Costs of BUYING & KEEPING a USED CAR compared to LEASING A NEW CAR
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- Опубликовано: 30 апр 2024
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In this one we take a look at one way of trying to calculate the cost of buying a 2-year-old car and keeping it for 3 years or 5 years. I'm using a Qashqai here as it's the most popular car in the UK.
This is purely an example designed to get you running the numbers for yourself in a common-sense way; it's not financial advice or any kind of "rule", it's just how I would calculate it and why and I hope it might inspire others to do the same.
#usedcars #carfinance
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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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My nine year old vw Passat estate just got a door ding in the pub car park and the culprit was long gone when I discovered it. Annoying as it is, I’ll probably just live with it whereas if it was a lease or PCP, it would cost me a good few bob.
If it’s a clean ding you could probably do it yourself or get it pulled out for £200. Treat yourself.
I've always run second hand cars (2-5 years old) since the 1980s. They've been largely reliable (an Austin Princess and old BMW 7 aside). The obvious thing to say is to check the car's history, and look after it well, including any remedial mechanicals that may need doing.
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I buy a 2 year old used car and drive it until it dies. I'm currently on my 2nd car with the first car lasting 18 years. I'm probably a unique case which it shouldn't. I should be the norm.
Good that you do whatever makes you happy
@@DefinitelyNotAGuru
At the same time. I'm addicted to your videos. Thanks
Now I think you may need a doctor 😉👍
As a car guy I would never lease because I'm a bit sad and actually enjoy the thrill of the hunt when shopping around for parts and doing some of the simpler bits myself, having some industry knowledge will save you a small fortune on servicing costs especially if you can fit them yourself. Changing brake pads/discs, replacing the odd sensor or changing the oil isn't rocket surgery and is an essential skill of car ownership in my view. All my cars have been 15-20 years old 100k+ miles and still going strong because I've looked after them.
Yes, effort can certainly pay off if you're that way inclined. I used to service my cars as a young bloke but I just can't be arsed these days, shame on me I know.
@@DefinitelyNotAGuruit's all about priorities, which often change as we get older.
Super video once again Jim. Great to see the comparison in black and white. Throw in some tyres and brakes and the lease option looks very tempting indeed. Thanks for making this Jim 👍🏼
Thanks Mark
Great informative video as always. For me I don’t want the hassle with an older car so prefer the leaseloco approach.
Thanks Richard. It’s a decent choice for sure, a known quantity is a great thing.
A well explained ownership video Jim. I’ve done a mixture over the years, owning and leasing with varying success. Your right doing the sums is absolutely crucial, but I know a lot of people when talking about cars forget about depreciation.
Thanks 👍
Really useful Jim 👍
Thanks Ant
Agree with your view point that you go with what your comfortable with. Personally I've bought and run 2 cars for over 10 years each. One was a year old when purchased and another brand new. I may have been lucky as I've had no issues that have been costly once the warranties expired. Love your channel and videos but leasings not for me....although some of your special offers are tempting 😉
Yeah people get very tribal about things and it all gets a bit daft. Just drive what you like, buy it, lease it whatever you want - just don’t give me grief about it 😂👍. I’ve spent the evening looking for a dirt cheap second car for us that won’t be a money pit. Failing so far (champagne taste, Pepsi budget)
My current preference is to buy fully depreciated premium cars and find the model years that avoid any show stopping jobs - Range Rover Timing Chain, Porsche IMS+Bore Scoring, BMW Injectors etc. It's cheaper than most leases and I get to drive more interesting cars. The thing that really dates cars is the infotainment and that is a cheap fix most of the time. Currently in a super cheap BMW 6 series and I absolutely love it!
👍nice car
Good one Jim. You can't beat a spreadsheet for life's decisions😄
100% 😂
The 'Opportunity cost' definitely needs considering, the financial world refers to it as the 'Cost of Money', if you use savings. at the moment you looking at say 5% interest lost, so £1000/year or £83/month, if you borrow the money your looking at more like 6% or 7% if you have a good credit rating so £100+ per month. It's the thing people most forget about.
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Lots of people still don't think of money like this unfortunately. Should teach this stuff at school.
I think so many kids leave school without some life skills. How to go self employed and why, how to manage your finances, understanding compound interest etc
Great video as always. 100% you have to do the calculations yourself based on circumstances. Making the right choice of vehicle is number one. I've not leased yet, but based on current conditions it certainly looks like a winner for many. I was very lucky with last car a 2014 Mini Cooper S 3door Hatch. Bought 5 years ago for £12k5 and sold privately on Facebook for £7k9 - it was a beaut. I think that was pretty cheap motoring :). I've switch to electric as I wanted to do and picked up again of Facebook a 2021 500e LaPrima for £12k8 about 3k below dealer retail so I'm hoping I have a bit of a buffer on the inevitable EV depreciation bomb. Time will tell.
