Case Study on a PCP vs LEASE vs LOAN vs CASH Car Finance
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- Опубликовано: 13 сен 2024
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Case Study on a PCP vs LEASE vs LOAN vs CASH | Car Finance Comparison
Remember, I am not a financial advisor! always do your own maths before buying, leasing or entering into any kind of finance agreement.
In this one we look at weather it's cheap to buy or lease a car and compare the differing types of finance options available (PCP Lease Purchase, PCH Contract Hire Leasing, a bank loan and of course a good old fashioned cash purchase).
Car finance can be a bit of a minefield and is often subject to pressure sales techniques so I hope this helps clear some of the most for some of you and helps you see how I do the calculations to help try to make the right decision.
The numbers will look very different in every case so PLEASE run the numbers yourself on any deal you are considering.
#carfinance #carleasing
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Important : This channel tries to deliver honest advice for real people. Remember that I am not a financial advisor or car finance professional and am therefore not qualified to give any kind of financial advice, views shown here are purely my own but you must make your own financial decisions. Always seek professional advice before entering a finance arrangement of any kind and seriously consider your financial position and the long-term affordability of any deal that you may enter into.
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Great advice if you're buying new. Depreciation is nearly always the biggest cost but the opportunity cost definitely puts me off moving a large pile of savings into a depreciating asset such as a car when I could spend it wisely on booze and fast women.
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Yeah, depreciating liability 👍
Fast women depreciate and consume £ far faster😂
I bought a used EV and I am one of those people that concider a lease and understand the benefits of leasing. I think another good reason for leasing when it comes to EV's, is how quickly the technology is advancing, even if it is just the batteries. Good video
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Just ordered a VW ID.7 touring on an absurdly cheap lease deal. Thank you for helping me navigate this, you've been invaluable and really helped me make good decisions
Thanks Aaron 👍👍
If you want a new car i'd buy a 3 year old car you can afford outright with a decent warranty and let someone else take the deprecation. Then sell it on and start again if get the itch for a new car.
Informative vid
That’s could still cost you more sometimes but not a terrible plan
Just starting my first car lease been buying cars and owned plenty im looking forward to no hastle drive pay hand back
Everytime my car got paid off it was worth a third i dont want to own a car now im 66 been there seen it etc
Great video, absolutely PCH lease for me but still a great reminder to do the calculation anyway just to make sure.
Absolutely 👍
Great analysis and video. Thanks a lot Jim. I picked up a BMW M2 on a PCH last month on a cracking deal. I love the option of only 1 month upfront, almost zero opportunity cost!
Amazing car 😎
I leased this exact same car in February for £320/month over 36 months with no deposit, so £11520 for three years and 30,000 miles. So far, I've been delighted with it. It's a lot of car for the money. This even compares favourably to a used 3 year old car which will have higher maintenance costs and of course finance costs.
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@@edwardlloyd1516 Hi Ed, great move. Just curious to know if £320 includes insurance too? I have heard of leasing deals that includes insurances as well. Considering moving to lease one.
Fully agree, it's exactly the Mathematics I used in leasing the 408GT. The £30k I saved up is in a 5.5% fixed rate account, giving me returns of over £100 per month (after tax). This £100 per month is very useful in offsetting the leasing cost, and makes my monthly car expenditure very low indeed.
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I've leased every one of my cars since around 2014 and it's by far both the cheapest and easiest way of having a new car. Never had a problem with the process but you are absolutely right - shop for the deal, not the car!
100% Barry 👍
As always a great video and you are getting close to 50k subscribers!
Next stop 500k 😂👍
Very timely Jim, wish I'd come across your channel 5 years ago before buying a new car (took dealership loan which I paid in full after 3 months saving a further £1,600, got a very good deal on it) but faced with depreciation. I'm now thinking of changing and thinking of a PCH deal!!! Would keep cash in the bank getting what miserly interest the banks give us. Many thanks.
Don’t overlook Premium Bonds and dedicated savings accounts, it’s possible to get a reasonable rate of return at the moment
More great consumer advice. Do the research and sums to shop the best deal.
Cheers, again.
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That's the plan! 👍
Great video.
I think the other point to make is that if you are happy to buy nearly new, you could save an awful lot from the new price!
Very true - it still doesn't always make sense however. We live in a mad world.
Often it’s still cheaper to lease new. So strange. Of course if you keep it forever the used car will be cheaper but it’s cost of time and inconvenience when it breaks down.
As always Jim, great advice. Much appreciated 👍
Thanks Jase 👍
Cheers Jim quite a spread of cost! As you say shop the deal not the car could end up with a "free" upgrade
Yes!
Buying the car means that from day 1 you need to be saving up your next 5 figure sum for the next car, which can more or less be the deprecation rate. Lease deals are the way to go I've recently found, if you can live with 1) Not the owner (it feels exactly the same as owning it, for me). 2) Flexible with the car you'd have and willing to see what deals there are. 3) Accept that you must repair damage. 4) Happy to commit to the monthly outgoings.
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Keep up the great work, great advice as always. Cheers.
Thank you
Really useful video. Food for thought. Cheers
Glad you think so!
