A new trend that he been around in the UK for some time now but is becoming increasingly popular is to lease your car and not actually buy your car. While many people, most in fact, still choose to buy the number of lease deals are on the increase. Currently in America the trend...
A new trend that he been around in the UK for some time now but is becoming increasingly popular is to lease your car and not actually buy your car. While many people, most in fact, still choose to buy the number of lease deals are on the increase. Currently in America the trend of leasing cars accounts for every 1 in 4 new cars on the road. The reason why it has become so popular is due to the financial freedom and savings you can make over a 2 to 3 year period. If we look at a working example of leasing compared to buying it's clear that it actually comes out a lot cheaper to lease the car. If you where to lease an Audi A6 Saloon 2.0 TDI S Line you would be looking at a down payment of £2002.80, the down payment is usually 3, 6 or 9 months rental fee upfront. The more you put down as a down payment the lower your monthly fees will be. In this example it's a 6-month down payment. Then you will have 23 monthly payments of £298.80 and a one off fee of £210 for setting up the deal. This brings your total spends over the 2 years to £9085.20. If you were to buy the same car from Audi it would cost you £32,835.00. Then you have to factor in depreciation. The AA thinks that depreciation of a vehicle is at about 20% per year. I personally think that the first year is more like 30-40% for the first year then 20% every year after, but for the sake of this let's keep it to 20% per year. So after the first year your car has dropped from 32,835.00 to £26,268.00 and then down another 20% for the second year to: £21,014.44. This works out at a total loss of £11,820.56 – YIKES! That's an overall saving of £2735.36 when leasing. The way you have to look at leasing is, essentially your renting the vehicle. Its not your, you simply use it and return it. With certain lease deals you can include "Maintenance" which will increase your monthly bill but is more than likely going to come in handy during the 2 years of your lease. Obviously there are limitations on what you can do with/to the vehicle while you lease it. You can't for example sell it, it not yours after all. There will also be limits on the number of miles you can cover per year. Usually these are set at about 10,000 per year, so anyone who does a lot of miles or very few miles may want to have a look at getting a bespoke deal that suits their needs. All in all Leasing can be a very attractive option. You do have to remember though that new tyres, fuel and insurance are not covered in the lease deals.