Lease or Buy

[mercuk]

Hi

I only do around 8k per year and treat my MB with care. I have been considering a change and came across this lease info on MB website. Having never considered lease before can anyone confirm if my maths add up.

1) According to this page

http://www2.mercedes-benz.co.uk/con...ome/new_cars/offers/c-class/saloon/lease.html

Lease is: £975 + 11375 + VAT = £14,511.25 for 3 years

2) C 220 CDI Sport Saloon List Price: £28,349.14

3) If i bought the car according to parkers etc the above car would be worth approx £13,000 after 3 years

Although the above figures will not be exact, it appears if I intend to keep a car for only 3 years I could possibly, in some scenarios, be financially better off with a lease.
Thoughts?

 

[Rory]

Yep, you're right.

If it's a personal purchase (rather than company) then the dealer may push you towards a PCP. They may decline to offer you a lease on the same terms as they're aimed at companies and they're not structured to allow for consumer credit regulations. lease usually includes annual road tax.

The advantage over buying is a bit of gamble but unlikely much would change - what you do get with lease or PCP is certainty at 3yrs. If you take the car as offered then it may well be unbeatable. Perhaps the main snag is if you start adding other options then it can really bump up the lease / PCP cost.

Also you need to be pretty certain of your situation over the next 3 years - it's hard to get out of a lease (look at the termination penalty and make sure you can live with it - typically it's half the outstanding payments, but it could be all of them) and the PCP can be difficult (expensive) as well as they're structured to get around consumer credit regulations. If your mileage goes up dramatically (perhaps you have to change jobs) then you'll be looking hefty excess mileage penalties.

All things being more or less equal, PCP would be the best as you can keep the car if you want to - with a lease you have to hand it back. PCP doesn't include road 2nd & 3rd year road tax.

 

[jberks]

The apples and oranges part of this is the discount. The lease already includes it, the cash price doesn't.
Lease wise - you're looking at 14.5k and cash 15k. However, topgear mag for example suggests a £3k discount should be achievable so that would be 12k for cash.
However, the lease also includes interest. If you put a similar amount down on a loan you're looking at more than £3k interest so back to lease.
All that said, new cars aren't selling too well which should mean that, assuming things have improved by then, that 3 year old cars in 3 years will be selling at a premium and if you own it, you'll get more than 13k back. All tricky.

It all depends on how much you can afford to put down IMO. On a lease you're paying interest on the whole lot, on HP you have more control.
Personally I buy an ex demo / 12 month old car, saving the vat and major depreciation, put down a decent deposit, take the rest over 3 years and then keep it for 5 years minimum.

 

[merc7]

Pcp allthe way

Hi meckuk ,i just done pcp deal never leased/pcp car before ,from the old school always hp,but now it is to me imho no brainer definitely pcp,especially if u keeping the car for three years,would you invest all that money in a depreciating asset?,why would you put big deposit/higher monthly payment?! with pcp mb contributing money towards the car as well guarantying the price end of lease so no worries ,ps if u intend to buy the car end of three years(finance) the purchase value pcp is the wrong option will the most expensive mercedes you buy. the new c class sport is a dream
Good luck:lol:

 

[geoffreyw]

Punctuation

Don't you know anything about punctuation Merc7? Very difficult to read.

 

[merc7]

English my second language!!,i i thought was doing not bad but point taken i will try harder next time

 

[carabind]

If you keep for the same three year period, not a lot in it. But owning the car gives you total freedom ie keep it 1 year or10, up to you.
I am of the same school as J Berks above ie " buy an ex demo / 12 month old car, saving the vat and major depreciation, put down a decent deposit, take the rest over 3 years and then keep it for 5 years minimum. "

Leases still have to generate a return for whoever you're leasing from! So in effect someone's still making margin from your transaction!

 

[merc7]

That also make sense too,buying ex-demo,i did that last september bought my wife a c-class(203) 9 months old 12k on the clock 57 plate for £13000 from mb dealer,it depends what you want to do ,historically i never kept a car more than 4.5 years so i thought pcp was a good deal for a change!

 

[mercuk]

Thank you for all for the very helpful replies.

The lease option has really intrigued me. As mentioned the problem might be getting a dealership to offer this to me on a personal rather than company basis.

I have the £30k to buy a car outright but I also like doing well financially. Even at todays low interest rates the £15,000 left and the deducting monthly payments over three years would earn me over £2,000 in interest making leasing even more financially attractive.

 

[merc7]

mercuk i take it you had a look @ the national Mercedes offer on the web??!!.
I think you be very lucky to get a grand in interest if you bank it :Oops:
Good luck to whatever you choose

 

[hawk20]

Several points. Good to see more fans for PCPs and leases!

Second, you cannot take the MB lease as a private customer. It looks cheap as business people get the VAT back. Private people don't. But you can contract hire/lease from various companies and pay the VAT.

