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PCP, Lease, HP or Cash for new car

Passion, instruction, buying, care, maintenance and more, any form of vehicle discussion is welcome here
scotview
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PCP, Lease, HP or Cash for new car

#499767

Postby scotview » May 11th, 2022, 9:19 am

Just out of interest I looked on the Tesla site for the cost of a model 3, cash price £45990.

Personal Contract Hire (lease ?) £532/month, 48 Months, £4000 deposit, 10000 miles/year
PCP £649/month , 48 Months, £4000 deposit, 10000miles/year, Residual value £17016.
Tesla loan £951/month, 48 Months, £4000 deposit.

I've used Model3 as an general example but Contract Hire (lease?) seems way cheaper.

I've never leased a car. How does leasing work? Do you have a preferred purchase option and why ?

pje16
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Re: PCP, Lease, HP or Cash for new car

#499769

Postby pje16 » May 11th, 2022, 9:25 am

Cash as I don't like paying any form of interest or charges
BUT I plan to keep a car for while, I don't need a new one every 2-3 years

bungeejumper
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Re: PCP, Lease, HP or Cash for new car

#499777

Postby bungeejumper » May 11th, 2022, 9:59 am

scotview wrote:Tesla loan £951/month, 48 Months, £4000 deposit.

Strewth. That's as much as our old mortgage. :shock:

BJ

Howard
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Re: PCP, Lease, HP or Cash for new car

#499778

Postby Howard » May 11th, 2022, 9:59 am

scotview wrote:Just out of interest I looked on the Tesla site for the cost of a model 3, cash price £45990.

Personal Contract Hire (lease ?) £532/month, 48 Months, £4000 deposit, 10000 miles/year
PCP £649/month , 48 Months, £4000 deposit, 10000miles/year, Residual value £17016.
Tesla loan £951/month, 48 Months, £4000 deposit.

I've used Model3 as an general example but Contract Hire (lease?) seems way cheaper.

I've never leased a car. How does leasing work? Do you have a preferred purchase option and why ?


Leasing is very straightforward. I use Leasing.com as a guide to the best contract hire prices. At the end of a contract hire lease one can buy the car by approaching the finance company direct. See https://www.arval.co.uk/customer-suppor ... al-vehicle as an example.

I have always included a maintenance option although this may not be necessary. It has been worth it for me as I have had two punctures since 2016 which both needed expensive new tyres and, because the leasing companies are such big customers for the tyre repair companies the service is fast and, in my case both repairs were completed at my home. I would definitely have this option for a Tesla as three acquaintances who have Teslas have had maintenance issues and also their tyres aren't cheap!

regards

Howard

pje16
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Re: PCP, Lease, HP or Cash for new car

#499779

Postby pje16 » May 11th, 2022, 10:03 am

Howard wrote:I would definitely have this option for a Tesla as three acquaintances who have Teslas have had maintenance issues and also their tyres aren't cheap!

very good point ;)
My earlier point referred to established cars, in my case, BMW

Howard
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Re: PCP, Lease, HP or Cash for new car

#499794

Postby Howard » May 11th, 2022, 10:59 am

pje16 wrote:
Howard wrote:I would definitely have this option for a Tesla as three acquaintances who have Teslas have had maintenance issues and also their tyres aren't cheap!

very good point ;)
My earlier point referred to established cars, in my case, BMW


Yes, BMWs tend to be very reliable. But their tyres can cost more than £200 plus fitting :( .

Incidentally, the reason that a leased car historically was a good deal is that UK brokers, who not uncommonly bought more than a thousand cars a year achieved massive discounts by buying, for example, direct from BMW. The car market has changed a lot in the last two years, but brokers were getting discounts of around 30% from manufacturers like BMW. (I know of some definite examples). This meant that, in my experience, contract hire was demonstrably lower cost than buying a new car as a private individual.

regards

Howard

pje16
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Re: PCP, Lease, HP or Cash for new car

#499797

Postby pje16 » May 11th, 2022, 11:10 am

Howard wrote:Yes, BMWs tend to be very reliable. But their tyres can cost more than £200 plus fitting :( .
regards
Howard

Not for mine
I shop around and have never paid more than £150 (fitting inc)

DrFfybes
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Re: PCP, Lease, HP or Cash for new car

#499798

Postby DrFfybes » May 11th, 2022, 11:15 am

scotview wrote:Just out of interest I looked on the Tesla site for the cost of a model 3, cash price £45990.

Personal Contract Hire (lease ?) £532/month, 48 Months, £4000 deposit, 10000 miles/year
PCP £649/month , 48 Months, £4000 deposit, 10000miles/year, Residual value £17016.
Tesla loan £951/month, 48 Months, £4000 deposit.


Ignoring the Tesla Loan, as that is really a 4 year repayment....

The long term hire agreements of various flavours tend to be cheap and simple, you only pay the depreciation, market fluctuations are at the risk of the hire company. The downside is you are limited to mileage, and the car must be returned undamaged. You know exactly how much you will pay, and how long for, and the entry cost is relatively low. If you want a new car, then if it fits your needs and your finances are going to be secure for the term of the agreement (or the exit clause isn't too onerous) they are a good idea. Go for the PCP is you intend to purchase the car at the end.

The thing with these to my eyes is you stump up £4k, and then pay another £17-32 per day, every day, including bank hols and Sundays, for 4 years, to drive around in a car which you then hand back.

How many days a week do you drive, how often would a larger or smaller vehicle be appropriate? We tend to use our cars 2 or 3 times a week, shopping and the odd trip. For us certanly it would be cheaper to hire and get taxis, possibly cheaper than running the 3 (plus a motorcycle) we already have.

