According to a recent article in the associated press, car shoppers are becoming more eager to lease than to buy cars, according to recent data. More than a third of all new-car owners leased rather than bought in 2016. But the statistics don't tell the whole story.
Many car buyers don't set out to lease a new car, but once they run the numbers, leases look like a much better deal.
Jim Howard Managing Director of Vehicle Save Group which includes Vehicle Save Contract Hire & Leasing and the Europcar franchise in South West England said that he concurs with the article.
“Customers are realising that when they carry out their research into the relative cost of leasing of vehicle compared to purchasing one, it can work out much cheaper to lease rather than to buy. “
The main reason is the depreciation of a new vehicle:
Howard added: “According to the AA, the average new car will have a residual value of around 40% of its new price after three years, assuming 10,000 miles per year, or in other words will have lost around 60% of its value at an average of 20% per year.” While the percentage drop may be similar the actual cost of deprecation clearly varies hugely between a small cheap car and an expensive luxury car. Buy a car for £10,000 and it might cost you £2000/year in deprecation and be worth around £4000 after three years but spend £50,000 and the bill for depreciation will be more like £10,000 per year.
But beyond the depreciation costs are other benefits to leasing a vehicle:
By leasing a car, you will more than likely be driving a new car, which means that most mechanical issues will be covered by the manufacturers warranty, and if you chose to take a maintenance package you will have the peace of mind that there will be nothing for you to pay if something goes wrong.
Another factor to consider is fuel economy – if you are a high mileage driver choosing a more fuel efficient car may well save you a lot of money.
Different cars cost different amounts to tax. This is based upon the emissions of the vehicle. By choosing a low emitting vehicle it will reduce your costs.
If you are a company car driver you are liable for 'Benefit in Kind' tax as your vehicle is being provided as a benefit by your Company. So you need to find out how much this would cost you too.
If you are a business, perhaps you should consider the profit you could make from investing your capital into your business as opposed to spending it on vehicles.
At Vehicle Save we are experts in contract hire and leasing and will help you make the right decision by choosing the right vehicle for your circumstances to ensure that you get the best value for money.
Please contact us to help you make the right choice.