My personal car lease is coming to an end in June so I plan to hand the car back (rather than paying a balloon payment and suffering the depreciation to buy it, especially as I don't particularly like it anyway).
I'm trying to figure out whether it is worth putting off getting a new leased car until after lockdown is lifted and I might actually use it, so saving monthly payments for a while, or getting one during lockdown in the hope that better deals might be available due to nobody buying.
Presumably due to interest rates being at an all time low, leasing is still the right thing to do?
Not looking for anything exciting, just a family car as I have two young children, and I don't put many miles on it, living in London and taking the tube if I go into town. Currently I have a Renault Kadjar on interest free credit, mainly as they gave me 2k towards it for trading in an old Golf I was about to scrap that was a temporary car.
Probably would like a slightly larger SUV, like a Volvo or a Japanese brand, but open to suggestions. I suppose would be buying without a test drive due to restrictions, that is if it is even still possible to buy.
Any thoughts you might have would be appreciated!
Timing the market is going to be pretty difficult - we are about to see a wave of mass redundancies as companies come to the end of the furlough scheme - so it could the deals are better just after lock-down ends and the great depression starts to bite properly.Originally Posted by mindforge
Indeed, I'd not be surprised if there was a significant glut of 2-3 year old ex lease cars on the market in a few months so there are likely to be bargains to be had.
Sad to say that you'd be benefiting from someone else's misfortune but I suspect that's where we'll be.
Id be interested to know (perhaps I'll do some lock down research) on the actual cost of manufacture etc. as I've a nagging feeling that car prices have been inflated in recent years to make the lease deals look more attractive. It's long been said that the cars are only there to make people take finance which is where the money is made.
If a £20k car is worth £10k after 3 years, a lease deal looks even more attractive if the list price of the vehicle is inflated to £40k but it's still worth £10k after 3 years. The punters are still paying to finance depreciation on a £40k car though.
I get what you're saying about depreciation. But what you're suggesting is buying the car outright? I prefer the finance option as I don't have the cash having just renovated my house... If it is that good a deal I could stretch to it I suppose.
That’s a pretty poor analogy I think. I had a new E Class on PCP back in 2016. It was a W212 and the W213 was due out so I managed to get my local dealer to match a Coast2Coast cars quote of just over 28k. It was an 8.5K discount or thereabouts.
Absolutely no artificial price increase whatsoever. Even now (I just looked) you can get a brand new E Class off C2C cars for 30K and that is with PCP available. I can’t remember far back enough when the E Class was a 15-20K car (using your example of making a 20K car a 40K car.
Why not work out what monthly payments you’re comfortable with, and get a bank loan with similar monthly payments and just go and buy a car.
Loads of decent low mileage 2 year old cars around at sensible money. Sounds like you don’t do much mileage, is a new car needed?
OK, my figures were exaggerated for effect (and to keep the sums easy). I fully understand that the monthly outgoings are lower because folk are only financing the depreciation and not the residual asset value too, however if people are consistently saying that the amount they are paying to lease is less than the actual depreciation would have been then the figures don't add up.
People saying they are not going to buy the car at the end of the lease term as the value is less than they'd be asked to pay is nothing new, and if this is happening a lot, either all the manufacturers are losing massively on the resale of used vehicles or they are making the money at the front end to offset such that overall the business model works.
It’s similar to house prices - there’s probably going to be a drop in values but no one yet knows how much. The end of June is still 8 weeks away, so if it was me I’d personally do nothing for now and wait it out. Worst case scenario you could just take a bank loan and buy a second hand car at a cheaper deal than before this started. Best case there could be some excellent lease deals with immediate or quick delivery.
Main reason for not buying a second hand car is I know nothing about them and have no way of knowing if I am getting a good one or not. I agree don't particularly need a new one.
It depends on how hold the second hand car is I guess. I just bought a 2019 E Class for 23K for work. It’s still got almost two years of unlimited mileage warranty left on it, and it was a considerable saving over new.
The manufacturers won’t be losing massively, the fact that PCP deals have been around for a number of years now and if anything they are getting pushed by the dealers even more, so the sums must add up.
Take the price example I gave earlier from C2C cars. The lowest spec E Class has a list price of nearly 39K yet you can get a brand new one, albeit one that is already in the system, for just under 30K through C2C. It’s still a car sourced from a Mercedes dealership.
Now not everyone knows about the fantastic deals you can get through brokers, so the average punter will walk into a dealerships and probably walk out feeling pretty smug have securing say a 2.5K discount off their new car. That is a nice profit for the dealership who can then afford the small negative equity offset at the end of the term.
It likely that some of the big car rental company will go under with ten of thousands of car hitting the used market price may drop 25%. In 2008 I went into a BMW dealership and got 22% of sticker on a 9 month old 3 series 60% of list price. Your in a good position to take advantage In June.
I think you're making my point for me.
