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My Company Car has a year to run on it's 4 yr lease, at which time I'll be going onto a 'car allowance' to fund a car. Current one is a BMW 5 estate, which will be in good nick, with 80k miles. It's through Lex leasing and I understand they will offer it to me to buy at market price, which is fair given my wife and I are only folk who have driven it and we know history.
Not sure on plusses/minuses though - an older car that I own, with likely bills to come (assuming I keep it for 2-3 yrs and then replace), or get a new version of same or similar on the allowance ?
See what price they offer you first. Last company car i was offered at the end of a lease was a joke.
About a grand and a half less than buying brand new. In the current model. With significantly more toys.
If it has been hassle free for you so far then expect that to change and with no warranty back up its a lottery. Air Con malfunctions, dead idrive, blown turbo, gear box sump, how much will you have stashed away for these. Or can you get an aftermarket warranty.
^^^^ yes, all those things have gone through my mind, and I can't imagine they'd be cheap to fix... The allure of a new one on PCP is strong, especially as the allowance would cover it
Id work out the monthly cost over 3 years of running second hand including a BMW warranty and depreciation. I bet a new lease deal would be more expensive, but not massively so..
Had this a few years back with a 3 series estate.
Didn't buy it though because the leasing company's idea of "market value" differed significantly from mine / Auto Trader. Obviously YMMV.
Also, the previous driver (i.e. me) had thrashed the nuts off it.
Car allowance was absolutley, for me, the way to go. Gives you the flexibility to have the car you want that fits your needs rather than the restrictions imposed by comapny car schemes.
I've also made a bit of cash from the car allowance by buying a series of low mileage 2 and a half year old cars. Get any major warranty issues resolved in final 6 months of warranty. Use the car allowance to pay for the car over 2 years and keep it for 4. Bank the "free" years of allowance in a seperate "car account" which funds any repairs etc. and allows me to upgrade to a better car next time round. Rinse and repeat.
We bought a Seat Alhambra from the leasing company via a work colleague who'd had it for 3 years from new as a company car.
The equivalent car with 3K more miles on it at a dealer was about £4,000 more, as a lease car it got serviced bang on schedule and anything that needed doing got done so so we decided it was worth the punt.
Depends on the price, if it's not cheaper than a dealer then it's pointless, if it's a good price then weigh that up against not having a warranty and make your call.
good info, thanks
I've just got rid of my company Golf and gone to an allowance. I had the option to buy and even though I look after all of my cars and it was serviced on time every time it was still on 65k and soon to be out of warranty.
It was easier and cheaper for me to have a beemer on PCP with some warranty and free service pack.
hmmm, my risk averse head is saying new 5 estate or XC60 on a 3 or 4 yr pcp and peace of mind...
It's happened to me too, similar 5 series Sport Touring only driven by me etc.etc. Lease came up for renewal, took a look at what the buy out price was and choked on my bacon sarnie. Too expensive, so handed it back. PCP later and allowance and a new car under a two year lease was the way to go for me.
I did buy out a PCP on BClass back in 2008, price was just about Mkt value so thought "why not", again owned from new. The cars still in the family and been great so far, still only just done 48k..
Can work out, if you are keen. But Lex are always the most expensive lease company, by a large way. It's a shame so many corporate's go with them.
Seen it work/seen it not work. Usual issue is that they want too much for your current vehicle. They usually go to auction where they're sold for less so you can make them a counter-offer or find out where it will be auctioned and buy it there.
We bought a golf estate from lease plan. Their initial offer was actually slightly under comparable cars on auto trader and we knocked a fair amount off of that. They supplied the car with a 1 years breakdown and after market warranty.
It seems that as a customer you would expect that lease companies would let the current user have a good price on a car as it would reduce the effort for the leasing company - pick up - valet and drop off at the auction etc.
However I think they have cottoned on to the fact that users know the history of a car so are keen to buy - so they give an inflated price in the hope that some people bite.
There is another way - find out which auction the car is likely to appear at and bid on it there - only you really know the history and you can easily work out your max bid based on the fees and Parkers / webuyanycar etc prices.
You're doing it wrong Iain. Drive it like you stole it for the rest of the lease, then hand it back with a smile and buy another of equal mileage/age.
Honestly though, I'd not expect that much hassle from a car of that age. I would probably buy it (if the offer is reasonable) and have something stashed away in case of any issues.
they will offer it to me to buy at market price
Very generous.
You might as well look at every other 5 on Autotrader then.
If it was below market you might have a reason to take it on.
^^^ surely the reason would be I know how it's been driven, looked after etc ?
I am swaying more to the new option on PCP; this thread has been really useful.
If you really want it - follow it to auction
Also do something deplorable to it cosmetically so the dealers will be terrified of it. Losing the service book and fitting a set of shredded mats and boot carpets might help
[i]hmmm, my risk averse head is saying new 5 estate or XC60 on a 3 or 4 yr pcp and peace of mind... [/i]
My risk averse head would say don't spend all your allowance on a contract, plus what would happen if you lost your job?
FWIW I went through this a few years ago, and as we didn't have any restrictions on the car/age I bought a s/h 5 Series and a new motorbike (for commuting to the office).