PCP is really the private person's equivalent of a company lease. Except that you have the option to purchase after three years.

In many ways the PCP is more flexible than owning. At the end of 3 years you can buy the car outright for cash at the Guaranteed Future Value; or you can refinance it and buy it on HP or a bank loan; or you can part-ex it against a new car (maybe having a small surplus above GFV to use towards a deposit - but don't bank on it nowadays); or you can just hand it back and walk away (after paying for any damage or excess mileage).

Excess mileage charges from MB are very low despite what many will tell you. And every time I have checked it costs about the same whether you declare higher miles in advance or pay them after the miles are done.

Extras do add to the cost of a PCP but no more than they would add to someone buying for cash. If you buy an extra that adds nothing to the resale value in 3 years time, then you pay all the cost of it -as you should. If you choose extras like auto, or leather that add to resale values you only pay a proportion of the cost over the life of the lease (because some extras increase the GFV).

The big gain of PCP is that some of the deals are hard to beat any other way; plus you keep your capital to invest elsewhere; plus you have guaranteed depreciation (useful nowadays). But think carefully if you really want to be tied for 3 years (subject to some get-out clauses) and whether it is safe for you to do that.


There are big gains from buying year old/nearly new cars much of the time. BUT if you want finance, I have never seen any dealer doing that at rates that come anywhere near the rates MB offer on PCPs. At the moment my local dealer is offering PCPs at under 6% or HP at over 14% APR. Really affects choice for some.

 

[*Thumper]

Totally agree with the above post ........... when I got my new car, a month ago ..... it was cheaper to buy new, than to buy anything at MB Direct, or anything on the secondhand lot at the franchised dealers .............. the low rate finance deals through a PCP, are no brainers at present ..............

OK so apparantly the doom mongers reckon I've lost 3-4K on it already ............... I dont see how .... cos it aint for sale for another 3 years at least........and at that time, I can either hand it back ............ of take it on ............... I'm a high milage user, so my figures reflect that.and am paying a hell of a lot more than the advertised rates on MB's website !!

 

[Rory]

Several points. Good to see more fans for PCPs and leases!

For the avoidance of doubt, I'm not a fan of PCPs, but individuals can't change the world so you have to take the best deal available. If you're looking at a £30K car, and you've got a spare £30K sloshing about, then it's nice to have the luxury of being to choose the aquisition model which suits you best.

It so happens that MB has chosen to offer greater support to PCPs than it offers to other methods of vehicle acquisition. There a couple of reasons why they do this, one is that it allows them to discount the cars without bombing the list prices (which is a good thing for all current owners) and another is because there is value to MB in a scheme which forces the customer to make a decision at the 3 year point.

While there are the choices that have been outlined, in many cases (and this is the value to MB) the most logical thing, and the thing that MB know most customers will do, is to roll into another PCP on another new vehicle. So get customers into PCPs, and in many cases, they'll take a new car every 3 years.


If dealers & MB would give the same discounts and would allow for the value of the finance support, then outright purcahse would become more sensible, and it leaves the owner with total flexibility. However they don't, so PCPs "appear" to be a good deal.


If you want to see really good deals and low APRs, have a look at the MB USA website.

 

[*Thumper]

Rory, Blame the Labour goverment for this ............ remember the day's of "anything off for cash guv?" ................... it bacame illegal to sell anything on consumer credit, cheaper, than cash prices . reason, so they say .......it descriminated against those who could only afford credit ...... what you see these days from the retailers, is the opposite ....... go into DFS with cash, and they cak there pants .............

 

[Blobcat]

For the avoidance of doubt, I'm not a fan of PCPs, but individuals can't change the world so you have to take the best deal available. If you're looking at a £30K car, and you've got a spare £30K sloshing about, then it's nice to have the luxury of being to choose the aquisition model which suits you best.

It so happens that MB has chosen to offer greater support to PCPs than it offers to other methods of vehicle acquisition. There a couple of reasons why they do this, one is that it allows them to discount the cars without bombing the list prices (which is a good thing for all current owners) and another is because there is value to MB in a scheme which forces the customer to make a decision at the 3 year point.

While there are the choices that have been outlined, in many cases (and this is the value to MB) the most logical thing, and the thing that MB know most customers will do, is to roll into another PCP on another new vehicle. So get customers into PCPs, and in many cases, they'll take a new car every 3 years.


If dealers & MB would give the same discounts and would allow for the value of the finance support, then outright purcahse would become more sensible, and it leaves the owner with total flexibility. However they don't, so PCPs "appear" to be a good deal.


If you want to see really good deals and low APRs, have a look at the MB USA website.

