[Closed] Downsides to leasing a new car?

If you want a new car, and don't want to own it and you can get a deal that beats depreciation of a new one then I'd say go for it.

I've leased all my cars for the last 10 years.

Great deals.

One downside would be is you may not get the exact car and the best deal at the timing you require.

I've never been charged for damage.

Mate has at least £300 worth of damage in his lease car. BCA charged it at £160. Not bad for two scrapped panels and a badly kerbed wheel.

You never “own” the car
You need to make sure your saving extra money above the cost of the lease to pay for the deposit on the next one
Your replacement of the car is fixed and difficult to move if that becomes inconvenient due to a change in circumstamces (job baby house etc)
You “may” have to pay for damage to the car when you return it
You will pay a disproportionate amount if you want any extras (you pay the full cost over x years) finance company benefit from the potential increase in residuals

You only asked for down sides but there are plenty of upsides that eclipse these if you get the right deal

Agree with the above on downsides. Also be aware of the excess mileage cost if you go over the contracted value.

However, on the positive side: if you find a good deal (there's 3000+ page pistonheads thread tracking the latest deals; the bad news is with WTLP and various reduced manufacturing outputs at the moment there isn't a lot of excess capacity that they want to "shift", which is when you get the very best deals) then proper leasing (aka PCH) can be fantastic. You just have to be flexible on make/model and timing to get the very best deals.

If you have a specific car/specification in mind then, whilst you might be lucky to find a decent PCH deal on it, you may well find PCP works out better from a "total cost of ownership" perspective over the term. For example I've just paid buttons for a fantastic 2 year lease on a great car (which I wasn't really interested in, but the deal was amazing), but really have my heart set on a new Alfa. PCH deals on Alfas are rubbish (especially the excess mileage cost) but the PCP terms are pretty good.

Also OP: you said "leasing as a way of purchasing one "

A true lease (PCH) is literally that: you are leasing a car (with no option of ownership(*)) for a contracted term. Are you thinking of Hire Purchase (HP) or PCP, rather than leasing (PCH)?

(*) You may be offered the opportunity to buy it, but that's at the lease company's discretion.

If it's more of a tool, e.g. high mileage, I'd lease. Had either company cars or purchased. I tend to keep my 'purchased cars' for a long time, but I'm not doing big miles. When I was doing long commutes and business miles, I had a company car. Was doing something like 18k (not huge) but didn't have that on a private car - I'm doing about 7-8k maximum on an 'owned car'.

Always over estimate what mileage you will do.
Lead time can be up to 3/4 monnths, so plan well in advance of when you need it.

Is it  a Skoda Superb for your brother in law ?

I like PCP because I want to potentially keep my current car - yet its a diesel so I could hand it back / swap in 2.5 yrs if the world goes crazy.

Lease or PCP I handed my prior car back with 3 golfball size dents, 600m over the limit and 4 bald tyres and negotiated equity as opposed to costing me anything.

Knowing you as I do Bullet I suspect the car will be well looked after, the trick with PCP is to negotiate at both ends - discount the car you want, find equity in the one you have. Only applied in the changeover scenario though.

Might you want to keep it? Negotiate on PCP. Definitely don't want to keep it? Lease.

Also depends on the car/manufacturer to an extent.

With the big leasing co's, the price is the price & if you want anything different from standard you may be in for a long wait. Generally the deals are very good though, as they rely on volume so make a depressingly small amount of money per sale, given the value.

Occasionally manufacturers do what on paper seems suicidal deals. Recently there was a deal for a new Octavia SE. Not the most interesting car, but it was a fairly small deposit & well under £100 a month on a lease. In other words, substantially under the cost of the depreciation.

Generally you get better deals on new cars, as the manufacturer finance company will 'support' the deal. Occasionally you might get this on something (very) nearly new or an ex demo, so worth looking around.

I built up a spreadsheet when I went through this process last year & basically it boils down to pence per mile to run the car. I didn't go for the absolute cheapest deal, as I was prepared to compromise on cost a little for a nicer spec, but I could sit there and see exactly how much it was going to cost me.

