Hey there! Sign in to join this conversationNew here? Join for free
x Turn on thread page Beta

Why do so many people lease flash cars now? watch

Announcements
    • Political Ambassador
    Offline

    20
    ReputationRep:
    Political Ambassador
    (Original post by Bill_Gates)
    This is for luxury vehicles though. You'd be better off buying a relatively older model with cash.
    You'd be surprised though - even with luxury cars, you'll probably still end up spending more or less the same amount on keeping it insured, taxed, MOTd and maintained where it's aged a bit, as you would leasing a new one. Plus as I said you're invested in it if you buy it, the insurers won't give you what it's worth or anywhere close if it's written off or stolen. Then there's the depreciation to consider as well, not a factor in leasing.

    I think the real idiots - and they're actually ten a penny - are those who finance new luxury cars. Practically just getting a loan and buying a car with it. You end up paying a big chunk of interest, it takes a few years to pay back, plus the car depreciates in value greatly by the time you're finished paying, not to mention you still have to find the money for the insurance and all that stuff. There are sadly a lot of young people doing this for the sake of having a new BMW or Audi and they're being royally lubed up and penetrated :lol:
    Online

    16
    ReputationRep:
    (Original post by Bill_Gates)
    it's the young, property less, poorly paid, living with mum and dad i have a problem with.
    How does it affect you in any way?
    Offline

    3
    ReputationRep:
    (Original post by Bill_Gates)
    My BMI is very healthy thanks. I see you have a picture of some chav wheel, please stay in your class.
    you are right, i changed it now. but did you know that 92.3-96.08% of all honda civic drivers don't know how to drive?
    Offline

    3
    ReputationRep:
    Leasing is a massive mug's game. A fool and his money are soon parted.
    Offline

    3
    ReputationRep:
    (Original post by TimmonaPortella)
    The lease often costs less than the depreciation of the owned asset would :dontknow:
    That's not a good reason to lease at all.

    Option 1 - Buy a car for $20,000 over two years (let's say 5% interest - I'll keep it simple just for ease) with 10% down - payments are $787.50/month. At the end of the term you own a car that is now worth $15,000 (let's say it depreciates 25%) So you have paid $20,900 for an asset that is now worth $15,000.

    Option 2 - Enter into a 2 year lease agreement on the same car for perhaps $500/month. At the end of the term you have paid $12,000 and have no asset - but an option to buy the car for $15,000. If you exercise that option you pay $27,000 for a car that is now worth $15,000.00. So you are worse off that had your purchased in the first place.

    This doesn't take into account that the mileage allowances and penalties on leased vehices are ridiculous - it's about $1/for every extra mile over a typical allowance of 12,000 miles a year. And it doesn't take into account that during the lease period you are responsible for all repairs and maintenance on a vehicle that you are essentially renting and might never actually own. Imagine renting a car from Budget or Avis and maintaining it as a part of the agreement! That's nuts!

    Leasing is rarely a good idea. In my opinion/experience, the best way to buy a car is from a private seller, (don't pay retail at a dealer and get mugged into buying a bunch of rubbish "options") - buy a car that is a year or two old (let someone else take the depreciation hit) - with a bank loan - put 25% into it (so you have immediate equity if you need to sell it) borrow the remaining 75% and pay down as quick as you can (I personally go for 12 months but that's aggressive) to reduce interest.

    And (if you do buy) never ever allow yourself to get blindsided by a dealer into buying a car based on what you can afford per month. They will get you into any car you want simply by manipulating the term so unless you want to pay massive amounts of interest on a 96 month loan steer well clear.

    One final tip - if you are part exchanging a car at a dealer, negotiate separately. Never allow them to roll the two cars into a single deal. You'll get stiffed every time.
    • Thread Starter
    Offline

    19
    ReputationRep:
    (Original post by A Mysterious Lord)
    How does it affect you in any way?
    Well i partake in this economy. I don't want another sub prime crisis for cars :P

    Society is losing all it's morals.
    Offline

    21
    ReputationRep:
    (Original post by Howard)
    That's not a good reason to lease at all.

    Option 1 - Buy a car for $20,000 over two years (let's say 5% interest - I'll keep it simple just for ease) with 10% down - payments are $787.50/month. At the end of the term you own a car that is now worth $15,000 (let's say it depreciates 25%) So you have paid $20,900 for an asset that is now worth $15,000.

