Buy Or Lease?

[nelliebee]

Does anyone have any advice on the choice of buying or leasing a new car? I have always purchased a car, but woul appreciate your views on the benefits or otherwise of leasing. Are there any pitfalls i should be aware of? Many thanks.

[rockyracoon]

My friend has just been toying with leasing a car, she's a single parent with only her wage coming in and has decided it's the more sensible option, no nasty surprises with breakdowns, no insurance to pay etc. She'll be able to budget her money much better.

[nelliebee]

Thank you for your reply, but surely I would have to insure the car myself,I did not quite understand the "no insurance " quote?

[rockyracoon]

I'm not too sure how it works but I'd imagine there are different packages, she was quoted £230 for a Ford Juke, insurance and services included and she'll get a new one every three years. She's a nurse so maybe some companies do special deals for them.

[mikey4444]

It depends on how many miles you expect to do each year. Most personal leasing contracts allow only 10,000 or maybe 12,000 mikes pa. If you go over that amount, you will have to pay a heavy penalty. Also, you still have to put down a hefty deposit to start your 3 year deal off, and at the end of the 3 year period, you will have to find another deposit to start another 3 year deal. Only really suitable for people who only do small mileages per year.

There is no such thing as a free lunch !

[mikey4444]

Rocky...just read your post again and the no insurance bit sounds suspiciously good. She may very well get all the servicing included but she will still have to put a deposit down on the car before she starts the 3 year deal, and another deposit on the 2nd and subsequent deals. By the way, Nissan make the Juke, not Ford.

Visit the showroom and they can explain deal to you properly.....its a bit more complicated that you make out. Be careful of annual mileage allowances.

[rockyracoon]

So it is. TBH I was only half listening to her but she seemed very excited by the whole thing seeing as her 6 year old Golf has been giving her horrendous financial problems.

[Graham-W]

I think the main saving by leasing is if the car is used as part of your business or as an essential part of your work eg. midwife etc.. A large part of your lease costs can then be set against your income tax bill and you effectively get the use of the car tax free.
In general, private leasing is not cost effective.

[rockyracoon]

She's a district nurse so needs a car, she was waffling about salary sacrifice so that would make sense with what you're talking about Graham.

[Graham-W]

Yes Rocky. My sister is a midwife and considered a lease. Trouble is, she does a lot of miles not for work and hers worked out cheaper to buy a new car and claim mileage allowance from work for her works mileage. She makes a tidy amount, tax free, from that each month.

[Graham-W]

Another factor in salary sacrifice is, if her pension is a final salary one, get rid of the lease car several years before her intended retirement or she could loose out.

[rockyracoon]

My friend's quite lucky as her mileage is local to where she lives and she doesn't go too far afield at any other time, the arrangement will probably suit her well.

[rockyracoon]

I'll tell her that, at the moment she said that with the salary sacrifice her wage will drop so she'll be able to claim some tax credits, no brainer for her really.