FWIW, I ended up on a PCP deal, as it was cheaper than the equivalent lease. We went through the same process with my other halfs new car/car allowance & she is leasing hers.

Downsides to leasing?

It lets nail technicians on minimum wage "buy" a white Audi A1 (black roof obvs 😉 ) and then proceed to drive it along the motorway in Lane 3 oblivious to all the other traffic.

It lets nail technicians on minimum wage “buy” a white Audi A1

I know, world gone mad innit? If you can no longer tell who's got a big important job by the car they drive how's a salesman or IT "manager" ever going to get respect?

- need to plan ahead for overseas trips, as you don't have the V5 and need to request a V103 from the lease company

- likewise, some insurers will include on their assumptions list that you're the registered keeper on the V5 and you have to call them to clarify. Becoming less of an issue these days though, they usually have a dropdown where you can pick "private lease" or similar.

- need to service as per schedule at a main dealer.

- while there are fair wear and tear guidelines and I've never been charged, if you're particularly careless with your cars then you'll get a bill at the end - but then if you were selling or p/x then you'd be getting less anyway.

- fixed term and expensive to exit early (typically 50%+ of remaining payments) and while you get a few months of flexibility at the end to line up with your next car, extending for longer is often a lot more expensive. Often there's no option to buy at the end, or they want an above-retail price to do so.

- dullards will go to great lengths to tell you how wrong you are to throw money away on a lease when you could be driving a 10 year old Focus instead.

Others are well covered. It can work out well if you're not that fussy about brand/model/trim level and can jump on a good deal. The most desirable cars that people want to buy without needing big incentives don't get pushed by the manufacturers on to lease companies.

Have to say I've been very lucky to have 3 lease cars in a row that were cars I really wanted when there happened to be good deals on them - not sure that will be the case in a year when the current one goes back. I keep an eye on things (and brokers I've ever asked for a quote keep emailing offers) but they're thin on the ground at the moment.

You never “own” the car
You need to make sure your saving extra money above the cost of the lease to pay for the deposit on the next one
Your replacement of the car is fixed and difficult to move if that becomes inconvenient due to a change in circumstamces (job baby house etc)
You “may” have to pay for damage to the car when you return it
You will pay a disproportionate amount if you want any extras (you pay the full cost over x years) finance company benefit from the potential increase in residuals

You never own the car...that's a benefit. There are no benefits to owning a car.

Saving up for the next lease deposit...no different to buying a new car..you still need to have a deposit to change cars...they depreciate, so you need to make up the cost of the depreciation plus and the cost of the loan or cost of money if you buy the car outright, so no difference there. Also with PCP you have some 'equity' in the car which can be used as the deposit for the next PCP, so unless you want to upgrade the car you can swap cars for very little or zero money.

Replacement of the car is fixed....well within certain limits, there is some flexibility, but so what. Often they're willing to do deals before the lease term is up.

You may pay for damage...just the same as if you own the car.

You pay a disproportionate amount if you want extra's...well you do also if you buy a brand new car and go to town on the spec sheet....upgrade the sat nave....£1500, want those nice leather seats....£1800 etc...extras are never cheap.

Finance company benefits from increase in residuals...well that never happens and even if it does then they deserve to benefit...they're taking the risk and lending the money. Why should you benefit after not taking any risk? Risk has a value.

At the end of the day PCP and leasing only makes sense if you want a brand new car for used car money and want to change it reasonably frequently.

As for leasing vs. PCP...I came to the conclusion that basically PCP is like leasing, but you have options at the end of the term, so I went for PCP. The downside to PCP is that you might be incentivised or trapped into one manufacturer.

I've just taken on an Octavia SE lease. Because it's technically a fleet car, The service schedule is every two years instead of every 12 months. So I'll only service it once and no need to mot in the three years I'll have it.

Edit to the above post, it's the SE TECH we got which makes it a "fleet" car

A few extra contradictions.