    Option 2 - Enter into a 2 year lease agreement on the same car for perhaps $500/month. At the end of the term you have paid $12,000 and have no asset - but an option to buy the car for $15,000. If you exercise that option you pay $27,000 for a car that is now worth $15,000.00. So you are worse off that had your purchased in the first place.

    This doesn't take into account that the mileage allowances and penalties on leased vehices are ridiculous - it's about $1/for every extra mile over a typical allowance of 12,000 miles a year. And it doesn't take into account that during the lease period you are responsible for all repairs and maintenance on a vehicle that you are essentially renting and might never actually own. Imagine renting a car from Budget or Avis and maintaining it as a part of the agreement! That's nuts!

    Leasing is rarely a good idea. In my opinion/experience, the best way to buy a car is from a private seller, (don't pay retail at a dealer and get mugged into buying a bunch of rubbish "options" - buy a car that is a year or two old (let someone else take the depreciation hit) - with a bank loan - put 25% into it (so you have immediate equity if you need to sell it) borrow the remaining 75% and pay down as quick as you can (I personally go for 12 months but that's aggressive) to reduce interest.
    I suppose on the mileage allowance the question is how far you want to drive. Since you're using dollar rates I assume you're American. You drive an awful lot further than we do. We have a much more compact country.

    I think there are two points you are missing. First, you assume that the lessor* wants to buy the car at the end of the period. I think that's a bit of a silly assumption. We're talking about leasing in the first place as a way to avoid buying the car. Secondly, you don't consider what else the money that is tied up in the bought car could have been used for in the intervening period. This will depend on people's circumstances, but even looking at that in a purely financial sense you must allow for the possibility that it could have been invested profitably during the two year period.

    A final point is that I don't know if there's any difference between how cars depreciate in the UK and USA. I do know that Americans seem much happier to use older cars than Brits. (It seems to me that Americans are happy to use old cars but insist on owning newbuild houses; Brits are generally the opposite.)

    edit: just seen your Canadian flag. The same points largely apply.

    edit 2: *lessee
    Online

    16
    ReputationRep:
    (Original post by Bill_Gates)
    Well i partake in this economy. I don't want another sub prime crisis for cars :P

    Society is losing all it's morals.
    So how is the fact they don't own property relevant?
    • Thread Starter
    Offline

    19
    ReputationRep:
    (Original post by A Mysterious Lord)
    So how is the fact they don't own property relevant?
    Proletariats brah
    Offline

    3
    ReputationRep:
    (Original post by TimmonaPortella)
    I suppose on the mileage allowance the question is how far you want to drive. Since you're using dollar rates I assume you're American. You drive an awful lot further than we do. We have a much more compact country.

    I think there are two points you are missing. First, you assume that the lessor* wants to buy the car at the end of the period. I think that's a bit of a silly assumption. We're talking about leasing in the first place as a way to avoid buying the car. Secondly, you don't consider what else the money that is tied up in the bought car could have been used for in the intervening period. This will depend on people's circumstances, but even looking at that in a purely financial sense you must allow for the possibility that it could have been invested profitably during the two year period.

    A final point is that I don't know if there's any difference between how cars depreciate in the UK and USA. I do know that Americans seem much happier to use older cars than Brits. (It seems to me that Americans are happy to use old cars but insist on owning newbuild houses; Brits are generally the opposite.)

    edit: just seen your Canadian flag. The same points largely apply.

    edit 2: *lessee
    Well that's true. I split time between Canada and the US and in both cases we drive a lot further than folks in the UK. It's not unusual to drive 100 miles a day to get to work and back (I do) so 12,000 miles as an allowance doesn't go far.

    The assumption that the lessor wants to buy the car at the end of the lease - I agree, seems a bit daft but some folks do - in the US and Canada the option to buy is a standard part of the lease agreement; no idea if the same is true in the UK.

