First off I'm not suggesting leasing through my LTD as I know about all the pain of BIK tax etc., this would be either a personal lease/PCP or cash loan purchase.
Basically got an A3 at the moment which has reached that age where it's starting to cost lots to keep it (just had the cambelt done, now needs 4 new tires and probably the front brakes done). I realise changing cars for financial gain is always a false economy as they're complete money pits whichever way you look at it, but the question is, is it better to lease or buy when I'd probably want to change it again in 3 years anyway?
Pros of leasing as I see it:
- new vehicle to exact spec.
- Fixed monthly outlay.
- Can pocket cash from sale of A3 (about £6k) and use this to partially fund the lease.
- I think the lease will include servicing and maybe tax too (need to check this).
- No hassle of selling at the end.
Cons of leasing:
- Is it throwing money away?
- No asset at the end.
Pros of buying:
- Cheaper, would prob get used car (0.5-1 year old) so save on the initial depreciation hit.
- Get to keep the car for as long as required.
- Could sell car at any point.
Cons of buying:
- Sale of A3 cash would all go into purchase (not necessarily a problem)
- Limited choice from used car market.
- Servicing costs.
I know on a purely mathematical level buying is normally more 'cost-effective' than leasing otherwise everyone would lease, but I'm looking for opinion here on what others would/have done. Part of the motivation is to reduce overall costs as we're looking at maybe a diesel Audi A1 which is a smaller car: better MPG, cheaper tax and insurance. Ultimately the goal is to replace our other car (also a small vehicle) with a bigger one in the next 9 months or so, so the A1 would become the 'small run-around' mainly used by the missus while I get something big and shiny!
Basically got an A3 at the moment which has reached that age where it's starting to cost lots to keep it (just had the cambelt done, now needs 4 new tires and probably the front brakes done). I realise changing cars for financial gain is always a false economy as they're complete money pits whichever way you look at it, but the question is, is it better to lease or buy when I'd probably want to change it again in 3 years anyway?
Pros of leasing as I see it:
- new vehicle to exact spec.
- Fixed monthly outlay.
- Can pocket cash from sale of A3 (about £6k) and use this to partially fund the lease.
- I think the lease will include servicing and maybe tax too (need to check this).
- No hassle of selling at the end.
Cons of leasing:
- Is it throwing money away?
- No asset at the end.
Pros of buying:
- Cheaper, would prob get used car (0.5-1 year old) so save on the initial depreciation hit.
- Get to keep the car for as long as required.
- Could sell car at any point.
Cons of buying:
- Sale of A3 cash would all go into purchase (not necessarily a problem)
- Limited choice from used car market.
- Servicing costs.
I know on a purely mathematical level buying is normally more 'cost-effective' than leasing otherwise everyone would lease, but I'm looking for opinion here on what others would/have done. Part of the motivation is to reduce overall costs as we're looking at maybe a diesel Audi A1 which is a smaller car: better MPG, cheaper tax and insurance. Ultimately the goal is to replace our other car (also a small vehicle) with a bigger one in the next 9 months or so, so the A1 would become the 'small run-around' mainly used by the missus while I get something big and shiny!
Comment