To buy or lease!!!! new car!

[merc7]

Hi, i am now toying with the idea of leasing than buying since MB giving good incentives on e-class& c class sport i have done my calculations found it no advantage in buying the car never leased a car previously any idea ,(pros/cons) appreciated thanks in advance

 

[gibsones135]

Hi merc7. Before I bought my C Class I also looked at leasing. As I run my own business there are benefits to leasing as far as the taxman goes. As it turned out my C Class came up and was too good an offer to turn down. However, I would certainly look at leasing for my next one. Have a look at this web site -you may have already- there are some very good tips on there. I know two chaps who have used this site and are chuffed to bits. The site is a little..... wierd, but worth persevering with!

http://www.lingscars.com/


cheers, Richard.

 

[PeterCLK]

This has been been discussed many times on here.

Take a look at this thread
http://forums.mercedesclub.org.uk/showthread.php?t=43926&highlight=pcp

There are others so a search may help

 

[luis@labaton.co.uk]

Buying outright, think of this to reach an answer " would you invest in a depreciating asset?"

 

[Rory]

I'm not going to get into the pounds and pence argument - it's been done to death by people who would argue black was white if it suited them.


Cautions I would have:
Bear in mind if you lease you need to be as certain as you can be that your circunstances won't change because you're pretty well stuck with the deal for the duration. Also, if your mileage goes up a lot then you could have a hefty excess mileage penalty.

Make sure there's some agreement about how end of contact damage is assessed and to to what standard - there are stories about people being debited many hundreds of pounds for cars that in their opinion were fine.

 

[jberks]

If your mileage is predictable and you will almost certainly change in the term then leasing makes a lot of sense. My only caution is what they're setting the end value to and whether you feel it will go up of down.
In my case, my mileage isn't predictable and whilst I like to change 3-4 years I also like the idea of being able to keep the car if things get a bit sticky - something I'm really appreciating at the moment.
Leasing also gives you the ability to buy something you couldn't otherwise afford as you never pay the whole capital amount.

 

[Blobcat]

I've looked at leasing previously and always appear to be missing something. Whilst I understand the payments and the guaranteed future value I can never get my head around paying so much and not having anything left to show for it at the end. My brother has leased an X3 an X5 and a Range Rover and in all 3 cases has had nothing left at the end of the lease. No deposit for another car just the option of another lease and the possibility of a deposit for another car assuming he wants the same make again. My mileage has previously been too high for leasing companies and I work my figures so that my car is worth nothing after 4 years, that way anything left is a bonus and as per jberks above I can keep it for awhile longer or sell or trade and am not tied to anything. I could also change my car early with no penalties if my circumstances were to change.
A friend at work has just leased a new CLK220 and has set his figures so that he hands it back after 3 years. He has budgeted for all services and tyres and is likely to be on a fixed mileage. He has just come out of a full company car and doesn't want the same risk as myself so in his circumstances I can understand why he has chosen to lease. He will however have paid out a great deal of money and only have a empty space on his drive in 3 years (with no oil stains I hope...)

 

[hawk20]

I'm not going to get into the pounds and pence argument - it's been done to death by people who would argue black was white if it suited them.


Cautions I would have:
Bear in mind if you lease you need to be as certain as you can be that your circunstances won't change because you're pretty well stuck with the deal for the duration. Also, if your mileage goes up a lot then you could have a hefty excess mileage penalty.

Make sure there's some agreement about how end of contact damage is assessed and to to what standard - there are stories about people being debited many hundreds of pounds for cars that in their opinion were fine.

Yes well you have certainly done your share of saying black is white on this topic.

You are not 'pretty well stuck with the deal for the duration'. The law sets out the terms on which you can leave early and does so in a way that is perfectly fair to both sides IMO. I ended two PCP deals early and was very happy with the figures involved.

There is no need at all to know your mileage in advance. The penalty for extra miles on most MB leases is remarkably small IMO and roughly in line with the effect that extra miles have on depreciation figures. On a £20k 2 litre A class the mileage penalty is about 6p per mile. Two thousand per year over the planned mileage adds a penalty of £120 per year or £360 over the three years of a normal PCP. Very small beer indeed.

If you are looking at an E class, the current offers on the MB website are very hard to beat buying any other way. Detractors with closed minds won't let the sunshine in but check the figures. Buy on HP and see what interest rate you can get. Bet it won't be the 5.9% APR on a PCP deal.

Check the dealer's contribution (which actually comes mainly from MB so you can get more discount still from the dealer). You may find it hard to beat that when you buy for cash or on HP.

Then look at the GFV. They are guaranteeing it at over 50% of the price you pay. There is no way that a new E class will have a 50% residual in the real world, in the UK, in three years time. So buy it outright and you will have more depreciation.

A lot of HP deals at dealers want an APR of 14% or more. You don't need a huge brain to see that 5.9% APR on a PCP just might be worth considering if your alternative is to do HP or get a loan from a bank or finance house.

Company leases offer even more benefits.

 

[hawk20]

I've looked at leasing previously and always appear to be missing something. Whilst I understand the payments and the guaranteed future value I can never get my head around paying so much and not having anything left to show for it at the end.

You say you can’t get your head round paying out a lot of money and owning nothing at the end of the contract.

It is simple, really. All leases/PCPs etc are just like renting. No different conceptually from renting a TV or a cottage in Devon for a holiday.

With the car you are paying the full annual cost of depreciation and interest on the capital tied up in the car.

You are not buying any equity in the car unless you choose to exercise the option to purchase after 3 years. And/or unless you get a windfall gain if the market value after 3 years happens to exceed the GFV.

You are in every real sense renting a car on a three year contract, but with an option to purchase at an agreed price, if you wish to do so. And you don’t need to decide now, you can wait and decide in three year’s time, assessing your circumstances and preferences at that time. Very nice.