I recently got a 408 GT on 18m lease, 8k miles p.a., £283 inc vat a month with 1 initial. Less than £10 a day. Genuine Bargain. I am in the trade a long time so know a deal when I see it. Great car with great spec. Highly recommended
Great 👍
Excellent stuff Jim 👍
Thanks 👍
Did just what you said. Manufacturers are trying hard to maintain the retail prices at the dealerships whilst at the same time giving large discounts to lease companies to clear stock. Surprisingly this is not just on EVs but popular PHEVs. It's largely these circa 20%plus discounts that make leasing so attractive.
I saved over £14k over 4 yrs compared with a pcp on a Lexus Phev. Incidentally if I was a limited company the dealer could give me similar terms to my lease deal but the manufacturers will not allow leasing to Joe Public.
Yes, PHEV's have also been massively overpriced and of course sales of them do contribute to ZEV manadtate credits so the deals on PHEV's will keep coming.
Oh Mr. Jim, what a mouthwatering deal on that 408 🤤. So Tempting. Shame the PHEV comes in at over £400 on top 😪. Good advice when you say look for the deal, not the car, but do the stars ever align to get the right deal AND right car? I'm looking for a replacement for my Alfa Guilia, with 92K miles. The 408 has caught my eye but am I ready to get sensible? 🤔
The two things do cross over mate, the right car might just be unexpected 👍
Some great advice there jim keep up the good work
Thanks 👍
eye opener ! Great presentation.👍I need to get away from looking for the car and not the deal !!!
You can do it! 👍
Another helpful video Jim. Thank you
Very welcome
Leasing is the way to go nowadays as what you pay on pcp is always higher that leasing figures and the balloon payment at the end is the killer for finally owning the car outright. Jusr get another lease to replace the current one on expiry and carry on ,i am surprised that manufacturers even try to rip off customers with a smiley face and are not the least bit embarrassed by their actions and they wonder why they have no customer loyalty
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Really fascinating, thanks Jim.
Thanks
Great video, very helpful, thank you
Glad you enjoyed it!
Granted these are new vehicles with the latest technology, but I've never spent more than £10K cash on a vehicle and its mine all mine from day 1 with no mileage restriction.
Crazy new prices ultimately being paid, even if on PCP deals, etc.
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Jim - without doubt you have opened my eyes to the potential benefits of leasing over traditional car financing and dealer schemes. However, in addition to cost, the winning benefit for me is the ability to hand the car back and walk away. You know depreciation from day 1.
Because we are seeing rapidly improving and better value EV’s coming to the market, an ICE car that is now considered the dogs bits could be viewed as old tech /unwanted in three years.
With current technology, for a cautious buyer like me perhaps a hybrid make sense, but in three years time? I would want to unload such a mechanically complex vehicle anyway and move to a BEV, (perhaps even buying it outright) with a view to simplified servicing and more guarantee/ knowledge in terms of battery life and charging infrastructure roll out.
Changing technology makes a good leasing deal a ‘no brainer’ in 2024.
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Very good explanation of opposition 😊
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Great vid.. nice to see the comparison 😊
Glad you liked it!
I’ve always bought 3 year old cars and keep them for a couple of years. You’ve avoided all the huge depreciation from new, lots of the niggles have been ironed out. But next one I am considering salary sacrifice and putting that spare cash into an ISA. Some are returning 10% on a decent year. Just not having to pay insurance , tax,etc which is going up on EVs I think it maybe worth a punt. But only if I can find something that’s around the £300 a month. Not the most exciting cars at that price range unfortunately.
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Really useful information.
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Cheers, useful info!
Glad it was helpful!
Hi, thanks for an amazing comparison video.
I am a chauffeur and was wondering what in your opinion is the best way to buy a vehicle for me to use ?
I will do approximately 25/30k miles per year.
Any advice would really help?
As I was under the impression a pcp or lease wasn’t an option?
Many thanks.
Hi Simon, we've obviously had a brief email exchange on this now. I think it should be fine under a Business Lease but you'd have to double check with the broker.
great video! ... im starting to understand how all these finance and leasing deals/options work.
were actually in the process of getting a new car, gonna bin the old fiat and most likely go for the 2024 Qashqai N-Connecta (glass roof)
ive been researching if pcp or leasing is better and from what im seeing , leasing for the qashqai works out cheaper (2 years is cheaper than 4). Monthly repayments are about 50-70 pounds less.... so it begs the question, why would we go on a pcp deal especially if we dont have any intention on buying the car at the end?
the cheapest PCP deal thats coming up for me on carwow is 318 p/m ( 4 year term)
leasing cost.. around 265
just seems like a no brainer... leasing wins for this car
You’d go on a PCP deal because the commission salesperson in the dealership is basically forced into pushing you into PCP - often not too many other good reasons (aside from those coming out of a PCP during Covid that did very well).
Would like to see a comparison like this (PCP vs Lease) but, as leasing a brand new car vs PCP of a one-year-old (or less) same car if possible, please. Thanks for all of your videos.
I’ve already done one I think.