Whilst you might not be able to get a great discount on a brand new one, there are quite a few pre-registered ones available. End of last year a loaded E320CDI Sport estate could be had for just less tahn £30K as pre-registered with 0 miles. I think this is a better price than available on any of the finance deals. There are also lots of 3 month old C's, E's & CLS's available as the managers within Mercedes change every 3 months. I bought my E at 3 months old and it worked out at £17.5K less than list. I know I wouldn't have paid list if I bought it new but I wouldn't have had £17.5K even with "Blobcat" discount.
They did try to push me into one of their finance packages and they did say that I couldn't get a better deal anywhere else. I had already run some figures and they couldn't get close to what I'm actually paying.
If you must have new then the finance may well work out for you, if you are prepared to take a pre-registered one or a 3 month old one and prepared to look for one then you could very well get a bargain.

 

[Alex M Grieve]

Whilst you might not be able to get a great discount on a brand new one, there are quite a few pre-registered ones available. End of last year a loaded E320CDI Sport estate could be had for just less than £30K as pre-registered with 0 miles.

I had already run some figures and they couldn't get close to what I'm actually paying. If you must have new then the finance may well work out for you, if you are prepared to take a pre-registered one or a 3 month old one and prepared to look for one then you could very well get a bargain.

The sums are not difficult, but confronted with lots of numbers, APRs and a salesman saying that their deal can not be beaten, it is easy to be confused.

You may need to pay a higher rate of interest on a personal loan - but you would be paying interest on a much smaller loan, so the amount of interest will be less. The depreciation will also be less.

I ran the figures for company PCP v buy second hand on HP when choosing my last company car. The figures were identical until the end of year 3. At that point, the PCP had a final "balloon" payment, but the car bought on HP was fully paid for.

 

[Blobcat]

The sums are not difficult, but confronted with lots of numbers, APRs and a salesman saying that their deal can not be beaten, it is easy to be confused.

You may need to pay a higher rate of interest on a personal loan - but you would be paying interest on a much smaller loan, so the amount of interest will be less. The depreciation will also be less.

I ran the figures for company PCP v buy second hand on HP when choosing my last company car. The figures were identical until the end of year 3. At that point, the PCP had a final "balloon" payment, but the car bought on HP was fully paid for.

Agreed, I had an email recently with a personal loan offering 78.9% apr, paying back ~£4,800 on a £2,500 loan ouch.

 

[hawk20]

The sums are not difficult, but confronted with lots of numbers, APRs and a salesman saying that their deal can not be beaten, it is easy to be confused.

You may need to pay a higher rate of interest on a personal loan - but you would be paying interest on a much smaller loan, so the amount of interest will be less. The depreciation will also be less.

I ran the figures for company PCP v buy second hand on HP when choosing my last company car. The figures were identical until the end of year 3. At that point, the PCP had a final "balloon" payment, but the car bought on HP was fully paid for.

Yes but you pay a lot less on the PCP as you are not buying any equity -just paying for depreciation and interest on capital.

You say the deprecaition will be less buying nearly new. Two points. First that depends on the GFV which on the MB offers has often been at least 50% of the price you pay (after discount). Hard to beat that in the present world owning the car yourself. And many have lost buckets from getting lousy residuals if they buy outright. Second point is hat those who need finance will often find that the APR on a PCP on a new car is miles less than the APR they want on secondhand cars or on HP. As I said before, my local MB dealer wants under 6% on PCPs but over 14% on HP or on secondhand.

Have alook at the CLK PCP offer on the MB website. Some are £6k off before you haggle and only 5.9% APR.

I am not saying the PCP is always better. Far from it. But it is sometimes especially if you want finance.

 

[Alex M Grieve]

Yes but you pay a lot less on the PCP as you are not buying any equity -just paying for depreciation and interest on capital.

You say the deprecation will be less buying nearly new. Two points. First that depends on the GFV which on the MB offers has often been at least 50% of the price you pay (after discount). Hard to beat that in the present world owning the car yourself. And many have lost buckets from getting lousy residuals if they buy outright. Second point is hat those who need finance will often find that the APR on a PCP on a new car is miles less than the APR they want on secondhand cars or on HP. As I said before, my local MB dealer wants under 6% on PCPs but over 14% on HP or on secondhand.

Have alook at the CLK PCP offer on the MB website. Some are £6k off before you haggle and only 5.9% APR.

I am not saying the PCP is always better. Far from it. But it is sometimes especially if you want finance.

In my instance the company took heed of the fact that on a "company car" you pay "benefit in kind", so their prices were adjusted to enable PCP purchase cheaper than that.

At the end of 3 years, however, with PCP you gave the car back (or paid the balloon payment). With HP the car was yours.

 

[Rory]

As I said before, my local MB dealer wants under 6% on PCPs but over 14% on HP or on secondhand.

14% isn't real though - it's like expecting you to pay list for the car. No one would borrow at 14% - Tesco will lend you money at 8% APR.

Well before the current crunch I kept saying "no" to finance from MB Direct - eventually they offered me HP at 2.9% flat with an APR at 5.something%. They were really miffed when I still refused it - so even at that level there still must have been something in it for them.