I have been offered to buy a lease car twice - despite VAG saying they don't do this at the beginning of the term.

PCP - I've never had any equity at the end of the term.

And when comparing PCH to PCP - PCP was always more expensive. But I'm talking about one brand.

I think most points have been covered, it really is all about finding a good deal and not being too specific. Current Superb SE Tech and previous Octavia Scout were cracking deals with the costs well below depreciation. The Scout was a £25k car, after 2 years and 16k miles they offered it to me for £14,800, a £10k drop despite it only costing me £5200.

My current deal ends in 5 months so I've started looking again but there is absolutely nothing at the moment and they have all switched to 4 years instead of 2 so you get a year out of warranty despite the monthly cost being more than before. The industry is in trouble so there may be a few more good deals but I think the days of amazing deals are over.
Next car will be 2 years old although some of the new deals on Car Wow (if you take PCP then cancel, to get the deal but not finance cost) work out not much more.

You pay a disproportionate amount if you want extra’s…well you do also if you buy a brand new car and go to town on the spec sheet….upgrade the sat nave….£1500, want those nice leather seats….£1800 etc…extras are never cheap

If you buy a car outright and sell it at 3 years old (to make to comparison easy) then you pay £1500 up front for the sat nav and then you might be able to get an extra £500 for the car because of the upgrade, so the option 'only' cost you £1000.

The best thing to do is to upgrade the trim level, e.g. it might be a difference in list price of £5k between base trim and 'Titanium X Tech Line Luxury' with all the gadgets. But the lease won't cost you an extra £5k because the residuals of the higher spec car are higher.

I’m a bangernomics dullard....but having previously leased I can see the benefits and wouldn’t hesitate to recommend a lease car.
My lease car was way over mileage, not serviced as regularly as it should have been and not in great condition (alloys a bit of a mess, inside was a mess due to kids eating in the back, roof had marks from getting bikes in etc). I just paid a nominal fee at the end. When the lease date was coming for expiration they let me keep it at the agreed monthly rate until I had my “new/old” car ready, probably about 4 months over the agreement.
I seriously thought I would get a ridiculous bill at the end of the lease, but it was less than £200 when I handed it in.
Once the current banger starts to cost more in maintenance I’ll probably lease again. At the moment though it’s nice to not have any monthly repayments to make.

Downside: you are paying for depreciation, and if you have kids, damage too
Upside: in the absence of kid-damage you have some idea how much you will be paying and it will be less than a purchase.

I prefer cheaper unsecured loans on used cars.

Leased cars in various forms for years.

Latest one was list price £42k recently bought it off the lease co. less than 2 yrs old for £17k

There are no benefits to owning a car

Part from having a car with little or no responsibility to anybody else of course.

But why new? Bank loan on low rates and buy one a few months old. Or am missing something?

Bank loan on low rates and buy one a few months old.

To buy mine a few months old would have meant payments of >£600 per month for 5 yrs.

Instead I paid £330pm including maintenance

Skimmed the other responses, but be aware that if you wish to get out of a lease mid-term, you will have to pay off a percentage of the outstanding payment. With VWFS, this is 55% of the outstanding amount.

At the other end, if you wish to extend the term, there may be limitations e.g. VWFS will allow upto an extra 6 months leasing at the existing payment on a rolling monthly basis. However, extending beyond this is effectively a new agreement and may not be possible or subject to different payment terms (that could be higher or lower).

But why new? Bank loan on low rates and buy one a few months old. Or am missing something?

As above - you need a bank loan for the full value of the car, which is expensive and quite limiting.

We've just bought mrs njee20 a SEAT Ateca on PCP, was 0% for 4 years. I did all the sums but leasing worked out more expensive. Buying used worked out (significantly) more expensive too.

You never own the car…that’s a benefit. There are no benefits to owning a car.

What a weird thing to say, of course there are benefits. You lose your job tomorrow and your roof caves in, you either have an asset you can sell immediately, or you have a lease car which costs you £300 a month with only expensive exit clauses...