Very useful content and a process I’m undertaking at the moment. Not to forget, under Opportunity costs, that any interest earned over the personal allowance of £1000 would be taxable too.
Not on premium bonds, it's all tax free
Comment is still valid when all tax free options are exhausted.
@@prestonslater2243 👌😉
👍👍👍. Thank you Jim
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Further down the line in the example above you've got rid of the car whilst in warranty on a 3 year lease, but keeping the car longer as a cash buyer risks the big bill when the wet belt chews the engine up
👌 or you could just service it properly
@@DefinitelyNotAGuru Recalls and USA law suits suggest design issue even if serviced properly. Principle of staying within warranty before costs is a plus factor for leasing. Thanks as always
There's also a chance that on PCH, you can buy the car afterwards and for less than the PCP GFV (balloon payment). So you end up paying less per month and get a lower final payment. Whether you take that gamble is another matter, seems to have worked of late with some EVs due to hard depreciation?
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Great advice Jim. Just considering leasing a car for the first time (traditionally a PCP customer). Can i ask if you or anyone else has seen a difference in insurance costs between PCP and leased cars given you aren't the registered keeper of the leased car ? Just curious. Cheers
I haven’t.
Jim, no VED on the leased car? I have never leased a car before until this year when I leased my new Mini Countryman S E and as I don’t hold the V5 I was wondering how VED worked on leased cars. Can you explain or do a video about how VED works on a leased car?
Not really video worthy to be fair - the lease company owns the car so they pay the VED
I was intrigued by your 14 days to get out of it comment. I get the premise/ policy - but are you suggesting that you can then say no to the dealer finance, keep the car and finance it though someone else?
Generally speaking you have 14 days cooling off on the finance agreement so you could, if inclined, take the dealer finance and simply refinance it within the 14 day window or of course settle it with cash. They won;t like it but it's done a lot - watch my recent video on refinancing your car finance.
But how does it compare if you're looking for a car for a specific purpose like towing! Or narrow it down to an EV for towing. There's more limited choice. First choice being an EV6 so how does that stack up?
DO the maths and find out, book a call if you need some help. I wouldn't get an EV for towing, personally.
Good stuff, thanks for the info. However, I have a question, the luxury car tax will take effect when? Also, if you buy a 40K + before that date, do you still have to pay luxury tax?
It applies now for most cars, it’s only EVs that don’t get it until April 2025 registrations
@@kab7044 According to Gov.UK the expensive car supplement for new electric vehicles kicks in from the second tax payment onwards and is only applicable to vehicles registered on or after 1 April 2025.
Love this but it’s always annoying that company car leasing is always much cheaper than buying. I want to buy a car but it makes no sense right now!
Also…. First!
They're simply getting big discounts for bulk buying and passing it on to the cosumer whilst the manufacturers aren't doing that so much. If buying a car makes no sense... don't ;) 👍
Fine work!
Tesla currently doing a new model Y for £299 a month at 36mths 10k per year
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Any good options for lease / PCP / HP deals for 25-30k miles per year?
Estate
Take a look, the link is in the video description
Scary to have such a good sized family car with only a 1.2ltr engine in it.
Not at all. 130 bhp does the job fine; as long as you’re not towing this drivetrain is very capable. There won’t be too many 150k milers in future though I’m sure.
Warren Buffet himself will tell you, never buy a depreciating asset.
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When you say PCP other, how does that finance work with a car at a dealership? They pay the dealership directly?
The dealership gets a commission
@@DefinitelyNotAGuru Aaah, ok - so do you recommend CarWow for the 'other' PCP finance options, so they compare rates across providers?
NO - I just used their calculator. I don't recommend anyone take PCP generally.
So you recommend lease over PCP? What happens if you fall in love with the car and end up wanting to buy it? 😢
Ask for a price from the lease company at the end of the
I was having the same conversation with a friend this week. Is there a further calculation in that with cash or PCH you own the £15k asset so the total cost needs to take this into account?
I don't really understand the question to be honest. You don't own anything with PCH; nor do you with PCP untill you pay the optional balloon payment. Even with cash the asset you own is a depreciating one in 99.9% of cases.
@@DefinitelyNotAGuru I agree that the asset when paying cash is depreciating but my point was that at the end of the term with cash (ignore my comment re PCH as I meant HP/Loan!) you then own a depreciated asset which you can theoretically sell whereas with a lease or PCH you have £0. So, this needs to be part of the overall cost of ownership?
@adrianroebuck6497 This to me is the strongest argument for buying cash if you can afford to. In the example given, at the end of 3 years you own an asset worth £15k.
@@jb57utube a £15k asset that has cost you more to get to that point than if you leased it. I’d rather give £15k to a lease company and end up with nothing than £20k to someone else to end up with something worth £15k as I would have just saved £5k
@@DefinitelyNotAGuruI can see where you're coming from. Thinking about cash vs leasing, for comparison I suppose the actual cash cost is the cost (incl servicing, tax), less £15k, plus opportunity cost? That then needs comparing against the £11478.
Why is the RFL £570, when the car is under £40K ?
3 year total
A 1.2 Peugeot won’t be worth 15k to the customer in three years….imho😏
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