Vehicle leasing -v- purchase?

Question

As a private individual as opposed to a business company, am I better off to purchase a brand new or nearly new car or go for private contract leasing? I want a Nissan X-Trail Columbia diesel 4x4, 10k miles per annum, for 3 years. Quotes so far seem awfully cheap which make me suspicious. However, when purchasing, depreciation is a major factor.

I would like to have a new car every three years, so am leaning towards the leasing option at the moment. I have sent off for quotes but it's just that it all seems too good to be true! I am a mere novice at this, so appreciate all advice. Thank you all in advance!

It might help if I tell you that I am a divorced lady, 60 years old in December, and retired, living alone in the Highlands of Scotland. I never lift the bonnet apart from filling the washer bottle.

Answer 1

Hi ,
I have had a lease vehicle for just under 3 years , ( the normal term ) I found the whole experience to be very worth while.

All in the deal I got only cost me £ 276.00 per month for a brand new Focus fully loaded with Leather / ABS / CD / Climate control etc..

But you must consider the following :

1. The Mileage you will do is fixed and if you go over the total you will pay a hefty rate per mile so err on the side of caution when considering your annual mileage.

2. The contract may be cheap , but have you considered the initial payment , normally 3- 5 months worth of the rate charged in advance ( as a deposit / down payment ) , also delivery / collection ( end of contract ) charges , are there any ?

3. Servicing , some deals can include the option to buy a service / maintenance contract , this will pay for all the servicing / tyres , Road Tax and other consumables during the life time of the lease. ** again mileage is important. 365 Evolution did mine.

4. Insurance, with a lease you can also buy a block of insurance for the life of the lease ( I did 3 years in one go ! ). ASA Insurance did mine fully comprehensive & protected no claims.
( highly recommended )

5. Finally ... option to buy and the value of the vehicle at the end of the lease.. is there an agreed price ?

In summary... with the full package listed above I found it to be the best option for me that allowed me to budget ,for the next 3 years , my transport costs , ( except fuel ) and meant that I didn't have to queue at the post office for TAX / get an MOT / worry about unexpected service charges , tyres , insurance renewal or loss of bonus if I had an accident...etc...

I will do the same when this contract runs out and get a brand new car without worrying about depreciation or having to haggle on a trade in.

I hope this has been of use... good luck
Colin

Answer 2

One of the main advantages of leasing in business is that 100% of the leasing fee is a business cost and therefore tax deductible. When buying you ether have to tie up valuable capital in a depreciating asset (though depreciation is at least another tax deductible), if you borrow cash to buy, the interest is deductible but not the capital. Add to this the convenience of the car being owned by someone else and it makes good sense for a business.

As a private individual (where the tax breaks will probably not apply), I would doubt an advantage, the lease company may have more purchasing power and be able to buy cars cheaper, they are also in busines to make money and someone has to pay for their profit. I would say, anything they can do, you can do for yourself.

Find the best available price (on-line etc) for a NEARLY NEW car of your choice, buy for cash, choose you service agent carefully, look after your investment and get half your money back in three years.

Answer 3

The original lease agreement should spell out what the residual value of the lease is. The current payoff should be the residual plus remaining payments minus a little interest. If you have not paid your last lease payment, you can still trade in your car. You need to find out the payoff. Either you can find that out from the lease company, or your dealer can. If your car's ACV (actual cash value), (not trade in value) is more than the payoff, then trade it. If it is worth less, then let the lease expire and let the lease company take the loss. If you have equity, trading early to take advantage of your equity gives you the best of both worlds. You let the lease company guarantee the residual, and you benefit if they are too conservative. Good luck on your trade. By the way, you can trade on your next lease as well. You should consider that.

Answer 4

10k miles a year is not that much, which probably explains why its so "cheap"

if you are looking to get out of the car every 2-3 yrs and don't drive much, then the leasing option is the way to go. however, if you are a traveling salesperson, then getting a lease is not in your best interest. And you can also deduct lease payments from your taxes as business expense

Answer 5

I lease my car I have a new one every 12 months and I find it as cheap as buying a car. Brought new car in the past and lost so much on it. I have an old car for when I am just driving around at home and then the lease for work. Wouldnt buy a decent car again

Answer 6

it depends on how long you want to keep it, I buy cars and never sell them but if you want a new car every 3 years leasing is the way to go. If you dont mind driving a 3-6 year old car then buy if you have the cash, be prepared that at 10 years old your car will be worth 10% of what you paid, but probably still giving good service

Answer 7

One question to ask yourself is whether you see yourself buying/leasing another car in 3 years time, and if you're generally good at maintenance and upkeep of the car. If the answer is yes, then it may well be worth considering the lease. Pore over the fine print before you agree.

Answer 8

all cars will depreciate as soon as you drive them off the lot. There is now way around that.

Answer 9

You look a bit tasty , get in touch if you fancy a roll round in the back seat