My bonus paid for these, and I 'banked' the allowance. Really good when laid off 6 months later as I could sell the bike and keep the car, and no debts/contracts plus I got my notice period for the allowance as well.
A friend laid off at the same time had TWO leased BMW's, a 5 Series for him and a X5 for his wife...
b r - interesting points for sure.
my wife's car is bought and paid for (no finance) so worst case scenario I guess would be the pcp one would go back and we'd walk away...
I'm hoping to do the same with mine when it's due, although it'll be a handmedown to my wife as hers is on it's arse.
Plusses for me, whilst I didn't have it brand new, it's lead a shelted life, yes I drive it hard sometimes, but that's frankly a plus with a diesel, but it's been serviced to the letter by Seat, including all those silly jobs they tag onto a service (although not always by them) and with 60k miles it is exactly like when I had it at 10k.
Plus being the unwanted ugly step-child Exeo model it's not going to be worth much in terms of cash, but worth quiet a bit to us in terms of easy, cheap, safe comfortable motoring. It's also a model with zero known faults - the only real issue being that my Wife is a District Nurse, 12 trips a day, usually only a mile or two each, should be enough for it to get up to temp, but maybe not great for the DPF - I'll probably end up using it at the weekend for riding to keep it clear.
Freeing me up to buy something a bit smaller, faster, and less practical....
I've really thought this through 🙂
Pop over to Pistonheads - they have a very long running thread on lease deals.
The Companies actually post in there too and you can ask details, etc.
They have just opened a new thread just for the deals - no discussion.
[i]my wife's car is bought and paid for (no finance) so worst case scenario I guess would be the pcp one would go back and we'd walk away... [/i]
Walk away, not heard of a PCP that hadn't a (long-term) commitment?
When I left my last job my lease Merc C250 still had about 18 months left to run on the lease. They offered me an excellent price which I reckoned was below market value to snatched their hand off. Two years later and no regrets. If they offer you a good price then go for it.
Surprised it's not been mentioned yet, but are you planning to continue using the car for business? It's not uncommon for car allowances to come with terms and conditions regarding age and mileage of the vehicle
I'm always intrigued by the idea that cars will suddenly sh*t their biscuits the moment the warranty runs out. It's just not true. If the OP's car has been fault-free so far then I'd wager it'll carry on like that for years before needing anything significant. My MiL was fretting that she should trade in her Jazz for a brand new one because it was coming to the end of its warranty. We talked her out of it and it's still running perfectly seven years later.
I don't receive a car allowance, but I do claim mileage, which right now equates to a bit over £6k/year. After paying fuel, insurance, VED that's about £300/month to fund the car. Do I have a lease ? No, I have a crap old hatchback that's very reliable but worth bugger-all and I pocket the £300 for more important things !
So as always it's all down to personal priorities. If you want a shiny new(ish) car then you need to pay for it. If you don't, you can do something else with the money. Don't get overly hung up on the numbers - do whatever makes you happy 🙂
^^^ good point, our rules are fairly flexible, car up to 6 yrs old, NCAP 3 minimum, so could keep it for 2 yrs post lease
If I didn't hate my Merc the buy-out conversation in January would be interesting. I've got a copy of their invoice with the car so I know exactly how much they paid for the car from Mercedes. And it's less than I will have paid them in lease fees over the 24 months I'll have the car.
So really, they should just give it to me, because anything over running costs (one service) is pure profit.
Hmm for only another 2 years I'd probably give it a miss.
The offer price on my leased BMW was only a few hundred quid less than I could buy the same off a dealer's forecourt, and doing the latter would have got me a 12 month warranty and BMW assist, etc.
Worth asking if you like the car and want to go on running it, but don't expect a bargain. Be careful to check what is eligible for car allowance too, plenty restrict on age so you may not get that long to continue with it before it needs replacing.
I did some work for a leasing company a year or so ago.
Spent quite a bit of time talking to the guy in disposals about what they do, reasons for decisions and the like.
They prefer to sell to the driver. They make the most money that way as people know the car, often like it and have looked after it and it seems cheaper.
Next they tend to offer the decent spec, decent condition, popular cars to dealers they work with. They make less money than selling to a driver but it's simpler.
Lastly they go to auction - this tends to be the route they factor into the lease costs - so the other routes are more profit.
When I asked what he would advise me to do if I were to be in the handing back scenario he smiled and said but it from him 🙂 then said to make sure you don't drive a desirable model, hand it back, attend the local auctions and buy it for a lot less there. The dealers need to make a profit so you can often out bid them. They will collude though and he has pulled all his cars from an auction before when they colluded to force prices down. He equally saw them force a private buyer out by bidding way over the market price to send the message that private buyers aren't welcome.
They've consistently asked well over market value here. Someone did actually buy their own car back from auction for about 15% less than the lease company offered. It seems like such a strange strategy considering the auction fees.
Chap who sits next to me is retiring in March, he enquired as to the price of his 2yr old Quashqai. Same price as a delivery mile model from one of the big retailers.
It confuses me.
well mine is a standard model (520d SE), probably fairly desirable at auction, grey with black inside, so going on some of the points in the earlier posts it is likely to be offered to me at a higher price than maybe sensible. Will see how things shape up over the summer, as will need to sort out by Autumn, as new ones seem to be up to 4 months delivery in some cases.