Three quarters of new cars in the UK are currently bought on finance. Would you rather buy a cheaper car outright, or splash out on a pricey car and several years’ worth of monthly payments?
Call me a cheapskate, but when I work out how much I can afford to spend on my next car, I look at my bank balance and savings and subtract a bit. If the money’s not there, I can’t afford to replace my car.
However, it looks like I’m in the minority – 74% of car buyers are using finance to put a new car on their drive.
But do you see car leasing as money wasting or just savvy spending?
The cost of leasing a car
Go to any car manufacturers’ website and you’ll see huge adverts for finance schemes on new cars. Monthly payments of just £69 are enough to secure the keys to a shiny new Skoda CitiGo. And even Rolls Royce or Aston Martin websites aren’t shy about the option of finance schemes.
Just in case you’re wondering, it’ll take payments starting from £1,888 per month for an Aston Martin Vanquish, and you’ll need to stump up a £40,000 deposit in the first place. As for purchasing the car at the end of the lease, that’ll be £91,000 please. But back to the real world…
Which? Car’s Claire Evans has shared her thoughts on wanting to own a car rather than borrow it, but my issue is whether people actually know how much leasing a car is actually going to cost them in total.
Monthly car leasing fees
It’s easy to be swayed by a sticker price of £69 per month and sign the contract without too much hesitation. But if you have to pay £69 per month, every month, for a number of years and still don’t own the car, is it really good value?
Well, in the case of the Skoda CitiGo, 0% finance means that you pay the list price of the car spread over three years – less if you choose not to buy the car outright at the end. However, a similar Seat Mii will cost an extra 8% over buying it outright thanks to added interest and several fees. And I do wonder how many people do the maths…
Another recent option is packaged leases which include insurance, road tax and servicing costs, all rolled into a monthly bill.
But what appeals to you? Would you consider leasing your next car, or would you rather buy a cheaper car outright?