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How is car leasing a good deal?


You should take a serious look at leasing because it is likely to offer a better deal. It could help you save more money and leasing offers less risk. Here are some situations where it would benefit you to take a look at leasing.

The Problem

Do you normally buy a car that's 3-5 years old, drive it for 2-3 years and then sell it on again? These days, if you take care of a car properly, nothing serious will go wrong for a good 7 years. So, plenty of people buy a car that is three years old, so they don't lose money when the car depreciates drastically, and then drive it for a few years and sell it before it starts having more expensive mechanical issues. 

If this is how you normally purchase a car, then you might want to consider a car lease. Buying a 3-year-old car, you can expect issues with the handbrake, brake discs, minor issues with electrics or the tyres. Nothing major, these things start to happen after 2-3 years, the parts that suffer wear and tear will need to be replaced. 

That's an additional cost that most people don't budget for. For a lot of people, having to find an extra £200-300 without any warning, to change the brake pads, is tough, people end up putting on a credit card which means they’re paying interest on that amount. So it ends up being £50-100 more expensive when we finally pay it off. Plus you are always playing with fire. 

If something more serious does go wrong, then you are faced with a dilemma. You could end up needing to find a large chunk of money, to fix a major mechanical problem. We all know someone who ends up paying out a lot of money for major repair work on their car when rightfully they could expect their car to be good for a few more years. 

So, why lease?

When you lease a car, you have a brand new car, brake pads and handbrakes are brand new, the car is under full warranty, there’s no car tax. You have a pre-agreed repayment each month and no nasty surprises. You've reduced the risk considerably and it's so much easier to budget. Do you normally buy a new car from a dealer? If you buy a new car, you’ll know there’s nothing like the smell and feel of a brand new car. 

One the biggest factors when looking for a new car is the deposit. As soon as the car leaves the forecourt, it’s going to depreciate by 15-20% in value, and you’ll be expected to cover that. With car leasing, you have more flexibility with the upfront cost. You can pay something similar to a normal deposit but equally, you can pay little or no deposit. Car leasing gives you that flexibility. 6 months or 3 months or just the first month upfront. 

The big difference is the risk. When you buy a car, you have to concern yourself with the price of the car after 2 or 3 years, when you plan to part exchange or sell it for your next new car. For example, now, used cars prices are plummeting, but new car prices aren’t really moving. It means you’ll be losing more money over the period in which you have the car. But just as importantly, it’s an unknown. Who knows what your car will be worth in 3 years time. Will you be lucky or not? 

With car leasing, there’s an advantage. That’s a risk the finance company takes. They concern themselves with the value of the car when the lease period has finished. You just agree to your deposit and your monthly fee; the market can fluctuate as much as it wants, it does not affect you. 

One of the main advantages of leasing, whether you’re buying a new car from a dealer or you’re buying a good quality used car, is that you get more for your money just because of the way leasing works. The cost of leasing a car is the difference between the cost of the finance company buying a car, and the value of them selling the car after the lease has finished. In this case, a car that “holds it's value” or doesn’t depreciate quickly, is a much better lease car option that a car that does. 

The types of cars that hold their value better are the better quality premium brands. Mercedes, Volkswagen, Audi, Nissan, BMW. A lot of people would never be able to afford these brands normally, but with leasing, they can work out a better deal. 

However, I would be wary of leasing a car if you don't have very stable employment. You're committing to 3 years of monthly payments. If you're not sure how safe your job is you might want to consider a runaround until you can be sure. Or alternatively, look at our 12 months lease deals. 

Otherwise, I think car leasing is something you should take a serious look at. If you want to have a look at real options, give us a call, and we’ll talk you through options you have in more detail.