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Motor lease or finance?

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  • 11-07-2007 1:22pm
    #1
    LegacyUser
    Registered Users Posts: 166,026 ✭✭✭✭


    I had a conversation with a friend yesterday and she was telling me that they are going to trade up their car but rather than take out finance/car loan and they are opting for leasing. The reason for this is that the repayments on the lease would be the same as the car loan except that they could get a younger/more expensive car, and they could upgrade it every 2 yrs. Is this possible or advisable as they will never own their car? Are there any pit falls with this? I feel she maybe getting into something that is not what it seems, as if it was would the general public not just lease their cars rather than finance?

    Any info would be grateful as I would consider this option if it is a good deal.


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    #2
    R.O.R
    Registered Users Posts: 12,684 ✭✭✭✭R.O.R


    The benefits of leasing are that you don't end up loosing money on a car when it's time to trade it in. The leasing company are taking the risk of what the car will be worth in 2/3/4/5 years time.

    Bad points are that it depends on milegage and you can't just decide to change your car whenever or you'll get hit with early termination penalties.

    Apparently a large percentage of new cars in the US are bought that way but it hasn't caught on in the UK or Ireland.


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    #3
    LegacyUser
    Registered Users Posts: 166,026 ✭✭✭✭LegacyUser


    So whay has it not cought on here. It seems to me that it's more or less the same disadvantages as financing your own car. When it comes to trade in the value also depends on condition/milage etc. And most people would be happy with the same car for a few years and then up grade to newer model.

    Is it only possible on new cars?


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    #4
    racso1975
    Registered Users Posts: 5,273 ✭✭✭racso1975


    i think it feeds into the irish psyche of never owning a vehicle kinda like the way everybody must own a house


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    #5
    crosstownk
    Registered Users Posts: 12,863 ✭✭✭✭crosstownk


    racso1975 wrote:
    i think it feeds into the irish psyche of never owning a vehicle kinda like the way everybody must own a house

    Yep - this is probably the single biggest factor as to why leasing hasn't caught on in Ireland.

    If not owning the car you drive doesn't bother you then leasing is probably slightly cheaper. The cheapest option is to lease from a dealer - dealers are usually cheaper than car leasing companies as they can afford to put a higher residual on the brand they sell. Ring a few leasing companies and get a few quotes - then call the dealer. There is usually a small bit of wriggle room in most offers.

    With most leases you have the option of a maintenance contract which means you pay monthly for tyres, services, road tax, etc. Less hassle but probably more expensive over the period of the lease.

    Remember too that when you return the car you will be charged for any damage that is outside the scope of fair wear and tear.
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