Key for leasing is to shop for the best deal rather than fixate on a specific car. I love the 500e.
Great video, I've always done the 2 year old and keep for 5 but never tried to put numbers on it.
Cheers Terry, far from an exactly science but it's something at least
Other than a couple of rare cases I buy cars at least five years old to start with. My current car is an 62 Reg Mercedes SLK. I paid £11200 for it in July 2020 and now I could probably still get £7500 for it. I've only had routine servicing at a specialist and a couple of tyres in that time (disks and pads will be required in a year I expect). The other plus of older cars is cheaper insurance. The downside is many people want something new and don't consider a ten year old car but buy a good one and look after it and it's the cheapest way to go. If you don't service it regularly that's when the problems often start. I like your videos and the fact that you take lost interest into account when working out costs - it's quite a lot now that 5% is possible on a deposit account.
👍luck is a huge factor
@@DefinitelyNotAGuru maybe but I've been largely lucky for forty years now. I can appreciate older cars aren't for everyone but my car still looks and feels like new.
@@robsmith1a I never have been with cars, aside from the new ones. There are lots of older cars that I've love to have but I just don't have the budget to keep them on the road (as I don't have your lucky gene).
Looking at those costs I would say leasing is better. I have always bought 2 to 3 year old cars and kept them. My current car is a 2016 kia ceed I bought in 2018 for £8300. No tax on it and a 7 year warranty. At the end of the warranty period it was worth about £5000. So annual cost of about £1100. But I still have it but no warranty any more
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Great advice. Considered leasing but after lots of research decided to bite the bullet and just paid cash for a 2021 Kia Soul EV £15k for our new family car. I think im old fashioned and wanted to have a fave to face interaction with the local dealership, give a thorough test drive, have a bit of a haggle and part ex our old car. Happy now hopefully still happy when we come to sell it. We had our last car for 17 years so who knows. Great vids.
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Had a qashqai as a hire car in Spain last week. Must say, I loved it. Shame the arriya isn’t quite an exact replica but electric (ie it has a smaller boot)
Ariya is an awesome car to be fair
Interesting stuff, thanks.
I did a similar calculation last week, just as the company I work for does salary sacrifice option to lease an electric car. comes with free insurance, maintenance, tyres, tax and breakdown cover. Looked at something under £400 , best I could get was a Toyota bz4x for £350 a month , out of a load of Nissans, BYD and MG cars that were less but not as attractive. Have a Mercedes 2020 B class now. Has lost about £8k in the 2 years I've owned it. Only do about 5k miles a year. Kind of works out the same when you factor in maintenance,mot,etc. Just I get a Toyota instead of a Mercedes, but a New rather than 2 year old used. I kind of prefer having a Mercedes to be honest and I like that I have £19k there if the worst comes and I have to sell it. Not having to think I need to get £350 each month for the next 2 years taken off my salary.
Swings and roundabouts I guess,
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Great video. Thanks for the info. My budget is down the lower end of leasing/buying second hand and I’m trying to weigh this up myself.
Do I buy second hand from a more reliable brand (Japanese) and hope I’m lucky RE repairs or go for the known costs leasing will give me
Also I’ve noticed a lot of new cars are higher insurance group and with insurers taking the p*ss that’s a factor as I’m in my 30s.
Insurance group is actually less of a driver than your postcode to be honest. Insurance group is a factor but it's not the be all and end all. Your final price comes from over 400 different sources of data, not just the bits you answer questions about.
@@DefinitelyNotAGuru that more reassuring to know. I will try for some quotes thanks for replying
There is a fantastic lease deal on the ora 03 about
New lease deals of the month goes live at 5!
👍👍👍. Thanks Jim
Cheers 👍
I guess another point worth mentioning is that not many people are lucky enough to have savings lying around to buy a 2yr old car with cash, so may take a personal loan to cover it. That would typically be at a higher interest rate over the three years of ownership. So they'd actually be paying maybe 7.9% on top of their purchase price, or the majority of it. I don't know what today's loan rates are but that's a guess.
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I agree we lease though motorbility and you can't bet it
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One thing that is always a bit irritating at the end of lease is the charges for damage.
My A5 after 3 years look perfect from a distance but I know there are a few car park door dings on it, a small scuff on one wheel and a scratch on the door and bumper. Most of them you have to duck and dive around to even see 😂
Now you will be very lucky not to have these sort of things after 3 years but you often get charged for them as the reasonable wear and tear guides are OK but strict.
I think it's worth noting that more often than not you will be liable for some charges on end of lease.
Having said that I rang up with my last car and complained at the number of tiny little things I was charged for and they removed most of them.
Just think it's worth mentioning as if you were buying second hand you would probably ignore small scuffs and dents you couldn't see from a metre away.