    I expect depreciation rates are the same but couldn't say.
    Offline

    2
    ReputationRep:
    I am the perfect person to answer this question.

    So i am in PCP arrangement, where after 3 years I won't end up with anything - I'm just paying depreciation. I don't personally own a flat and I think my income is relatively modest and I'm quite young - 26.

    Basically, I consider driving a major factor of enjoyment in my life - I don't have any other major hobbies, I don't spend money on anything else really, just clothes and apple stuff but I have lots of that.
    My rent is taken care of because my parents pay a mortgage on a flat they bought and I live in. I am earning nearly £4000 a month after tax at the moment, what am I supposed to do with that money? I don't really need to save it for anything, I don't have any student loans or debt... Why not buy something I spend a lot of time doing every chance I can.
    Why not save up £60k and buy the car outright or go second hand ? Seems pointless when the interest rate is 4% and everything is taken care of except fuel and insurance.
    • Thread Starter
    Offline

    19
    ReputationRep:
    (Original post by Awesome Genius)
    I am the perfect person to answer this question.

    So i am in PCP arrangement, where after 3 years I won't end up with anything - I'm just paying depreciation. I don't personally own a flat and I think my income is relatively modest and I'm quite young - 26.

    Basically, I consider driving a major factor of enjoyment in my life - I don't have any other major hobbies, I don't spend money on anything else really, just clothes and apple stuff but I have lots of that.
    My rent is taken care of because my parents pay a mortgage on a flat they bought and I live in. I am earning nearly £4000 a month after tax at the moment, what am I supposed to do with that money? I don't really need to save it for anything, I don't have any student loans or debt... Why not buy something I spend a lot of time doing every chance I can.
    Why not save up £60k and buy the car outright or go second hand ? Seems pointless when the interest rate is 4% and everything is taken care of except fuel and insurance.
    You technically do own your flat, it's just on your parents name lol.
    Offline

    2
    ReputationRep:
    (Original post by awesome genius)
    i am the perfect person to answer this question.

    So i am in pcp arrangement, where after 3 years i won't end up with anything - i'm just paying depreciation. I don't personally own a flat and i think my income is relatively modest and i'm quite young - 26.

    Basically, i consider driving a major factor of enjoyment in my life - i don't have any other major hobbies, i don't spend money on anything else really, just clothes and apple stuff but i have lots of that.
    My rent is taken care of because my parents pay a mortgage on a flat they bought and i live in. I am earning nearly £4000 a month after tax at the moment, what am i supposed to do with that money? I don't really need to save it for anything, i don't have any student loans or debt... Why not buy something i spend a lot of time doing every chance i can.
    Why not save up £60k and buy the car outright or go second hand ? Seems pointless when the interest rate is 4% and everything is taken care of except fuel and insurance.
    you my friend are one lucky mofo
    Online

    19
    ReputationRep:
    (Original post by Bill_Gates)
    it's the young, property less, poorly paid, living with mum and dad i have a problem with.
    Its their lives.
    • Thread Starter
    Offline

    19
    ReputationRep:
    (Original post by Quady)
    Its their lives.
    It is our society.
    Online

    19
    ReputationRep:
    (Original post by Bill_Gates)
    It is our society.
    Yup.

    Not sure what the problem is there.

    Better integrated families like we used to have.
    Offline

    16
    ReputationRep:
    Financing cars is nothing new. It's been going on for 70+ years.
    At the end of the day, it's up to folk how they choose to spend their own money. Must admit the new car thing isn't really for me. By and large the finance payment is basically what the car has lost in depriciation that month. I'd rather have no monthly commitments and spend what I save in petrol.
    I can see the appeal of being the only person to have driven a vehicle, though. You do at least know how it's been looked after or not as the case may be. I don't keep anything anywhere near long enough to justify the losses on a new vehicle, though.
 
 
 
Reply
Submit reply
Turn on thread page Beta
TSR Support Team

We have a brilliant team of more than 60 Support Team members looking after discussions on The Student Room, helping to make it a fun, safe and useful place to hang out.

This forum is supported by:
Updated: October 25, 2015
Poll
Do you agree with the proposed ban on plastic straws and cotton buds?

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Write a reply...
Reply
Hide
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.