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 – 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 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 Advantages & Disadvantages of Store Cards

There are a number of reasons you might take out a store card: whether you’re just waiting in-line at the shop and find out you can save on today’s shopping or they offer the promise of making money in the future, these cards regularly find their way into wallets (or phones via an app). Most big retailers offer their own cards, which allow you to take your purchases home – often with a nice discount applied – without having to part with a penny at the till.

Published on 10 Jul 2018 by Tom Blandford

Full Article

What Happens To Your Credit Report When You Move Country?

Moving from one country to another results in a lot of changes and new things – a new place and culture, new job, new people and in some cases even a new language. However, one thing lots of people do not realise is that you will also be starting afresh when it comes to your Credit Report. Credit Reports and the information they contain are country-specific and do not follow you from one country to another.

Published on 27 Jun 2018 by Kirstie Day

Full Article

What To Do If You’re a Victim of Data Breach

Another day, another high-profile data breach, with the morning news bringing word of another leak of personal information that affects millions of consumers. This time it’s the turn of Dixons Carphone - the company behind PC World, Currys and Carphone Warehouse.

Published on 14 Jun 2018 by Jamie Mackenzie Smith

Full Article

What Does Bongo Know About You?

“What does Bongo know about you?” A slightly off-the-wall question I’ll grant you, but one that you might have been asked at some point in time.

Published on 7 Jun 2018 by Richard Catlin

Full Article

Why Don’t Millennials Take Out Credit?

As a millennial, it can feel like my generation is besieged with criticisms on a daily basis, and not all of them are entirely fair (though lots are). We are frequently told that as a generation we are entitled, we have it so much easier than our elders and arguably, worst of all: we buy too many avocados. While I don’t buy avocados, I do have access to credit, which makes me a minority among my age group.

Published on 16 May 2018 by Beth Jennings

Full Article

Why Is My Loan Balance Wrong On My Credit Report?

One of the single most important pieces of information to appear on your credit file is the information relating to your credit agreements and how you repay them - with this information lenders can see your borrowing history across the last six years and use it to help them decide whether or not to offer you finance.

Published on 7 May 2018 by George Coburn

Full Article

How long do closed accounts appear on my credit report?

Some people believe that as soon as a credit agreement is settled and closed, it will no longer be reported to the UK’s Credit Reference Agencies and therefore will no longer have an influence on future credit applications. However, this is a popular misconception, one that could affect your ability to get credit if not correctly understood.

Published on 2 May 2018 by Tom Magor

Full Article

How to Save Big in the Bank Holiday Sales

Bank holidays may not guarantee a day of sun-soaked fun, but as is British tradition, we’d probably be quite happy barbecuing in the snow if it came to it. But no matter what your plans are, if you want to grab a bargain, you can use the Bank Holiday sales to save some serious money.

Published on 26 Apr 2018 by Kiah Phillips

Full Article

Should I Buy or Finance an Aston Martin Valkyrie?

We’ve all been there. £3 million burning a hole in your pocket and a track-going version of Aston Martin’s latest hypercar sat in front of you. But as a shrewd, savvy business-type, you know that dropping £3m in one go on a 1,100bhp car could be considered a questionable, perhaps even ‘baller’ move. But what about putting it on finance?

Published on 13 Apr 2018 by Jamie Mackenzie Smith

Full Article

How to Build Credit History Without a Credit Card

When it comes to the best way to build up a credit history, conventional wisdom is to take out a credit card and use it for everyday purchases, while paying it off (on time) at the end of every month. There’s plenty to support this advice too, as a credit card allows you to spend as much or as little as your limit will allow, while building a history in a reasonably short amount of time.

Published on 26 Mar 2018 by Jamie Mackenzie Smith

Full Article


We have loads of great customer reviews