Yep, usually when challenged they do. Our Touran went back after 4 years with more than a little damage and they charged us £250, to get the work done locally would have been £600+ so I didn’t even bother to challenge as it seemed like a great deal. The annoying bit is that the car generally just goes straight to auction anyway.
How much would you typically budget for cosmetic repairs/touch ups to a lease before you return it? Tricky to factor in, like used maintenance costs/servicing but something to consider... Interesting video as always 👏
Tricky as much depends on your driving ability quite frankly. Our Touran went back after 4 years with a charge of £250, my young son did his best to destroy the car, as did my wife who was the main driver.
@@DefinitelyNotAGuru That's useful, certainly considering salary sacrifice on the next car. We've switched to EVs and given how quickly he models are changing and improving, within a 3 year period and new models being released all the time, I think lease/SS fits better than buying used and hanging onto the car for 3 years.
With my Audi it was cheaper to let them ding me than it was to pay for a repair. Quite a lot of marks will be classed as wear and tear so you don't need to worry about it.
ET cetera. I love the videos though, please keep them coming.
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Interesting 😊
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Great video Jim.
Suggestion for your next video, comparing a 10 year old luxury car ownership for 3 years or 5 years vs lease.
In my experience with a 2013 E class mercedes. Total cost per year comes out to be 1600£ per year factoring in depreciation and repairs. Roughly 133£/month. At this kind of money per month, i wont be able to lease. Certainly would be using the bus. 😅
That’s a pretty odd comparison to be fair. I could do one on the price of a banana vs a house but I don’t think it would make much sense. 😁👍
@@DefinitelyNotAGuru Lol, I understand from your point of view, you cant truly justify showing the least financially taxing options because you’re sponsored by car lease companies. If they make money, you make money ;)
I don’t know where to start with that comment - here goes :
1) I’m not sponsored by a leasing company and my business arrangements are my look out.
2) your video idea is irrelevant - why watch something comparing a brand new car to one approaching the end of its life? It’s irrelevant.
3) you’ve clearly been very lucky with your old car, many aren’t.
4) I pride myself on being honest and upfront and don’t appreciate what you are intimating in your comment.
Now please leave more respectful comments in future or you will be banned. Thanks.
Surely a fairer comparison would be a new leased car for 3 or 5 years compared with the same car bought new then traded in at the end of the time period. That way it is like for like. I will do this myself and will not forget to allow for the loss of savings interest on the cars cost to buy (at 5.2%)
I’ve done several of those before (take a look) and always get asked to do a new lease vs a used car. If you do as you say with new cars, shop for a decent lease deal rather than focus on a very specific model and you’ll almost always do better with the lease (outside of the crazy covid days).
Thank you, I am considering a fairly newly released EV (Tesla Model Y) so finding this hard as I can’t put a value on it at 3 or 5 years old.
You can only try to predict, if Tesla suddenly releases a new one with 100 more miles range etc the value will drop significantly. It’s very tough with EV.
Good video Jim. A lot of people dont realise how cheap leasing is.
As for the 'I buy a £700 car and it lasts me forever ' crew, they ain't comparing like for like. If they want to drive an unsafe sh_tbox thats their choice, good luck to them.
I agree. It’s almost impossible to compare a new car to one that’s several years old but I wanted to give it a go. For me a used car is sometimes worth a gamble when it’s already lost pretty much all its value (ie sub £5k), otherwise just give me a lease and save me the hassle.
I have always purchased 5 to 10yr old ICE as newer ones still devalue at around £3,000 per year. However, the current prices of 2 or 3 year old BEVs is making me reconsider the maths. As for new, I still believe a lease (especially a Leaselocco deal) is the cheapest way to go.
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If you pick a car that holds it's value well and you can drive a decent discount off the dealer and you can get a decent trade in a PCP can be a good deal, you have equity in the car, (potentially) reasonable payments, flexibility to end the agreement early at reasonable cost. I've done it with Yaris and Corolla's a few times and had lower monthly payments than a lease, I use carwow to find the manufacturer discount (often the offer comes from my local dealer!), the various buying services to find a minimum trade in (they'll also settle finance). It's helped that the interest rates have been low over the last few years. As Jim says is 'do the sums'
@@makemineapint PCP is almost always a bad idea unless you’re in a rising market. Pretty much any other finance mechanism often works out better for you and worse for the dealer…in very general terms.
@DefinitelyNotAGuru - I guess I've been lucky 🙂 If you look on PCPs as a DIY lease and make sure you know your numbers and negotiate hard you can make it work, a few areas where I think PCPs can be advantageous...
