Not sure if leasing a car is for you? Take a look at some of the benefits and pitfalls with leasing and why, for me, leasing is
I’m certainly not a petrol head but I do like cars. Or to be more exact, I love the technology that comes with them. I bought a Seat Ibiza back in 2003 that had climate control, xenon head lights, an auto-dimming rear view mirror and electric windows. Having been used to driving cars that came with little more than just the engine, this felt like luxury. Since then, I have been more concerned about the inside of the car more than anything else.
In 2009, I bought the ultimate car (well, for me) – a Lexus! Although it was just over 3 years old, it still set me back £14k. This car had everything I needed, including a reversing camera, which I had never seen in a car before. And what a bargain I thought I had; £14k for a car that cost over £30k only a few years before.
This was the way forward I thought to myself. Until recently that is.
My eye was first caught by leasing when I was scrolling through HotUkDeals. Until then, all I had used that site for was to buy the odd DVD that had been reduced in price or just to look at people arguing about whether a phone for £900 was a bargain or not. Yes, I do get that bored.
But leasing deals seemed to get a lot of heat (which is a good thing on HotUKDeals) but also attracted a lot of negative comments. I always thought that if you can buy a car, you just sell it when you decide to change vehicles, which meant you always got something back. With leasing, you hand back the car and have nothing to show for it. But after some research, I realise that things aren’t always so simple.
The cost of owning a car
I kept my Lexus for 9 years. I had always planned to keep it for as long as possible as that would be the most cost efficient way. When I came to sell, I managed to get back just £800. So, that meant I spent £1466 per year or £122 per month. On top of that, I spent on average, £250 on servicing and MOTs and changed
On top of all these bills, I also had to pay tax which started at around £160 when I initially bought the car and ended at £220 in 2018. Plus, I also spent £40 per year on breakdown cover. It’s not essential, but certainly important for me.
In total, I worked out that my car cost £165 to run and own every month.
The cost of leasing
The car I opted for was a Hyundai i30. Not exactly my (or probably anybody else’s?) dream car, but it was the best deal I could find. It means I had a new car for 18 months at £170 per month. I wouldn’t need to pay tax and the car came with breakdown cover (all new Hyundai cars do). I wouldn’t need to change the tyres as I wouldn’t have the car for that long and the car would not need an MOT. The only cost I will have is the service after 1 year. If a service costs £200, that makes the total monthly cost of leasing £181.
So, is car leasing a good idea?
Well, for £16 extra per month, I get to drive a brand new car. Ok, so a Hyundai isn’t the same as a Lexus, but a 13 year old Lexus doesn’t feel particularly luxurious. But there are a couple of things you need to consider before you jump in.
It’s important that you realise there could be extra costs involved. Lease deals usually limit the amount of miles you can cover. My deal allows me to travel 8000 miles per year. If I go over this amount, I have to pay 9 pence extra per mile. Although that doesn’t sound horrendous, it can start to add up.
Another potential cost comes from repairs. When it’s time to hand the car back to the leasing company, they will want it in good condition. Most will accept small chips, but large scratches or damage to alloys will need to be paid for. Usually, it’s much cheaper for you to arrange the repairs yourself, rather than waiting for an invoice from your lease company. I’m now one of those people that parks at the far end of the car park when I visit the supermarket.
Another downside is the commitment. If your circumstances change, you will still have to pay for the car. You can often cancel a lease deal early, but will have to pay a penalty to do so.
Would I recommend leasing?
For me, I’ve been really pleased with how leasing has worked out. It helped a lot that I didn’t have a specific car in mind and I was willing to more-or-less go with any car. Whether I go with a lease car again will depend if I can find a good deal.
Of course, leasing won’t be for everyone. If you’re knowledgeable about cars (or at least know somebody that is), you could buy a car for far less that will last you for years.