If the numbers are good, these deals can be just right for some people. And they have the advantage of showing people just how high is the annual cost of owning a new car these days.

 

[Rory]

Yes well you have certainly done your share of saying black is white on this topic.

Well done for completely confusing Leasing and PCPs.

If I were you I'd delete your post and hope nobody else notices.

 

[hawk20]

Well done for completely confusing Leasing and PCPs.

If I were you I'd delete your post and hope nobody else notices.

Think long and hard and you will see the similarities are far greater than the differences. Leasing or PCP's are merely forms of renting. Payment patterns are often slightly different, and companies gain from different tax arrangements. But look beyond the superficial and the generic similarities are quite clear.

 

[hawk20]

If it helps, to see how close PCP's and lease deals are, the figures from the MB website are interesting.

The lease for companies (on a E class 220cdi saloon, auto etc etc) has payments of £1,185 up front followed by 35 payments of £372 making a total of £14,136 over 3 years.

The PCP for private individuals has a deposit of £4,500 and 36 payments of £319 making a total of £15,984 plus a £180 'acceptance fee' -- £16,164 in total.

But add VAT to the company lease and it would total £16,256 which is a very similar amount.

The PCP deal is essentially a rental deal but with an option to purchase at the end.


It is a shame that manufacturers have used fancy names for PCP’s like ‘Agility Agreement ‘ and so on. This has clearly confused many as these threads show.

Really the choices are simple. We can buy -either for cash or with some version of deferred payments like HP or a bank loan.

Or we can essentially rent – either with an option to purchase as with a PCP or without such an option –as with contract rental/leasing etc.

If this was made clear these threads would simply be about to buy or to rent and far fewer would think PCP’s were some plot thought up by the devil.

 

[Rory]

If it helps, to see how close PCP's and lease deals are, the figures from the MB website are interesting.

The result they produce can effectively be very similar BUT they are fundamentally different financial products with VERY different terms and conditions.

...and just because you did well with your PCP termination it doesn't mean everyone will - many people are shocked to find out that the GFV, for example, is only guaranteed at the very end of the term, and that the way PCPs are constructed tends to cancel out consumer protection regulation benefits.

 

[hawk20]

The result they produce can effectively be very similar BUT they are fundamentally different financial products with VERY different terms and conditions.

.

Perhaps you could kindly give us three examples of such differences -that are important and not trivial - other than the option to purchase, and the tax differences that I've already mentioned.

IMO they are basically two versions of what is essentially a three year rental agreement --one with an option to purchase and one without. I don't see how the tiny details of T's and C's can alter this basic fact but I'm always open to be convinced by a good argument.

 

[Rory]

Perhaps you could kindly give us three examples of such differences -that are important and not trivial - other than the option to purchase, and the tax differences that I've already mentioned.

For private individuals (rather than businesses) Leasing and buying are for people who know what they want. PCPs are for people who aren't sure.

The fundamental difference is that Lease is rental, PCP is a loan (HP in another name).

Leasing should always be cheaper, and it includes road tax for the duration. However individual deals can distort that, and we've discussed at length on previous occasions why it suits manufacturers to offer extra support to PCPs.

Leasing usually requires little or no deposit. Small beer to you (and me) but some people can't just plonk a £5K deposit on their debit card.

In situations of absolute distress, it's cheaper and more straightforward to get out of a personal lease than a PCP, especially if the vehicle has an uncertain residual value.


Oh, and the excess mileage warning I gave wasn't meant to be about doing an extra couple of K. I'm talking about where someone gets made redundant and is forced to take a job that involves perhaps a 100mile commute vs their previous 20 mile round trip. So they're putting 30K/yr onto the car instead of 10K. OK, you (and I) would budget for that, but in the real world many people would hand the car back and then be stunned by the excess mileage charge.

 

[hawk20]

The fundamental difference is that Lease is rental, PCP is a loan (HP in another name).

.

Oh boy! A lease is just as much a loan as a PCP. More so in fact as the deposit is smaller. In both cases you pay a deposit and a monthly sum for the use of the car for, say, three years. The amounts vary but the principles are the same. One offers an option to purchase at the end; the other doesn't.

 

[Rory]

far fewer would think PCP’s were some plot thought up by the devil.

They were invented by the car industry - that tells you everything you need to know!

 

[hawk20]

They were invented by the car industry - that tells you everything you need to know!

Yes indeed. Trying as usual to give the public what they want.

 

[Rory]

Yes indeed. Trying as usual to give the public what they want.

"they" being the car industry.

 

[*Thumper]

Why do people rattle on about depreciation .............. it's a damn car ....... not a piece of gold bullion .................. you use .............. it's value drops !

Cars are consumables .................. the only time the word asset, means anything, is when it's on a companies balance sheet.

I give not one hoot that my car will be worth, less in 3 years time, thatn it is today ............ I care not, that I drove it out of the showroom, and alledgedly lost around £4K ................. that's a crock of crap to start with ...... cos my car aint for sale ........... and when it is ......... I will have used it............ a lot .............. that has value to me.

So will people, stop try patronising one another about depreciation ............ if you can't or won't afford a new one, and all that comes with it ........ then don't !

Rant over !

A PCP is an excellent vehicle to get hold of a new car ............... your only financing the difference between the purchase price, and the future value of the car ............ and with cheap finance around at MB, it's a no brainer ....... wether you can use a calculator or not

Go in ...... screw em down on price, for a good deal........... then ask em to finance it via a PCP .....................

I was prepaired to buy my car outright ........ but took a PcP, and am financing around £14K at present ................ and, More importantly, you can get out of the contract at anytime (consumer credit act 1974)

My opinion ..lease companies, dont pass on the benefits and keep more margin.