Member Since: 15 Jun 2007
Location: Rochdale
Posts: 4
Lease or Purchase
Hi guys,
What are the thoughts on outright purchase or personal lease for a new D3. Not contacted dealer yet as they will drive me mad. Looking to change september/october this year.
20th Jun 2007 8:37 am
Bodsy Site Sponsor
Member Since: 06 Nov 2006
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I leased with a balloon option at the end of the term. There are some good finance deals around at the moment, so if you have 40k sitting in your bank, you could probably make more money than the lease will cost with a good investment. Do some research on the internet for example costs etc before you go into the dealer. LR's leasing scheme isn't so cheap.
Having said that, if you prefer to own your vehicle so you don't have the monthly payments, then that would be the way to go.
I leased because I can change with no cost after the term, or decide to keep it. To be honest, the way I set up the lease, I was already of a mind to keep it for SWMBO after the initial term. My company pay a good car allowance that I use for this purpose.
Kam one of the site sponsors can get some very good finance deals and can often get savings on the actual vehicle as well.
I purchased through sainsbury's website who use freeway to source the car & finance through BoS, supplied by a dealer in Lincoln and delivered to my house.
So part of it will also depend on if you want to get the car and finance for the lowest price, or if you want to get the best price from your local dealer (for additional re-assurance that you can go back direct should anything go wrong) and then get the finance based on the dealer price.
Look in the finance section and Kam will be able to give you some good advice, without the pushy salesman bit.
All down to your own personal circumstances and preferences chap!
If it is your own car and your own money then buying outright would be my choice. After all, it's only pocket change
Deferred / balloon payments make the worst financial sense and is the most costly way to buy a car.
Company purchase makes a different set of rules and agendas come into play.
Your choice.......The older I get, the more I realise that people confuse wrinkles for wisdom
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20th Jun 2007 8:56 am
Bodsy Site Sponsor
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I'd disagree about the balloon payment being the MOST costly (if you get the right package). Yes, it is more expensive compared to if you have the 'pocket change' already available, but for the many people who don't then it is a very effective way of financing a vehicle IMO.
No worry about residuals at the end and if you get the right package together, then the interest you pay is negligible compared with the interest you lose by taking the money out of the bank/shares/whatever.
For business, it may be a different set of choices.
one things for sure, Dealers very very rarely give the best deals on finance.Bodsys Brake Bible
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20th Jun 2007 9:04 am
DG Site Moderator
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I tend to agree with Bodsy there. I've owned cars outright in the past and taken a right old beating finacially at trade time...nowadays I am only interested in paying as little deposit as I can and what the monthly repayment cost is. At the end of my three year stint I will have effectively paid for less than half the value of the car new which would be the same as the depreciation values ...but with the scheme I am in I just hand it back and drive out with a brand spanking new motor (and a new warranty ) for roughly the same monthly repayment 21 year LR veteran > D2 GS 2003 > D3 S 2006 > D3 HSE 2009 > D4 HSE 2013 > D4 HSE 2015 > D5 HSE 2018 > DS HSE R-Dynamic P300e 2021
20th Jun 2007 9:37 am
pdes
Member Since: 09 Jan 2007
Location: Cambridgeshire
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I got an even cheaper loan - from myself! If you have one of these "Australian" (offset) mortgages, you can traet the account as if it were your cash. I withdrew a chunk of change and agreed with myself the repayments and term! All this at mortgage interest rates.D4 HSE MY2015
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20th Jun 2007 3:47 pm
gilmore
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Cssh.
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robAll opinions expressed in this posting are my own and are not necessarily those of someone who knows what they are talking about.
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20th Jun 2007 6:53 pm
wag the dog
Member Since: 29 Mar 2007
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Baloon=easy in /easy out . you effectively pay for cost of car LESS baloon residual and just give it back at the end if you are worried about running it out of warranty !. I use HBoS too but sourced though stealer to keep eveyone happy. watch out for mileage limitations though....
24th Jun 2007 9:36 am
vogue se
Member Since: 11 Jan 2007
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Lease is most interesting for a company. Leaase is a 100% cost for the company so less tax. And at the end of the lease you buy it back on your personal name at rest value (between 5 and 20%) and you sell it for what's it worth. Difference is tax free and legal!!! My Kyoto is fantastic
Has nobody noticed that you are always paying the interest on the baloon portion? - just like a mortgage
Even if you are lucky enough to get a good flat rate on that, then you are still paying about £3000 in interest on the baloon portion (non-reducing balance) over three years.
Proven time and time again to be the most expensive way to buy a car.... I suppose question and the choice is whether or not to buy in the first place.The older I get, the more I realise that people confuse wrinkles for wisdom
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25th Jun 2007 11:44 am
DG Site Moderator
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Are you sure thats right JMC ...I'm not aware that you are paying the whole applied interest during your repayment term because I thought a relative proportion of the overall interest remains in the final settlement figure. This is because the interest is applied to the total value of the vehicle ...No? 21 year LR veteran > D2 GS 2003 > D3 S 2006 > D3 HSE 2009 > D4 HSE 2013 > D4 HSE 2015 > D5 HSE 2018 > DS HSE R-Dynamic P300e 2021
Balloon or not, just add up the total cost of the deposit and all the payments over the term and see what it is costing you. Forget about how much per month or the quoted interest rate, just add up all their charges over the term to compare different ways of finance.
I've found that with my last 3 vehicles, having a balloon of around 30% of the vehicle value worked out a good method of purchasing it on a purchase lease agreement. You are then effectively just paying the depreciation and at the end of the term you can settle the balloon to keep the car or sell the vehicle to settle the balloon.
With a lease, you are not tied to an annual mileage as you are with other forms of finance/rent. In all cases, I've changed my vehicle well before the 3 year or 5 year term. In the last case, I sold me D3 when it was 13 months old and canceling the lease was just a case of settling the outstanding amount. This should have been always less than the vehicle value, but the D3 took quite a depreciation hit and I did 25K miles, but still sold for the same as the lease settlement.
Be careful with rental type arrangements as you do not often have this flexibility to sell earlier without penalties.
Finance vs buying outright - well buying outright will always be cheaper. On a HSE you'll be loosing about £21,000 over three years. If you finance then you'll got to add the interest to this.Matt
I know it is a shock but it certainly makes sense if you think about it. Take a £40k car and you only pay for half of it. Who else do you think is paying for the interest on the other £20k...... The finance company?
They usually do a good job of hiding this fact but I can assure you the cost of 'offset financing' the other £20k is in there somewhere. Then, after 3 years, people re-finance the outsatnding £20k and they wonder why their car has cost so much in the long term.
Furthermore, balloon payment deals are simply a new name for lease-purchase agreements. As Matt says, if you add-up all the costs (including re-financing to actually buy the car at balloon time) then it will work out more costly than say a straight 5-year loan....The older I get, the more I realise that people confuse wrinkles for wisdom
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25th Jun 2007 2:01 pm
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25th Jun 2007 2:03 pm
simon
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but Derek (nice to see you back by the way), I bet you got a student discount on your D3's along with a free Euro Travel Rail Card and HSBC branded ruck sack to bring home all your dirty washing to mother
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) for roughly the same monthly repayment 