In your example, that £39k car can be bought for either £30k or £36.5k (or £39k for that matter). Both cars will have the same value at the end of the lease.
I'm pretty sure that the dealer wasn't making a loss when they sold you that car for £30k, just not making as much as if they sold it to the other guy. And they'll not sell you that car at a tiny profit with an expectation that they'll make a loss greater than that profit when they take it in at the end of the term. That wouldn't make sense.
They'll not use the profit from customer A (£36.5k man) to offset a loss from customer B (you). If they would lose on B they'd only sell to customer A.
Customer A is simply financing an additional £6.5k of made up depreciation. And it's the finance where they make their money.
Don’t forget a 40k list Mercedes won’t cost Mercedes anything like 40k to make.
Cheers..
Jase
Get a bank loan and buy a decent second hand car in warranty. Or go on leasing.com and get an outrageous deal on a Volvo V90 or equivalent. It's the same inside as the XC90 and usually a big bargain.
I hear what you are saying and you are correct, but the point I’m trying to get across (badly) is that manufacturers have ALWAYS made big profits on their cars, but with PCP and broker discounts the profit per vehicle has dropped, but by offering what appears to be good deals on PCP’s they are shifting more volume.
I will say at this point that the above is my opinion only, I have no figures or proof to back this up.
Bottom line, they don’t have to falsely increase the value, they are just shifting more cars at slightly less profit per vehicle.
Not sure if it's still the case as my time in the car world was during the late 80's (small citroen/lancia dealership). But dealers used to get a kick back from the manufacturers according to how many cars they had sold in a given period.............there were certainly good deals to be had at the end of the month - particularly if they were one sale short of target.
OP - would drover or something similar be worth considering for the short term.
If I was in the market for a new car I'd be tempted to buy a car off the forecourt, dealers will have plenty of stock to shift after this lockdown and will be heavily discounting either 70 plate or late 69 plate cars
Alternatively buy a cheap secondhand car to last you a few months and then spend some time shopping around and find something that you like and then decide whether to buy new or finance etc
Presumably the Drover price works out more than taking a risk on a longer term lease for 3 to 5 years? Might be good to bridge a gap between cars though.
That's what I did previously but it was a pain to offload the second hand car and to be honest I don't have the time or interest in cars to do that much. That's why I prefer getting a new one by lease, less hassle...
I would guess so, but I have no idea as to what their pricing structure is.
I practice bangernomics, I buy an old snotter with good service history, recent clutch and cambelt change, and then run it into the ground. I maintain it, but if something major goes wrong I simply junk it. It's a policy that has served me very well over the years.
I like the higher position of a SUV but would be happy with the estate version if it's a good deal! I like the idea of the plug in hybrid version as I have a power point outside in the drive.
I appreciate that's the right thing to do but I know nothing about cars...
Just had a look at leasing.com and the V90.
For a V90 T5 Inscription plus on a 2 year lease. 15 thou miles a year.
£4595.04 up front.
£484.56 per month.
Total £15739.92.
Or work it out at £655.83 a month.
Very nice car. Tested a few in February. Went for the S60 instead. Not leased or PCP. That monthly payment is close to the state pension.
Thanks. Well sod that then!
See if you can extend current lease for a couple of months then review a new lease when things have settled down
That’s a lot of money each month to wind up with nothing.
Yes, I agree. Currently paying £230 a month which is much more palatable....
Can I clarify? You said in your first post there was a balloon payment and then you mentioned lease. Is is PCP deal or a lease ?
You'll lose less money and time offloading the used car through Carwow than you will if you rush into another lease
Not sure on the exact terms but I have the option at the end of the term to hand the car back if I elect to, or it defaults to my having to pay the remaining amount of the loan and then keeping it.
Not a lease then a pcp deal
Lease you pay monthly and then HAVE to hand the car back, pcp you have the option
You might be lucky to extend the deal on your current car but i'd start looking online now and get an idea of what you want vs what you can afford
Nah they are very inflexible and difficult to deal with so there is no way they will do anything like that.
Yup that's what I'm doing but I really don't know. A plug in hybrid SUV, a bit larger than a Qashai, would be ideal for me.
I have a V90 and love it, got every option and its mine to own, which I am happy with as I plan to keep to for 5 years or whilst the youngest is still running around. I looked at the lease deals and and by the time I specced it up did not seem worth it IMHO>
Wife's RR will be going and decided what to buy at the moment; maybe something bot more fun.
What car do you have now? My 16 plate Merc on PCP has just this month come to the end of the agreement and Mercedes finance have given me the option of extending the agreement for a further 3 months.
They can’t collect the cars at the moment, and you can’t take them to the dealership because they are all closed.
Give them a call or email, they may be more flexible than you think.
The S60 and V60 models are more expensive as they're more desired. I would rather have the S/V60 but would go 90 due to the value (similar to the deals on a Skoda Karoq Vs Kodiaq).
