Is leasing a car stupid!
Buying your first car can be a pretty complicated process, there are a lot of options out there now, and it is hard to know which option is best for you. It is an important decision to make as the wrong decision could leave you suffering financially. The most important thing is that you understand the Ts & Cs of your contract whether you are leasing or purchasing the car.
I have recently been looking at buying myself a used Renault Clio, and my browser kept bombarding me with adverts for Renault Clio contract hire deals, which I must admit became more and more appealing the more I looked, but does leasing a car make fiscal sense? From a purely financial perspective it is not a great idea to lease a car. This is no surprise as you are giving out money for something that you aren’t going to own. However, buying a new car doesn’t make financial sense either, for it will depreciate rapidly unless it is a special limited edition or something which you don’t plan on putting any miles on.
That leaves you with the option of buying a used car that is at least 3 years old. By this point the car will have taken the biggest hit on its residual value meaning you don’t stand to lose as much on it and it is still relatively new. However there is always the risk that is associated with a used car, that there is no guarantee that there isn’t an underlying issue that you don’t know about, and you may end up spending a fortune on a used car over the course of a few years. So maybe when you think about it like that leasing isn’t the worst option.
With used car horror stories in mind, and my own first hand experiences, curiosity got the better of me and I decided to get on the internet and do a search for personal car lease Renault Clio. The second you hit enter on search like that you are hit with a hell of a lot of choice, and before long you will be seeing offers every, ads will pop up on other web pages you go to that have nothing to with cars, until small monthly payments do actually start coming way more appealing. Hardly surprising, in my case it was either buy a second hand 2014 Renault Clio 0.9 TCE 90 Dynamique MediaNav Energy 5dr for somewhere around £8k and set up my own finance deal, or get a brand new one and pay £187 a month for 35 months after an initial payment of £1364. The lease looks more manageable for obvious reasons, the car is new so it will be under guarantee, you shouldn’t get hit with any huge service bills and you don’t have to worry about the cars residual value at all. The point that got me was my purchasing habits when it comes to cars, if I bought it outright by the time I got to paying it off I would typically be looking for a new car anyway, so regardless of how I go about it I’m going to be spending the best part of 200 pounds a month for the foreseeable future. Obviously, the benefit of buying a second hand car outright is I can get some money in my pocket each time I trade the car in. But it is extra admin and shopping around, having to barter with dealers etc which is genuinely up there with my least favourite things to do, right behind selling a car privately.
As you can probably gather I am leaning more and more to personal contract hire Renault Clio being the best option. To answer the original question, does leasing a car make fiscal sense, no, but your other options aren’t exactly fantastic and leasing makes sense in just about every other aspect. In a perfect world I could get a Renault Clio business car lease through my company.