get back to normal, prices won't immediately flatline so PCP would probably be my favoured one in this case. Any extra left in the PCP can obviously be rolled into your next one making that cheaper, an option a lease would not give. Not so clear cut for the Hybrid as the numbers didn't come out so well, either Halifax didn't like it, or might be it doesn't have data for latest model with higher prices yet, lease on 15k miles is 4.78k down, 398 a month, versus 461 a month on PCP with same deposit so PCP looks to have a ~£3k cost differential, I still reckon the car would be worth more than the 10k payment at the end of PCP, so the potential to buy and make some dough is there, just not sure it'd be enough to do more than breakeven over lease due to that 3k extra unless you are a master negotiator or the market stays fecked for longer. If you lease/pcp with lower mileage for a lower monthly which is what I often do obviously things will be cheaper just take care of the mileage penalty if handed back, if its 10ppm it could be cheaper to do this than take the higher monthly with mileage covered, just check the fine print. There's a hell of a lot of assumptions in those numbers, Do you feel lucky Punk
Thanks for all the advice folks, lots of new questions to consider which Is what I wanted from this. Ideally I want to hold onto my car for as long as I can, my partner owning a car makes it easier for a potential disaster period. Just want to be prepared if the bill no longer warrants the repair cost! However, It’s be reliable up until now *touch wood* Plan to test drive the 308 GT next weekend, will see how I feel about I then
