Lease or buy car

B

Broadcaster

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We are driving 2012 Peugeot 3006 and thinking of either trading it in and buying a 2 year old car or perhaps this time go the leasing route.

Has anyone experience leasing ..good or bad idea.
Cost of a 2 year old car will be approx €25k which is a lot to fork out in one go. Although leasing would mean we would never own the car that wouldn't bother us......in fact it would take away the hassle of trading in 4 or 5 years later.

Any other negatives?
Thanks in advance.
 
Trying to figure out the figures for leasing myself at the moment, not for myself but for someone else who is quite hard on cars.
They do drive about 50000km per annum. And a private lease not a business lease.
Some of the businesses offering private leasing seem to have an upper limit of 30000km per annum.
 
For post 1 - car marques are back doing low finance deals. Eg Skoda and VW are 0% . Many require 30% deposit, but may be worth a look.

For post 2, a standard bank personal lease is probably the only option at that mileage. But a decent car will give 300k +++ trouble free driving
 
Thanks peemac for your reply. We only do about 5000 km a year so low mileage. I see this advice on Nifi “buy appreciating assets, lease depreciating assets”. Although this is coming from a leasing company, it does make sense I suppose.

On their site a Skoda Karoq 1.5 over 36 months costs €522 pm with an initial payment of €6,500 so overall the cost is €25,292. Over 48 months it costs €30.3k. Buying a new Karoq outright is approx €35k so but you own it. Mmmm...maybe need to do more sums!
 
If it's a cost issue, why trading again after 4/5 years if you only drive 5000km per year.
After 4 years you would have spent 30k in leasing but own nothing. If you bought the car, you would be able to sell it with only 20000km on the clock so presumably a reasonable price. Personally, I don't see how leasing makes any financial sense. But I might be missing something.
 
Perhaps consider a PCP arrangement on a new car whereby you pay a deposit, then a relatively low monthly payment after which you have an option to buy outright if you’ve liked the car. Might suit with such a low mileage.
 
Broadcaster said:
Cost of a 2 year old car will be approx €25k which is a lot to fork out in one go.
Click to expand...

But you don't need to fork it out in one go.

Get a car loan. Then you don't have to worry about terms and conditions and you have have an asset after the loan is paid off.

If you want to hold onto it after 5 years, you can. If you want to sell it before the loan is paid off, you can. You have complete flexibility.

I drive about 5000 km a year and I still think of my 2005 car as my "new car".

Brendan
 
As others have said, why would you be trading in a car after 4/5 years if you're only put 5k on the clock each year? I would be buying a car with a view to at least 10 years ownership if I was in your shoes. I would also buy the best 2/3/4 year old car I could afford now and look after it well, that way you have a good quality car at very low annual cost relative to leasing costs. As Brendan said, if payment in one go doesn't suit then look at a loan. Main thing is, if you own it and mind it then financially this option is a no brainer compared to leasing.
 

For me, the need to fork out such a significant initial payment would rule out this option completely.

PCPs have their critics, but at least there’s an option to buy at the end meaning your monthly payments have counted for something. The initial payment might be higher but the monthly outlay is lower.

At the end of 3 years, you have the option to buy your 3 year old car for less than market value and with the added advantage that you will know its history.

New Karoq Offers

www.skoda.ie
 
What is the interest rate on PCPs these days?

It used to be 0% but I assume it's more now.

From Toyota's website it says "from 7.9%".

Getting a used car on PCP might be ok if you have the cash to buy it out after 3 years.

Brendan
 
Depending on what you are looking for it's possible to get a 0% PCP.

They can be a good deal provided you know you can make the balloon payment at the end of 3 years and you run the car for 7 or 8 years or even longer.
 
For what its worth, here is what I’d do in your shoes. You’d get about 4.5K for your car - put that with the 6.5K deposit you’d need for the new Skoda Karoq on lease. For 11K you could get a perfectly nice Citroen C4 Picasso (151), with plenty of k’s left in her (especially as you are doing low annual mileage). Then invest the €522 per month. Even at a modest rate of return, after 5 years you’d have north of 30K in cash with which to buy a nice brand new car or a really nice luxury 2 or 3 year old car that will last you 10 years or more.

I know its probably not popular advice to give as people (including myself) are attracted to the brand new car with low repayments, but buying older cars in cash until I could afford a new car in cash is a strategy that has served me well over the years.

A wise (and well off) man once told me he never buys a new car unless he could buy 2 of them in cash.
 
Salvadore said:
Perhaps consider a PCP arrangement on a new car whereby you pay a deposit, then a relatively low monthly payment after which you have an option to buy outright if you’ve liked the car. Might suit with such a low mileage.
Click to expand...
With such low mileage, the car will almost certainly be worth considerably more at the end of the PCP term than the final payment value. With a zero or low % rate this is a good way to finance a car you intend to hold on to, provided you can come up with the final payment at the end of the term.
 
DannyBoyD said:
Depending on what you are looking for it's possible to get a 0% PCP.

They can be a good deal provided you know you can make the balloon payment at the end of 3 years and you run the car for 7 or 8 years or even longer.
Click to expand...
Is that for new cars only? If so then I wouldn't consider it a good deal compared to buying a reliable second hand car especially as OP is a low mileage driver.
 
I'm one for hanging on to a car for as long as its road worthy and don't see the value in trading in every 3 4 years.

Not sure if there's any servicing included in your leasing plans, so that might affect the sums, but the way I see it is...

Leasing over 36 months: €25292 / 15000 miles = €1.67 per mile
Leasing over 48 months: €30300 / 20000 miles = €1.52 per mile

Buying at €35000 and keeping the car for 10 years / 50000 miles = €0.70 per mile and you still have an asset to trade in at the end of the 10 years

But I also wouldn't be one to pay €25000+ for a car that's doing that few miles
 
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