1. When the dealers wants you car they will give you good money for it (know your numbers), used cars are where the branches make their profit
2. They have a discount to give away on new sales (know your numbers), the real profit on new cars is at group level on volume bonuses
3. Manufacturer finance is usually competitive with the finance terms lease companies have access to (assuming you're credit worthy)
4. You can normally terminate a PCP much more cheaply than a lease, you just settle the finance and sell the car any equity is yours, WBAC will do both for you
5. Any miles under the limit are effectively lost equity/overpayments on a lease, with a PCP they make your trade in more valuable
6. Dealers are more forgiving on condition when you return a PCP, especially if they're selling you a new one (I have a story about a rugby ball and the bonnet of a 6mo car 🙂)
I would agree that a lot of people would be better off leasing a new car, they're the ones who think with a PCP you 'own' the car and don't know the numbers and don't negotiate hard. I always think of a PCP as a self arranged lease.
If a PCP doesn't work for you, as you say, you can always lease, at the end of the day "knowledge is power" !!
My son bought a Peroduo Myvi for £400 ran it for 7 years spent £300 on tyres and repairs and then scrapped it for £140.= £80 a year
👌 not really the same as the example here and I’d probably want to be paid to drive one of those but hats off to him, sounds like he’s a lucky boy 👍
good to have choices
Bangernomics. I am a strong advocate. None of our 4 cars are under 19 years old. But quite a few people actually enjoy spending money on cars that are costing them thousands. I love servicing our cars and using the money saved to have a holiday or something else. My colleague on similar money to me just spent £85000 on his car and loves it - but now hes a bit hard up. Fair play to him but not for me.
Each to their own. For some, cars are a necessary evil that they want to cost as little as possible. For others they’re the reason to live or a guilty pleasure. bangernomics can be great if you’re lucky or a money pit if you’re not. To each his own.
@@DefinitelyNotAGuru😂👏🏼
I bought a pre reg (7 miles on the clock) BMW 530d Touring on 18 Jan 2018. List price 57k and I paid 27k (imagine getting the same car today at that price!) So over 6 years old now (it came with a paid for service pack for the first three years). I’ve only had one repair so far (failed suspension air bag cost £275 last week) and it’s still worth over 20k as I’ve only done 35k miles. Passed every mot first time, not even an advisory. Cheapest car i’ve ever owned and the performance is stellar.
That new price was insane; was there a dead body in the boot? 😂 sounds like you got a good car anyway 👍
@@DefinitelyNotAGuru Thinking of getting an RX450+ now, wish I could find a similar deal! I want something softer for our dire roads
With second hand prices on something like a model 3, these numbers can be a lot better.
Car choice obviously will change all of this - that’s kind of the point.
I think you missed the trade in. If you do the same again and your car is worth £8 or 9k your 2 yo car is now costing you £11k to buy! Not applicable to everyone, but I wouldn't let anyone other than myself put a spanner near my car. 😉
No idea what you’re trying to say there I’m afraid. If you’re saying what I think you might be saying then maybe watch again and rethink.
Hi. Am I first?
You are, and you’re LukeRan2210! 👍
@@DefinitelyNotAGuru Awesome video as per usual, so informative, keep it up!
Well played champ 👍👍👍
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Interesting. It is close thing lease or secondhand. It has a lot to with which car you chose. The Maths must done .
It does
19 GRAND CAR AS A LOW PRICE?
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I've never leased a car , I buy 1 or 3 years old , cash , but will lease my 1st EV .
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7th
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Simple maths, lease for £300 per month for 3 years plus upfront payment, and still, it's not yours versus even at the end of lease they charge for every small mark as a smart repair, costing £70 each repair.
Used car
Even if you spent £300 each month for 6 on repairs, you save a small fortune, and the car is yours.
Perhaps a bit too simple. You obviously don’t understand the benefits of leasing and didn’t get slightly the more complex maths in the video. You also don’t seem to understand what the BVLRA guidelines do. Nevermind, we do.
Leasing model relies on the second hand market. If it can't be sold on so the leasing company can recoup costs, leasing rates would have to increase significantly.
Incorrect I’m afraid.
At the moment used EV prices have never been lower. New EV leases have never been cheaper.
The business model for leasing is a complex one but economies of scale are a key factor.
One point you missed is that if you lease in your own name and get divorced, then there is no asset to split. If you buy and own the car, the value is lumped into the joint pot and then divided. I found out too late. My ex leased and kept her expensive luxury car while she demanded half the value of my modest family hatch back.
😂 I don’t do marital law on here mate but fair point 👍
Warranties are not worth a rub, so why include it ? Your better off with a maintenance plan, such as what Toyota are offering. Up to 100,000 miles.
Some warranties are poo, lots of them are “discretionary” rather than “insured”. This is a very good “insured” product.
I think you’re talking about a service plan and only Toyota offers the 10 year 100k warranty and only on their newest models.
You should not be comparing a mild hybrid with non mild hybrid
Did you even listen to the start of the video???
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