Your car – lease new or buy second-hand

Posted by Barry Stamp in Personal Finance on 23 March 2015 - Barry is Managing Director at checkmyfile

Thinking of changing your car?

The way you finance it is a really hard decision to make, and while most of us simply buy a replacement car, whether new or second-hand, few consider the option of leasing.

To give a sense of perspective, you first need to determine how much your current car is costing you to run. Only then can you make an informed decision.

Some years ago I bought a car new for £25,000. I ran it for over 11 years and sold it for scrap. During its lifetime it averaged just over 30mpg. It covered 170,000 miles. Towards the end of its life, the usual nasty repair bills came in with increasing regularity, some costing as much as £500 a time, plus a lot of frustration and time wasted. And of course tyres needed replacement every 20-25,000 miles at a cost of £200.

So in simple terms the car cost me £189 per month (£25,000 divided by 132 months) plus tyres and repairs, which cost approximately £26 per month on average. So that comes to £215 per month, plus servicing, MOT, tax and petrol. And that is probably the cost of running a typical car, or as close as you can get it, which most motorists bear without too much thinking about.

Now if I were to replace that same model of car today, I could lease it from www.lingscars.com – well worth a visit if only for its psychedelic brilliance – for just over £310 per month. I wouldn’t have to worry about tax or MOT for 3 years, the car would be much more reliable, and with a claimed fuel consumption of 60mpg, I’d save petrol too. At a nominal price of £5 per gallon, petrol for my old car cost me £214 per month. A new leased one would cost me half that, saving £107 per month.

Pick the right lease deal and a leased car comes with free breakdown cover (worth up to £10 per month), doesn’t need an annual MOT (saving approximately £3 per month), often has no road tax to pay (saving up to £20 per month) and can be replaced for a nice new one in three years’ time, by which time it will probably still be running on the same tyres.

There is still servicing to pay for, but add it all up and the cost of leasing a brand new car can often be less than buying a new one and running it into the ground.

For many motorists, there is a bit of an issue about the car ‘not being yours’, but I have leased cars, and for me this is no issue at all. The only real disadvantages of a leased car is that personalised plates are not an option, you need to think about what mileage you do, (if you go over you just pay a few pence per mile) and a few insurance companies don’t insure them (e.g. Swiftcover), but most do.

Also, as Valentine Ling of www.lingscars.com once said to me, chase the deal, not the car. There are always dealers offering great cars at a discount. If you’re in the market for a Volkswagen Up, for example, LingsCars currently offers one at just £115 per month. And with 62mpg on offer, that means that with my saving of £107 per month on fuel from my old car, and with no tax, MOT, tyres and stuff, I’d be hundreds of pounds better off, every month, if I went for a leased Volkswagen Up.

You need to do your figures, and choose the right deal, and you can make real savings if you lease rather than buy.

The Cost of Incorrect Information on Your Credit Report

Your credit file is compiled from a number of different sources, including payment history from each of your lenders (past and present) and public data as reported by local authorities and courts. The majority of people find that everything held about them is correct, but due to the large amount of information being shared, errors in the information reported can happen, which can lead to issues when you go to apply for credit.

Published on 2 Feb 2018 by Tom Blandford

Full Article

Your Guide to Open Banking

On 13 January, the UK banks embarked upon arguably one of the biggest changes to personal finances since the introduction of computers. Open Banking is aiming to make it easier for banks, lenders and consumers to access and share information, with a view to creating new products and opportunities through innovation and increased competition.

Published on 15 Jan 2018 by Jamie Mackenzie Smith

Full Article

HMRC Bans Credit Card Tax Payments

From 13 January 2018, it will no longer be possible for consumers to use a personal credit card to make a payment on HMRC’s Self-Assessment tax portal. Historically, this has been a popular option as it allows what is often a considerable sum to be deferred.

Published on 12 Jan 2018 by Tom Magor

Full Article

How to Get the Best Deal When Buying a New or Used Car

Buying a new car is both exciting and expensive, but if you know where to look and when, you can grab yourself a bargain. If you take a little time to look into finance or loan deals as well, you can bring down the overall costs significantly.

Published on 11 Jan 2018 by Kevin Pearce

Full Article

Are football clubs exploiting their fans

With Premier League teams under huge pressure to remain in the top flight of English football, the amount lavished on transfer fees and player wages have soared in recent years.

Published on 8 Jan 2018 by Sam Twyford

Full Article

What The 2017 Autumn Budget Means For First-Time Buyers

Wednesday’s autumn budget brought great news to would be first-time homeowners: if you’re buying a home up to the value of £300,000, you won’t have to pay stamp duty for the property. This, the Conservative Party estimate, will benefit 80% of first-time buyers, saving them potentially thousands of pounds on the total cost.

Published on 28 Nov 2017 by Jamie Mackenzie Smith

Full Article

Blacklists - Ten things you probably didn't know

1. Blacklists are not unlawful. No lender is compelled by law to give credit or to give any reason when declining credit. Each may consult several sources of information before making a decision, including any form of list that may exist. Any list containing personal data is automatically regulated by the Data Protection Act 1998.

Published on 9 Oct 2017 by Barry Stamp

Full Article

Is a credit building card a good idea

A credit building credit card is most often used by people that are either looking to improve their credit rating or take out their first credit card.

Published on 24 Mar 2017 by Kelly Luff

Full Article

Which Credit Report Information Can Landlords See

Whenever you rent a property, you will be required to pass some checks set by the landlord or letting agent to prove that you will be a good tenant and that you’ll be able to afford to rent the property.

Published on 7 Mar 2017 by Kevin Pearce

Full Article

Impacts of late payment on your credit card agreement

We’ve all done it before – had that mad panic when we’ve forgotten to pay a bill. But what happens if you do forget to pay your credit card by the monthly repayment date?

Published on 20 Feb 2017 by Kelly Luff

Full Article
keyboard_arrow_left

keyboard_arrow_right

We have loads of great customer reviews