There is an in stock S90 on leasing.com now for £314pm (total cost / 48 month term) or just under £3.8k per year for a brand new executive saloon. This is on a 15k miles pa basis. Drop down to 10k miles and on the same basis it's £3,425 per year or £285 per month.
Of course if you go looking for a top spec anything you will find a £600pm option. With something as high end as a V/S90 you don't need to go top spec. If you're buying to keep then sure, but for a 2-4 year car which you'll never own, who cares?
I bought a 3 year old GLC from a private seller who was due to give it back to the dealership for £600 more than his balloon. He took it on a 10k miles pa basis but only did 16k after 3 years so good deal indeed. I would go this route every day of the week if OP has the cash to lump or is happy to take a competitive bank loan but some people prefer leasing.
Renault Kadjar. It is terrible and Renault are awful to deal with. I have barely used it though, so must be worth something...
Ok so collective wisdom is, unsurprisingly I suppose, cash is king and I am better off buying a car which is 1 to 3 years old, having already depreciated, preferably which is still under warranty. Got to decide what though!
Pre-reg is a good option too. I saved a third off list on a pre-reg 4 series with a sum total of 9 miles on the clock. I pay for it through a bank loan with very low interest (much better than PCP) and will have paid it off fully over what would normally be a PCP term, but with no balloon payment at the end.
Nice. Where do you buy from, a dealer?
I always purchased my cars up until four years ago, when my mate opened my eyes to leasing.
New car every two years, only maintenance is one service, no tyres, no tax no nothing apart from fuel.
Peugeot 208 GTI by Peugeotsport, 6x23 £133 per month
Abarth 124 spider 3x23 £205 per month
My latest arrived just before lock down, Renaultsport Megane RS280 3x23 £222 per month.
Works for me and many others, awaits the ‘but you don’t own it comments’ that’s the idea I just get to rag the arse off them for two years & hand them back
Well that had always been my thinking. I don't want to own them! Those deals seem very cheap. Where did you find them?I always purchased my cars up until four years ago, when my mate opened my eyes to leasing.
New car every two years, only maintenance is one service, no tyres, no tax no nothing apart from fuel.
Peugeot 208 GTI by Peugeotsport, 6x23 £133 per month
Abarth 124 spider 3x23 £205 per month
My latest arrived just before lock down, Renaultsport Megane RS280 3x23 £222 per month.
Works for me and many others, awaits the ‘but you don’t own it comments’ that’s the idea I just get to rag the arse off them for two years & hand them back
Pistonheads has a car buying thread, I used the info off there to get my first & current deal ( you have to be quick as these were limited numbers at these prices) the 124 I managed to get from my local dealer using the info from that thread as proof.
BMW Approved Used. They wouldn’t deliver, so I had to collect from the only BMW-owned dealership - Park Lane. Quite a long day’s driving up to Edinburgh, but done in a day as I needed to fly out on holiday the day after. Quiet roads were good fun.
That's quite a drive! Must have been fun in the new car though.
Wouldn’t think it would be that much fun.
Unless he found an interesting route.
I’d strongly suggest waiting until the market comes back when dealers re-open. Leasing is the way forward in my opinion.
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Well, relatively, better in a new car than an old one. Some people enjoy driving. I don't...
Once it got quieter and closer to home it was better. Early evening on the A68 after the tourist traffic had died down was good. Parts of Scotland (especially much further North) are almost empty on the roads from 5 onwards. In summer you can get 5+ hours of open roads before it’s dark.
I’m confused. You don’t appear to do many miles, but want to buy a hybrid - why?
Imho, if you’re not that interested in cars, wait until prices plummet around June as others have suggested, get a bank loan and buy a used approved not french car with a years warranty from a half decent company like VW, at a good deal. Get a small engine petrol model with low emissions and insurance (no point getting something sporty to do low miles in a city and pay higher insurance and road tax unless you’re a petrolhead). Do some research using something like honest John to work out which models are most reliable, engines to avoid etc. Aim to keep the car for 10 years, find a decent local garage once the warranty expires, learn where the oil and coolant go, just the basics, have it serviced regularly and you’ll have cheap motoring. The other advantage is that any small bump or ding won’t bother you, nobody will try to steal your ordinary car, you won’t be that worried if the kids spill a drink in the back etc
I think the ‘new car every 2 years’ crowd think that cars dissolve when they’re 2 years old with 15,000 miles on the clock, and an oil change is £500!
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Last edited by RobDad; 4th May 2020 at 12:14.
I'm toying with the idea of buying my lease car.
Overall it works out as about a 7.5K discount on the new price (once you've taken into account what I've paid and what they're looking for, for it now).
That's around 20% off the new price and they're asking around £3-4K less than most places have the same car in the same spec, mileage, age, etc (not many do, though).
On the other hand, I wouldn't GET 3-4K more and I've still got to find a big chunk of money to pay for the car.
I still haven't made my mind up and I've got about 10 days to do so.
M
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