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.

How To Get The Best Car Finance Deals

New car sales may have slowed in recent years, with the economy, emissions scandals and Millennials all being cited as the root cause at one point or another. But the number of people choosing to use credit as a means of driving away in a new car continues to rise, according to figures from the Finance & Leasing Association which shows that the new car finance market grew by 15% in July 2018 when compared to the previous year.

Published on 8 Oct 2018 by Kiah Phillips

Full Article

We're Now More Likely To Be Borrowers Than Savers

UK Households are now more likely to be borrowers than savers, with savings at their lowest since 1963, according to a study by the Office for National Statistics. Households are increasingly borrowing more – by taking out loans, car finance, and mortgages – than they are collectively depositing into savings accounts.

Published on 5 Oct 2018 by Sam Griffin

Full Article

The Credit Crunch 10 Years On: What’s Changed?

For many people, especially the those lucky enough to not have been old enough to be directly affected, the economic downturn of 2007-2009 seems like a distant memory. The first iPhone had launched a mere two months before the recession hit, and since then they’ve rebooted the Spiderman film franchise not once, but twice. But more importantly, has enough time passed for the borrowing/lending market to revert to its old tricks?

Published on 26 Sep 2018 by Jamie Mackenzie Smith

Full Article

The Limitation Act 1980 and Debt Time limits

The majority of credit consumers believe that once a debt has been acquired, that debt will remain until the full balance has been cleared regardless of the length of time passed. This may not be the case though, thanks to a little-known piece of legislation known as the Limitation Act 1980.

Published on 19 Sep 2018 by Erika Bone

Full Article

UK Households More Likely to be Borrowers Than Savers

UK Households are now more likely to be borrowers than savers, with savings at their lowest since 1963, according to a study by the Office for National Statistics. Households are increasingly borrowing more – by taking out loans, mobile phones, car finance, and mortgages – than they are actively depositing into savings accounts.

Published on 3 Sep 2018 by Sam Griffin

Full Article

Wonga Administration: What it Means For You

On Thursday 30th August the payday lender Wonga filed for Administration, following a spike in compensation claims and increased pressure on the payday loans industry. This follows a steady decline in this form of lending since the FCA began introducing stricter regulations 2013 in the name of protecting consumers.

Published on 31 Aug 2018 by Jamie Mackenzie Smith

Full Article

How a Baby Name Can Affect Creditworthiness

A lot of preparation (and usually arguing) goes into choosing a baby name – books, ‘top 100’ lists, place names, family names – the list of possibilities is endless. The trouble is, most parents don’t give much thought to the long-term impact of the name they decide on, beyond checking to make sure it doesn’t sound ridiculous when paired with the last name or that when put into initials it doesn’t spell something unfortunate.

Published on 19 Aug 2018 by Jamie Mackenzie Smith

Full Article

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
keyboard_arrow_left

keyboard_arrow_right

We are rated number 1 for customer service on