As for the cash option, then personally there are a lot of cars I would rather spend £45k or so on that would give me a lot more pleasure to drive. Look at 3 or 4 years old and if you want the Eco credentials there is a bunch of Hybrids from Lexus, BMW, Audi, Porsche, etc. Used car prices are unusualy high at the moment, and will correct a bit in 4 years, but any of these would probably still cost less over the 4 year term.

Paul

Howard
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Re: PCP, Lease, HP or Cash for new car

#499801

Postby Howard » May 11th, 2022, 11:27 am

pje16 wrote:
Howard wrote:Yes, BMWs tend to be very reliable. But their tyres can cost more than £200 plus fitting :( .
regards
Howard

Not for mine
I shop around and have never paid more than £150 (fitting inc)


Leased BMW 330e in 2017 hit a pothole at speed and bulged a run flat. Unusual performance tyres which had to be sourced from the midlands. Tyreservice arrived next day to replace and rebalance. I asked how much I'd have had to pay if I were a private customer. Reply was: more than £500 for this level of service. To be frank we'd not have come to your home with a mobile van, you'd have had to book a week or two in advance and bring your car in as we are very busy - with leasing company vehicles who have priority service!

No extra cost to me, all included in the lease ;)

regards

Howard

pje16
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Re: PCP, Lease, HP or Cash for new car

#499803

Postby pje16 » May 11th, 2022, 11:36 am

Ah yes but you were stranded and up a creek without a paddle :lol:
I'm talking about normal prices
bet you were pleased it was leased

BullDog
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Re: PCP, Lease, HP or Cash for new car

#499806

Postby BullDog » May 11th, 2022, 11:46 am

I guess one way of looking at not buying the £45600 Tesla is that you still have the cash. As a savvy TLFer, you would invest that to get a 5% yield and use the yield to part pay for the lease/hire.

At the end of the term, you still have the £45600. Which with any luck, might have appreciated in the term.

Rinse and repeat?

AF62
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Re: PCP, Lease, HP or Cash for new car

#499814

Postby AF62 » May 11th, 2022, 12:19 pm

scotview wrote:Just out of interest I looked on the Tesla site for the cost of a model 3, cash price £45990.

Personal Contract Hire (lease ?) £532/month, 48 Months, £4000 deposit, 10000 miles/year
PCP £649/month , 48 Months, £4000 deposit, 10000miles/year, Residual value £17016.
Tesla loan £951/month, 48 Months, £4000 deposit.

I've used Model3 as an general example but Contract Hire (lease?) seems way cheaper.

I've never leased a car. How does leasing work? Do you have a preferred purchase option and why ?


The Personal Contract Hire (lease) deal is a pure transaction in that what you are paying for is the depreciation of the car over the four years plus the cost of the finance over that period, so you are paying £29,536 to drive a car for four years. At the end of the lease a few companies will let you buy the car, some just tell you which auction it is going into and you can bid if you want, and some have no interest at all in letting you buy the car, but if you do buy you are going to be paying the full trade price for it.

The PCP deal is smoke and mirrors. Is the residual value at the end of four years actually £17,016 or is it under-priced to provide an amount that would get you into another PCP deal in four years time? If that valuation was accurate then the PCP deal would have cost £35,152 so significantly more expensive than leasing, but if the valuation was (say) £4k or £5k undervalued to provide the deposit for the next deal then the price is broadly similar to the leasing deal.

The main issue with leasing as opposed to owning is the need to predict your mileage in advance. If you guess your mileage will be lower than it is then you end up paying excess mileage charges and if you guess higher then you have paid for a higher depreciation than necessary. Generally is thought better to underestimate than overestimate as it can be cheaper to pay the excess mileage if needed than the higher monthly payments.

In respect of overestimating, lots of people got caught with that in the pandemic when instead of commuting their lease car was just sat on the drive whilst they worked from home.

Anyway, an awful lot of people leasing the Tesla will be doing it through work salary sacrifice schemes which will make the effective cost far far lower than the £532 'headline' figure with a £4k deposit and could be as low as £350 a month with no deposit.

monabri
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Re: PCP, Lease, HP or Cash for new car

#499856

Postby monabri » May 11th, 2022, 3:02 pm

I've just leased a base model Audi A6 over 4 years. I'm working on the adage that " if it appreciates, buy it, depreciates, rent it". I could flash out the £38k but I decided to use dividends to lease instead.

I'm really impressed with the A6 in terms of finish and spec even for the base model ( 2 litre petrol, automatic) coming with all leather interior (as opposed to Mercedes' "pleather"). I'm struggling to think what really essential features I would need to add? The ride comfort is much better than expected ( for a German car) and it soaks up the uneven road surfaces well.

https://www.whatcar.com/audi/a6/saloon/ ... pack/95933

I paid £1854 up front and a monthly of £ 309 with a 5k mileage pa. It's 13p per mile excess charge if 20k allowance is exceeded. As I'm retired, I believe I will keep under the allowance but if I were to go over by a 1000 miles or so the extra charge would not be too onerous. I'm paying the service costs but road tax is included in the deal. I also took out " gap insurance " for ~£140 covering the 4 yrs.

DrFfybes
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Re: PCP, Lease, HP or Cash for new car

#499907

Postby DrFfybes » May 11th, 2022, 5:20 pm

monabri wrote:I'm really impressed with the A6 in terms of finish and spec even for the base model ( 2 litre petrol, automatic) coming with all leather interior (as opposed to Mercedes' "pleather"). I'm struggling to think what really essential features I would need to add? The ride comfort is much better than expected ( for a German car) and it soaks up the uneven road surfaces well.


That's because you had the good sense to go with the base model, instead of the S-line, which with the big wheels and sporty tyres and stiff suspension has all the discomfort of the sports version, but without the performance.

Paul


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