Leasing verses buying a car

mariaalice

The plan is to change my car in July, I could buy a car outright, however I have looked at some leasing deals and they seem very attractive as opposed to using up your savings.

I always take out fully compressive insurance with all the bells and whistles added.

If I can get a deal with a low deposit, an extended warntry and servicing package included would it be better that buying a car particularly if the interested rate was less than 10% on the leasing plan.

I am aware that you do no own the car in a leasing plan but that would not bother me, what I want is the most economical way of providing my self with a car which I mostly use to get to work. My husband has a car which we own outright and we use that for all leisure outings.

coylemj

Be careful - the lease price you're being quoted may not include VAT. Leasing is usually not a viable option for a personal purchaser, it's usually only attractive for the self-employed and by employers for their sales people because personal buyers can't reclaim the VAT.

By all means look at a personal finance option which by the sound of it in your case could be a HP deal but if the package you're looking at uses the word 'lease' then you need to check out the situation regarding VAT before making any decisions.

mariaalice

Maybe I am mixing this up because when I was talking to the sales person in the garage they said it is similar to a leasing deal as servicing etc is included, maybe its a HP deal that is structured like a leasing plan?.

coylemj

There is a difference between something which is 'similar to a lease' and an actual lease, it's called VAT.

Whatever you're looking at, just make sure that the repayments are not liable to VAT.

Finance packages are a good way for salespeople to hide extras so don't look at the price of the car alone, you may be paying for a lot of extras that are poor value for money. Take a look at this, it's concerns an actual lease and it's the US but it tells how an attractive package can conceal hidden 'gotchas' and downright bad value for money.

http://bucks.blogs.nytimes.com/2013/01/08/what-i-learned-the-hard-way-about-leasing-a-car/

homer911

If its a lease, you never own the vehicle. If its HP, you will, once the final payment is made

coylemj

homer911 wrote: »

If its a lease, you never own the vehicle. If its HP, you will, once the final payment is made

Typically that's true for vehicle leasing because most agreements are what's known as an 'operating lease' though it is possible to lease a vehicle under a 'finance lease' in which case you end up owning the vehicle, similar to a consumer HP agreement. Almost all self-employed and corporate vehicle leasing is done as an operating lease.

There are also hybrid consumer deals where you hand back the vehicle at the end of the period so there are options both ways.

digzy

if you've the cash buy it from your savings. the deposit rate after DIRT wont beat the 'rate' given by the garage.

Scortho

The nice advantage of hire purchase is the half back clause. See Section 63 of the Consumer Credit Act 1995.

http://www.irishstatutebook.ie/1995/en/act/pub/0024/sec0063.html

Having paid over 50% of the price of the car you can return it to the financial company.
They have to take it and it has no effect on your credit rating and they can't be predjudiced against you If you want to take out a new hire purchase agreement.
Generally by the time you've paid half of the car back through hire purchase its in neg. equity so it works out well for you.
It's a pity we can't do this with houses now!:(