SO what is everyones thoughts on this? I am mulling the figures over and have come to the following conclusions based on a Dynamic £40k ish and ownership over 2 years
Cash - £40k down, no interest obviously (minimal lost in banks-urrrhh bloody goverment) residual value after 2 years being £25K ?? Is that fair to say? Depreciation loss being circa £15k.
Finance - £10 deposit, 2 years at circa £1200 pcm based on 9ish %, total interest over 2 years being circa £30k, depreciation = £40k - £25k residual - finace paid (£30k) + deposit £10k = £10k
Leasing - £3500 deposit, £600pcm x 23 months = total £17,200 plus you get your deposit back plus the fact that you can use your cash on other investments.
So surely Leasing is a no-brainer here isn't it???
Well Glasses guide say 94% after one year and 70% after three. So your estimation of £25K may seem a little stingy. If you took 80% at end of year two thats £32K and makes a big difference to your calculations. Cheers YT
Personally, I take the view that as cars are depreciable assets, I PCP new cars as I am then only financing the depreciation over 3 years. I have a rate of under 7%. My view is that I can use the cash I have to reinvest to make more money than that rather than being tied up. If I buy a car over 3 years old, then as the majority of the depreciation has already happened, I'll buy outright.
Not saying it's right, but works for me
It's got to be cash...provided you have it. I reckon residuals will still be excellent in 2 years especially as I expect prices to increase during that period.
I did look at lease costs but found them expensive. M&S Finance will do up to £15k personal loan at 6.3% APR which seems good.
You think the residuals can really stay that high?
But if you could take the £40k cash and invest it to give an approx 30% RoE (which gives you an additional £12k) then surely it is better to take the leasing option, as the leasing costs £17k, and you feel none of the depreciation.
Be interesting to add a poll to the thread to see what percentage of people are choosing which option........ cash, lease or finance ?
Well a poll I shall add then. I agree with goMark. I would rather use the money to make further money. Don't see the point in putting the cash down if you can make more than the 6% or minimum interest rate's people are quoting.
I am only (hopefully) able to buy the Evoque due to an inherritance that my wife is getting (hopefully) soon. As I run my own mobile valeting sole trader business I propose she puts around 50% down but as a loan to me (my business) & the rest on either PCP or straight finance, all of which then can go on my accounts.
I guess thats the other factor, work usage. As a company car you would get various tax breaks wouldn't you?