What a weird thing to say, of course there are benefits. You lose your job tomorrow and your roof caves in, you either have an asset you can sell immediately, or you have a lease car which costs you £300 a month with only expensive exit clauses…

This. Our "family" car is bought and paid for. My car is on PCP. I'm led to believe that if such a crisis happen my vehicle manufacturer will do everything they can to help me retain the vehicle, oops I mean keep some money coming in rather than administer the return and sale of it second hand. Even if that happened, we'd have a family sized car which cannot be taken away.

(As an aside, hows things NJEE - looking up?)

You never own the car…that’s a benefit. There are no benefits to owning a car.

Other than someone owns it, and it undoubtedly making money on it.

Same in theory could be said of houses, why own a house, there's even less reason to as you can get out of a rental at the end of the year not 3 years like a car lease. House prices generally go up, but they don't have to. Boilers break down, roofs leak, locks jam, walls need redecorating, washing machines break down.

But then I drive a 14yr old Focus with enough miles on it to get halfway to the moon. What would I know, other than the depreciation, servicing, tax and and maintenance over it's lifetime with me comes to about £100 /month over the past 7 years. And if I was desperate it's still worth about £1200. And the added bonus I can fit a towbar, make other mods, do silly mileages if I have to, go abroad without having to write letters. Apart from that, what have the Romans ever done for us?

Thanks for all the comments, really interesting. As Kryton said, I do look after my cars so no worries from that perspective 🙂 Didn't mean 'purchase', and don't plan on nodding in any way so leasing appeals.
Forgive my simplistic view but is it as simple as paying the initial amount then 36 X £300 (for example) and then just give the car back in three years?
Seems like a good way to drive a new car?

Yes, that's pretty much it. Deals almost always include car tax. You'll need to pay for insurance, servicing, tyres, brake pads and any other consumables. No MOT as you'll hand it back before it needs one (do some places make you get one before you hand it back?).

I'd lease a car tomorrow (as I drive a 12 yr old Mazda which we have owned from new but it's beginning to behave like an old car). However it gets left in the train station car park all day every single working day (in the winter - I ride my bike more in the spring/summer). Therefore I couldn't care less where I park it or if it gets damaged - I couldn't be doing with the hassle and worry of trying to protect a lease car from all the numpties in the car park.

There are no benefits to owning a car.

Sweeping statement is bollocks. For me, there are no benefits to leasing a car, but I wouldn't come on this thread and presume that applies to everyone.

We've not leased a car before but I'm tempted to use it for a small (Auto), second car (primarily for my wife to use).

So does leasing suit cheaper, smaller cars rather than a bigger saloon/estates? I get the impression it's seen more as a way of laying your hands on a higher spec, bigger car than people might be able to otherwise afford.

And also which outfits are the better "go to" Car lease companies?
There seem to be a lot of options.

I might be able to sell it to the missus on tha basis of us being able to set low, fixed costs and not have to worry about big servicing or any MOT costs on what would probably be the most used car (lots of short local journeys unfortunately). then I can look at chopping in our aging diesel MPV for a more sensible (probably used) estate that I can throw muddy bikes in and use for longer family trips...

I might be able to sell it to the missus on tha basis of us being able to set low, fixed costs

This is the big thing with leasing. It’s prerty much fixed cost motoring. Doesn’t suit everyone - the owning a car is useless statement is a sweeping statement that’s really not relevant.

I could have leased my car for the same cost over 2 years as the depreciation on the car I actually bought, which is 2 years old. So on the face of it - you would say why buy? Because once I added the options I wanted you pay for those over the lease so they are hurrendously expensive, I also would have to wait 12 months for the WLTP thing to sort itself out as I seem to have a car that singlehandedly can destroy rainforests in Belize with its fuel consumption, and most importantly I would have to find another deposit at the end of the lease, whereas my car is paid for in 2 years and there’s the deposit for the next one. Different things suit different people.